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Googorola, a New Age in Mobility
Well, it certainly has been an interesting couple of weeks in the mobility industry. Lawsuits galore, HP punting on the Tab (and most likely the whole Palm acquisition), Google buying Motorola Mobility (Googorola?), rumors of iPhone5 getting louder, and other rumors that Microsoft is finally going to compete in the space. And silently, well not so silently one by one the companies that started it all are being gobbled up. New, 21st century brands, some that can’t look at hardware if it was staring them in the eyes are taking center stage.
When there are winners, there have to be losers, even in a rapidly expanding market such as this. Nokia, the once titan of the category, that robbed market share from the inventors of cellular telephony (Motorola), although still #1 are now falling like a rock. Palm, who arguably added the “smart” aspect of smart phones by creating the PIM (personal information manager) elements now ubiquitous, recently bought by HP are now defunct and their legacy, sadly, may follow. Research in Motion, RIM, makers of the ubiquitous executive gadget of Christmas Past are down to a meager 3% and declining. While Google and Apple, who dominate the mobile Operating System market share see no end in sight.
Google’s acquisition of Motorola Mobility (MMI) brings to the table the largest patent dowry available: 17000 granted patents plus more than 7000 in process, including some unimaginable radio and communication intellectual property. This not only gives Google the ability to counter the myriad of lawsuits that make analysts weary of the future of Android, but can actually put them in the driver seat if they weren’t there already. Unfortunately there are always downsides to every upside. In this case its in the form of a Taiwanese and 2 Korean companies. Yes, you guessed it: HTC, Samsung, and LG. These 3 plus Motorola Mobility are the main adopters of Android and responsible for Google’s rise to the top OS in this category. Together they represent roughly 25% of the market or about the size of Apple’s iOS.
The question is, my loyal reader (singular), will they pick up their marbles and go home (with a layover in Redmond, Wa)? or will they trust Google to keep MMI running independently? Yeah right! Just like other things in life, some win, and some lose. The ones that win by just waiting it out, Microsoft have a real chance to become the third horse in the race. Mainly because they will be the only remaining independent. But with $53B burning their balance sheet, how long can they afford to stay that way?
Enjoy.
Losers can get married too
Have you ever seen a couple walking down the street, holding hands that make you think that only they could have found each other? That’s the impression I get when I see Microsoft and Nokia ink a strategic alliance. Granted, that’s not quite a marriage, but more like dating. Two of largest technology companies that arrived late to the smartphone party and who are struggling to remain relevant in the fastest growing boom in the Tech Industry since … well … ever, decide to join forces to battle Apple, Google, and their ecosystems. A daunting task I might add.
This is the deal: Microsoft has not been able to do anything good in the mobile world even after pouring millions (if not billions) of dollars. And Nokia, once the giant to follow in the cellphone industry did not see the modern smartphones come. Together, well, in this blogger’s humble opinion, is no better. Nokia’s hardware, as good as it is, is just that: hardware. They have never been able to stand out as a software supplier, areas where both Google, and Apple, the 2 leading forces in the smartphone world, excel at.
On the other hand, Microsoft has not been able to cut the cord. Still the number one player, by far, in fixed applications, has just been a disaster in the mobile world. Windows Mobile, arguably one of the first “smartphone” OS’s out there, did not evolve. And Windows Phone 7, a great approach, is a classic case of “too little, too late”. While Balmer, Microsoft’s CEO, brags about the eight thousand apps in WP7′s marketplace it remains at least an order of magnitude below iOS or Android. Carrier’s have dozens of smartphones in their lineup already with access to these apps and users preference, either by cult or anti-cult. NokiaSoft (or MicroNokia) will have to do the equivalent of pushing a herd of elephants up Mount Everest, one by one, without a sherpa, oxygen, and very little food.
In a letter to Nokia’s associates, Stephen Elop, Nokia’s CEO explained the transition his company will make to dump all activities on Symbian OS in order to adopt WP7 as its main smartphone OS. I find interesting he used the analogy of a “burning platform” and how people do desperate things in desperate moments. Kudos for admitting the desperate times and comparing a partnership with Microsoft to “jumping into the icy Atlantic”. Although it may seem a bit too much, it is more like jumping into the icy Atlantic, naked, in the middle of the night, and picking up drowning friends, with luggage, on the way down.
Granted, these are both outstanding companies with a history of innovation and impressive comebacks (remember Netscape?). But to pull this one off will require oodles of money, several miracles, outstanding negotiating with the carriers, and great, great products. They’ve both done it in the past, but will they do it again? But, given where they both are in this multibillion dollar market, do they really have a choice? Maybe not.
So good luck in your marriage, hope you both keep your maiden names. And please do not argue about naming the kids, hire professionals instead. Neither of you have a good track record there …
Enjoy.
Dell Streaks but Doesn’t Impress
Well, it is official. The world will be inundated with tablets of all sizes, colors, OSs and capabilities. Dell recently jumped into the deep end of the pool with the highly anticipated, but slightly disappointing Streak. It falls smack center in the middle of nowhere: too big for a phone, to small for a tablet.
The OS is archaic, old, last century (well, last year at quarter) in a market that moves faster than you can keep up with. When Motorola, HTC, and others are boasting Android 2.2, and others talk about Android 3.0, Dell launches a 1.6. Quite frankly what a waste of one of the most beautiful displays I’ve seen in this category. I hope Dell brings out an update soon since a lot of apps are not compatible to it (like Touchdown, the only real way to get to a corporate Exchange email/calendar system).
The device is really good looking, and Android is just great (yeah, even the ancient version 1.6). Just take it out in any public place and people will ask you what is it. But you will have to take the laughs when you pick it up as a phone. Maybe Dell, in its infinite wisdom, thought people will use a bluetooth headset to answer the phone or will not mind the geeky look of a huge tablet on your face. In any case, people will want to know what’s your fabulous device.
Anyway, I have to give them credit for making a bet. Tablets have 3 places in the market: a substitute for a laptop, a substitute for a smartphone, or a third device. Apple’s iPad was clearly a bet on the “third device” and against all my predictions, has hit a home run. Microsoft had bet for the better laptop case in the past, with … well not so good results. Dell bets on a better phone with the Streak, even with an AT&T subsidy. Good try, but I don’t think it will work out. It is too big to be your only phone.
If you’re going out for dinner it takes up a big chunk of the table and it is not pocketable at all. You’ll need your phone anywhere you go, but a “cleverphone” is not good enough since you may want to use it as a GPS or look for the restaurant, or all the other things we’re used to do with our phones these days. So you need a smartphone. At that point you’re in 3rd device territory so you might as well opt for a 7, 8, 9 or 10 inch display.
Oh well, as much as I wanted to toss my iPhone I will still have to wait for a good Android phone for AT&T.
Enjoy.
Two Recent Deaths in the Smartphone world. Long Live the Emperor.
Within the last couple of weeks two surprising deaths happened in the Smartphone world: Kin and Nexus One (direct from Google); both of whom I had blogged about before here and here. Similar to my predictions on tablets, the world has decided to make me look bad.
I can’t say either action is a real surprise, given the success – or lack thereof – of both products, but it begs the question of what the hell is so unique about Apple that makes them so successful? Both products were reasonably good and both came out with some marketing strength and high hopes, albeit none had Jobs sticking his turtleneck out for. In fact one can almost say they are truly cleverphones. Nexus One sold directly by Google lasted a few months but managed to sell more through the carriers than direct. Kin, on the other hand, didn’t even last enough to hear comments about it. Microsoft has decided to protect their channel by pulling it out of the market and allowing HTC, Dell, Samsung, and LG who will release Windows 7 Phone Series (gotta love Microsoft’s marketing) devices this year for the “holidays”.
What I think is really happening is that even strong players like these tend to underestimate the power of the wireless carriers. They own the customer since people buy phones in order to get a service, not the other way around. Smartphone OEMs have learned the game and have succumbed to the carriers’ will, quite successfully I might add. The market has turned into a selection of services where you pick a desirable phone for. In other words, I know I want AT&T, Verizon, Telus, Vodafone, etc. for whatever reason and then I select my phone. Nexus One tried to separate it out unsuccessfully, even given the fact that Google didn’t need to make money on the phone! People still bought the subsidized phone through the carrier in spite of a long term commitment.
Microsoft on the other hand didn’t try to sell direct, but attempted to bypass OEMs, where carriers buy more devices from. So it is easier for them to add a Windows 7 Phone from HTC to the portfolio they already buy from them. Besides, Kin was a succession of project “Pink” in which Microsoft had an agreement with Verizon to supply a device. This contractual agreement forced Microsoft to release Kin with an OS that was not quite Windows 7 Phone. In addition to that Verizon changed data plans and made the Kin less than attractive cost wise. Again, a wireless carrier took control of the market.
One can also blame Palm’s near demise (and HP’s gain) on carriers’ acceptance or choice.
Whatever the reasons are, wireless carriers will continue to dominate and control the market. Granted, both Google and Microsoft have a potentially great future with their mobile OS without their own branded phones as long as they follow the desire of the carriers they sell through.
The only exception so far is Apple. AT&T has gained millions upon millions of customers that wanted one and were willing to compromise their carrier selection for the privilege of carrying an iPhone. When Apple opens up to Verizon we’ll most likely see them run back and abandon AT&T. Apple will churn the base, Verizon will add users, and AT&T will lose them. Very few new iPhone users, but Apple will continue to sell them new ones. Will Jobs be open to have an unsubsidized dual system (AT&T and Verizon) iPhone to sell direct so users can declare him his loyalty? I can see it if AT&T and Verizon decide to create cheaper iPhone plans since they will not subsidize the phone anymore and create a price war. We’ll see.
But for the time being iPhone remains the only device requested by name and the carriers maintain control over everything else. For how long?
Enjoy.
Ma Bell teaches us a lesson
In the shadow of Apple’s kick-butt quarter, AT&T reported results that made the market yawn. “Yeah, yeah, you sold 2.7 million new iPhones in the quarter, added 1.9 million subscribers for a total of 87 million (1 in every 3.5 US residents uses AT&T), reduced churn, and increased ARPU (average revenue per unit) 3.9%, and a 30% increase in data revenue; so what?” is essentially what Wall Street said. I don’t know about you, but a company that still manages these numbers in a market that is essentially 100% penetrated is impressive – sure, a 6%+ dividend helps . But the really impressive, albeit insignificant number to this humble blogger is the “connected devices” increase of 1.1 million to a total of 5.8 million.
AT&T has close to 6 million non-phone devices on the network. Now why is that even relevant, my fellow reader (singular)? Simply because there are a lot more non-phone devices and a lot more things out there that need to be connected than there are phones or people. Yes, they may not be sexy, play music, browse the web, or even wash your car, but they essentially do everything else. Beyond the obvious (Kindles, iPads, etc.) these things are everywhere and in desperate need to be connected.
Take your car, for example. If you have Onstar it’s already connected (not with AT&T) so you know some possible apps. But imagine a world in which you go to Google Maps, plan a route and squirt it into your car’s GPS! Or simply download the movie you want your kids to watch from your home DVR. Your electric meter one day will be connected to so you can monitor your consumption real time (Ok, Ok, i don’t know why would I want to do that either, but you can). Every thing out there can be connected and can benefit from the internet. But where things really start changing is with Enterprise Applications.
Next time you receive a FedEx or UPS package go to the web immediately after you sign for it and voila it says received, in real time because the device where you signed is connected. The copier service personnel can consult schematics and order parts in real time when his/her machines are connected. Or the copier can ping someone when it’s running out of toner; the end of the empty copiers or useless service visits. Making every device a smart device has endless applications that are starting to look affordable. Ma Bell’s humble cellular non-phone numbers are starting to show growth. The ubiquitously connected world is getting started. Make sure you are ready for it.
Enjoy.
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