donzelion

Can Apple Stop the Android?

The iPod is a triumph of incremental evolution and design execution, not a revolution (yes, I remember Diamond Rio, and the ugly Archos jukebox). iTunes was somewhat more revolutionary (overthrowing a pirate empire), but the closed sandbox limits the business appeal of the devices (what company will ever install iTunes on their internal servers?).

Apple lost the Mac/PC wars in the 80s/90s because the IBM/Wintel/ et. al. platform aggregated incremental evolutions from numerous players in a "good enough" platform attractive to "serious" corporate IT budgets. Windows never needed to best Mac - they just needed to swallow all the other business contenders (remember IBM ProDos, OS/2, and the windowing emulators?).

A proliferation of quality Android handsets gaining consumer market share won't really threaten Apple. Rather, following the 80s/90s parallel, the threat is that Android will swallow RIM, Nokia/Symbian, and the navigation devices, and integrate them into a "good enough" business platform. That day may come, but it's a long ways from becoming a crisis for Apple.

Google Drops a Nuclear Bomb on Microsoft. And It's Made of Chrome.

User305589 writes: "For all the hate against MSFT, Google isn't any better... I will not work on office documents via the web - how could I be sure that the data and information will not end up at places where i don't want them to be? "

Some people hate computers generally, preferring typewriters.

"Cloud computing" is hardly about making life easier for the average worker (although in some contexts it can). As managers adopt it, they discover that they can monitor actual employee performance in real time - and what's more, assess quality of contributions (rather than reviewing a flurry of email attachments separately).

Microsoft's competing solution involves taking an architecture designed to personalize and decentralize information, then adding more software to "un-decentralize" it (Windows + Office + Sharepoint + Office Server + security apps +...), then paying to do that on each workstation separately (and then paying when the laptop that holds the data gets stolen or the central server gets hacked).

Businesses don't care about the cost of such inherent inefficiency during booms...

Google Drops a Nuclear Bomb on Microsoft. And It's Made of Chrome.

Corporate America (or Corporate Global for that matter) is cost-adverse, not change-adverse. Every time you change standards, there are a host of other costs involved for a company (few of which apply to tech savvy users who would be most early adopters). That often weighs - but not always - weighs in favor of resisting change.

That said: netbooks are selling to the "non-tech savvy" crowd. The notebook makers mocked them as "little toys" that could never cannibalize sales, and the software makers mock open source alternatives as "little toys." Once upon a time, the steam engine and gunpowder were also little toys (and Microsoft itself was merely peddling a "toy OS" for the fringe niche of "geeks who bought computers for use at home").


On Jul 08 09:24 AM User 443002 wrote:

> Good point. As fast a robust these new system may be the
> average consumer will not have time to adapt to new protocol...
> Google OS will sell better with the geeks and specialized
> professionals that require flexibility and starting out.

Google Drops a Nuclear Bomb on Microsoft. And It's Made of Chrome.

Google's OS runs on Linux; Apple's OS is a thoroughly redesigned Linux-based system; and then there are a host of other Linux-kernels out there...

For the doubters out there - I'm not sure how many ordinary users wil pay $100 - $200 for Microsoft Office + $50-100 for Windows XP on a netbook that costs $300.

For the Microsoft boosters (e.g., LA Tech), (1) MSFT made its money by reselling DOS, a free OS, with an MS wrapper, (2) MSFT only became a juggernaut by profiting from missteps at Apple and IBM, and (3) Windows itself existed primarily as vaporware for close to 5 years (if ever had the "pleasure" of using Windows 2.0 or 3.0, you'd know what I'm talking about) - not one user ever preferred Windows to Apple OS even then, but all liked the fact that the total cost (for OS plus basic office applications) was about half as much.

If You Think Steve Jobs' Health Is Not a Material Event...

I'm no fan of "great man" theories of company management, BUT if companies appoint specific individuals with an eye to their effect on market values, then CEO health becomes as relevant as CEO compensation. If boards are permitted to pick and choose, then they degenerate into media relations filters, rather than corporate officers with important duties. "Privacy" exists for those who desire privacy - not for those who seek the benefit of the public view but are unwilling to pay the cost for such benefits.

I admire Steve Jobs, and wish him well, but I despise the cult-like following, comparable only to Greenspan's cult just a few years ago. Investors ought to focus on whether companies like Apple can hold on to their profitable niches, whether those niches will grow over time, and what new niches are within a company's grasp.

Jobs' Integrity: A Reason to Buy Apple

After Enron/WorldCom/et. al., a crackdown on accounting discrepancies and options gimmickry lasted for all of two seasons - then fell apart after Martha Stewart's insider trading charges landed her in prison. The public backlash obliterated prosecutorial initiative.

Martha Stewart's prosecution exemplifies the "Baby Panda" approach to weakening a regulatory regime. Want to stop the red tape? Show how it will strangle a baby panda (rather, find an appealing public figure and show how they will suffer as a result).

Steve Jobs, the successful CEO who helped turnaround Apple, is the Baby Panda of the day. Whatever may or may not have happened in his case, he's a useful shield to protect thousands of other executives who may have received comparable stock options backdating benefits, but who are certainly not as publicly appealing.

Week in Review, Part I: Global Economics, International and U.S. Equity Markets Overview

Re consumer spending:
(1) gas is down to remarkable lows, leaving more disposable income for consumers to make up for deferred purchases last year;
(2) a stronger dollar makes imported goods seem cheaper,
(3) laid off workers are spending severance packages on bulk necessities.

Unemployment will slow in future quarters - as more employees take early retirement rather than layoffs. That will encourage day traders, but certainly won't help the economy.

My hazy recollection from April/May '08: "The worst is over, the crisis is contained, the crisis is merely a financial hiccup and has nothing to do with sound fundamentals..." A bunch of nonsense on stilts.

Of course, we do have the "stress tests" - and aside from a handful of B+ grades, the banks will pass with flying colors. This emperor has no clothes, and this rally offers little more than heartbreak.

Barron's Big Money Poll: Bullish, But with Little Conviction

Just can't see US economy improving all that much for next few years. A consumer-driven economy without consumers? Unemployment will be "cured" by retirement, not job growth. Corporate expansion plans will focus on the biggest bang for the buck investments - which are generally outside the developed markets. Most US spending will be about maintenance and preservation, not new enterprises.

Not a recipe for growth, but not Armageddon either. Maybe some new technology miracle will bubble us out of stagnation, or maybe waves of inflation will wipe out equities - but to be honest, I'd expect sideways movement for years to come (just as we've had for 10 years now) - bubbles appeal to traders, but are lousy for investors.

Better days ahead for emerging markets - but not necessarily for equities in those markets.

Will Intel's New Processor Be a Game-Changer?

Hmmm..."hard things can be done quickly and really difficult things become reasonable to attempt." Such as?

'Hard things' like rendering HD video, which will appeal to a few hundred thousand people? Or what? Running Vista a bit faster? Opening documents and sending emails? It's very hard to see that many applications for this kind of power - at this point. Of course, perhaps someone will provide the new killer app that will drive a whole new universe of growth in the sector...

That said, I see Intel as a long haul investment - the GE of the 21st century (er, that is, GE sans GE Capital). They execute well, they engineer well, they pay a reasonable dividend. For the foreseeable future, there's nobody who can touch them in their main field of competence, and their main field of competence is imminently desirable business to be in.

Downside? Hard to see how they might double in the next three years. After all, just how many computers do you need?

Skype for iPhone: Beginning of the End For Mobile Phone Revenue Growth?

"In other words, for true mobility and carrier quality of service, there is no alternative to cellular..."

Sorry Oleg, but you're making a variation of the argument that the fixed line operators in the States made fifteen years ago as they fought tooth'n'nail against mobile phone adoption in America (while the Europeans and Asians leaped generations ahead of America), the same argument that old-line music labels made against downloadable MP3s, and the same argument Detroit made against small cars.

Sure, customers will pay for slightly better sound quality and slightly more convenience. But the ultimate question is HOW MUCH MORE will they pay? The answer to that question tells you just how much revenue Skype will ultimately take off the table for the mobile (and fixed line) operators.

How many people would be willing to suffer through 1 minute of work to get a WIFI hotspot functional if they could save $5 on the phone call? What if it was 1 minute of work for a $20 call? And in these cost cutting days, how many businesses would demand that employees call through the VOIP system wherever possible, or else they risk nonreimbursement? (Don't believe me? I can name 10 major corporations that are doing this already for their conference call system)

Commoditization and the Demise of Customer Support

There's an ebb and flow to all these things. Clothing has gone through rounds of commoditization/de-com... for over a century (in theory, Sears & Roebuck created the possibility of commoditizing manufactured goods) - turns out at the end of the day that Wal-Mart can coexist with Saks Fifth Ave. Cars started out as highly personalized objects, took off when Ford learned how to commoditize them, then went through their ebb and flow as well.

Computers are relatively novel, and present relatively novel circumstances where parties need help to perform "normal" operations. For cars, in the first decade of their existence, whoever assembled and sold the highly personalized objects also knew how to drive, repair, operate them - and often would assist buyers, who, at the turn of the century were always "early adopters." The flight to netbooks today represents the next phase of commoditization in computer hardware - but people will adjust their expectations (instead of expecting the car salesman to make all repairs, go and find a mechanic, or make friends with a grease monkey, or sign up with a dealer warranty...).

Netbook Sales Cannibalizing PC Revenues

"Huberty asserts that the netbook trend is exacerbating the downturn; she sees a 10% netbook cannibalization at of traditional notebooks, but with an even bigger impact from pricing."

That seems reasonable, and will continue until the emergence of replacement killer applications at an enterprise level (Dell, HP, MSFT, Intel, Toshiba, and Sony - and many others - will all be affected).

Apple jumped the gun on small, handheld devices with the Newton. Turned out to be a mistake so bad that they were mocked for years in the 90s (way I see it: right idea, wrong timing - and failure was because Newtons and PalmPilots don't offer any killer app that couldn't be better achieved with a laptop + a paper-based planner). Lessons learned from the Newton guided Apple towards integrating iPod with iTunes from an early point in the planning.

We'll see similar uses for netbooks - effectively, "micro-clients" - netbooks that do one thing extremely well (mega-sized crackberries, for those folks who work with documents, or multi-functional GPS systems, for folks with an enterprise who want to do position-based services rather than just getting directions). Dell, HP, IBM, or whoever may wind up prevailing here - because they come up with an iTunes equivalent of their own.

Or there could be many sorts of iTuneses out there yet to be discovered...

Ten Worthy Technology Stocks

IndianAmerican asks, "What sort of due diligence should be required before treating an Indian equity like Infosys the same way one would treat the other equities on this list?"

My answer: actually, I don't trust any DD in emerging markets (even the DD that I've led in mergers and acquisitions contexts), at least not to help me secure a company worth buying with my own money. Trust dividends. Indian managers are as smart as Americans - and know how to cook books for purposes of fooling investors. Thing is, Indian managers operate in an environment where they're relatively safe - while Americans who hide the secret family controlling features would go to jail for insider trading.

Ten Worthy Technology Stocks

Dump GRMN unless you want to speculate on a buyout. 47% revenue growth over 5 years in an infant industry is hardly intriguing; the real issue is who will take personal navigation into new enterprise applications (think UPS' logistics system, but priced for your local fast food restaurant).

I'd swap in Intel, Cisco, and either Google or Amazon, and I'd swap out the last three picks. Yep, that'll give you a large cap bias. It'll also give far better security - lower bankruptcy risk (and you pick up Intel's pretty sweet dividend).

As for Infosys: tell me how you know it's different from Satyam, and then perhaps it's eligible for inclusion. When doing real due diligence becomes too difficult, and when there are no critical voices, but only captive PR voices out there, I steer clear, wait for the crash, and then pick through the rubble.

Zune To Be Forgotten

Zune is something of an orphan, along with "Plays4Sure" or whatever it was called, and half a dozen other unreliable quasi-standards. The folks who have continually gotten trounced by Apple belief - erroneously - that Apple lost the corporate/consumer desktop war because Wintel machines were cheaper. Not so. Wintel machines had a much broader array of developers offering a massive pool of software with dozens of niche uses - while Apple dominated graphic design.

If Microsoft had designed Windows in 1990 so that nobody else could make software that played on it, then nobody would have ever heard of Windows XP or Vista.

But let's not count Microsoft out. After all, for every iPod, Apple has its Newton.