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Doing The Research Gives You The Answers. Looking for Disruptive Technology And Comeback Stories. Finding Overhyped Situations.
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  • Google In "Cool Factor" War With Apple As 'Open Yet Secure' Erupts As New Smartphone Mantra 0 comments
    Feb 25, 2013 9:20 AM | about stocks: AAPL, BBRY, GOOG

    We have been speaking of the 'open' being a factor in the smartphones evolution. The industry seems to agree. This mornings Mobile World Congress 2013 in Barcelona, Spain kick off has headlines such as "Apple Wobbles as Mobile World's Walls Come Down". A few excerpts we copy below show we are on to something:

    The nonprofit whose Firefox browser a decade ago helped dismantle Microsoft's chokehold on web browsers is now similarly looking to upend the mobile device market. The industry at present is "unnaturally controlled by a few parties," Mozilla's chief executive, Gary Kovacs, declared as he unveiled the first generation of Firefox OS devices and partners.

    And the two-dozen telecom execs who helped launch Firefox OS reiterated that sentiment.
    "We are changing the industry for the better of everyone," Cesar Alienta, the chief executive of Telefonica, the Spanish-based telecom which is one of the worlds largest, said on-stage at Mozilla's event Sunday night. This after lashing out at "closed operating systems" (read: Apple) and warning that "the smartphone world is moving backwards" from the openness of the web-based internet. Telefonica plans to shortly introduce Firefox OS-based devices to its customers in Spain, Brazil, Colombia, and Venezuela......
    "Carlos Slim, has meanwhile committed to launch Firefox OS phones in Mexico and "all possible markets" as soon as possible. "I believe this is the beginning of the end of walled gardens,"

    Well, the new OS competition seems to evidence the fact that the world wants and the industry recognizes that there is room for more players. And BBRY has a nice head start in this revolution with its tried and true QNX OS which is already embedded in the M2M machine to machine marketplace other than just smartphones as we have written in the past. Moreover, it also seems that hardware makers are willing to open their devices to whatever OS their users want. We think BBRY has a leg up in giving the consumer a rock solid alternative to the walled garden IOS they have been locked inside. It looks like BBRY management is ahead of the curve on knowing what the marketplace wants and is delivering it.A peculiar alliance may be forming in front of our eyes. As the war between Google (NASDAQ:GOOG) and Apple (NASDAQ:AAPL) has been all but officially announced, BlackBerry (NASDAQ:BBRY), the resurrected founder of the smartphone business, has a formidable new offering with its Z10 smartphone which is the first in its line of devices on its new BB10 platform. By turning a blind eye and allowing access to Android apps for porting to BBRY devices, GOOG is providing key tools for BBRY BB10 device buyers. The buzz around the devices has been growing as the rollout to new countries outside the US expands. The latest country to launch the Z10 is India today with an $800 price tag.

    As CNBC reported in an article titled "Google Takes Aim at Apple, Setting Up Clash of Titans" :

    "Any time a company that traditionally has not been in hardware, especially a company like Google … it's tricky," noted David Tan, assistant professor of strategy at Georgetown University's McDonough School of Business. Google could have a huge hit on its hands with Google Glass, but the company has to find a way to marry seamlessly its Internet dominance with hardware that consumers might be slow to adopt. "Without that tight integration, the benefits aren't clear," Tan said, adding that would likely take "several years for [Glass] to become a hit like iPhone, iPad and iPod."

    As we have seen APPL's shares fall to the $450 level from $700 and GOOG shares do the opposite and breaking $800, the battle here between the two may be providing BBRY the 'cover' it needs to rebuild its relevance as a needed and trusted number 3 player. Ironically, it looks very familiar to real war strategy. In World War II, the United States entered the European battle to help its former ruler, the United Kingdom, to bring an end to Hitler's quest for dominance. GOOG's app developer community seems to be embracing BBRY because it gives them a brand new potential revenue stream at virtually zero cost.

    The "Cool Factor" war is something that drives share price in every market. It is not often written about in financial rags as it is hard to quantify. Capturing the "Cool Factor" can be likened to catching "lightning in a bottle". There is no formula for it, but if you put the right set of ingredients into the mix, you just might end up with the mystical charm.

    An interview translated by Google with BBRY CEO Thorsten Heins in a German publication has him quoted as saying:

    "Q:There was speculation that the new BlackBerrys were sold out in some stores only because you have kept the offer extremely tight ...

    A:The fact is that we have been surprised by the positive response. We have now increased our production capacity.

    Q:How much for?

    A:I will not reveal at the moment. But I can say this much: significant for us and unexpectedly high proportion of BlackBerry 10 devices will be purchased by new customers who previously had iPhones or Android smartphones."

    BlackBerry seems to be onto mixing its own batch of 'cool'. Its Z10 is creating a stir with its new light, crisp and open QNX operating system {OS}. You see the smartphone world as envisioned by AAPL was built as a "walled garden" or a closed ecosystem run like a kingdom. It resembles the early days of the Internet when everyone thought AOL was the Internet. Well that surely came to an abrupt end like many kingdoms do eventually. We see the same thing happening in the smartphone world and GOOG through Android may be fueling it with BBRY being the first beneficiary. BBRY has an open approach to its OS. It encourages connections to their device. It has a built in developer interface making fertile for exploitation. And yet it is secure. In fact BlackBerry in the enterprise market has been long the 'gold standard' for security. BlackBerry seems to be leveraging its storied past, its recent decent to 'underdog' status and its clean, open, and wicked fast QNX OS into a new 'cool' in the markets where it's available. This can be seen by the pricing power the first QNX Z10 seems to be enjoying, albeit probably temporary, as reported by fellow SA contributor Michael Collins here.

    Disclosure: I am long BBRY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Themes: long-ideas, technology Stocks: AAPL, BBRY, GOOG
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