Tech Strat Fin is a blog dedicated to delivering insightful analysis to the developments of the Technology Industry. Frustrated with the rudimentary and sometimes laughable analysis found in traditional media outlets, the author(s) (it’s my goal to have this be more than just my personal rants on tech industry, but we’ll see…) set out to provide a media source to help readers understand the ‘why‘ behind the ‘what‘ in the tech industry they read about in traditional media.
Tech Strat Fin is produced by technologists and industry executives with experience in the technology industry, venture capital, strategy and/or investment banking. We don’t have a punishing publication deadlines hopefully allowing us to deliver a deeper level of insight and analysis.
Welcome to Tech Strat Fin. We hope you enjoy what you find!
First off – What is Google Goggles? Watch this cute video:
Okay now that you know what I know, here’s my first reactions
its currently only available on Android creating differentiation from iPhone (at least for the time being)
I predict Google will try to get iPhone version of Goggles out as soon as they can
However, one can foresee in the future, where Android and iPhone are more closer competitors, Google holding back key IP such as Goggles to try to gain advantage for the Android platform (is this considered ‘Evil’ in the Google value system?)
this plays into the Google’s wheelhouse and will be difficult for others (with the possible exception of MS Bing) to replicate (barriers to imitation)
Why you may ask? Because in all likelihood, Goggles is implemented by matching the uploaded mobile picture through to the vast store of images Google has crawled and index on the internet (i.e. from its Google Images feature) via some funky matching/image rec/visualization algorithm. Clearly the provider with the biggest indexed image set should return the best results. Guess who has the biggest image DB on the planet – Google.
BTW – the business card input reader is tres cool – I need that for my iPhone – do they have an app for that?
easy mobile comparison shopping is now/soon to be within reach. Soon because bandwidth and client performance are roadblocks but which should be solved by Moore’s Law eventually.
one could imagine Google Enterprise rolling out digital storefront and some light weight inventory catalog for local merchants to take advantage of this comparison shopping. Imagine a new ad unit (essentially a sales lead) where merchants pay Google for consumer’s purchase intention and proximity to any particular item
It does Augmented Reality.
Yelp! really should form a partnership tout suite to be the provider of recommendations for AR input. Eiffel Tower – 4 stars from Yelp!
Well done Google! Orwellians you can start feeling even more uncomfortable
Randomly found this video of Mint.com CEO Aaron Patzer giving a TechCrunch talk about the dollars and sense (yes, pun intended) of doing a startup from garage to exit. Pretty informative…
Well the smartphone wars are in full swing. Let’s take a look at where we are so far and what we might expect in the future as the level of competition deepens.
Review of Round 1:
As everyone now knows, Apple cleaned everyone’s clock with the iPhone in Round 1, easily rebuffing early attempts from traditional handset OEMs like Samsung (Instinct), LG (Voyager) and RIM (Storm) to capitalized on Apple’s success with iPhone-look-a-likes. These units copied iPhone’s hardware specs but none of the software innovation, user experience polish or most importantly applications ecosystem.
At the end of that round, Apple (along with its much maligned partner AT&T) stood alone atop the bodies of its bloodied competitors, basking in the triumph of its synergistic hardware + software + apps strategy. The final count for this round is stark and impressive:
33.8M iPhone units sold
$8.7B+ in iPhone revenues
100,000 iPhone applications, 2B downloads, representing the majority of the $1B BusinessWeek coined ‘App Economy’
5.7M new subscribers to AT&T because of iPhone
14.6M iPhone subs on AT&T in total representing some $438M monthly data revenues.
Perhaps most telling is how easily Apple has displaced incumbents to take dominant position in the smartphone OS segment. Despite years headstart in the market both Microsoft and Nokia have been scrambling to mount an effective response to Apple. At last count, Microsoft had just shipped WinMo 6.5 positioning it for lower end smartphones while Nokia was reportedly rethinking it support of the Symbian OS potentially in favor of Linux based MAEMO.
A reinvigorated Palm, with its ‘modern’ WebOs platform and well received Apple-like devices, emerged in the middle of round 1 as a potential contender but has yet to mount serious challenge to Apple. Most recently it has floundered with middling sales, a dearth of apps, no clear differentiation to iPhone, a weak exclusive partner in Sprint, and a shrewd price cut from Apple the wrecked Palm’s price-feature parity with iPhone.
Sizing Up Round 2:
We enter Round 2 of the Smartphone Wars less certain of iPhone’s continued dominance. At issue is the challenge mounted by Android-based smart phones.
In many wars, the smartphone wars is shaping up to be a replay of the PC wars with Apple’s integrated system model one on side and an ecosystem alliance led by Google in conjunction with handset oems. The case in point is the recently announced Verizon-homed, Android-base Motorola Droid phone which has been hailed as the most serious challenger to the iPhone yet. This is true, though I suspect, the degree of threat it represents to Apple has more to do with Droid’s availability on the Verizon network than its laudable hardware specs and stylish industrial design.
Verizon has done fairly well weathering the iPhone assault and in fact has grown it subscriber base some by 26M subs in years the iPhone was released by managing its business accounts, acquisition, and the perception of being a superior network but even it subs base vulnerable to the charms the iPhone.
Here are my predictions and prognostications for Round 2:
Android will emerge as de facto mobile OS for the majority of mobile devices in the future. It’s free, there is an emerging app ecosystem behind it and it sponsored by Google. Compared to the Windows Mobile, which costs some $5 per unit and currently little in the way of apps, Android is the obvious choice.
Nokia will abandon Symbian.
Due to lack of strong 3rd party OEM support, eMicrosoft will offer a WinMo 7-based Zune phone in attempt to prove WinMo 7’s viability in the marketplace. It will/should push strong integration with Windows as a selling point. Unfortunately, in the age of the cloud, the desktop means much less than it used to
Palm will eventually be acquired.
RIM will founder with its growth leveling off. Despite its best efforts, RIM is fundamentally a hardware engineering company and has not yet mastered the competencies to offer a compelling user experience or build a strong ecosystem. It will continue to retain strength in the hardcore professional segments (i.e. financial and law) – alas this segment has been hard hit in the current economic upheaval. Expect a strategy transaction (maybe Palm?) to help it fill in the gap
In order to close the feature function gap against iPhone, Android will need to improve its media integration. Expect Google to offer its own media management/iTunes-program, likely through acquisition.
In order to close the applications gap, Google, perhaps acting through partners such as Verizon and Motorola will in effect ‘bribe’ iPhone Devs to port their apps over to Android, likely through the use of Marketing Development Funds.
Motorola will stabilize as a viable handset manufacturer and continue to grow its currently developing position as high end smartphone OEM. However, it will struggle to breakout from this role and will face strong competition from the likes of HTC, DELL(!) and host of other Android-producing OEMs that will keep its pricing power in check.
The line between smartphone and PC OEMs will continue blur. Already Dell and HP are stepping back into the smartphone space and Nokia has gone the other way offering its own notebook.
If anything, the market power of Verizon which I gather used its clout to keep the MotoBlur skin off the Droid phone demonstrates how beholden other handset manufacturers are network operators.
mobile applications will be even more pervasive than the current crop of desktop social media apps. Those services such as LinkedIn and Facebook that make gracefully make the transition to the mobile context will flourish as mobile becomes the de facto paradigm with which people interact with computing. Arguably, Twitter already is more of a mobile app than a traditional desk-bound web app.
expect a continued evolution in the business model of network providers away from current monthly unlimited data plans. Kindle WhisperNet’s subsidized wireless and MiFi pay per megabyte packages are a sign of things to come.
X-Factors in Round 2 (and 3) are:
the impact of the transition of wireless networks to LTE on handset OEMs in the 2011-2012 timeframe. Will this be incremental or disruptive?
will the smartphones and netbooks segments converge?
will the 700mhz spectrum, with its open access conditions, break the current wireless business model of charging users data plans per (subsidized) device?
when will someone create the killer app for smartphone devices and will it be on iPhone or Android?
Android Offense:
The recent verizon-run Droid ads have been successful in articulating the key points of difference between iPhone and Android – open development, multi-tasking and background development. However, one important consideration could be availability of Adobe Flash on smartphones which would provide a good support crutch for tier 2 platforms such as WinMo, RIM and Palm.
Nokia recently announced its intention to enter the fast growing netbook space with the introduction of the Nokia Booklet 3G. Below is the nice-looking marketing video that provides an introduction to this product.
Here is the quick summary of the Features and Specs:
Intel Atom processor
Microsoft Windows 7
10″ screen, 2.75lbs
High-end embellishments including HDMI port and aluminum enclosure
Fully suite of connectivity including WiFi, HSPA 3G and GPS
12-hour battery life
Integration with Nokia’s mobile services including:
Nokia Music store
Maps, Contacts, mail, photosharing
expected $700-800 price point
The media has been apt to comment on how Nokia is becoming more Apple-like in its offerings albeit in the opposite direction of crossing from mobiles in PCs. This is an interesting point and another step in the road toward convergence of the mobile and PC industries.
The reaction has been heavily mixed with some critics pointing out entering the PC industry with its razor thin margins will not help Nokia’s financial performance. Clearly, with its high end price point and supporting embellishments such as aluminum casing and HDMI output, Nokia is trying to position the Booklet closer to a MacBook Air as opposed to a Asus eeePC and earn Apple-like margins as opposed to Dell-like ones.
It will be interesting to see if the Booklet will be able to maintain is price position. Certainly the use of commodity components such as the WinTel architecture and likely standardized smartphone chipsets suggests the Booklet’s hardware specs can be easily replicated.
Assessing Strengths and Weaknesses
The two potentials advantages I see are distribution and OVI services. With its scale, Nokia does have the ability to push the Booklet through its traditional mobile distribution channels to get into niches of the market inaccessible to traditional PC manufacturers. Currently, there is an gap in the netbook market for a subsidized high-end mobile enabled netbook sold through mobile operators in return for multi-year contract commitment that Booklet could fill. And to be fair, the $700 expected price point isn’t actually that far off from what Nokia charges for its high-end N-series smartphones.
The other potential advantage for the Booklet is its integration with Nokia’s OVI mobile services which potentially serves as a point of differentiation to traditional netbook OEMs (at least until Apple releases it’s Tablet + MobileMe offering) and could function as potential point of lock-in into a Nokia mobile devices ecosystem.
One point of concern is system performance and whether the Booklet, with its Atom processor, will run speedy enough to live up to its high end positioning in the netbook space.
Handicapping Market Success
All-in all, I don’t expect the Nokia to a runaway success in the vein of the iPhone or eeePC. However, it’s probably not expecting such monster results anyways. Realistically, I expect Booklet to have some good success in the European market via dint it’s brand and distribution strength.
For the same reasons, it will probably be challenged in North America, absent a huge marketing push and some heavy hitting distribution agreements such as with AT&T.
Asia is more of a mixed bag – again its stronger brand in Asia and distribution networks (relative to North America) should help it see play. However, because its their hometurf, competition will be much more fierce from the Asian electronics manufacturers such as Sony and Samsung. Nokia’s success here will hinge on its ability to focus on the high end of the market and create some form of differentiation via promotion.
Most interesting thing I see from the Booklet is Nokia trying to set itself up to be a kind of “European Apple” focusing on the high-end segments of that market.
CNet had this interesting video on how iPhone users fed up with AT&T can use Verizon (and Sprint’s) recently introduced MiFi hotspot system to get escape AT&T clutches.
Vodpod videos no longer available.
My responses evolved from:
“this is cool – can I do it with my iPhone?” to
“but it’s not free, MiFi charges by the GB vs unlimited data from AT&T” to
“wow, will Apple use something like this to circumvent is contract with Apple?” to
“Hey MiFi tech is the perfect kludge to get ppl off this 1 device – 1 network acct paradigm we are all currently stuck on to just paying for network access” to
“That would be cool – what other device usage scenarios does this now enable?” to
“Hey, waitasec, Verizon is allowing itself to become a dumb pipe with the MiFi tech – is it doing this on purpose?”
Personally, it would be very interesting to see if Verizon could release MiFi with a pay-as-you-go-plan for it – which would likely expand the addressable market for cellular data usage. My take is that such an offering would go a long way to having customers getting accustomed to the idea of using Internet connections on cellular networks other than their smartphones. Having emergency mobile internet for my laptop and what not devices would be interesting…
On that last comment, it will be very interesting to see what type of customer response Verizon gartners with its MiFi offering.
Apparently, some enterprising hacker was able to circumvent the security on SlideShare.net and access Netflix CEO Reed Hastings’ private account. What he found was this gem of a deck that outlined Netflix thinking of its company culture.
Says the deck:
This slide deck is our current best thinking about maximizing our likelihood of company success.
and what a doozy of thinking it is. Big pay, relentless focus on results, marking employee salaries to market annual, as much vacation as you think you deserve and can handle, this deck is jam-packed with all sorts of thought-provoking ideas on what it means to run a company in the 21st century.
My b-school classmates who remember our coursework on Mary Kay going back to our MBA pre-term will certainly appreciate Netflix’s thoughtful and deliberate use of culture as a form sustainable competitive advantage.
This actually segues into related line of thought I came across sometime ago about how Silicon Valley employment culture was increasingly resembling Hollywood with a growing army of entrepreneurial free agents with limited allegiance to companies that jump around from project to project, coalescing swiftly around promising projects and just as quickly disassembling as prospects dimmed or the project was completed. Just as stars move up and down the A-B-C-D lists, so too do SiliValley developers, product managers and marketers.
What interesting is that in our increasingly non-manufacturing centric economy, where value-add no longer comes from the day-in and day-out of mechanically producing a good or even service; where digital goods can be duplicated and transmitted costlessly at the speed of thought, only now are we beginning to see a rethinking of what it means to earn a livelihood in this new type of economic environment where creative-innovative work is what pays.
Saw this video with the controversy/catchy headline and for fun decided to check it out.
What struck me as really interesting in the piece was not so much the deficiencies in the Palm Pre handset but rather the mundane but still frustrating issue of channel partner management Justine’s clip seems to highlight.
Think about it, Justine just wants to SEE the Pre before she purchasing the item.
BestBuy – she gets to see a plastic brick mock-up of the phone.
Sprint – she gets put out by a surly Sprint store employee
Whatever we may think of our fair-haired protagonist, I can’t help but be appreciative what a competitive advantage a network of retail stores Apple has relative to its erstwhile competitor. Apple never seemed to have these type of issues with iPhone (to be fair AT&T activation snafus did mar the launches of iPhone 3G and 3Gs).
My personal takeaway from this episode is that if Palm Pre does not succeed, it won’t be because of the product, its because Apple has done such a good job on raising the bar on customer’s expectations of distribution aspects of the smartphone purchase experience.
As rumors of a pending Apple Tablet product for Verizon pick up steam, the media sentiment (well maybe just the tech blogosphere) towards AT&T and its marriage partnership has turned decidedly negative.
Amidst all the complaints and gripes among other things:
poor network coverage,
slow download speeds,
poor customer service
lack of tethering support,
acting upon its position against net neutrality by blocking off tiny website 4Chan.org
meddling in AppStore approval process and
the inability to keep visual voicemail up
an interesting line of question has begun to emerge – Can AT&T handle the iPhone anymore?;How Important is the iPhone to AT&T? and more crucially Does Apple still need AT&T?“
Quantifying the AT&T-Apple Relationship
Along this train of thought, we decided to “run some of the numbers” to get a better handle on this increasingly fractious relationship between these two behemoths of US industry.
Some the highlights:
iPhone has helped AT&T capture 4M new customers
and helped protect some 7M of AT&T’s subscriber base, some many of which might have otherwise defected to another network because of iPhone
Amidst the recession, the iPhone is increasingly becoming AT&T’s primary driver for new customer acquisition – in the most recent quarter, almost 61% of new AT&T customers purchased iPhones.
iPhone added some $1.2B in recurring quarterly revenues to AT&T by driving adoption of mobile data services
On the flip side, it’s not like Apple had totally been taken advantage of by AT&T.
The US market is still Apple’s biggest purchasers of iPhones. 40% of all iPhones sold end up on AT&T
Realistically, AT&T was the only logical choice for Apple to be able to release a global product (based on the GSM standard)
Certainly the iPhone has had a tremendous positive impact for AT&T and these numbers and the fact AT&T is actively trying to pursue another extension to its exclusivity agreement with Apple bear that out.
In future posts, we will do some analysis how high a price AT&T can afford to pay to renew its exclusivity agreement and conversely see if it actually makes sense for Apple to do so.
Creative Labs of originators of the SoundBlaster audio card of yesterday just unveiled their latest Personal Media Player (PMP) which I can only describe as an iPod Touch knockoff running Google Android.
Curiously, instead of going to market directly with the it, they are positioning it as an ODM mobile platform (featuring Creative’s Zii media chip) giving OEMs the ability to white-label it to take to market and also to to additionally modify for niche applications. (I’m guessing they either didn’t want to or did not have the resources to take the device directly to market under their Creative brand and/or the semiconductor division foot the bill for the device development.)
I’m really interested in seeing if anyone will be pick this up and take to market and if so what the market response will be. It goes without saying that the PMP is a bit of a dying market save for the iPod Touch so it will be a good experiment to see whether iPod Touch’s success has more to do with the Apple brand, the iPhone Apps or the advanced functionality.
Tech Strat Fin 