Tag Archives: Smartphone

Google Acquires Patents – and Also Motorola

Google + Moto is the BIG NEWS of the summer.  It was big enough to grab me out of my blog vacation.  While the pundits are filling the airwaves with analysis on this one , I view it perhaps more simply, more straightforward.

The battleground for supremacy in connected devices (mobile smartphones, Tablets, and  set-top boxes) has moved from the R&D labs to the court rooms.  The patent wars between Apple and Google are fierce, with Microsoft bulking up on its own portfolio as part of the consortium that bought the Nortel patents.

Motorola was worth the price Google paid just for their patent portfolio.  In patent wars if you get sued, you better have a patent in your portfolio that can hurt the attacker.  In this way you trade mutual assured destruction with a patent stand-off.

When Google acquired the rights to Motorola’s 25,000+ patents, they bought both defensive capability and offensive firepower.  Apple may go after Android for an Apple patent but what are the changes that Google now has a patent that can hurt Apple?

It is impossible to design and produce a device such as an iPhone, iPad, or Android device that will not infringe on someone’s patent.  Impossible.  What a company must do is acknowledge that they will infringe and hope the other guy also infringes on their patents and us the mutual infringement to to either create a license arrangement or to have both companies do nothing.

Google’s price of $12.5B is about $500,000 per patent, which seems to be a bargain compared to the $4.5B  Apple and Microsoft for 6000 Nortel patents.  Their price was  $750,000 per patent.

Lets assume that the Motorola sale  is approved and Google gets the Motorola patent portfolio.  Google’s next problem is that they have also bought a company that makes handsets.  I say this is a problem because this is a huge company in a market that is different from Google’s core competency.  This is also a company that competes with Google’s other OEM partners for Android Devices.  The conventional wisdom is that these other OEM partners will start to defect, en mass,  to Microsoft.

Yeah right….

What does defect even mean?  Microsoft will pay these companies to produce some Windows phones anyway.

Android is free.  Can Microsoft compete with free?  Google makes its money on Android from their ad business.  Microsoft must make money from their software license for Mobile 7 operating system.  Besides for being years late to the party, Microsoft is structural disadvantaged to compete.  At best they can hope to be a number 3 player.

Google has two choices.

Number 1: They can acquire the patent portfolio and then spin out the Motorola Mobility Business, probably re-cooping half their initial investment.  They could sell Motorola’s handset and tablet businesses, along with licenses to the patents they now own to either HTC or Samsung, their two most important OEM partners.  This would be an amazing move.

Number 2:  Keep the Motorola hardware business and expand Android into the Cable Set-Top Box market.  This is the riskier of the paths as the sheer weight of a big manufacturing company could alter the culture of Google for the worse.  This path would be an attempt to become “Apple”.  While this path seems to be the assumed defacto strategy of Google, I am placing my bets on scenario #1.  This will take a couple of years to play out, so hold onto this link and let’s see if I am right.

An indicator that we are on Scenario 1 will be if Microsoft acquires RIM (Blackberry) or Nokia.  This would be an acknowledgment that the Google OEM manufacturers are not going to defect to Microsoft and that they must own a hardware company to compete.

This has only gotten worse in the last 10 months!

1 Comment

Filed under Acquisitions, advertising, android, Apple, blackberry, Cable, Droid, Google, HTC, iPad, mobile advertising, Mobile Application Stores, mobile commerce, smart phone, Smartphone

Microkia – Birth of a New Species? or Death of Old Ones?

Last Week Nokia announced that they were ditching their Symbian Smartphone OS in favor of Windows Mobile 7.  For those consumers who live, work and play in North America this announcement barely warrants a yawn.  For the rest of the world- the world in which Nokia has been the number one mobile device for what seems like forever – this is big news.

I was an “involved player” in the early formation of Symbian.  At the time a Palm-like device from Psion was dominant in Europe.  The three intelligent organizers (as they were called 14 years ago) came from Palm, Psion and Microsoft.  The conventional wisdom, at the time was to not allow Microsoft to establish a monopolistic stranglehold on mobile platforms, like it did in the PC.

From this strategy grew the Symbian operating system that was used primarily by Nokia and Ericsson. Symbian was based on the Psion OS.  During the BiCE (Before Iphone common era), the coolest smartphones were in Europe and ran Symbian.  Microsoft tried to continually adapt a desktop centric design philosophy to mobile devices.   They had very modest success, far less than their corporate ego would admit, externally or internally.

The good news is that the strategy worked.  Microsoft never established a monopolistic foothold in the mobile space.  The industry exchanged one dominant force for another. Apple and Google have established that position in this next generation.

In the AiCE (After iPhone Common Era) period the world changed.

Nokia’s dominance which was (is) based on great physical phone design, radio interfaces, button placement, and distribution, suddenly seemed less relevant.

The great Symbian operating system was like the  Neanderthals, once Homo-sapiens appeared.

A report released just 4 days ago listed Apple with a 45% share of Smartphones in Europe, followed by 16% for both Android and Blackberry.  Symbian had fallen to around 12%, and is in free fall.  Nokia’s Smartphone share in the largest Smartphone market (North America) is close to nil.  On a worldwide basis, Symbian  has just been eclipsed as the leader by Android with both around 30% share.

Against this backdrop, Steve Elop the CEO of Nokia and most recently a top executive at Microsoft, issued an internal Memo in which he likened the Nokia business to a burning oil platform with multiple fires. Great imagery! (His complete memo to the Nokia troops is at the bottom of this blog)

Meanwhile Microsoft has also been ablaze, except they continue a public stance of  “damn the torpedoes, full speed ahead”.  They seem to have temporarily righted their ship with Windows 7 sales, mainly because businesses refused to buy the disastrous Windows Vista.   They are becoming the Xerox of the new millennium- Lots of great ideas and ground breaking technologies,  with very poor execution.

I have mentioned in previous blog articles that the Windows 7 Mobile, on the surface looks like a viable technology. However, the product is very late to the party, is called “Windows”, and its marketing was linked to Zune (Do you have one?) and Xbox.  Good ideas, poor execution.

Against this backdrop, Steve Elop hooks up with his former Boss, Steve Balmer and the two sinking ships attempt to tie themselves together to stay afloat.  Nokia will have to navigate through the support issues for the millions of Symbian consumers and also there now seemingly aborted relationship with Intel on the Meego Smartphone platform.  Nokia is rationalizing themselves as a hardware platform vendor, not a software producer.  They are making a deal that seemed unthinkable for over a decade.  They have been pushed into a partnership with Microsoft by the success of Apple and Google.

The real winner is Microsoft.  Nokia is betting their Smartphone future with the Windows Platform and hoping that it turns around its plummeting Smartphone share.   Microsoft is risking much less because they have much less to risk in the mobile space.  They have a single digit of market share.  The announced Micorosoft relationship with the largest manufacturer of mobile devices, as they say, “Can’t hurt!”.

The integration and production of  “Microkia” phones will take at least 6 months and  more likely a year.  That’s another year of innovation and product releases from Apple and Google.

The Micorosft /Nokia combination must define a new class of Smartphone, perhaps aimed at developing markets , that is a clear differentiation from the highend iPhone and Droids.   Without a new Smartphone species, Microsoft and Nokia with continue to look like Neanderthals and suffer a similar fate.

——————————

Steven Elop – CEO of Nokia – Memo to his troops

Hello there,

There is a pertinent story about a man who was working on an oil platform in the North Sea. He woke up one night from a loud explosion, which suddenly set his entire oil platform on fire. In mere moments, he was surrounded by flames. Through the smoke and heat, he barely made his way out of the chaos to the platform’s edge. When he looked down over the edge, all he could see were the dark, cold, foreboding Atlantic waters.

As the fire approached him, the man had mere seconds to react. He could stand on the platform, and inevitably be consumed by the burning flames. Or, he could plunge 30 meters in to the freezing waters. The man was standing upon a “burning platform,” and he needed to make a choice.

He decided to jump. It was unexpected. In ordinary circumstances, the man would never consider plunging into icy waters. But these were not ordinary times – his platform was on fire. The man survived the fall and the waters. After he was rescued, he noted that a “burning platform” caused a radical change in his behaviour.

We too, are standing on a “burning platform,” and we must decide how we are going to change our behaviour.

Over the past few months, I’ve shared with you what I’ve heard from our shareholders, operators, developers, suppliers and from you. Today, I’m going to share what I’ve learned and what I have come to believe.

I have learned that we are standing on a burning platform.

And, we have more than one explosion – we have multiple points of scorching heat that are fuelling a blazing fire around us.

For example, there is intense heat coming from our competitors, more rapidly than we ever expected. Apple disrupted the market by redefining the smartphone and attracting developers to a closed, but very powerful ecosystem.

In 2008, Apple’s market share in the $300+ price range was 25 percent; by 2010 it escalated to 61 percent. They are enjoying a tremendous growth trajectory with a 78 percent earnings growth year over year in Q4 2010. Apple demonstrated that if designed well, consumers would buy a high-priced phone with a great experience and developers would build applications. They changed the game, and today, Apple owns the high-end range.

And then, there is Android. In about two years, Android created a platform that attracts application developers, service providers and hardware manufacturers. Android came in at the high-end, they are now winning the mid-range, and quickly they are going downstream to phones under €100. Google has become a gravitational force, drawing much of the industry’s innovation to its core.

Let’s not forget about the low-end price range. In 2008, MediaTek supplied complete reference designs for phone chipsets, which enabled manufacturers in the Shenzhen region of China to produce phones at an unbelievable pace. By some accounts, this ecosystem now produces more than one third of the phones sold globally – taking share from us in emerging markets.

While competitors poured flames on our market share, what happened at Nokia? We fell behind, we missed big trends, and we lost time. At that time, we thought we were making the right decisions; but, with the benefit of hindsight, we now find ourselves years behind.

The first iPhone shipped in 2007, and we still don’t have a product that is close to their experience. Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes. Unbelievable.

We have some brilliant sources of innovation inside Nokia, but we are not bringing it to market fast enough. We thought MeeGo would be a platform for winning high-end smartphones. However, at this rate, by the end of 2011, we might have only one MeeGo product in the market.

At the midrange, we have Symbian. It has proven to be non-competitive in leading markets like North America. Additionally, Symbian is proving to be an increasingly difficult environment in which to develop to meet the continuously expanding consumer requirements, leading to slowness in product development and also creating a disadvantage when we seek to take advantage of new hardware platforms. As a result, if we continue like before, we will get further and further behind, while our competitors advance further and further ahead.

At the lower-end price range, Chinese OEMs are cranking out a device much faster than, as one Nokia employee said only partially in jest, “the time that it takes us to polish a PowerPoint presentation.” They are fast, they are cheap, and they are challenging us.

And the truly perplexing aspect is that we’re not even fighting with the right weapons. We are still too often trying to approach each price range on a device-to-device basis.

The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, ecommerce, advertising, search, social applications, location-based services, unified communications and many other things. Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem. This means we’re going to have to decide how we either build, catalyse or join an ecosystem.

This is one of the decisions we need to make. In the meantime, we’ve lost market share, we’ve lost mind share and we’ve lost time.

On Tuesday, Standard & Poor’s informed that they will put our A long term and A-1 short term ratings on negative credit watch. This is a similar rating action to the one that Moody’s took last week. Basically it means that during the next few weeks they will make an analysis of Nokia, and decide on a possible credit rating downgrade. Why are these credit agencies contemplating these changes? Because they are concerned about our competitiveness.

Consumer preference for Nokia declined worldwide. In the UK, our brand preference has slipped to 20 percent, which is 8 percent lower than last year. That means only 1 out of 5 people in the UK prefer Nokia to other brands. It’s also down in the other markets, which are traditionally our strongholds: Russia, Germany, Indonesia, UAE, and on and on and on.

How did we get to this point? Why did we fall behind when the world around us evolved?

This is what I have been trying to understand. I believe at least some of it has been due to our attitude inside Nokia. We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven’t been delivering innovation fast enough. We’re not collaborating internally.

Nokia, our platform is burning.

We are working on a path forward — a path to rebuild our market leadership. When we share the new strategy on February 11, it will be a huge effort to transform our company. But, I believe that together, we can face the challenges ahead of us. Together, we can choose to define our future.

The burning platform, upon which the man found himself, caused the man to shift his behaviour, and take a bold and brave step into an uncertain future. He was able to tell his story. Now, we have a great opportunity to do the same.

Stephen.

Comments Off on Microkia – Birth of a New Species? or Death of Old Ones?

Filed under android, Apple, blackberry, Google, iphone, microsoft, mobile, Mobile Application Stores, mobile commerce, Nokia, smart phone, Smartphone, Windows, Windows Mobile, wireless

iWant my iPad – iJust don’t know why?

With the much anticipated launch of the iPad, I stepped back from the hype and techno glitz to ask the question,”Is Apple making the same mistakes of 25 years ago?”

The macro headline for Apple of that time would be “Great Product, lack of licensing and eco-system cedes market to Microsoft” So what’s different this time and what is the same?

The differences are that Apple, under Jobs is an innovation engine that is inventing new product classes – iPod, iTouch,  iPhone, iPad, etc.  The new products are launched and live in a ecosystem  under a benevolent dictatorship (or is it?).  One architecture, One way of getting apps, ads or “tunes” through their closed garden eco-system.  Everyone pays a tax to Apple to play.  This works as long as there are not viable alternatives to the Apple product.

In the case of the iPod, Apple’s eco-system became so powerful that it all but squeezed out all comers. Does anyone own a Zune?  The iPhone, however,  will likely be a different story.

The iPhone was the techno-product equivalent of a genetic mutation, the first of a new species.  It leveraged the eco-system of the IPod , then enhanced it with a vibrant app store.  So what’s the problem?   Apple’s problem is that Google is not the Microsoft.

The Android Platform will mutate and evolve dozens of times a year.  The Apple Iphone is on pace for one major release a year.   Add to this mix Nokia’s Symbian platform, Palm, Blackberry , and yes even Microsoft – and the challenge to Apple’s smartphone bonanza is formidable.   The challengers permit innovation from many hardware vendors  ( HTC, Samsung, Motorola and LG  to just name a few).  The innovation of smartphone products with a common eco-system(s) (Android, Symbian, Nokia, etc) will be more than Apple can bare.  Their share will become a significant but much smaller niche.  This will happen unless the iPhone OS is permitted to evolve outside of Apple.  Since the history of Apple is to control their value chain, this is not likely.

But have no fear you Apple devotees.  Apple’s respond is to morph new species, not new versions of an old one.

Thus enter the iPad – Not a netbook, not a laptop, not an iTouch….  It’s something new- and yes it leverages the vibrant iPhone eco-system,  Another key aspect of the iPad strategy is cloud computing.  The more your “stuff” is stored online , the less you need mass local storage.  Ironically a leader in this space is Google with their Google docs.   I recently purchased a Netbook for around $250.  Rather than double that investment with a version of Microsoft Office, I use Google Docs.  For most use cases it works great and all the docs are backed up – check that – live on the net.  If the iPad is going to squeeze in between netbooks and laptops, it has to have cloud computing for email storage, simple “office-like” apps and document storage.

Is there room in this Darwinian e-volution tree for this hybrid being?  Apple is betting yes – and if successful it will provide them another 5 year run before competitors really catch up.  In the mean time, they invent a new product category, while the previous product hits start to get caught and even surpassed from a market share and innovation standpoint.   Apple cannot afford to compete in every e-category of consumer products with 100% of the innovation – no company can compete with the entire industry.

The secret to this strategy is not to suffer from innovators dilemma.  Apple seems very content to re-invent products categories, even if they diminish the position they have in a previous market.  It is hard to come up with many examples that rival such a strategic culture.   Rather than invest in two more iPhone iterations or faster innovation on an Ipod – they re-invent them all.  This is the truly amazing aspect of Apple and can only come directly from Steve Jobs.  They bet the company on continued hit products.  The strategy works as long as the hits keep coming and Jobs remains at the helm.  Apple would not have been able to sustain a “Vista-like” disaster and have a flagship product be a complete bomb for years.

So – now its off the Apple store to buy my iPad.  Why?  I don’t know – but I’m sure I’ll like it when I figure it out.

Comments Off on iWant my iPad – iJust don’t know why?

Filed under advertising, android, Apple, cloud computing, iPad, iphone, Ipod, iTunes, mobile

Clouds can make it rain, and follow you – Your Personal Cloud

Cloud computing is in the air. Wherever I turn people are talking about public clouds, private clouds, enterprise clouds. It seems that the makers of cloud technology can be the next generation of rainmakers. Truth be told, the computing concept of virtualization or even time-sharing is hardly a new one.

The natural ebb and flow of computing power and application requirements has swung to the point where most applications can share a single physical platform, thus virtualization and cloud computing. This trend coupled with a high speed connected internet enables cloud computing to become a metered utility.


All of that dark fiber and infrastructure that was placed during the dot.com boom is coming into play. But, as I said , nothing really new here.

Back in Graduate School, in a time when Carl Sagan was still gazing at the billions and billions of stars, my personal computing account was metered by compute cycle. If I designed a particular program poorly and ate up a lot of compute time, it might be time to whip out the credit cad and recharge the account. This methodology certainly made you a precise and careful program designer!

While this cloud trend is particularly relevant and profit making for companies such as Amazon, RackSpace, VMware, Microsoft, etc – what does it mean for the guy on the street?

The companion trend that will have more far reaching implications for the consumer is personal clouds. A personal cloud is a collection of your data and applications that is accessible from any device, anytime. This includes documents, photos, videos, games, TV and movies, applications and personal preferences. Everything that now sits on your semi-connected home or work PC, mp3 player or smartphone  just waiting for a hard-disk crash,  or the device to break or be lost ,will now be available in your personal cloud.

This has already started. Gmail, Hotmail, and other online mail providers store and manage your email accounts. Goggle docs can store any document type and has online versions of word processing, spread sheeting and presentation software. The majority of my TV viewing is done online. I do not even know the original air date of most of the shows that I retrieve form Hulu or the network sites.

The personal cloud has been complimented by netbooks and recently the iPad. (I will share my thoughts on the iPad in my next article).
A netbook should more accurately be called “My Cloud Viewer”.

What a netbook does well is get on the Internet and get to your stuff. The personal cloud does for the individual what enterprise cloud computing does for the corporation – it turns computing power and storage from device centric (PC, Laptop, Phone, TV) to a network utility. Display and connectivity is what will be needed in the future.

3 Comments

Filed under advertising, cloud computing, Distribution, iphone, mobile, netbooks

Apple Beware? Or Not

Two consumer electronic giants are challenging the Apple iPhone momentum. 

I will not use the popular cliche term iPhone killer.  The only way the iPhone will become extinct is if another Asteroid hits our planet.  Lets all settle on the less violent – iPhone competitor.



Here are the competitors:

These companies dominate their respective home product markets and now have designs on the iPhone.

Let’s size up this fight and make the predictions.

Nokia 5800 "Tube"

Nokia 5800 "Tube"

 

 

In one corner, weighing in at over 100M mobile phones per quarter and a recent announcement that their new touch screen “comes with music” phone, has sold over 1M units, a dominate 40% market leader in all major worldwide markets, is Nokia.

 (European whistles, and polite Finnish cheering)

 

In another corner, weighing in, and weighed down by Vista, with over $60B in yearly revenue, over 30% market share for desktop and laptop computers, with extra muscle in the enterprise space and an e-commerce website that ranks in the top 150 of all sites, worldwide – The Maven from Texas – Michael Dell and Dell Computers. 

(Yelping and waving of cowboy hats!)

 

Now entering the ring, the reigning touch screen champion.  They have sold nearly 14M iPhones, with 4.4M last quarter.  They have generated over 500M application downloads and have corporate revenues of about $10B quarter.  Ladies and Gentlemen welcome Apple.

  (Audible humming from Lycra clad Apple-philes on yoga mats)

Before I get hate mail from Blackberry users asking why I did not include them, I have to state the obvious.  Have you seen the Storm?  If you have, you know that the Blackberry product, while good at what it does, is not yet a threat to iPhone. Let’s move on.

(Boos, hisses, and lot’s of Tim Horton Donuts thrown into the ring, ehhh?)

Pre-game analysis:

If anyone is going to pose a serious challenge to Apple and iPhone it will be Nokia.

Nokia is the world class, world leader in mobile devices.  They have a competency that approaches Apple for usability.  They already have achieved massive economies of scale.  The Nokia  “Comes with Music Service” launched in the U.K. in 2007.

This service allows users to download as many songs as they want from the Nokia Music Store for 12 months after they have purchased a compatible Nokia handset.

Users may keep all the music that they download.  Songs are available from all of the major record labels; Universal, Sony BMG, EMI and Warner Music Group artists.

There have been bumps in the road for Nokia.  Their learning curve is taking some time.  With the introduction of the 5800 touch screen handset (the sexier name of this phone is the “Tube”), and over the air music downloads, they are getting close to getting it right.

With the kinks being worked out in the U.K., market expansion is expected in 2009.

Another big advantage that Nokia has is that the music industry wants a competitor to Apple and ITunes.  I give Nokia a better than 50/50 chance of being the significant 2nd place market chaser to the leading iPhone product.

Dell is a different story.  Dell’s Smartphone plans, or lack thereof, were chronicled in today’s New York Times.   The “paper of record” was less than kind to Dell’s prospects in the Smartphone arena.   The reasons for pessimism are simple.

3248Firstly, Dell is only barely in the handheld computing business.  Their handhelds have been product and market failures.    Both Apple and Nokia have huge successful handheld device product lines. Strike One.

Secondly, Dell is not known for software and user interface design.  They are basically a hardware commodity manufacturer.  Both Nokia and Apple are device software and usability leaders.   Strike Two


Lastly, Dell has no phone design experience.  To be fair, Apple did not have a resume of phone design expertise prior to the iPhone.   Apple has fixed many of the early phone issues with the Iphone. Nokia has forgotten more things about phone design and marketing, than Apple or Dell will ever learn over the next ten years.  Strike 2 and a half.

The strengths of Dell are in manufacturing, web marketing, enterprise accounts and sheer volume of PC boxes.

So, Dell enters this fight strategically and tactically handicapped.

Nokia, on the other hand, has better worldwide marketing clout in the mobile segment; tremendous handset design and manufacturing capability and partners who really want them to succeed.   An example of the Nokia thought process for communications design is the inclusion of a second camera on the front of the phone to facilitate video conferencing.  The “Tube” is powered by Symbian software and has borrowed from the iPhone in certain look and feel aspects

This will be the battlefield for touch screen, music enabled phones for the next several years.

So what should Apple do to compete with Nokia?  Simple, just be Apple.  Change the game every 6 months and out innovate Nokia and everyone else.  Nokia may compete in the music download feature, but Apple will define the product as something much broader.  The Iphone platform will out game, out video, out cool, the Nokia devices.

Nokia will try to out produce and provide their devices at a cost advantage to the iPhone.

While the outcome of this looming market battle will not be as exciting or definite as Santonio Holmes’ last minute catch in the Super Bowl, for wireless pundits it will provide enough material to fill a thousand blogs, and hundreds of trade mag articles.  The initial impact for consumers in the U.S. will be some increased price pressure on the iPhone, with a drop in its contract price to below $100.


Let the games begin.

Iphone and Tube

Iphone and Tube

 

 

—————————————–

Authors Note:

By popular demand, I will start a lighthearted “DotMania” blog to relate all of the truly wacky things I have witnessed over my years in big and small companies.  In most cases I will change the names to protect the innocent, the guilty and everyone in between.  Watch for it on Fridays.  If anyone wants to contribute their stories to this regular feature, just send me an email with the details.  See you  on Friday’s at dotmania.wordpress.com


2 Comments

Filed under Apple, blackberry, Dell, Google, iphone, mobile, Music, new media, Nokia, Smartphone, wireless