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Michael Blair
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I retired as CEO of an Automotive Parts supplier, and manage an investment portfolio for myself and family. I have a BA in History from Royal Military College of Canada and an MBA from the University of Western Ontario. My first career was as a fighter pilot in the RCAF, and, following my MBA I... More
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  • 64-Bit Exynos Octacore Blows Away Apple's A8 By A Wide Margin

    The Apple A7 and A8 64-bit processors were hailed by many as the holy grail of computing, putting desktop power on a handheld. SA author Mark Hibben was in the vanguard of Apple fans extolling the progress Apple was making with its in-house tweaks of ARM Holdings (NASDAQ:ARMH) technology, publishing an article declaring that Apple has won the smartphone wars based on its next processor advance using Samsung's 14nm process technology. I was curious at the time of Hibben's well-written article why Hibben thought Apple could sustain a lead using ARMH and Samsung technology with little of its own value added, let alone declare victory in its war with the world's largest smartphone company. Claiming victory against an opponent on whom one depends for process technology seemed a stretch to me then.

    As events unfolded and Samsung introduced its Galaxy S6 it became pretty clear that it is Samsung, not Apple, who has the lead in mobile processors, with its 64-bit octacore Exynos processor now powering the S6. There are many measures of processor power but a useful and popular one is the Antutu score. The S6 processor clocks in at about 70,000 on Antutu. That compares to an Antutu score of around 48,000 for the iPhone, somewhat similar to the performance of the mid-tier Samsung Alpha with its Qualcomm processor.

    (click to enlarge)

    Source: Techno Phone 2014

    No doubt the Apple A9 expected this fall will advance Apple's processor performance to another level, but the declaration that Apple had won the smartphone war based on processor performance was more than premature - it was silly.

    Tags: AAPL, short ideas
    Mar 03 5:06 AM | Link | 9 Comments
  • Apple Pay: A Field Day For Scammers

    Apple Pay (NASDAQ:AAPL) was launched with a lot of fanfare to accolades that claimed Apple had made great advances in security of online payments and expectations that the new service would not only help Apple sell a lot of iPhones but also create a new and sizeable stream of income for Apple.

    Now Apple Insider reports that banks are scrambling to combat Apple Pay identity fraud. Charles Arthur, writing for the Guardian, called Apple Pay "a new frontier for scammers".

    The problem seems to lie in the provisioning and approval of the cards loaded on an iPhone, and not the iPhone technology itself. For the customers who have been defrauded of millions of dollars, it seems a distinction without a difference.

    The fanfare over Apple Pay when it was announced seems to have died down, and the dreams of taking over major online payment markets in fast-growing Asian economies like China seem unlikely to be realized any time soon, with little progress reported in discussions with Unionpay bank card service and Alibaba (NYSE:BABA) who offer competing payments services.

    Reports of fraud on Apple Pay comes just as Samsung's newly introduced S6 offers a Samsung Pay system that will compete with Apple Pay with a non-NFC payments system that is compatible with most current merchant hardwire used to read magnetic stripes on cards, dealing out the necessity for NFC capability typically present in only high-end smartphones. While it is early days for Samsung, the ability to use existing merchant terminals combined with the rash of coverage of Apple Pay fraud may give Samsung the edge in gaining acceptance for its new system.

    Piper Jaffray forecast Apple revenue from Apple Pay might exceed $300 million in 2016. Not everyone is convinced as illustrated by this excellent review in The Financial Brand. The Piper Jaffray forecast preceded news that Apple Pay was at a minimum not as bulletproof as the initial hype. Pymnts.com, an initial enthusiast for Apple Pay, now criticizes Apple and comments that: "Apple Pay fraud has now graduated from an itch to a raging infection."

    The real value of Apple Pay lied in its bragging rights, in my opinion. If Apple Pay was as secure as Apple claimed it would be, it heralded lower fraud and lower costs for payments providers who seemed eager to embrace a promising new approach. Maybe between Apple and the banks the bugs will be worked out and the current issues fade away, but in the meantime one reason to buy an iPhone instead of a Samsung Galaxy seems to be slipping away and, if anything, may prompt a shift away from Apple.

    Apple Pay combined biometrics and tokens with the promise of security. Enterprising thieves took little time to see the holes in the approach lay with the provisioning process of the banks and seized the opportunity to walk into the gap between theory and practice by using the banks overconfidence in Apple Pay to "provision" stolen cards on iPhones and make purchases with stolen identities. The real issue is not technology, it is identity theft. While your fingerprint may be enough to identify you, it has no value in identifying your credit card. By loading an iPhone with your credit card data and using their own fingerprint for the biometrics, the thief simply becomes you as far as your bank is concerned. Unless the fingerprint or other biometric is imbedded in the credit card itself in some way, the vulnerability will be hard to overcome. Card holder present signatures may have been cumbersome, but they were reasonably effective.

    It is likely that between Apple and the banks a fix will emerge for this particular issue but its existence alone points to the risks in overstating the value of a technology before it is proven in use. In the dynamic world of smart connected devices, speed is critical but haste is dangerous.

    Tags: AAPL, Short ideas
    Mar 03 4:47 AM | Link | 1 Comment
  • Don't Tug On Superman's Cape - Apple Meets The Samsung S6

    As Jim Croce wrote in his iconic song, you don't tug on superman's cape. To some extent, Apple took that dare with its iPhone 6 models. The Samsung S6 and S6 Edge are Samsung's answer to the challenge of the iPhone 6.

    (click to enlarge)

    Source: Wall Street Journal

    My first take - the S6 seems to outshine the iPhone 6 on each and every metric users care about. Better appearance; better camera; better battery; better charging speed; faster processor; better screen with higher pixel density; and, perhaps for the first time, a more intuitive user interface.

    The camera is very impressive. Always in standby and ready to short in one second at all times, the photo quality makes the iPhone 6 look basic.

    Source: BGR.com

    Samsung also launched Samsung Pay, a feature not dependent on NFC but which uses same terminals as all credit cards; debit cards; or, NFC. This provides universal acceptance, working even where the merchant only uses a magnetic card reader. Like Apple Pay, it users fingerprint recognition and "tokens" to provide similar levels of security. Samsung Pay is already accepted by more merchants than any other offering, according to Samsung's launch presentation.

    For its part, Apple is struggling with growing evidence of rampant fraud on Apple Pay, apparently a result of how Apple set up card provisioning in the system.

    For enterprise, Samsung has built-in compatibility with all mobile device management systems including Good; Mobile Iron; and, BlackBerry (NASDAQ:BBRY).

    Source: BGR

    By building in security and compatibility with major enterprise systems, Samsung is capitalizing on the growing weakness of Apple's operating system - a high degree of vulnerability:

    (click to enlarge)

    Source: Microsoft News

    Samsung's focus on security follows news that Android is more stable than iOS.

    What's more, the devices are gorgeous. They will include 32GB; 64GB; and 128GB storage and will be available from April 10, 2015. Samsung says the screen is the least breakable available and assures consumers the device will not bend.

    I expected Samsung to come out swinging in its rivalry with Apple (NASDAQ:AAPL) following the enormous success of the iPhone 6 and iPhone 6 Plus. Samsung did not disappoint.

    I expect Apple to have a strong fiscal Q2 which ends March 31, 2015. For the rest of the year, Apple will have to fight with Samsung for customers and in my opinion Samsung has raised the bar in that fight. CNet compares the S6 with the iPhone 6 Plus in what it describes as a prizefight, declaring the new S6 the winner.

    Samsung's Exynos Quadcore 64-bit processor with 3GB of DRAM may be the most powerful processor put into a smartphone to date. Processing power gained relevance when Apple introduced 64-bit processing with its A7 and A8 processors which held the lead for quite awhile, only to be surpassed by faster CPU's from Qualcomm and Mediatek based on Antutu benchmarks. The iPhone 6 turned in a 47,529 rating.

    Source: bestmobs.com

    The 64-bit Octacore Exynos processor is built on Samsung's 14nm process and while we don't have Antutu scores for it yet but I expect they will exceed anything now in use. The processor power war is well underway and the fastest I have seen to date is an Antutu score over 50,000 clocked by the latest Intel processor in an Asus Zenfone which turned in a 50,401 Antutu score.

    Led by Samsung, Android devices pushed iPhone market share in the U.S. down from 43.9% in December 2013 to 31.5% by June 2015 according to Kantar Worldpanel data, despite product upgrades like the Samsung S5 that were little more than tweaks. This year is different - the S6 is a major product advance.

    Source: Kantar World Panel Dataviz

    I project the S6 together with new devices by other leading Android OEM's like Xiaomi and HTC to displace at least 30% of the iPhone global market share in the June quarter. If it does, Apple will do well to hold onto a volume of 35 million iPhones in its Q3, equal to its 2014 performance. At the same time, there is little doubt the venerable iPad is in decline. KGI Securities sees the product sinking sharply for the rest of the year.

    (click to enlarge)

    The Apple Watch will take up some of the slack, no doubt, and I project 3 million units will be shipped in Q3. In total, however, the third quarter should start to show the problems Apple faces sustaining growth. I project $38 billion in sales and $1.27 per share in net income - about the same as in Q3 2014 despite fewer share outstanding.

    Between now and then, Apple should turn in a strong Q2 and with the general sentiment bullish there will be selling opportunities. I am short Apple through put options and will likely add more when Q2 results are released in April.

    Tags: AAPL, Short idea
    Mar 02 6:16 PM | Link | 6 Comments
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