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Putting the Entire Map on the Map
This week Google backed satellite operator O3b, which stands for the Other 3 billion, secured $1.2b in funding to launch a satellite based fiber quality broadband service for the un-wired world (not to be confused with the wireless world). O3b estimates that 70% of the world’s population does not have access to the internet, and their satellite service will fill that gap.
Now, that is not new. Motorola tried to offer phone service around the world with the now defunct Iridium venture. What’s different, one might ask? For starters, Google is backing it, which means they are not afraid of risk. Not that Motorola was, but Google has also a business model that can allow them to reach other heights if the forgotten 70% of the world starts searching online.
Second, and the fun part, the satellite constellation will be launched at 8000 km above the Earths surface, or 4 times closer than geostationary satellites (like Iridium was). This means that users will get 4 times less latency (aka delay) one of the limitations that made Iridium usage so annoying. At this distance a signal will take roughly 50 mS to go up to the satellite and back to Earth. Seems acceptable, right?
Third, it is not necessarily meant for mobile applications. This means that you can have a huge battery since you will not be carrying the device with you all the time. Again, like Iridium that needed a 20lb backpack to make a phone call. Although they will probably do offer telephone services it is not its main purpose. Internet access is.
O3b plans to start commercial service by the first half of 2013 after their first 8 satellites. The question, my fellow reader (singular) is: will they survive? Who knows. Like I said, Google backing means a lot, especially since they are so used to non-money making ventures but with a strategy to make them money in the future (Android anyone?). But it is definitely an interesting approach that confirms the “universally available” part of Google’s mission. Will it support it’s “Don’t Do Evil” motto? Let’s wait for the business model.
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.
Two Recent Deaths in the Smartphone world. Long Live the Emperor.
Within the last couple of weeks two surprising deaths happened in the Smartphone world: Kin and Nexus One (direct from Google); both of whom I had blogged about before here and here. Similar to my predictions on tablets, the world has decided to make me look bad.
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.
Apple or Microsoft, which is cheaper?
It is all over the news that Apple (AAPL) surpassed Microsoft (MSFT) market capitalization last week becoming the largest tech company from that metric perspective. The question is which one is more expensive?
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.
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.
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