The last earnings report from Apple was good on many fronts. While I was concerned with the dip in sales everywhere outside of the iPhone, Apple’s iPhone sales showed great promise, both in terms of unit sales and average selling price. But I believe this is a blip. Downward pressure on margins will continue on Apple, Samsung and elsewhere. The mobile space’s clone wars are now beginning.
Yesterday, Google announced that it would buy privately-held Nest Labs for $3.2 billion. This was Google’s second largest acquisition ever. Nest is a smart thermostat and smoke alarm-maker which promises to give Google a leg up in the fast expanding home automation market. But the acquisition also highlights the degree to which communications technology is now embedded in ordinary devices. The benefit is convenience. The risk is privacy.
The new flagship phone for Motorola, Google’s mobile hardware subsidiary, the Moto X has grabbed the tech industry’s attention. It is made in the US and comes with a lot of flashy customization features. I think the phone is a bit disappointing. But it won’t matter because the Android ecosystem is so large now that its momentum cannot be stopped.
In the wake of the NSA spying scandal, I have been moving my data away from large US vendors and increasing my computer security. Both of these issues needed to be addressed but the NSA spying scandal has made them relevant for me – and I suspect many others. This will negatively impact earnings growth, particularly at Google and Facebook, particularly for international and business revenue.
I am a big believer in cloud computing. As storage and mobile bandwidth costs plummet, the ease of use that mobile devices give us makes the cloud compelling. The ability to access your data, your company’s data or someone else’s data anywhere and from any device is a huge boon to productivity in businesses and to ease of use to consumers. The NSA spying scandal casts this business model in a different light.
Google’s big developer conference began yesterday and we heard a lot of news about what Google has planned over the coming months. However, the big highlights centered around the Android platform. As I have indicated over the past 4 years, I believe Android will continue to take share and the announcements from Google I/O only further this view. However, more than that, with 75% of new handset sales going to Android, now there is the real threat that Android could become the Windows of mobile.
Gartner’s latest market share results are in and they show Google’s Android operating system gaining significant market share in Q1 2013 to nearly 75%. That is a jump of almost 20% in just one year.
What I am seeing is a second great wave of consolidation in the industry. And by that I mean that every large company is getting into the traditional space of every other large company. Let’s go down a sample list of some of the changes that are afoot.
Many of the largest technology companies are making so much money that they are rapidly accumulating cash on their balance sheets. While on could argue that this cash should be stripped off the balance sheet for valuation purposes, I would argue that the cash is worth less than face value because having excess cash on the balance sheet is an invitation to wealth-destroying acquisitions. The excess cash should be returned to shareholders as quickly as possible in the form of dividends or share buybacks to prevent such an outcome.
Bloomberg News recently conducted a wide-ranging interview with Google Chairman Eric Schmidt and the headline comments that are lighting up the technology world point to Schmidt’s belief that Google is “winning” the mobile platform “war” against Apple. If Schmidt defines winning by market share, he is correct. But if one defines it according to profits and market capitalization, Apple is […]
Apple’s latest tablet, the much-anticipated iPad mini, is out and reactions are all over the web. The big news from the Apple presser is threefold: the iPad mini will retail starting at $329, the MacBook Pro line gets a retina display model, and the Mac Mini gets an update as well. Below are some thoughts on the strategic implications of […]
When I started to write about the mobile space on Credit Writedowns three years ago, it was clear to me that Apple’s strategy as a sole hardware manufacturer earning high margins and maintaining dominant market share was limited. The question at the time was how much money Apple could earn before that strategy became vulnerable. Since then, I have written […]