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Smartphones’ ecosystem dilemma
Why is the Motorola Droid apparently gaining traction in the smartphone market, when Microsoft and Nokia are failing so miserably?
The Droid, built on Google’s Android mobile operating system, sold 250,000 in its first week on the market. That’s way behind the 1.6 million iPhone 3Gs sold in the first week after its launch, but it’s still enough for Motorola to see possible salvation after years of decline and for Google to feel self-congratulatory about its venture into mobile.
Some of the success of the Droid, and the increasing number of Android-based phones available, can be ascribed to its clean and versatile operating system. Reviewers and users agree that Android still lags the iPhone, but the gap is closing. In contrast, Microsoft’s Windows Mobile has stumbled through numerous iterations — it’s now on version 6.5 — and endless renamings. No one has ever liked it.
Nokia once ruled the roost with its Symbian-based smartphones, but its market share has been declining steadily. Nokia still sells more mobile phones than anyone else in the world, but Apple — which sold 7 million phones versus 113 million for Nokia in Q3 — astoundingly makes more profit, $1.6 billion on handsets in Q3 this year against $1.1 billion for Nokia.
The operating system alone, however, doesn’t explain the Droid’s initial success, or even the iPhone’s ascendancy. What Apple has done so successfully is build a thriving ecosystem around its product. The various Android-based phones are following the same path. There are now more than 100,000 applications (dubbed apps) for the iPhone, with hundred more appearing every week. As the advertisements tell consumers, there’s an app for that, whether it is timing your cooking for a complicated dinner party, using Facebook, tracking FedEx packages or getting snow reports from ski resorts.
As more apps are developed, there are more and more reasons to buy an iPhone rather than the competitor, the phenomenon economists call network effects. In contrast, there are about 10,000 apps available for Android-based phones. That probably covers the vast bulk of what most users want to do, but the perception is that the iPhone can do much more (hence the Droid’s advertising slogan: Droid Does).
Apps, overwhelmingly built by third-party developers, are nothing new. Apple’s innovative idea was to put an app store on its device, so users could browse, choose and buy apps casually and spontaneously. You didn’t need to search for different vendors, or download apps to your computer for future syncing with your phone. So the ecosystem becomes the phone itself, the app store and the thousands of developers.
Dow 10,000 is a gas
Jack Healy’s story in The New York Times about the Dow getting closer and closer to the magical 10,000 mark is OK, but it contains few surprises. But I really was blown away by the chart that shows the perfomance of Dow component stocks since March 29, 1999–when the index crossed 10,000 for the first time.
The chart, which includes a number of stocks that are no longer part of the Dow–such as AIG, Citigroup and Eastman Kodak–is interesting because more component stocks have lost ground over the past 10 years than posted gains.
The list of losers that are still part of the Dow include a broad swath of US industries. Some of the stocks that have lost ground in the decade since the Dow first hit 10,000 include American Express, Walt Disney, Cisco, JPMorgan Chase, Microsoft and Home Depot.
This long list of illustrious losers should be a sober reminder for the bulls prediciting an ecomonic rebound simply because the stock market is rising.
And maybe just as disturbing is the fact that two of the biggest gainers in the Dow over the past 10 years are oil and gas giants, ExxonMobil and Chevron. That, of course, is a byproduct of the ill-fated and ill-advised love affair US citizens have with gas guzzling SUVs.
Exxon and Chevron’s dominance should also serve as reminder that we remain too heavily dependent on a dwindling natural resource that makes us dependent on tyrannical foreign governments and is quickly destroying our environment.
One can only hope that 10 years from now, the top performers in the Dow will include a solar cell manufacturer and a wind farm manufacturer.
Presumably the stocks are listed because they have a solid earnings and cash flow record, good dividend payouts, strong balance sheets and clear audits.’Solar cell manufacturer and a wind farm manufacturer’: I am so pro this, but just worried when these projects will be paid off and by whom ? Will the net present values be positive or the least negative compared to e.g. nuclear energy. That would inlude variable, fixed, sunk, opportunity costs and opportunity income and related tax and risk effects.
Why Paddy powers past the field
Here’s why Paddy Power makes the other bookies look flat-footed. Microsoft’s politically-incorrect move to turn a black model’s face white for an ad featuring three smiley happy people that ran in Poland has produced the predictable grovelling apology from the company.
Now Paddy (is that racist? – ed) is offering odds on the racial mix when the campaign for MS Office 2010 is launched. Here they are: 12/1 against white and Asian, 4/1 white only, and a reassuring 11/10 for the original mix of white, Afro-American and Asian. Bet on the favourite, I’d say.
(Source: Engadget)
from The Great Debate:
Forget Microsoft, Yahoo’s value is overseas
-- Eric Auchard is a Reuters columnist. The opinions expressed are his own --
The fate of Yahoo Inc has become intertwined in the public's imagination with the success or failure of its dealings with Microsoft Corp in recent years.
That's despite the fact that as much as 70 percent of the value investors put on Yahoo's depressed shares are tied up in its international assets or cash holdings -- factors that have nothing to do with Microsoft.
Yahoo's operations trade for just $5 to $6 per share out of its current $15 share price, once you exclude its Asian investments and the value of its cash. Its hidden assets in Japan and Chinese affiliates -- Yahoo Japan Corp and China's Alibaba Group -- alone are worth around $6 to $7 per share.
The trouble is that Yahoo needs to find a way to cash out of its increasingly rocky relationship with Alibaba Group, in which it holds a 39 percent stake after it pulled back from operating its own business in China in 2005.
Yahoo's best chance here may come next year if Alibaba succeeds with a second IPO of its Taobao.com consumer ecommerce site, building on the success of the 2007 IPO of Alibaba.com, now valued at more than US$13 billion on the Hong Kong exchange.
Truth be told, Yahoo's huge success in building the biggest U.S. Internet media destination never translated very well overseas, despite the early foray into Asia that left it with lucrative assets in Japan and China. These passive investments came to substitute for a global operating strategy.
Say it ain’t so – Yahoo is Big In Japan?
Unfortunately, all the growth areas cited here are notorious fad markets.
If it’s in trouble regaining lost ground in Europe, as signs are, Yahoo needs to rebrand, ditch the amateurish logo, stop tagging all its email with smarmy little ads and emerge (if it can) as a truly impartial, value-perception driven community of record instead of just whatever mental teenagers who hadn’t read Gulliver’s Travels once happened to be using for the time being.
Maybe then…
Revolution?
Video compression technology can be interesting, really.
Most people forget how online video worked before YouTube popularized the embedded Flash video player. Remember the frustration of making sure you had the right video player to play this or that web video? It was YouTube that popularized giving people one-click access to videos.
On Wednesday, Google said it had agreed to acquire On2 Technologies, a maker of video compression technology, in a deal that could have sweeping effects for how video works on the web. The Internet search leader has a bland blog post about how it intends to use On2 to innovate in how video working on the Web, but it isn’t at all clear how far it Google is ready to go.
There’s lots of speculation that Google may choose to open source, or give away, On2′s video compression technology, undercutting royalty-bearing video compression technologies in use across the Web. That could undermine Adobe and its widely used Flash player, Microsoft, with its Silverlight alternative, not to mention Apple Inc and RealNetworks. Dan Frommer at Silicon Alley Insider spells out how far-reaching the Google gambit could be. As a counterpoint, Dan Rayburn of StreamingMedia.com argues the Google move is no big deal.
Google is only paying $106.5 million in stock for the American Stock Exchange listed-firm based in Clifton Park, New York. Because the deal involves two public companies, there’s an outside chance that a competitor may want to mount a rival bid. The On2 board would have to consider a richer bid for fiduciary reasons. Google might have more on its hands that it bargained for.
(Images: Beet.tv, Google Finance)
http://wayonda.com/index.php?page=videos §ion=view&vid_id=100106 Interesting historical perspective on the company and it’s investor relations leading up to the deal.
Apple-Google learn Corporate Governance 1.0
LONDON, Aug 3 (Reuters) – The resignation of Google CEO Eric Schmidt from Apple’s board should come as no surprise to anyone with an inkling of what corporate governance means.
But then Silicon Valley’s idea of corporate boards has long consisted of cozy, interlocking directorships which would be considered collusion in most other industries.
Google’s CEO is not leaving Apple’s board voluntarily. He is only stepping down in response to the increased government scrutiny of obvious potential conflicts of interest between the two companies.
Yet regulators shouldn’t be content with Schmidt’s departure. The truth is that Apple and Google have been heading into the same markets for years. A veritable chain of overlapping business ties remain in place even if the most obvious formal link is now broken.
The chairman of Apple’s board, former Genentech CEO Art Levinson, remains on Google’s board. Another Google board member, Ann Mather, is the former chief financial officer of Steve Jobs’ former animation company, Pixar Studios.
Paul Otellini, the CEO of Intel Corp, Apple’s main chip supplier, also sits on Google’s board. Al Gore remains on Apple’s board, but in his new turn as venture capitalist he has many business ties to Google and its founders. Gore is a partner of Google board member John Doerr at legendary Silicon Valley VC firm Kleiner Perkins.
For months, the U.S. Federal Trade Commission has been examining Schmidt’s participation on the boards of the tech world’s two most dynamic companies. Last week, the Federal Communications Commission said it was looking into Apple’s decision to reject a Google phone application to run on the iPhone.
This reader generally finds Eric Auchard easier to follow than in the present article, which ought to be interesting, but in my opinion leaves much room for confusion.
Is the point here that Apple and Google are not competing sufficiently against one another, or that they\’re competing too much and if so, how could this possibly be the case? Frankly, I\’d like to see them compete more rather than less, but it\’s really hard to tell from what has been written here whether they do and what makes them any worse than [insert long list of major U.S., corporations here].
In passing, would it not be appropriate also to actively question the debilitating role in post-IPO terms that VC can and too often does exert upon emerging industries, by dictating terms of policy and players involved? There\’s more than a smattering of governance ethics needing dealt out and enforced in the entire business sphere of so-called Venture Capital, and has been for over a decade. Which brings us to the present.
Corporate governance – or lack thereof – would be a fundamental topic of immense importance if properly argued across the board in American [for lack of a better word] industry.
I for one would like to see corporate cartel considerations scrutinized more closely in general, rendered transparent, (within reason) enforceable and, particularly in this case, put in better perspective before concluding the debate.
Tech Links: Phones, more phones and communion wafers
Better luck next year for Android Taiwanese smartphone maker HTC has warned of a revenue shortfall, saying it has too many new phone models chasing too little revenue. Revenue growth will turn negative in 2009, instead of growing 10 percent, as the company had previously forecast.
Chief Executive Peter Chou says: “Momentum on both the Windows Mobile and Android platforms are also turning out to be weaker than expected.”
HTC said it is boosting its marketing spending to more than 15 percent of revenue from 13.5 percent to fend off market leader Nokia and the Apple iPhone juggernaut.
My favorite line: ”Investors have been relatively bearish on the company this year, with HTC’s shares having risen about 36 percent so far, far lagging the 54 percent advance on the TAIEX share index.”
Bharti looks ready to raise price for MTN Bharti Airtel and MTN have agreed to a month-long extension to merger talks to seal a deal that would create the world’s third largest mobile phone company in subscriber terms.
This looks like the prelude to Bharti raising its bid for MTN, answering resistance to the deal by investors in the South African company. It all follows weeks of jockeying by Bharti to line up funding with banks and key shareholders.
The merger appears to be moving ahead despite signs of growing worker unrest in MTN’s homeland. Over the weekend, South Africa’s Communication Workers Union said workers at the fixed-line operations of Telkom SA will hold a two-day strike this week.
What I wish these phone maker companies would start working on is an Internet Cell Phone. One that uses the internet to communicate voice thru. They will compete against Cell Based Systems and this will force the Cell Companies to Lower their Prices to Decent Levels.. This current Contract/subscriber system is old and Monopolistic. If Google or Sony or or Somebody could develop this phone that worked as tranparently as the current cell system then the next wave of Telecommunications could begin and Give these Cell Companies LOTS of Competition. Thus Lower Prices to the end user. Right now My next phone will be an Internet Based Phone NOT a Cell Phone.
Saying boo to Micro-hoo: Eric Auchard
LONDON, July 29 (Reuters) – There’s been a bonfire of shareholder value at Yahoo and the blaze is not out yet, even after the agreement to a long-delayed deal with Microsoft.
Eighteen months ago, Yahoo walked away from Microsoft’s nearly $45 billion acquisition offer — a 60 percent premium to Yahoo’s then market value.
Fast forward to today and there is a zero premium being offered by Microsoft. And that’s after Yahoo also spurned $9 billion from Microsoft to buy just Yahoo’s search business. Still, investors had been hoping Microsoft might pay at least $1 billion in up-front cash to Yahoo.
No chance. Instead, Yahoo is receiving face-saving revenue guarantees for search advertising sold on Yahoo’s own sites for the first 18 months after the Microsoft deal takes effect.
Think ahead to 2012, the Olympics. That’s when Microsoft and Yahoo expect to finish fighting for regulatory approval, closing the deal, dividing up assets, putting their plans into effect and re-launching services.
The agreement is not an acquisition, but for Microsoft, it might as well be, as it gets control of the key levers.
For Yahoo shareholders, it’s value destruction not seen since the misguided merger of America Online and Time Warner at the peak of the dot-com era. The parallel between what is happening to Yahoo and the decline of AOL is instructive.
The European browser elections and other tech news links
Microsoft says the best way to resolve its dispute with European Union competition regulators may be an election. The software giant spelled out late on Friday Brussels time plans for an election-style ballot to decide the question of which browser consumers use in Windows.
The forthcoming Windows 7 operating system would offer a “ballot screen” that lets consumers turn off Microsoft’s own Internet Explorer (IE) and instead use rival browsers such as Mozilla Firefox, Apple Safari Google Chrome or Opera Software.
There are two obvious issues with this approach: 1. Most consumers rely on default settings and rarely change their browsers once they are installed. Will more than a small percentage of users elect to change browsers at the moment they are installing Windows?
2. But the big question is whether the majority of consumers who haven’t had much choice of using Internet Explorer over the past decade will find that their favourite Web sites work with other browsers. Sure, all the major browser alternatives are designed to support Web standards. But the issue will be the degree to which Web site developers themselves have played along and supported alternatives to IE. Of course the latest modern Web sites will work. But what about the hundreds of thousands of sites built for lazy IE users?
EBAY COURTS BIG RETAIL eBay is set to announce on Monday plans to make the online auction site a more attractive place for large merchants to dispose of unsold or out-of-season inventory in another move away from its roots as an online flea market or garage sale, AuctionBytes says. EBay isn’t commenting directly on the plan. But last week, Mercent, an indepenent developer of marketing systems for retailers, appears to have jumped the gun by saying it was offering a product listing platform for large merchants selling on eBay.
SOLD. AT ALMOST TWICE THE PRICE!!! Ericsson’s last-minute US$1.13 billion bid for the wireless assets of bankrupt Nortel deprived Nokia Siemens and a third rival bidder of the prize. The bad news is that Ericsson ended up spending nearly twice as much as the $650 million Nokia Siemens originally bid for the assets a few weeks earlier.
Microsoft’s attempts to settle the EC case are understandable given the eye-watering fines the Commission has been imposing lately on anyone caught breaking the rules. Arguably these fines are now well out of control and are starting to resemble criminal penalties – but without the legal protections you’d expect. The Commission is judge and jury when it comes to anti-trust proceedings – and its the shareholders who are punished, even if they had nothing to do with the unlawful conduct. No doubt Microsoft will be anxious to acheive a settlement if it possibly can.
Tech results give few clues to economy: Eric Auchard
LONDON, July 24 (Reuters) – Investors have proved all too ready to interpret positive earnings trends from Intel, IBM and Apple as signs of economic recovery and to justify a continued rally in technology stocks.
Now they are taking the wrong lessons in reverse by reading disappointing results from Microsoft Corp as evidence that a nascent rebound in the economy has stalled.
By the same token, it’s mistaken to read the best quarterly results in two-and-a-half years for Samsung Electronics, the world’s biggest maker of memory chips, as any indicator of progress on the economic front.
Look past the headlines and you’ll find factors specific to each of these companies that say little about any fresh demand for technology in this economy.
The truth is that technology companies have done a terrific job of cutting costs and preserving cash flow, even as revenue growth has continued to shrivel or turn negative. (See Reuters analysis).
But demand for new products and services remains scarce, except in isolated pockets. Apple and Blackberry-maker Research in Motion make must-have gadgets that resist economic penny-pinching.
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The Wall
Is the smart, droid market actually worth all the hype?
I have a Straight Talk Phone With all you Need $30 monthly I get 30mb data on Verizons network and find it is enough for a email and a bit of searching. what is so much better with all the applications? a normal phone works just as well in my opinion and possibly easier.