Timeline Strategy Consulting

Europe's Biggest Newspaper Forcing Purchase of Its iPhone App

Good one. That Europian is really stuped!


On Nov 06 11:56 PM KACER wrote:

> Stupid Europian

Research In Motion: Still the Best Positioned Smartphones Play

Lucky Lenny, I read that blog and the writer's opinions are legitimate and well-written.

However......I'm guessing that out of 5 people who carry Blackberries, perhaps 2 will appreciate the blog that you reference. This means that 3 out of 5 are candidates for switching to something else, be it iPhone, Droid, whatever. That's a problem for RIM. They have no current solution for this problem, and I'm guessing - based upon their track record of introducing the same thing with some slight improvement - that they have nothing substantial in the pipeline.

If the RIM argument comes down to safety and security that mandates acceptance by large corporations.....well, that sounds a lot like a utility company and not a technology company.

People assume that iPhone sales are rising because overall smartphone sales are rising. I would go a step further and suggest that smartphones sales are rising precisely BECAUSE iPhone sales are rising. iPhone has raised expectation levels for all smartphones, not just those made by Apple. In this manner, it has pulled the market along with it, by forcing handset makers to develop more quickly in order to survive. Touch screens, app stores, browsing, syncing, GPS, and other iPhone features have raised the bar, and handset makers who have embraced this future have a realistic chance to outperform the competition.

I am afraid that RIM does not show that urgency.

And if you think that Apple is not working on many of the legitimate issues, then you're looking at a different company than I am. Probably the biggest of them, battery life, is a tough nut to crack because it's pushing the limits of physics. I would suspect that battery life for all devices is a very hot topic at Apple.

Go Google another arcane reference from a non-switcher. I bet I can find 10X more in the other direction.

Research In Motion: Still the Best Positioned Smartphones Play

RIMM may very well increase in value as speculators flood back into its shares, but this won't be a long-term increase because nothing has fundamentally changed with the company's (in)ability to innovate. They have squandered years in which they could have been innovating for real, and are now fading fast.

You're obviously smart, you are managing other people's money. I really don't understand why it's not obvious to people like yourself, when you look into the future, to see how RIM will have trouble staying viable. Perhaps you are on the East Coast, on the Verizon network, and surrounded by people with Blackberries, so you have a bias. They are swimming against the tide for many different reasons: (1) Lack of touchscreen devices, despite obvious market direction toward touchscreens; (2) very slow development in apps; (3) heavily tied to one carrier, Verizon, who sees the writing on the wall and is pushing Android to compete with iPhone; (4) serious hardware limitations.

Mentioning this or that acquisition that RIM has done, or their supposed 'innovation' is not going to cut it. They should have been innovating in 2005 when they had the lead. Now they are playing catchup like a bunch of other sad-sack companies, trying to be belle of the ball once again. Why should I bet on RIMM with my investment dollars, when I could choose MOT - who clearly acted with urgency - or AAPL?

Can you honestly tell me what RIMM will report on December 17th? Because I have no idea. What will be the stock price on December 18th and why should I think it won't be cheaper then?

Riddle me this - if many people prefer anything other than AT&T, and Verizon accounts for 1/3 of RIM's sales, what happens when iPhone goes to another U.S. carrier? What happens today - on Verizon - when the Droid is another option? How many fewer Blackberries get sold then?

Look into the future man, it's clear as day. When the CEO of a company is off trying to buy hockey teams, his head's not in the game.

Good thing they have another CEO for a spare. Just another buy-one-get-one-free deal from Blackberry.

Apples to Apples: Will History Repeat Itself as Android Gains on the iPhone?

Three points, one technical and two strategic.

First, the iPhone camera is not rubbish. Limited it may be, but it does take very nice pictures in the right conditions. If it were so terrible, it would probably not be the second most popular camera - of all types - on Flickr. Furthermore, the app choices for picture processing make it a very interesting camera with which to be creative, and cover up some of the technical limitations. Nonetheless, if you have no ability to consider the conditions of a shot, perhaps it's your photography skills and not the camera that are rubbish.

Second, iPhone may have been a 'fashion item' or 'cult' object 2 years ago, but again no longer. 60 million devices in use make it a powerful, flexible force that can be all things to all users thanks to the customization that apps provide. As an affirmation of the platform's value, compare used iPhone prices with prices of other handheld devices at gazelle.com. iPhone OS devices will be reused in higher percentages than any other device. This fact, plus the fact that Apple is now selling the better part of 10 million (iPhone plus iPod touch) per quarter, make the math impossible to ignore. Can you really argue your way out of the 60 million vs. less than 5 million paradox?

Third, you make it sound as if it's an aggressive strategy that has all those handset manufacturers converting to Android. Wrong. Those companies are moving out of desperation. A few of them won't even be in this industry in 2 years, and half will be gone in 5. Just watch. That's how much iPhone has changed expectations and the playing field.

I think if Android had made a major push in 2007 or 2008, perhaps they could gain a significant position, but the horse has left the barn. It will grow to some middling platform that is not terribly profitable for anyone involved, and will have just enough device sales to keep it modestly interesting for the top few sellers.

Finally, the observation that Apple is now in a position to repeat its previous behavior - snatching defeat from the jaws of victory - is now the argument du jour used by bloggers who are predicting Android success. Technical details aside, how many credit card numbers and customer accounts did Apple have in 1985? How many does it have now?

(Hint - it's 100 million and growing by 5% per quarter). That's the power of the platform, and that's a big part of why they will not lose again.

Cramer's Stop Trading! How Apple Can Get Past $200 (10/27/09)

Solid advice Cramer. I'll just sell my AAPL shares and buy shares of corn flake manufacturers.

We'll just wait for Kelloggs to make the future for us. They have a strong history of innovating all manner of sugar spraying and Froot Looping technology to see us through this recession.

With Vonage App, Apple Isn't Even Bothering to Lie Anymore

Are you going to have VoIP apps on the CrunchPad when it comes out?

Is Buying Apple Today Like Buying Microsoft in 1998?

Nice timing. AAPL closed at $172.56 on the day you wrote this and it's around $184 now.

Please publish another article so Apple can rise another 7% in 10 days.

Oh, and while you're at it, you may want to look at the financial basis of why Apple is rising. There's a reason, and it's not just traders, hedge funds, speculation, etc. Apple is quite likely on the precipice of $10 or more annual EPS, which of course re-jiggers the share price north of $200. As I have said months ago, $250 becomes quite likely, and sooner rather than later. There are tens of billions of investment dollars from all over the world that will be chasing this stock. Just watch.

Is the Time Right for Nokia?

I agree with the conclusions of this article.

Nokia's problems are only too clear. Those 'economies of scale' that will make them so profitable in the future? Good luck with them, because they come shackled to a corporate bureaucracy that calls press conferences and makes PR announcements instead of executing anything.

Apple makes innovation look so simple and straightforward that it's easy to think that any company can just do it. Nokia spends $6 billion for R&D annually. For what? Apple spends $1 billion and is eating Nokia's lunch. On the basis of that metric alone, Nokia may still be overvalued, at a P/E of 18.

Europe is the next battleground that Nokia will lose. iPhone is penetrating heavily into this market (6-8 week wait times for iPhone in the Netherlands, for example), and Nokia's fallback will be the developing world. Guess what? They will lose that too, it's just a matter of time.

I also completely agree with the concept of too many products for Nokia. That mattered less when the devices were not part of a platform. Now that they are, too many configurations make their strategy a complete liability.

Want proof of that? Go on gazelle.com, and check the resale value for a used 3G iPhone in fair or good condition. That's right - a cell phone that you can resell after your contract is up. iPhone is so well made, so desirable, and has such a rapidly growing platform that they sell them used.

Now compare that with any Nokia and see what you find. The proof of that pudding is right there in the eating.

Reading Palm: Pre Sales and the Secondary Offering

A further point on the numbers used in this research briefing:

You say "Apple...selling more than 5.4 million phones in its second quarter"...". This statement is incorrect on two counts.

First, Apple sold 5.2 million phones in the calendar second quarter. That can be seen here: www.apple.com/pr/libra...

The difference is minor, but because it's a published number, there is no reason to get it wrong, even by 3.85%.

Second, the calendar second quarter is Apple's fiscal 3rd quarter. Again, this is known, and precise use of relevant timeframe makes the point clear and correct, and avoids confusion.

Good research starts with details, not sloppiness, or pulling numbers that appear to be close enough.

100% Gainers and Their Estimated P/Es

Isn't a P/E from a company having negative earnings, not 'Negative' as you state, but rather incalculable and thus 'N/A'?

Motorola's Cliq Builds on iPhone Concept

How can a phone that needs to be given away for free be seen as a 'game changer'?

That device, unlike the iPhone, is cluttered and messy. What's the value in that, even for free?

I'm sorry, but I'm just not convinced that Android offers anything yet, despite the fact that it's open source and all that business.

Buying Apple Today: Like Buying Microsoft in 1998?

I think you're wrong, and here's why.

In 1998, Microsoft had established a massively dominant operating system and business suite (Office) business, as well as leading market shares in database, server, and other enterprise. There was little that it did in which it did not lead. Thus, its growth outlook was capped. It's ironic that Microsoft's current dominance in operating systems (93.06% for Microsoft vs. 4.87% for Mac via one measurement) is often used as the defense of investing in MSFT or against investing in AAPL. Such dominance is more risk than opportunity, for the company and for the shareholder.

Contrasted, there is no space in which Apple competes, other than music players (which have now declined to 18% of its revenue) where it holds more that 10% market share. Not desktop or laptop computers, and despite the success of iPhone, not mobile handsets.

Here's an open question for you. How can you financially value a business that is:

1. Already massive (200 million units sold worldwide for at least $400 per unit, or $80 billion)
2. Growing massively (20% year over year)
3. Technologically up for grabs
4. The next consumer-driven revolution
5. Led by hardware but followed by software

This, of course, is the smartphone market, and Apple's swiftly-growing position here on the technical side is somewhat muted by the manner in which it recognizes revenue via the 2-year subscription model. I am admittedly biased in favor of (long) Apple, but I believe that they are building an unassailable position in handsets and applications that go with them. Simply put, the competition is confused and scrambling, consumers are flocking, and Apple got 95% of the ecosystem right at exactly the point that the terrain was unclaimed.

One practical example - there is currently a 5-8 week wait time for iPhone 3GS at various T-Mobile locations in the Netherlands and at other carriers throughout Europe. At those same locations, you can obtain practically any other handset the same day, but Apple can't make theirs fast enough. What's next? China, of course, and perhaps that's even the reason why these handsets are in short supply currently.

And here's one point that should not be overlooked - Apple has 100 million credit card-registered iTunes users who have access to one-touch purchasing. This will swell, conservatively, by 4-6 million customer per quarter as iPhone and iPod touch devices require syncing and loading. No company on earth will have what Apple has within 2 years, and that's key to the software portion of the business.

Practically speaking, AAPL sees $7.50 earnings in 2010, which at a P/E of 30 yields a share price of $225.

So, in summary, Apple's potential rests upon this area in which they snuck in. Once there, they quickly established something simultaneously untouchable by competition and very appealing to consumers, and that's the appeal.

By the way, I think that you forget the 'not' in this sentence:

"Of course, if you're buying Apple, you're too terribly interested in the assets."

Great Expectations of Apple Events

30% fewer words please. You are not paid by the pound.

Microsoft vs. Apple - Which Is Worth More?

Few questions:

1. Free cash flow? Which company excels in this category?

2. You mention that Microsoft has spent $9 billion per year, in the past 2 years, for R&D. I add to that point that Apple has spent about $1 billion. Unless Microsoft receives some kind of a beneficial financial treatment (ie tax incentives for allocating overhead toward R&D), it appears that Microsoft receives a poor ROI relative to Apple in this category, if revenue growth is a classified as the return. Please comment.

3. Apple has miniscule but rapidly growing shares in both computer and mobile device operating systems. Furthermore, Apple also has miniscule, but again rapidly growing, penetration in Japan, China, and European countries. Counter this with Microsoft, which has a 90%+ market share in computer OS, which is overall growing slowly, and a quickly fading position in mobile OS, which is overall growing quickly. That would seem to be opportunity for Apple and risk for Microsoft. Discuss.

4. Debt. Please compare. Note that Microsoft has gone from zero in 2008 to nearly $6 billion now. While the amount is relatively insignificant, the trend is concerning.

5. Please compare their retail strategies, noting that about 1 of every 8 dollars revenue for Apple comes via the Apple Stores, while Microsoft is only beginning a retail effort. Please characterize what value Microsoft, which is 95% software-oriented, will obtain from retail.

6. How did the year over year results of these companies compare during the downturn?

Apple's iPhone Gets a Foot in China's Door with China Unicom

@Constable Odo: You seem to fall into the same trap that many do when looking at the Chinese market. You extrapolate a common or even dominant behavior (that they all buy the 'really cheap stuff that the Chinese seem to favor'), which distracts you from the fact that Apple doesn't attempt to serve these customers anywhere. It's not their strategy. Even if 10% of 700 million mobile customers consider iPhone, and only 30% of that 10% buy one - well just run the numbers.

I agree with Mr. Butterfield on several counts. First, the media and analysts have been sleeping, which implies to me that the market hasn't begun to value this launch (ie that the stock price is still undervalued). Second, 14 million iPhones sounds like a reasonable number to me as well.

Also agree with Brian Marshall. This was exactly why Phil Schiller mentioned the 200% growth (from 25 million users to 75 million) of OS X since the introduction of iPhone and iPod Touch. What Apple is doing is using the elegance of their handheld operating system, to sway users to completely convert to Mac. Works for me.