/images/Logo.png){kind=logo}
/images/loginout.gif)
/images/rss.gif)
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.
Garmin Needs Rerouting
Imagine you are a leader in your market and you have been dealing with your competition day in and day out, extremely successfully by having arguably the best product in your category. Then, all of the sudden, a disruption occurs that makes your product obsolete. If you still hold Garmin shares (NASDAQ:GRMN), well, I’m sorry. They are not coming back up, ’cause that’s exactly what happened to Personal Navigation Devices (PND), where Garmin was a dominant player. Smartphones with integrated GPS made them obsolete.
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.
RIM Passes the Torch
Last year in June I wrote a piece about Research in Motion (Nasdaq:RIMM), maker of the Blackberry. At that point the stock closed @ $76.55. After a 42% drop is it probably time to cover our shorts to avoid a repeat of Palm? After the latest results release, RIM showed progress on earnings, but decrease subscriber adds and more importantly is draining cash. Being acquired seems to be their best option. Not that there are dozens of companies with billions to spare on an ailing smartphone maker. But it only takes one; and there is one who is also struggling to get a piece of the smartphone market: our beloved Microsoft.
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.
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.
Android 2.2 Brings Mobility to the Mobile World
Today Google launched Android 2.2 which, in this humble blogger’s opinion is a leap frog from anything else out there. Besides the obvious smarter smartphone capabilities like the photo gallery, customizable home screen, better exchange support, etc. , it turns your phone into a real mobility powerhouse. Hotspot and enhanced bluetooth make your phone a gateway to mobility for all other stuff you may want to carry. I know what you’re thinking, PalmPre had that already. But Android is mainstream, supported by multiple vendors, and the 2nd best selling mobile OS (after RIM’s blackberry, not iPhone).
The hotspot feature that essentially turns your phone into a Starbucks without the coffee – WiFi hotspot using 3G as back-haul. 3G may not have enough capacity, but remember 4G is coming to a city near you. The point is, my phone becomes my only truly connected device via the wireless wide area network, with a single data plan that allows any other device that I might carry to connect to the Internet through it, without extra payments. As lame as the unconnected iPad is, it is the cheapest out there (before the gPad comes out). My Android2.2 smartphone will make it connected and I do not have to pay extra data. With my laptop I can browse the web, download a book, send email, you name it, even if I don’t have a broadband adapter. My phone is the broadband adapter.
Enhanced bluetooth means that I can now have an ergonomically perfect set of devices to manage my mobile life. I can carry my phone in my pocket or briefcase and use my headset or car kit to dial, answer an make all phone calls. I can even play music through my car’s fancy audio without plugging it in. You can envision new devices that use these capabilities to get connected. A camera, for example can upload to Picassa or YouTube directly without having to connect directly. In-car GPS or portable can also connect and get faster first fixes, maps from your phone or PC, etc.
Again, this is hardly new, but the combination of all this features in Android 2.2 brings true mobility to the mainstream, and will definitely put a dent to iPhone’s reign, that is until Apple decides to add these features too. The question that remains open is how will wireless service providers embrace a single data plan? Today they all charge for “tethered mode” which is really what we all use in substitution of a broadband card; we don’t buy a card, but we still have to pay for the extra data plan. If carriers do away with this extra charge, they will create an explosion of data traffic that they are most likely not ready for. Sprint in the US has created a plan that allows all this for a fixed rate. Sprint also has the only 4G phone available today and with its partnership with Clearwire they have a shot to regain market share even if it’s only to geeks like us. Soon others will follow, though.
Soon 4G, better back-haul from your wireless service provider, and an Android 2.2 (or equivalent feature set) can make every device a connected device. The ubiquitously connected world is getting a push.
Enjoy.
/images/logosmall.gif)
Copyright © 2009 -2012 ·