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.

Let’s recap.  Originally netbooks were small, light and only browser based.  They were the productization of Intel’s shinny new Atom processor, touted as a low power x86 that would allow powerful enough computers in these form factors with unmatched battery life.  They ran some kind of Linux (Ubuntu mostly), had a 7″ screen little memory, no hard drive to speak of, and a WiFi connection.  They would set you back $300 – $400.  Few bought them.  Microsoft, in a desperate territorial move, launched “Windows Starter Edition” at a significantly reduced licensing cost for OEMs.  The Windows netbooks were born.  Few bought them.  Then, OEMs in a smart move added up to 250GB of hard drive larger screens, more memory and a better keyboard.  Now they were selling them.  Unfortunately people bought them instead of laptops.  Wait … they were laptops … only cheaper.  Congratulations!  Microsoft and Intel had found a way to make less money with essentially the same product from essentially the same customers.  Not good.

Then the iPad was born.  Most techies entertaining to buy a low octane netbook either to substitute their aging laptop or as a lighter traveling device opted for Job’s money printing overgrown iPod Touch instead.  Why not?  a lot sexier, lighter, cooler, and just a little more money (there, among other things, relies the brilliance of Mr. Jobs).  So netbooks went into life support.  All OEMs are now jumping into the confused Tablet marketplace.  Apple, at the top, just laughs it out.

Where has Google been?  Well, Chrome is not new.  You may recognizer it from the fastest growing browser in the PC world.  Even as an OS it has been talked about for years.  But the world decided to focus more on Android since it is selling millions of smartphones and is sexier than a boring light OS.

But now  Google would launch the ChromeBook, a netbook with a twist.

Starting at a mere $379 with a $20 – $28 monthly fee on a 3 year contract for a WiFi cloud service. hmmm  again.  In this blogger’s humble opinion, my loyal reader (singular), what the … ?  Unless those cloud services are a real cloud or send you to the clouds using legal ways, I predict a disaster only rivaled by the NEXT computer.   I’m not ready to dump my iPad, at least for one of these.  And I don’t have a bag big enough for a fourth device.

The question is?  Is it a business model problem or a product problem?  Will you get one if you could get it for free and only pay the monthly fee?  Or better yet, what if Google can subsidize it 100% even the monthly fees to make money on advertisement alone?

And there, my fellow reader, among other things, rely the geniuses of Page and Brin.

Enjoy.

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.

The question is how many will survive in 2012 and how will they all differentiate among each other?  There are really 2 camps:  Consumer tablets (iPad and Android based), and everyone else.  I know, I know, RIM has one (the Playbook), Cisco (Cius), and Avaya (Flare) have one too, and maybe HP’s WebOS will be like these too.  But, I’m sorry, they fall in the “everyone else” camp.  Let me explain:

iPad and most Android tablets (Dell Streak, Motorola Xoom, Asus Slate, Samsung Galaxy, etc.) are designed primarily  for media consumption.  In other words to watch videos, read books and blogs, listen to music, etc.  The difference between iPad and all Android tablets is the obvious, but the uses are pretty much the same.  The “other three” are for communications.  All three companies have a great history of selling product to the enterprise and want to capitalize on the Tablet buzz. So they are tailoring them to be best for video communications, email, and those kinds of apps for people that are on the go.  BTW, where is Microsoft in all this?

Now, there is also a sub categorization of the consumer devices in iPads, “good” Androids, and 100′s of cheapo devices.  During CES, Motorola Mobility (one of the 2 siblings that came out of the mother ship Motorola, Inc.) introduced the Xoom, whose main allure was the introduction of Google’s new version of Android, Honeycomb.  Reviews were amazing, Honeycomb looks fabulous.  But every non Apple manufacturer in the consumer space will have access to it, so there will be competing head to head, the same way Android Smartphones do today.  But there will be 100′s of cheap ones too, based on Android, but not necessarily good.  When you take away the complexity of the phone, almost every manufacturer can build one, but few will be worthy of the Android seal of approval.  Those are the ones to look for.

By any measure, this is great since it will drive lots of product innovation, lots of choices, in a market with iDevices has been the only true alternative, but it will also drive commoditization.  Good for consumers, bad for the companies that will be competing.  Particularly great for Google who will see it’s new OS proliferate like the corn subproducts.  And more and more users will access the internet using a mobile via either Google’s Android or Apple’s iOS with infinite income potential for both.  And the competition between them will only get more fascinating.

How will everyone differentiate remains to be seen, but with the clever ideas on this post there will be room for plenty.  One more thought: Will this be totally incremental to the 600M smartphones supposed to be sold in 2012 or will it cannibalize it?  Quite frankly who cares?  There is plenty of pie for both.

So, my faithful reader (singular) wait for Honeycomb and run for your tablet or go buy an iPad now.  You will be glad you did.

Enjoy.

Now why would Microsoft pay big bucks (really big bucks) for RIM only to combine a decreasing market share with an almost non-existent one, may I ask? I don’t seem to find the right answer.  I struggle with the idea on any synergy that the merger will bring.  RIM needs to invest to bring products up to par with Android and iOS based ones.  Their Acquisition of Torch Mobile (who brought you the Torch) was an attempt to do that but it seems to fall short: it is not a wow phone.  Even if corporate fans buy them, we’ve all seen Androids and iPhones show up in the enterprise and for the most part successful using them for the same applications.

At a first glance, the synergy seems to be there.  RIM’s corporate fans and huge installed base of BES – which happens to mobilize Microsoft Exchange for the most part – and Microsoft has been unsuccessful in bringing a decent smartphone to the party with their Windows Mobile, Windows Phone, and other inroads, but understand well how to sell to the average consumer.  Add a bunch of cash to mix and it is seemingly a marriage made in heaven. But not so fast, my fellow reader (singular)!  RIM’s market cap is in the neighborhood of $25B plus the typical premiums tech deals get may drain all of Microsoft’s cash.  Although it seems like a better investment than dividends or buying back stock it will probably not leave enough room to invest what it takes to win in this market.

Both companies need a miracle in the smartphone space.  But Microsoft has other legs in the stool, albeit declining too but at a slower pace. And most likely want to conserve some cash to maintain Windows and Office in the spot they have as well as their Bing and Xbox franchises.   Whereas RIM doesn’t have pagers anymore and more and more viable alternative devices are popping up in the market and making their way to the enterprise.  So while RIM passes the Torch (pun intended), Microsoft passed on the Kin and both are being left behind in the race.

Now, a 42% drop is good to cover our short positions because you don’t want to be that greedy, especially after what happened to Palm (which I predicted the exact opposite).  Nobody will blame you for covering in the vicinity of $45.  But, if you don’t believe in Microsoft’s acquisition:  short, short away till the cows come home or the stock dips another few bucks!

Enjoy.

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.

Assume you have $500 to invest and you are trying to decide which one is a better bet.  Let’s see.  On June 10th, Microsoft opened near $25 and Apple near $250.  So you could buy 20 MSFT or 2 AAPL.  So what are you really buying with your hard earned bucks?  Based on the prior 12 months and latest financial statements these are the numbers (rounded):

AAPL:  revenue $51B, Net Income $10.7B, Cash and Short term investments $23B, and a market cap of $227B (908 M outstanding shares).

MSFT: revenue $59B, Net Income $17.2B, Cash and ST investments $39B with a market cap of $218B (8720 M outstanding shares).

So if you buy 2 shares of Apple your $500 buy you $112 in revenue, $23.50 in NI, and $50.70 in cash.  Microsoft’s 20 shares are $135.3 in revenue, $39.4 in NI, and $89.4 in cash.  In other words, picking one metric, let’s say cash,  Microsoft is trading at 5.6 times cash, Apple at 9.8 times cash.  That is 1.76 times more expensive!

Now, let me throw Google (GOOG) into the mix, just for kicks:  Google was trading at around $480 with a market cap of $115B (240M shares).  Revenues of $25B, Net Income of $7.1B, Cash $26B.  You can buy 1.04 GOOG, meaning $108 in revenue, $30.8 NI, and an impressive $113 in cash (4.44 times cash).

So you tell me which one is more expensive?  I know, I know, this is based on past results and does not factor in growth potential, investor’s sentiment, cult followers, and other factors.  But for the same reason it clearly paints a picture of which company is more favored by investors and which one is less.

Consider one last point:  Microsoft hit an all time high of $58.37 on December 31, 1999, Google $724.80 on December 14, 2007, and Apple hit $272.40 on April 26, 2010.  Investor’s favoritism has been shifting over time.  What’s next for all these three?  If I knew, I wouldn’t be blogging about it but it is definitely interesting behavior of 3 of the most traded stocks.

Quoting Scott Adams, the creator of Dilbert, “I remind you to ignore me”.  By no means this is an endorsment to invest in any of these companies.  You, my fellow reader (singular) make your own judgment.

Enjoy.

Hey, we’re all for standards, even better if they are open, but is it realistic to essentially ban all Flash designed websites from your mobile iProducts?  Microsoft definitelly adds some muscle to the fight, but Shantanu Narayen (Adobe’s CEO) got there first.  An estimated  70% of websites with video use Flash.  It has a great advantage over html5: it exists today.  It has also a huge  installed base,  works across browsers, and makes it easier for non-geek developers to use.  The question is: will the the explosion of browsers (especially mobile) makes an open standard needed even more? Indeed, but it will not happen overnight, even with the Steves’ weight behind it.

Claiming that Flash crashed devices and drains battery is a bit too extreme, unrealistic, and quite frankly arrogant.  Not that there’s anything wrong with that.  But when you consider that the iPad has a 6000 mAh battery compared to the 1200 mAh battery in the iPhone 3GS sure, I’ll give you 10 hours of video too!  Simply put, battery problems are solved with batteries.  You want more battery life? put a bigger battery in.  Granted, it drives the device’s weight, but so does the display. Palm Pre, RIM, Windows Mobile (and soon Android) devices that support Flash lite are roughly the same weight than the iPhone, and crash just as often. Reality is, Flash provides the programmer control over the video experience and that makes Jobs angry.  He wants to control it all!  As per Microsoft’s motive?  Well, it just sounded like a good idea to blame computer crashes on somebody else’s software for a change.

Flash’s biggest limitation is the lack of mobile platform support.  It is a heavy weight platform that so far only works well on “big” desktop OS’s.  There is a Flash Lite out there but it is not 100% compatible with all Flash’s features.  But that will have to change soon, if Narayen wants to stay on top.   But then again, with more powerful processors and graphics coming to a mobile device near you will make this limitation a thing of the past.  In any case, it is this bloggers opinion that html5 video will eventually take over video on the internet.  The timing is the unknown.  But I don’t think one should start to short Adobe (ADBE), at least not because of Flash.  Au contraire mon fraire, this makes them a pricey acquisition target for cash rich software companies.

Enjoy.

Sure there’s some intellectual property and some innovation left in the inventor of the category.  And it is the fastest growing and one of the most profitable markets in the industry but the world does not need that many mobile Operating Systems (OS) to choose from.  I’m sorry.  As I’ve pointed out before, to unseat the iPhone it will take more, a lot more than multitasking, a cool form factor, and a clever UI.  I’m sure HP will make products people want to buy, but the question in my mind is will HP be able to create the ecosystem that will finally challenge Apple?  I quite frankly doubt it.  Not because it is impossible, or because HP doesn’t have the skills, it is because it is not in their DNA and Palm does not bring that to the table.

Other bloggers (the real ones) are talking about tablets and netbooks using WebOS.  Now that is even crazier.  If a stretched out iPhone makes little sense, a bloated Pre (will they call it HP-Pro or the Maxi?) doesn’t make much sense either.  A clever-phone OS will make a tablet look like a dumb keyboardless PC (no offense Steve).  Besides, with no app store, no cult to follow you, no content delivery, no store chain, no Steve (sorry Mark) things don’t look too promising.  Besides, HP is a much more powerful brand than Palm, so it’s not that they’re bringing that to the table.

So, my dear follower (singular).  Let’s just regret having covered our short a day too late and wait for their next move.  An app delivery company? video distribution? or perhaps music delivery?  We’ll see.  But one thing is certain: there will be more of these moves (some may be really big).   Microsoft, Dell, HTC, RIM, and others will be on the M&A news soon.

Enjoy.

During this year’s Mobile World Congress in Barcelona, the world’s most important mobile trade show, everyone seemed to think that a new OS (Operating System) is the way to go.  It is unclear to me what makes them think that.

First, I’m a bit tired of the overuse of the OS nomenclature.  Few deserve this title since they are really adding proprietary layers on top of Linux.  Actually most do, even the beloved Android and iPhone.  They should all be called “platforms”.  However that is not the cause of my outrage. No.

Second, who does the branding for these things?  Symbian, Bada, MeeGo, Mobiln, MeeMo, LiMo, Else, and others in addition to the successful iPhone, RIM, and Android.  My favorite name in a sarcastic kind of way will have to be “Windows 7 Phone Series”.  Redmond finally got something that does not deserve bashing throughout the blogsphere – a la Vista – and decides to use it everywhere.  I get it, kind of makes sense.  But, my fellow follower (singular) Windows 7 has a nice ring to it.  Windows 7 Phone Series does not, I’m sorry.

Third is that application developers have better things to do than to port their app to the “OS” of the day. And who is thinking about users? Thanks to this inflation you will have to scavenge the world to find the right app if you made the mistake to buy a platform that didn’t quite make it for whatever reason.  Now that is an outrage, but not the point of my post.  Suffice it to say that there will be plenty of casualties in these OS’s flood.

Amidst this Mobile OS inflation there is one that in my opinion deserves mention:  MeeGo.  Sure, the name sucks but I’ll have to give it some points for obscure geekyness.  A shape-shifting 9000-year old alien from the planet Marmazon 4.0 has to attract the dormant or not so dormant geek in most smartphone users, from the Blackberry suits to the Android hoodys.  Let’s just hope it doesn’t suffer the fate of the CBS sitcom who didn’t get the chance to finish a single season mostly because it wasn’t any good.

Anyway, MeeGo is worth mentioning not because of the fact that it is a joint venture between Nokia and Intel.  MeeGo is a platform that promises to bring smartphones to the 2010′s by using an x86 architecture instead of the perpetual ARM.  x86 architectures are ubiquitous in the PC world whereas ARM architectures have their humble roots in the embedded world (you know watches, sensors, WiFi radios, set top boxes, routers, cellphones – Ok, not so humble).   ARM uses RISC – Reduced Instruction Set Computing – vs x86′s CISC – Complex Instruction Set Computing.  This difference has allowed computers to run more complex software and algorithms so they can behave like, well, computers.  ARM on the other hand is fundamentally more power efficient, which explains its huge presence in mobility.

Until now the lowest x86 has gone is Intel’s Atom family (which drove the netbook “revolution”).  What is so new about the Atom family?  Low power consumption in an x86 processor.  At the same time, Qualcomm has been touting its Snapdragon 1 GHz+ Arm based systems – base for the reference design of my favorite name Windows 7 Phone Series – and now powering some “smartbooks” (again with the naming).

You see what’s happening under the hood?  New product categories are being launched, OS inflation is flooding the mobile world but at its real core there is a tremendous collision happening.  ARM getting more powerful while x86 is getting more efficient.  This brings us back to why MeeGo is so significant for the industry.

x86 based phones are out there but none has really made a mark basically because they haven’t offered anything new.  In this blogger’s very humble opinion if Nokia-Intel get it right (which is a big “if”) this could be the next revolution in mobility: the power of a real computer in the palm of your hand.  With html 5, 4G networks, ubiquitous 802.11n WiFi,  comparative shopping, location based services, “billions upon billions” of webpages, will now be available to complex software thanks to CISC based smartphones.  By the middle of this starting decade we will all wonder what was the hype behind all these “clever-phones” that could barely browse the web.  We will remember them as we now think of the first color Mac’s.  Very cool but just a sign of what’s to come.

Enjoy.