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.

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.

I know what you’re thinking: Jobs’ vision was better than Ballmer’s, which may be true, but I believe Jobs’ team executed better than Ballmer’s. At the end of the day both companies had to catch up to Research in Motion’s Blackberry dominance in the smartphone market and they both had the opportunity to do it with a mobile browser. Let me explain. The common vision here, which in hindsight sounds even lame, was to allow web browsing with a cellphone. Apple executed that vision since the first version with a flawless browser experience. While Microsoft decided to develop very limited Pocket IE with their traditional first-version-to-be-fixed-several versions-later approach. The networks weren’t ready for a “big boy’s browser” anyway. Several years later Windows Mobile is a distant follower in the race that will most likely define the next decade.

Same vision, radically different execution. So my contention is that execution is really the cornerstone of leadership. One could argue that execution is what provides credibility, but that is a “rear view mirror” approach. Vision with execution is what leadership is all about. Again, I do agree that a vision needs to be clear, compelling, and credible to inspire execution. And that is the true definition of leadership.

Enjoy.

What’s surprising about the article is the fact that they wrote an article that mentions customer service as a competitive advantage. You’d think that a retailer with such a complex line of articles has to have customer service as their number one priority. Well, apparently they didn’t. According to the article, if you go during the “power hours” of 10 Am to 2 PM Saturdays and Sundays, all associates are dedicated to customer service. So when you go shopping for your next chainsaw, go during those hours and ask questions, it is actually fun and useful.

As a tech / business geek, this impresses me as much as the launch of a new smart phone. But it highlights the importance of the basic things during economic troubles. Now imagine using technology to make it even better and more personal (in a geeky kind of way). Go to one of those price checkers that are ubiquitous across retail. Scan the barcode and a video shows you how to use it, how to select between different options, and even a couple of numbers of people who offer the service just in case you feel the chainsaw is not what you expected. Punch your email address and the video link gets sent to you so you can follow it during your ordeal at home. Sure you want a warm body to ask questions too, but you want to go home and still feel comfortable using the chainsaw.

Grocery shopping? well, how about a recipe with that striped bass you just bought and a wine that goes well with it. At Best Buy shopping for a new TV? how about some comparative TVs, what services provide HD and why you want 1080p so your wife/husband lets you go for it. And the installation instructions directly in your home email.

Sure, it will take a lot of work (and a lot of disk storage) to generate these databases, but during an economic recovery when margins are razor thin and differentiation lasts as long as a blink of an eye, technology can come to the rescue.

Enjoy.

Cramer writes as he speaks: a little too cocky, self confident, straightforward, candid, and with a couple of “insider” jokes that make you think he is the only one that finds them funny. It is a great flight book (that is a book to read on a boring 6 hour flight). That being said, the book is a good collection of sane (yes, I said sane) advices for the novice and no so novice investor. His stock-picking rules are a good organized way to summarize the basics of disciplined investing / trading. I have two pet peeves on his recommendations: the way he defines diversification (which is not exclusive of Mr. Cramer), and the 5 stock limit for part time investors. Let me explain.

I am not saying that you shouldn’t diversify, but diversification is different for each investor. If you call his show to the “am I diversified” segment and tell him: “I own EBAY, GOOG, AAPL, CSCO, and QCOM” i can hear the screams all the way from here: “They are all tech!!, are you crazy????” The firs statement is true, the second … well, I don’t know for sure, but not because you own those stocks. EBAY is really online retail, Google is advertisement; Apple devices; Cisco, infrastructure, and Qualcomm, chips. True, there may be some correlation between them, especially between QCOM and AAPL (iPhone uses silicon chips). But based on fundamentals they really address very different markets and their revenues are not so closely tied. Technically, they might be closer since most investors aren’t tech geeks so they think they are tied together more than they really are. If you work in tech like I do, you can distinguish the differences between these sub-categories and be diversified within a sector. Moreover if you work in tech you have to monitor these companies.

Cramer also suggests to own a minimum of 5 stocks to consider diversified, and he even goes through rules of how to pick the categories of these 5. He also suggests that more than 5 is too many due to the “buy and homework” strategy, arguing that you can’t devote enough time to do homework on more than 5 stocks and still have a day job. My opinion is that like everything else in life it depends. Following on my example above I have to know about the 5 companies I highlighted below for my day job, so I can afford to own stock of more than 5 if I can dedicate my moonlight hours to do “homework” outside of my area of expertise.

One last comment: I think Cramer overlooks one additional cardinal rule of investing. That is keep a balanced portfolio. Diversification doesn’t mean a lot if you own 5 stocks but 80% of your portfolio is in only one. Index funds that follow the Dow Jones or S&P are another fallacy of proper diversification like I explained here.

Enjoy.

The industry seems desperate to find an alternative to the iPhone so far with no success. Palm (the inventor of the category in a way) launched last week the “pre” a successor to the “pro” (pretty creative naming) that is supposed to be what we’re all been waiting for. Based on what Palm calls WebOS (do not try to pronounce it in Spanish) which is really a WebKit browser on top of a Linux kernel. It is to me just another “clever phone”, pretty well designed, but just a follow up.

The phone looks promising with a full touch screen, a sliding qwerty keyboard, a well thought out user interface and a great webkit browser. It is really an adequate challenger to the iPhone’s kingdom. The problem is the partner carrier. Sprint has been losing customers since the Nextel acquisition (at the tune of 300K/month at some point!) that did not go well at all. It has the worst coverage in the US and the least amount of international carrier partnerships. It has put all its eggs in the 4G JV with Clearwire and has not invested enough in the mundane 3 or 3.5G. If it wasn’t enough, the Pre is built on the CDMA technology, which is great, but very few carriers in the world support it. One will hope they thought about it and they are cranking an HSPA version as we speak for AT&T and most of the world. Better yet, a dual mode (like the Blackberry Storm) that supports both technologies in the same device. But for the Pre to stand a chance, it needs to find other carriers pronto.

The battle for the smart phone kingdom currently dominated by Research in Motion (aka RIM) the creator of the Blackberry with the most successful lineup in the industry that seems to yet unchallenged (yeah even by the iPhone). The interesting thing is that Windows Mobile (WM), the first mobile OS with (sort of) a real mobile browser after WEP is falling behind, way, way behind. LG, Motorola, Samsung, HTC, and others serve up WM phone of varying success but no where near what RIM has been able to accomplish. When in 2006 there were twice as many WM phones shipped than any other smart phone.

Now, there is still the battle of the App Stores where Apple has an apparently unbeatable lead. Palm has not announced its store yet (as RIM has) but the Pre is iTunes compatible…weird thing. Is it a play for the true alternative to the iPhone or is it something else like someone getting ready to buy Palm? Who knows. But in any case, Nokia failed miserably with its store, RIM’s success is yet to be seen, and Windows’ App store, well …, will be Windows: late and not so impressive.

This battle brings memories of the glorious days of the RAZR, where everybody had one but Moto still sold 100M phones until it fell off a cliff with no true follow up. Will the iPhone follow the same fate? and the Pre, HTC-magic, G2, Moto-Q, STORM, Dare, and all sorts of weird unimaginative names – all probably registered trademarks – being the “me too’s” will also fall into oblivion soon? Check out a great comparison here.

A real mobile internet is what is needed. Check my other post What’s next after the iPhone and tell me what you think.

Enjoy.

Reading through my June 2009 Bicycling magazine – which I typically do cover to cover, ads and all – the article from the editor Loren Mooney caught my eye.  The author does a great piece on how keeping logs has changed and the the amount of data available for the casual rider thanks to multiple cool gadgets in the market.  Technology combined with biking, what can go wrong?  I then ventured to find my first logs too. Although I will not reveal the content, I found out that keeping a log by hand did not work for me not only because I was not too good, but because I was – actually still am – lazy too.  However, towards the end of 2008 I snatched the Garmin Forerunner 305® on a huge sell that couldn’t resist.  Given my definition of good weather, I have been able to try it out a couple of times only and I now realize this is the only real way to create a log.

The Garmin Training Center® logs your heart rate, the route you followed, instantaneous speed throughout the ride, pace, elevation, and draws great graphs with all the data superimposed.    Besides the embarrassing realization that I am out of shape, maybe beyond repair, the visual of your ride makes you analyze what you did.

If you are like me and ride the same route often, you  identify  the weak spots in it and plan for them.  You see them on the map – the speed decreases, heart rate went up and it isn’t really that inclined – so you can plan your attack next time.  Check the Edge 705 with power sensor, even though it is more expensive than my bike and it will overload me with data, I want it!

I know what you’re thinking, will that make me a better rider?  Of course … not.  Remember what Lance said: 

It is probably not about the gadget either.  Or is it?  My theory with these gadgets is that they really help you become a better biker not because of the analysis of the data that help you improve your training, but because geeks like me look forward to the data and that makes me ride more.

Enjoy.

Think about it, smartphones have gone the route of the Swiss Army Knife: they do everything but nothing really, really well.  They work like a camera, music player, email, browser, gps, messaging, oh yeah they make phone calls too.  But when possible, we all prefer the alternative.  For true navigation, my TomTom beats my phone hands down.  3 mega pixel camera (and that is a good camera for a phone) with digital only zoom; you have to be kidding me!  “Let me call you from a landline”.  Yeah I can do email, but attachments are weird, I can’t edit them and a really long email (not sure why I would do that) is cumbersome.  So, at the risk of being called heretic by the iPhone cult and geek community, I propose we start calling them “clever” phones.

In order to revindicate myself with the aforementioned community I would like to blame Microsoft.  I know they are not really the inventors of the problem, but they are the responsible party to it popularity.  I mean the Graphical User Interface (GUI) to the computing world: Keyboard, a rich graphic screen, and a mouse.  The virtual world is designed with that in mind; you “click” hyperlinks, “type” blogs’ content, and look at lots of rich media all the time.  But when we communicate with people we hardly do any of these things.  Even when we write, we have to learn the odd QWERTY or AZERTY (or any other) keyboard layout that slow us down and require two hands to do it efficiently especially when mouse gestures are involved.

That brings me to the clever-phone concept.  Trying to cram the internet designed for a computer that was designed for a GUI is clever, but not smart.  There have even been attempts to compress the internet to WAP when bandwidth was a premium but not the GUI.  Let’s face it, our hands are not getting smaller and our eyes are not getting better, so for a true mobile internet, an effort to create new user interfaces has to be achieved.  We need development of a true mobile internet, mobile browsers, and server side languages that do not rely on the IE triumvirate (keyboard, display, and mouse) but that are designed for mobility.  One hand operation (or hands free) audio, quick visual feedback, few key presses, speech recognition that actually works, knows when you’re walking driving, riding, or whatever it is you do to move from one place to another.

When we have solved the user interface problem for the mobile internet, then we can start designing smartphones that take advantage of it. Or maybe we will just go back to a regular phone that sounds like a phone and call it … well … a phone.

Enjoy.

Mobile network deployments are expected to provide up to 15 Mbps of capacity within a typical cell radius deployment of up to three kilometers. Its main application is allowing for urban areas and cities to become “metro zones” for portable outdoor broadband wireless access.
WiMAX is classified as a 4G technology in the sense that it is significantly different than 3G wireless technologies like HSPA or EVDO.   Due to these differences, service providers can launch teh technology significantly cheaper than prior versions.   At the same time they drive complexities and high cost for the device manufacturers particularly in its early stages.

The main characteristics in the standard that make WiMAX so compelling are:

1. S-OFDMA (Symmetric Orthogonal Frequency Division Multiple Access). The OFDMA modulation scheme allows for a significant improvement in spectral efficiency over CDMA used in 3G. This translates into higher capacity on the same spectrum allocation for the service provider. Symmetry allows for same upload and download speeds, critical for Web 2.0 applications where the user requires similar bandwith in both directions. The combination of these 2 features allows WiMAX to perform very similar to a traditional broadband connection like DSL, cable, or enterprise T-1’s and at faster speeds.

2. Full IP architecture: Non circuit switched architectures allow for bandwidth on demand applications as well as an easy expansion over time. This drives the right economics for the service providers allowing very high bandwidth reuse factors. Very similar to the wired Internet that grew extremely fast.

3. MIMO (Multiple Input Multiple Output): This technology enables a significant channel efficiency compared to SISO (Single Input Single Output) used in 3G by adding frequency diversity to the communications channel. Fading and multi-path, so common in urban environments and indoors, are frequency dependent. MIMO increases the probability of uncorrupted packets arriving at their destination. From the service provider perspective this translates into more users in the same spectrum due to the reduction in retransmissions and lost packets. From the device perspective battery consumption is being saved.

4. Frequency Agnostic: There are currently WiMAX deployments across the world in 450, 700 MHz; 1.9, 2.1, 2.3-2.7, 3.3-3-5, and 5.8 GHz, both in licensed and unlicensed bands. This allows adaptation to the spectral allocations and flexibility for large or small service providers. This is perhaps the feature that has yet to be rationalized since it presents a lot of complexities and cost for device manufacturers, particularly for international enterprise deployments such as multi-national companies.

5. Support for TDD (Time Division Duplex) and FDD (Frequency Division Duplex) profiles: This part of the standard allows for flexibility to adopt WiMAX in frequency ranges where either scheme is technically preferable or mandated by local regulatory bodies.

6. IABF (Intelligent Adaptive Beam Forming): This feature is particularly critical for urban environments where power is lost through absorption in buildings and other interferers. It also allows devices to operate at lower power by introducing antenna gain in the communication channel which also translates into longer battery life.
Although all of these features are technically compelling there are not WiMAX exclusive. Most notably the other 4G technologies that are being analyzed (LTE or Long Term Evolution and UMB or Ultra Mobile Broadband) are following similar technical recommendations.

It is worth noticing the complexity of this technology from the device perspective. Multi-frequency systems will drive complex RF front ends and antennae whereas TDD/FDD profiles with MIMO and OFDMA drive very complex baseband architectures. Silicon suppliers will require significant R&D investments in order to address these issues efficiently.

There are basically two main standards driven by the IEEE. 802.16d or “fixed” WiMAX, which is designed for fixed, nomadic, and portable applications. This standard competes with fixed wireless proprietary architectures, Metro-WiFi and hot spots. 802.16e or “mobile” WiMAX is geared towards internet-on-the-go-applications.  This is the version that is most relevant for a 4G applications.

The WiMAX standard is the result of two main standards bodies: IEEE-802.16 and the WiMAX Forum. It is similar to WiFi in the sense that the IEEE (802.11)is responsible of setting the standards and a group formed by industry leaders (WFA) is responsible of ensuring interoperability. Today more than 500 companies are members of the WiMAX forum, 170 of whom are service operators. Some of the most notable are Motorola, Intel, Sprint-Nextel®, Clearwire®, Bell Canada®, Vodafone®, Nokia-Siemens®, Alcatel-Lucent®, IBM®, and Cisco® through the aquisition of Navini in 2007.

The September 2007 WiMAX World conference in Chicago, one of 3 held worldwide that year drew an estimated 7000 attendees from some 500 companies and around 100 speakers. In contrast, 3GPP and the OMA (Open Mobile Alliance) responsible for driving the GPRS / UMTS activities has thousands of members and runs 3GSM event twice a year. The European event that same year drew 70000 attendees, 1300 exhibitors and 500 speakers (120 CEOs).

As promising as WiMAX sounds, it has not been selected by major service providers around the world for their 4G deployments. the only exception  has been the CLearwire-Sprint JV.  LTE in contrast has been given significant preference throughout the world and has the potential to overshadow Clearwire’s attempts.  In the US AT&T and Verizon have announced LTE as their 4G technology of choice.  Combined they boast more than 150 million subscribers.  In addition to that it is expected that most European service providers will follow the LTE route as well.  The economies of scale that this will provide for device manufacturers is tremendous.

The only advantage WiMAX has over LTE is the fact that it exists today.  An advantage that has a very, very short shelf life.  Can Sprint/Clearwire launch the service fast enough to gain some subscribers or AT&T and Verizon Wireless beat them to the punch?  A quick glance at their balance sheets will provide a hint.

WiMAX, perhaps one of the most exciting technology developments of the 21st century has the potential to suffer the fate of iDEN:  outstanding technology, potential for a great service, but relegated to a single service provider.

Enjoy.

Image rights belong to the Science Museum Library, UK

We may feel nostalgia for out traditional telephone lines or what the industry calls POTS (Plain old telephone system) but is the world still in need for something so 20th century? Every year millions of landlines are being canceled in the US and Western Europe and in some places in the developing world they were never even installed.  It seems that the world is doing away with wires in lieu of wireless or cellular telephony.  Vonage and other VoIP (Voice over internet protocol) providers have  given a bit more life to the traditional telephone but in some places cellular is the only phone.  Why hasn’t it totally moved over? For a home installation the phone is supposed to ring throughout the house so you can pick it up wherever you are.  The traditional telephone industry came up with cordless to cut the wire, but it still rings in multiple places.  The VoIP providers created the little boxes that you plug into you wall phone jack to “transform” your phone wires into VoIP phone wires.  This way all your phones ring with a single number and you can still hook up things like your alarm, answering machine (not sure why you still want that), a fax machine (ditto), modem (seriously?), etc.  But the cellular providers have not done the same.  Think about it.  For example in the US if you have AT&T, Verizon, T-Mobile, or Sprint and you are on a family plan, you can add a line for $10 / month and all your calls within all numbers in the plan will be free (well, actually included) plus every call you make to at least 40 million people (within the network) or 70 million + 10 chosen are also included.    So why nobody has come up with a little cellular box that you plug into your home phone wiring to make your home number another number of your family plan?  If you can get a free phone from any of these providers you have to imagine that someone can build this little box.  This “box” will make your home phone work like you’re used to.  Why haven’t they done it is a mystery.

Verizon has been advertising The Hub.  Essentially a VoIP (Voice over Internet Protocol) phone not too different from your Vonage box with an attached cordless handset.  It has the additional advantage of making it part of your Verizon family plan for “only” $35/ month plus a $200 entry fee.  Sure it does things like the Chaperon feature that allows you to monitor where your kids are, it has a message center, picture sharing, etc.  But when you can get the phone service for only $10 / month you’ll have to question yourself.  Furthermore, you could use your internet service to duplicate the hub’s features if your provider gave you the app.  It hardly looks like a useful device.

So AT&T, Sprint, T-Mobile, or any other provider ask one of your suppliers to do “the box” so I can do away with my home phone. Give it to me for free, create an app over the internet that I can use to send messages and manage my accounts and you will make it a lot more difficult for me to move to a different network.  Well, at least until they offer me the “box” and a free year of DirecTV.

For enterprises, though it is even more puzzling.  Why do PBXs still exist?  We all carry cellphones, don’t we?  Can enterprises outsource their telephony services to a cellular provider the same way they outsourced their shipping needs to UPS, FedEx or DHL?  But this is a topic for a future post. Enjoy.