Connected World

May 30, 2016 by · Leave a Comment
Filed under: Business, Technology 

cloudofthingsv2As the term Internet of Things (IoT) becomes as colloquial as “smartphone” or “texting”, one can’t help but to think about the implications to modern life.  It is undeniable that it is the biggest economic opportunity in the world since …well, the Internet (although I always considered computers as being “things”).   The concept that devices (aka things) can sense stuff in their environment,  send data autonomously, and act on commands at a relatively low cost is what makes it so disruptive and intriguing.  There is no surprise that companies like Apple, Microsoft, Alphabet (the company formerly known as Google), and Amazon have been gobbling up startups and investing oodles of cash into it.  This is a technological transformation similar to the digital era that changed the way we read, listen to music, or watch movies. Besides these are the companies best suited to drive the trend. There will be hundreds of other smaller companies in this industries developing devices, software, sensors, and network elements.  But these 4 have to be at the epicenter of the action.

In the humble opinion of this obscure blogger, there are 4 elements worth analyzing that are affecting this new trend:  The evolution of technology, the “things” themselves, the data they send or receive, and the system to make the whole thing do something useful.

  1. Technology Evolution: This answers the question of why now.  Moore’s law, Metcalfe’s law, and the development of fast wireless is making it all economically and physically possible. In essence, a lot of processing can be done in very small sizes and at a very low cost.  It is now cost and size effective to have electronics in almost every “thing” to sense the environment and transmit data.  None of this will even be thinkable without the right scale of technology.  The right scale is happening now.
  2. Data:   “Things” sense data and autonomously transmit it.  A “thing” can send identification data, status data, environmental data, location data, actionable data, or a combination of these.  A message saying “the third fridge in the ice cream section is malfunctioning” can be an example. A message like this can be sent to a store operator’s device so s/he can go and physically check the fridge and fix the problem.  But if there is a feedback loop, a system can remotely trigger an action to correct it automatically.  In other words, data can be just informational, actionable, or a command itself. The data is captured by sensors that are meaningful to the object: Temperature for a fridge and weight for a truck are examples.  An intelligent system will then make sense of the data by analyzing it and then propose or trigger an action. Sense, connect, analyze, and do something about it.  Simple, right?
  3. The “things”. These are the “what”.  I like to classify them according to seven major environments where “things” are.  The individual, home, vehicles, public places, the workplace,  the enterprise, and infrastructures.  The data is different across all these and, more importantly, it is used for different reasons.  The first four imply a direct relationship with individuals and they are inter-related.  In all of them, for example, we’d like the temperature to be comfortable so an automatic thermostat may be enough.  An individual may have control over the temperature in his/her car, but not in the mall or the office. So there is no need for these thermostats to interact with each other.  However, if you google (or is it alphabet now?)  the restaurant for your business dinner, wouldn’t you want it to seamlessly show up in your car’s navi so you can drive there, and then on your phone for the last few steps?  Or would you like your playlist to continue from your home, to your morning run, and then your car?  These require an integration beyond just their own environment and the end user needs to be the center of the experience.  The connected enterprise, workplace, and infrastructures are a bit different.  In these cases the “things” are the core of the operations.  My simple ice cream fridge example above is one of those.  These will generate a significant ROI for companies, so they will most likely develop faster.  More on this in future posts …
  4. Architecture.  This is where the debate gets not only nerdy, but interesting.  The industry is toying around with 3 basic architectures: Smartphone centric, cloud centric, or environment centric (based on a local hub or a mesh of objects in the environment).  In my opinion, there always has to be something in the environment managing and connecting all the “things” even when the smartphone is not there, so lets consider that a given.  But there are pros and cons to a smartphone vs. a cloud architecture.  And as it often occurs when new technologies are being launched, the control of the experience is the battleground.  It is in the best interest of the smartphone players to have it be the center.  Apple or Alphabet (through the Android ecosystem) will thrive in this environment.  For the strong cloud providers, like Microsoft or Amazon, cloud is the way to go. But from the user’s point of view a combination is the best option.  So the word “centric” needs to not be that relevant.  Again, companies like Apple and Alphabet have a great presence in both the smartphone and the cloud.  In addition to that, their hubs, AppleTV and Google’s OneHub will complete the offering.  Microsoft and Amazon do not have enough presence in the personal device but are very well positioned with cloud services and hubs, so they will also be strong players.

To paraphrase Dr. Carl Sagan, there a billions upon billions of “things” out there that need to sense, get connected, monitored, and acted upon. Some estimates put it in the trillions of dollars of economic activity. Consumers will benefit significantly with a seamless and open architecture.  What made the Internet so successful is, in part, the openness.  One would hope that the “things” will also be as open.  If this market is to be as big as predicted, we will need a lot of large companies and lots of smaller ones to make it work.  Openness will make it happen.

Mr Cook, Mr Nadella, Mr Bezos, and Mr. Page, I hope you agree when you read this. If you don’t, let’s discuss.

Enjoy.

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Bezos is On Fire

December 3, 2011 by · 2 Comments
Filed under: Business, Technology 

Well, the race is on.  Finally a product that can challenge the iPad’s # 1 spot: The Kindle Fire.  But is it really?  Analyst predict the Kindle Fire to be the #2 selling tablet in the market.  But it is not a tablet – said Bezos – it is a portal to the cloud.  The main difference between the iPad and the Kindle Fire is the business model.  Yes, my loyal reader (singular) let me explain:

Apple’s business is simple.  Make a kick ass product for $x and sell it for $x+y.  They make money by making cheap things (yes, I said cheap things referring to Apple) and selling them for more.  iTunes is only a way to keep you from buying something else.  Amazon’s business model is making a good product (sorry Jeff, the iPad has you beat) for $x and selling it for $x or even a little less.  They will make money selling you content, you know, books, apps, movies, music, etc. I know what you’re thinking: “so does Apple, have you heard of iTunes?”  hmmm, let’s see.

Apple reported Fiscal 2011 revenue of roughly $108B and a net income of $26B.  This was made of $21B in Mac sales, $7B in iPod sales, a mind boggling $47B in iPhones, $20B in Ipads, $2.3B in peripherals, and a meager (for Apple standards) $6B in iTunes.  On the other hand, Amazon who reported its third quarter a week later has sold $30B in the first 9 months, almost $12 of them in what they call “media”.  In percentage, 6% of Apple’s revenue is iTunes, whereas 40% of Amazon’s is media.  Although the numbers are not directly comparable and Amazon doesn’t distinguish digital from physical media (CDs, DVDs, Books), it is clear that Amazon’s business is heavily weighted in media, whereas Apple’s is mainly hardware, at least for now.

Another way to look at it is that Amazon’s “store front” is the Kindle in all its forms, more comparable to Apple’s stores that to the iPad itself.  Charging $200 for the Kindle Fire is like charging cover to enter an Apple store (kind of what Costco does).  So it is logical to expect that Amazon will not make money on the store front alone since it is really designed to attract customers to by its media products.

Now this is just the beginning of a new Tech rivalry, kind of when Android launched caused Apple to unfriend Google.  iCloud is a direct competitor to Amazon’s media store and Kindle Fire is kind of a competitor to the iPad.  The movie gets more intriguing with all the rumors of Amazon launching free smartphones, again as portals and Apple doubling down on iCloud in iOS5 and beyond.  How will it unfold? don’t miss 2012 – 2015, where 2 of the most revered tech companies go at it cloud to cloud.

But, my dear reader, if you accidentally stumbled upon this blog for investment advice, be forewarned that you’re not getting it.  Apple (AAPL) has$82B in cash and is trading at 14 times earnings. Amazon (AMZN) has $6.5B in cash and trades at around 103 times earnings.  You tell me where would you rather put your money?  Of course, don’t forget one of tech’s fave companies: Google (GOOG) with $42B in cash trading @ roughly 21 times earnings who is about to close the acquisition of Motorola Mobility (MMI) with one of the most impressive IP portfolios in the industry and the capability to develop state of the art hardware and kind of the “inventors” of the cloud.  In other words I’ll wait it out.   I would sell a share and a half of Apple to buy an iPad and a share of Amazon to buy a Kindle Fire and use my free Google account to access both.

The media battle, in this blogger’s humble opinion will be won outside the cloud; on a desk negotiating with media companies that are old fashion and do not understand or particularly care about technology. Better content will win and getting the right terms for the producers is what will be the key.  All 3 have done it and have done it well.  It might just come down to who executes best …

Enjoy.

 

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Googorola, a New Age in Mobility

August 20, 2011 by · 2 Comments
Filed under: Business, Technology 

GoogorolaWell, it certainly has been an interesting couple of weeks in the mobility  industry.  Lawsuits galore, HP punting on the Tab (and most likely the whole Palm acquisition), Google buying Motorola Mobility (Googorola?), rumors of iPhone5 getting louder, and other rumors that Microsoft is finally going to compete in the space.  And silently, well not so silently one by one the companies that started it all are being gobbled up.  New, 21st century brands, some that can’t look at hardware if it was staring them in the eyes are taking center stage.

When there are winners, there have to be losers, even in a rapidly expanding market such as this.  Nokia, the once titan of the category, that robbed market share from the inventors of cellular telephony (Motorola), although still #1 are now falling like a rock.  Palm, who arguably  added the “smart” aspect of smart phones by creating the PIM (personal information manager) elements now ubiquitous, recently bought by HP are now defunct and their legacy, sadly, may follow.  Research in Motion, RIM, makers of the ubiquitous executive gadget of Christmas Past are down to a meager 3% and declining.  While Google and Apple, who dominate the mobile Operating System market share see no end in sight.

Google’s acquisition of Motorola Mobility (MMI) brings to the table the largest patent dowry available:  17000 granted patents plus more than 7000 in process, including some unimaginable radio and communication intellectual property.  This not only gives Google the ability to counter the myriad of lawsuits that make analysts weary of the future of Android, but can actually put them in the driver seat if they weren’t there already.  Unfortunately there are always downsides to every upside.  In this case its in the form of a Taiwanese and 2 Korean companies.  Yes, you guessed it: HTC, Samsung, and LG.  These 3 plus Motorola Mobility are the main adopters of Android and responsible for Google’s rise to the top OS in this category.  Together they represent roughly 25% of the market or about the size of Apple’s iOS.

The question is, my loyal reader (singular), will they pick up their marbles and go home (with a layover in Redmond, Wa)? or will they trust Google to keep MMI running independently?  Yeah right!  Just like other things in life, some win, and some lose.  The ones that win by just waiting it out, Microsoft have a  real chance to become the third horse in the race.  Mainly because they will be the only remaining independent.  But with $53B burning their balance sheet, how long can they afford to stay that way?

Enjoy.

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Netbooks get a Chrome Finish

May 13, 2011 by · Leave a Comment
Filed under: Business, Technology 

When you Google “Netbook” you get thousands if not millions of hits.  The most optimistic ones predict the demise of the category.  Others make fun of the rapid growth and crash landing of it.  The remaining ones credit the iPad for talking over that space.  Google, in a traditional Googlesque move jumps in to redefine the category. hmmm.

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.

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Losers can get married too

February 13, 2011 by · Leave a Comment
Filed under: Business, Technology 

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.

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