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.

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, to their credit, they tried to remain relevant by launching 2 phones, one of them even running Android.  But as they reported today in their 3Q results call, they’ll be “winding down” that business.  I can’t blame them.  Trying to compete with Apple, RIM, Motorola, LG, Samsung, Nokia, and all those multimillion brands that spend millions on each smartphone is tough.  The question is what’s left for Garmin to hang their hat on?

At roughly $6B US in market cap and still making $130M in earnings last quarter you’d think there is hope.  Focusing on their fitness, aviation, and marine business, which grew last quarter, seems reasonable, but I doubt they can sustain a $6B market cap that way.  So, my fellow reader (singular) there might still be room to short, but not a lot.  They may be an acquisition target for their technology, but it is a gamble.  So exit your position, whatever it is and be glad it didn’t go any worse.

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.

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.

This strategy represents a hardware/software branded device from Microsoft in a sense competing with its own OEMs.  All those companies however have not shown any loyalty to the Redmond folks since they have diversified or totally migrated to the Android platform.  So I guess Balmer decided: Screw them I will go Google … sorry I will do like Apple … not really, I will do my own hardware and control my own destiny.   Good move?  We’ll see.  But definitely not a bad one or a move that will damage any OEM relationships.  The world is ready for a diversity in OSs and the smartphone category is the fastest growing category in the industry.  Microsoft cannot afford to be the fifth.

The question is:  Will this make a difference?  Not likely.

Microsoft has by far the largest market share in the enterprise – with “big Windows”, not smartphones, that privilege belongs to RIM.  It boasts millions upon millions of applications and it is the “standard” enterprise Operating System.  These are not 99 cent apps, no! These represent real money for enterprises and Microsoft.  A simple copy of Office may go for hundreds of dollars.  Why? because it is the defacto standard (for now).  The smartphone world behaves very different.  With the exception of email and a couple of minor “connectors” to ERP systems there are very few apps for the enterprise.  In fact Windows Mobile today has the largest number of  enterprise ISVs (Independent Software Vendors) but they specialize in niche applications like inventory, supply chain, delivery, fleet management, etc.  The devices these apps run on are not your typical HTC smartphone Fender edition but very specialized hardware made by Motorola and others.

The thing is:  The Microsoft name, which carries a lot of weight in the enterprise, does not represent a mayority choice for the consumers as it does in PCs or in those niche applications.  The perception of a “standard” OS with millions of applications does not exist in the Smarthphone world.  There are millions of apps for several OSs, in fact lots of apps are available for most smartphone OSs (paradoxically Windows Phone is typically the last one to be developed).  So my contention is that even if Microsoft comes up with a killer device it is an uphill battle to go after RIM, iPhone, Symbian, and Android.  It may much better than OEM versions since Microsoft has intimate knowledge of hardware and software to make it so, but it will hardly take the world by storm as its competitors have.

Good luck Microsoft and thanks for giving us all something to write about and for another great opportunity for a clever Apple commercial.  I’m sure there’s a map for that somewhere.

Enjoy.

Anyway, Android is now adding true multitask capabilities, a better than ever PND (personal navigation device) performance – with accessories and all – as well as a notification panel that keeps you in control of what you want to be notified about, when, and how. Personalization – which is really tough to do on the iPhone – is what’s new! Of course most contenders will catch up with features, but one has to analyze the cultures behind each device to understand what’s really the key and what markets they will appeal to.

Apple, of course is the “I control everything” culture. I have the best designers in the world, and I have apps, music, and all, so the end-to-end experience is Applesque all the time. Things usually work seamlessly well and when problems arise, they usually get fixed before the people get unrest. I call that the Emperor culture.

RIM, on the other hand is also end-to-end, but it is clearly a messaging centric company. Email is their roots and will never compromise the ability to input text the way God intended it, with a real keypad feel. Its OS is solid, secure, light, and simple to use. A true “Executive” style culture.

Nokia is a mass marketer. A phone for every liking is their strength. How can they have 50% market share otherwise? They have keyboards, touch screens, small, big, medium all colors, etc. This is a bit confusing for power users and it does limit their ability to have a comprehensive set of apps that can cover all those phones. They are a true mass pleaser and not too enthusiastic with the powers; a socialist if you will.

Microsoft, well, what can we say about our friends from Redmond? Are you a PC? then you know what i mean. There are probably more applications written and running for Windows Mobile than any other OS out there (the majority of them are quite nichy – for warehouses, UPS drivers, etc.), since a big number of developers is familiar with the .net framework and the mobile version called Compact Framework (CF) is similar enough in style. When more than one app is running at the same time they tend to step on each other. Unfortunately, most don’t work well, the OS has to be rebooted a couple of times a week, and it takes forever to start, especially if you have lots of apps. True Anarchy!

Android is different because Google is different. Each manufacturer that uses Android will have the ability to tailor the phones to their brand and service provider. Google will provide some common elements and APIs to minimize chaos. They will manage the app store which in a way will help apps run across products in a slightly more organized fashion. Of course, not every device will be perfect, but they will all live in harmony. Users will perceive commonalities giving them the “Googlesque” identity but each with its own personality. Just like a democracy.

Of course, Democracies have prevailed throughout the course of history and some lucky monarchies have survived if nothing else for the amusement of the tourists.

Enjoy.

Research in Motion, responsible for those of us “thumb-typing” all day long and undoubtedly king of the smart phone market announced quarterly results today. Impressive!! They beat analyst estimates again. Yet, the stock traded at some point after hours almost 10% below yesterday’s close (it has then recovered all but the last 2% or so). Is the Blackberry is running out of juice (I hate puns!) at last?

People buy things because of the things these things do (whaaat?). Applications are what sell devices, not the devices themselves. Sure a sexier iPhone will sell better than an ugly one but first and foremost you have to want to do what the iPhone does before you consider it.

Blackberries mobilized email. An applications that had been relegated to a computer and involved carving out time of your day to actually do it. RIM leveraged their know-how in two-way paging technologies to create email “push” technology that allowed devices on a cellular network to receive email in real time. They had perfected the thumb qwerty keyboard in the RIM- 950 (leapfrog) so they had a great input UI. They added a screen and a great scrolling interface. Lastly (and the most important component) they created the Blackberry Enterprise Server (BES) that made email “push” technology seamlessly integrate to Microsoft’s Outlook and voila, by April 2000, mobile email was born. In other words, they created the perfect combination of device, infrastructure, and services for the application at hand. Over the past 9 years they’ve managed to dominate the smart phone market by essentially bringing mobile email to more and more people from the corner office to around the corner soccer moms and hockey dads. Sure, you see some people running SAP interfaces, Syclo apps, Salesforce.com, and a bunch of other business apps on them, but they are really, really very good for email only and most importantly email is what lures people into buying them. Are there more people that need to mobilize email? Not really and they now have too many options to chose from. That may be the reason why Wall Street did not get excited about another blowout quarter by RIMM. They have to clearly prove a new application base in order to grow significantly.

Similarly Apple had found an amazing way to sell and distribute digital music that made everybody win: consumers, record labels, and mostly, well, Apple. When they introduced the iPhone they leveraged that, added telephony (which was no big deal anymore) and found a great way to mobilize the internet. A real browser with an awesome user interface made it really useful on the go. But forgive my heretic comment, but iPhone, 3G, and 3GS are reminiscent of the PC speeds of the 90′s and the RAZR, KRZR, ROKR sequence: essentially the same thing with an minimal evolutionary advance.

Palm is now trying to combine both email and browsing but, like I pointed out in a prior post, it is just dividing the pie further (if they are lucky) not really growing the pie or creating new pies.

In other words we need a new mobile application that will create new categories of devices and grow the market. Think about it, we started with simple telephony, we added PIM (Personal Information Managers), text messaging, media, pictures, videos, games, email, location (gps), internet browsing, books and magazines, and there may be a couple more. But the list really stops there. It is all about things that are tethered today and need to be mobilized so we can do them any time and anywhere without having to dedicate special time to them. Or things that we keep in one place and we want to take with us everywhere we go.

The app store phenomena with various degrees of success is, in my opinion an attempt to find other things to do with your device as a secondary functions. Good idea, don’t get me wrong, but if wireless carriers, device manufacturers, OS suppliers, etc. all have an app store, few are making money, and more importantly few app developers are making money too it is hardly what you would consider a market changing catalyst the way the Palm Pilot, StarTack (now I’m aging myself here), BlackBerry, or iPhone have been.

There are several possibilities here: Either someone finds something else to mobilize which I find difficult to believe at least on a massive scale (the PC industry has not found a lot of new things to automate on a fixed basis that will later need to be mobilized) or we approach this in a totally different way. The fact of the matter is that your Blackberry, iPhone, MotoSurf, Palm-pre, pro, pra, or pri are a commodity.

The point is that although there may be some innovation coming up to a device near you it is only evolutionary. It may be in the form of a sexier phone with more features. But to really be a catalyst for change the networks need to build out bandwidth and capacity. Network addressable storage has to come to a consumer simplicity, and innovation has to come in the form of services and data delivery. Why? well …. that’s a topic for another discussion.

By the way, make sure you start digitizing your entire life in preparation for it. Remember whatever you own that displaces water it is not portable. If it is stored in binary format it is.

Enjoy.