Wednesday, December 31, 2008

An Apple Rumor That Makes Sense.

No, not the ever present commentary about Jobs's health, this is a new iPhone rumor that seems more plausible than the shrunken Nano's that has been bandied about. iPhone Alley is claiming that a new iPhone is being worked on that is in the form of the iPod Touch and may or may not include 3G. A cost reduced version of the current iPhone that still includes the current screen size would make sense. The key would be to reduce the cost of the data plan as well as the upfront price. If AT&T is willing to sell a $99 EDGE version of the handset that only requires a $25 a month data plan, that would significantly reduce the barriers of entry to owning the iPhone.

Saturday, December 27, 2008

Doubts on the iPhone Nano

While the iPhone Nano rumors continue to swirl, I think it is worthwhile for investors and gadget freaks to go back to this quote from Steve Jobs during the October conference call about the likelihood of expanding the handset lineup.

Steven P. Jobs

Well, I wasn’t alive then but from everything I heard, Babe Ruth had only one homerun, he just kept hitting it over and over again. So I don’t think that -- I think the traditional game in the phone market has been to produce a voice phone in a hundred different varieties. But as software starts to become the differentiating technology of this product category, I think that people are going to find that a hundred variations presented to a software developer is not very enticing and most of the competitors in this phone business do not really have much experience in a software platform business. So we are extremely comfortable with our strategy, our product strategy going forward and we approach it as a software platform company, which is pretty different than most of our competitors.

This is about as straight forward a quote as you can get from Jobs. The iPhone Nano may have been a possibility prior to the gigantic popularity of the app store, but it would now represent a step backwards in Apple's quest to own the dominant platform within the smartphone space. Apple has seen first hand that applications define the winners and losers in computing and I don't see them taking the risks that fragmenting their handset lineup would entail.

Of course, this doesn't mean that Apple wont have a $99 iPhone fairly soon. A price cut in the first few months of the year shouldn't drastically impact margins and would spur sales ahead of the introduction of the iPhone 3.0. I actually believe that it would be in Apple's interest to keep producing this version of the iPhone and use it as their price driver in Christmas '09. A high-end 3.0 version of the iPhone and the current version given away for free with a contract would be a compelling combination covering the range of price points. It would suck the oxygen out of the smartphone space for the competition and deliver most of the benefits of the iPhone Nano without the drawbacks.

Wednesday, July 30, 2008

Nuvifone delayed

Not much of a surprise, the Nuvifone has been delayed into the first half of next year. This is going to be a real problem for Garmin as this Christmas is going to see an explosion of interest in GPS enabled functionality on handsets. The 2.1 version of the iPhone software looks set to support turn by turn directions and with Apple, you know that there will be a PR related blitz when it is introduced. While the capabilities have been available on handsets like the N95 for quite a while, the iPhone is likely to push it into the mainstream.

The complication for Garmin is that delays in handset introduction are an absolute killer. What looks like a well-spec'd handset for Christmas '08 may be an outdated dinosaur by June '09. Garmin has obviously seen the fact that stand-alone GPS units are going to become more and more of a niche as time goes on....unfortunately, the solution of attempting to compete in the mobile handset market is one that is easier said than done. Garmin is going to have a very tough road to travel in 2009.

Monday, June 23, 2008

Sony Ericsson going to abandon UIQ?

There are some rumors floating around that SE is preparing an announcement about the future of their UIQ platform. If the hints are to be believed, they are going to seriously scale back their commitment and perhaps even abandon the Symbian derivative all together. This would square with the various reports that the new high-end Symbian handsets scheduled for the 2nd half have been cancelled (Paris and BeiBei).

The implications of such a move depend on which direction Sony Ericsson chooses to go. If they plan to move towards a derivative of Linux, it will be a blow to Symbian, but the winners will be harder to figure. OTOH, if this move is a prelude to a strong commitment to Windows Mobile, Microsoft and Qualcomm should be in the catbird's seat. This would be the kind of tier-one handset support that Microsoft has longed for and Qualcomm's long work with Softie on the platform should pay off with future opportunities at Sony Ericsson. The Xperia X1 could just be the first of a whole new portfolio of devices based on Quaclomm's chipsts.

Supposedly we should hear something this week....

Friday, June 13, 2008

iPhone Subsidies

Apple delivered a mixed bag in terms of features upgrades but delivered a solid win with the revamp of their business model and distribution. While a June US launch would have been nice, the 22 country launch on July 11th delivers a broad rollout much more quickly than most had expected.

The key point here is the subsidies that are going to be provided around the world by the handset providers. AT&T is going to sell the 8GB model at an upfront price of $199 but has raised the plan prices by $15 a month. That works out to $360 more over the two year contract.

So what does the customer get in return? Subsidies....and comments from SK Telecom (500,000 to 600,000 Won wholesale price) as well as the Vodafone Italy prepay pricing ($644 for 8GB model) indicate that they will be in the $350-$400 range in the US. The figure is even higher in Europe where they are using their standard practice of varying upfront pricing based on the monthly spend. However, the numbers involved arent particularly unusual considering the fact that the N95 was available for free shortly after its launch a year ago (unsubidized price of $750).

These subsidies are going to drive sales substantially higher. While the total amount paid over the life of the contract wont change much compared to the 2G iPhone, the fact that the upfront price is now below $200 removes a key barrier to entry for customers. That is the price point that has consistently been shown to move consumer electronics products from cutting edge into the mass market. The DVD player is the classic example.

Friday, June 6, 2008

A WWDC Checklist

As usual, rumors are flying on what exactly Jobs will reveal at the latest keynote at WWDC. With the stock trading around 190, I think it would be useful to set out a checklist of what Apple absolutely NEEDS to announce and what would simply be a bonus for investors. A miss on these expectations might not impact the long-term performance of Apple, but I think you could see a significant pullback if the market is disappointed.

The Minimum.

Obviously a 3G version of the iPhone is a lock, but beyond that the specs absolutely matter. An upgrade to the camera to 3 megapixels and video camera functionality plus GPS is a baseline for the new specs. Miss on either of those specs and the 2nd half projections will be risky.

The rumors of subsidies have become so strong that this is now in the minimum camp. Apple might not even announce pricing outside the US, but the minimum price for an iPhone has to move below $300...and even $299 might not be enough to satisfy the market. Pricing outside the US might not even be announce by Apple as this may be completely up to the operators.

Commercial availability in the US by the end of June with rapid successive launches in Europe by the end of July. Asia can wait until the fall.

I see the above data points as the absolute minimum that Apple needs to announce to keep the stock from cratering following WWDC. Luckily, I do believe they will hit all of those marks.


Apple doesnt need to hit all of these, but likely they need a few to satisfy both the market and consumers.

The latest rumor that is gaining steam is one of Apple launching multiple iPhone models on Monday. This nicely dovetails the various sources saying that the new iPhone will both be thicker (3G, larger capacity) and thinner (new EDGE version). If true, this would be a clear indication that Apple is looking to grab substantial share in the near-term.

There are rumors of support for iChat, multiple colors and a bump in the maximum capacity to 32GB. All would be nice to have, but unlikely to be a real sales drivers.

Perhaps the most interesting announcements will revolve around the new Apple store. How compelling will the new apps be? This will be the hardest to judge, but if Apple pulls this off, they will be able to generate a whole new revenue stream for many years to come.


One analyst is predicting a 50% chance of an Apple MID (4-7" screen) being announced. While I think these devices are in development, I think that this fall would be the natural time for such an announcement. Apple's reference to the Touch as a WiFi enabled mobile computing platform basically revealed their future product direction. The iPod is going upmarket....but I very much doubt it would be today.

Likewise revised Macs/Macbooks are more likely to be introduced later this summer.

The key to Apple's trading today is going to lie in the pricing and timing. A $199 pricepoint with availability next Tuesday in the US and in Europe by the end of June and I think we should see a nice multiweek run. The 10 million unit estimates would all be getting revised upwards as analysts realized that Apple was serious about grabbing share.

Monday, May 19, 2008

Dont forget the Feature Phones!

Lost in the building fervor over the raft of new smartphone devices expected over the next six months (3G iPhone, Blackbery Bold, HTC Diamond, etc) has been the absolute onslaught of new high-end non-smartphones (or "feature phones")from LG and Samsung. This is a definite mistake as the unit volumes of these handsets are likely to be absolutely huge and have as much impact on marketshare for both the semi and handset players as the upcoming smartphones. The Samsung Soul has hit the market to rave reviews and the LG Secret is getting similar early press before its launch at the end of the month. Both these devices, as well as others such as the Samsung F480, pack in 5 megapixel cameras, touchscreens, user friendly interfaces and top of the line display technologies into some very hot form factors. It is these devices that are driving Samsung and LG's share gains as well as the continuing momemtum in Qualcomm's chipset business.

The question is when Nokia/SE/Motorola will manage to respond. The current announced products from those vendors for the 2nd half of the year simply dont measure up to what LG and Samsung are putting on the market right now. The combination of these feature phones and the newcomers to the smartphone segment present a serious challenge to the high-end shares of the current market leaders. Both TXN and Nokia are bouncing today on an upgrade from SSB, but I must say I'm not optimistic about their prospects in the 2nd half.

Thursday, March 13, 2008

Motorola up to bat at CTIA

A new video on Youtube (since been pulled) looks like it has provided another set of leaks of Motorola's upcoming lineup. Yes, the ones that were originally scheduled for MWC, but were mysteriously pulled at the last minute. Some details and specs are available here.. The 5 Megapixel Kodak enabled handset is the most interesting, but the rest of the devices look like updates to existing designs. If these leaks accurately reflect Motorola's roadmap for the 2nd half of the year, I am decidely underwhelmed.

Right now I'm guessing that Motorola will do better than 2.5G for their Kodak enabled handset and/or just a couple of updates to the Q/Ming, but if not, it really could get worse during the 2nd half of the year. Amazing.

Monday, March 3, 2008

EMP vs. Qualcomm

It wasnt quite an earthquake in the mobile world, but Sony Ericsson's decision to use Qualcomm for their baseband/apps processor in the Xperia was certainly unexpected. After all, the two companies have never been friendly, with Ericsson being one of the six companies that brought an anti-trust complaint before the EU in 2005. On top of that Ericsson has their own in-house chipset division in EMP which is the source of the vast majority of their 3G chipsets. The choice of Qualcomm for the handset was at least as curious as their choice of Windows Mobile.

Well, now we know the reason for that choice. This above specs detailing the EMP enabled ASUS ZX1 tell the story, and it isnt pretty. The fact that the EMP U360 needed to be paired with a TI OMAP2430 to run Windows Mobile with a touchscreen wasnt surprising, but the resulting 3G talktime is stunningly abysmal. A 90 minute talk time guarantees that this handset will be a commercial flop (though the GUI looks very cool). Luckily for shareholders, Sony Ericsson was flexible enough to go in another direction.

This is going to lead us to an interesting decision for Sony Ericsson later this year. The Xperia X1 was the highlight of Barcelona and interest from various mobile forums make it look like it will be a smashing success. So, where will Sony Ericsson go for the baseband of its successor? The EMP U380 is due to be released in the 1st half of '09, so it is the most likly winner....but a succesful X1 launch might give Qualcomm a realistic shot at continued business within SE. That is something I never would have expected a year ago.

Thursday, February 28, 2008

Bit Pipes are the Future

Unlike just about every other wireless operator in the world, Sprint is moving to embrace its roll as a bit pipe to its customers. The price plan they announced this morning delves perfectly with their plans for their upcoming WiMAX network.

These moves are going to have a profound impact on the wireless industry in the US. The combination of the next generation of touchscreen mobile OS's with flexible pricing and open networks is exactly what the industry needs to drive the innovation/adoption life cycle. The key is simplicity on all fronts and we are seeing moves across the board towards that goal. The industry is going to look quite different when the iPhone isnt alone in driving huge amounts of web traffic from mobile phones.

Sprint might be good for a turn around play, but I see the real winners in the smartphone/chipset and content spaces.

Tuesday, February 26, 2008

MacBook Revamp


That is the first word that comes to mind when looking at the new MacBook's that Apple released today. The spec upgrades were sorely needed and the addition of multitouch to the Pro line is nice to see, but overall, I think expectations were higher. These upgrades certainly wont provide any sort of step function boost to Apple's sales in the near-term. I am more than a little surprised that Apple didnt attempt to incorporate facets of the Air's design into this upgrade. The current design is getting a little long in the tooth.

Friday, February 22, 2008

The Next Generation of Mobile OS's

The hype over the iPhone was absolutely overwhelming and while sales have only been lukewarm thus far, there is one area where it did live up to its billing. It truly has changed the game in terms of the development of the mobile OS. Intuitive, receptive and just downright fun to use, the iPhone is light years ahead of the competition. However, Barcelona gave us an idea as to what some of the competition has up it sleeve. Most have rightly focused on the development of Android, but I think Nvidia's demonstrations provided a far more revealing look at the capabilities of the next generation of OS's.

As one blogger wrote, it looks like it is right out of Minority Report.

Now Nvidia isnt in the OS business. They were just using this as a demonstration for their ARM11 enabled AXP 2500 processor, which is what makes this demonstration all the more stunning. They put that OS together in five weeks. Imagine what Apple, Sony Ericsson or Nokia will be able to do when they get their hands on that kind of horsepower. Unfortunately, the AXP 2500 wont be available in handsets until the 2nd half of ' is going to be a long wait!

Wednesday, February 20, 2008

Joining the hunt for the 3G iPhone

There has already been a vast amount of speculation as to the timing of the 3G version of the iPhone. This is for good reason. A late year launch would mean drastic price cuts would be needed to keep sales going over the summer. The handset market moves much to fast to keep a year old device selling for $400 relevant to the majority of consumers. Conversely, a late spring launch would bring a jolt to iPhone sales that I think would go well beyond most analyst expectations. The customer satisfaction numbers for the iPhone are off the charts, but the fact that it is well known that a 3G version will launch in '08 has kept many consumers on the sidelines. Nobody wants to buy the current iPhone only to see a more advanced version released a month later.

So the question is, how do we narrow down the launch window for the iPhone? I think the best clues come from the suppliers. The baseband and applications processor for the iPhone are, by necessity, going to require the latest and greatest chipsets.

The Baseband

Infineon won the 2G iPhone slot with their ARM9 enabled S-GOLD2 EDGE baseband. This likely gives them the inside track for the 3G iPhone, though it is by no means a lock. Infineon has stated that their S-GOLD3 HSDPA processor will be in volume production in the 2nd quarter. They have been close mouthed about the identity of any customers for this chip.

Qualcomm is also a possibility though I'd place the odds considerably lower than for Infineon. One advantage to Apple for going with Qualcomm is that they have a much better application processor combined with their baseband. The MSM7200a is a 65nm chipset with a 528MHz ARM11 enabled apps processor. In the past, Qualcomm has indicated that this chip would be capable of running the iPhone. I have my doubts though that it could do so without another dedicated apps chip. However, coupling the MSM7200a with an apps processor would provide more than enough horsepower for a fully featured iPhone (5 megapixel camera, GPS, 30fps video capture). The MSM7200a sampled in the 1st quarter of 2007 and I believe that volume shipments would likely begin in the spring.

Broadcom is the last of the likely candidates. At one time, I had thought that the iPhone could be their break through win in the mobile space but I think that this has become unlikely. The press has focused their attention on the single-chip HSUPA chip that they announced in October, but this chip wont show up in handsets until 2009. Their ARM11 enabled HSDPA chip that was announced last February (BCM2153) is a possibility, but Broadcom's public comments on wireless have downplayed the prospects for wireless in 2008. It seems unlikely that this chip is going to get much traction.

Apps Processor

Many choices, but porting the iPhone OS to a new applications processor seems unlikely unless it involves the battery/cost savings of a converged chipset. That means that Samsung's 2G design win is going to give them a considerable advantage in the 3G slot. Their 2G chip was the S3C6400, which was a 667MHz ARM11 enabled processor on a 90nm process. The 65nm version of this chip (S3C6410) is due to begin sampling in May with volume production in the 3rd quarter. As they did with the S3C6400, it is entirely possible that Apple will get early access to a custom version of this chip.

My best guess is that Apple will go with a repeat of their 2G iPhone partners. Infineon and Samsung both look to be in position to have volume shipments of the required chipsets by the summer. While the exact timing would be nice to know, I dont think it is necessary to profit on Apple. The key is that they should be able to avoid the worst case scenarios of a November launch. That would have been disastrous for the summer/fall sales and would have left them launching directly opposite Nokia's expected S60 touchscreen device. A late spring or summer launch avoids this and sets Apple up to do very well in the back half of the year.

Thursday, February 14, 2008

The iPhone's Stunning Search Numbers

We all know that the iPhone has changed the rules of the mobile handset game....watching the other handset manufacturers fall all over themselves in their rush to embrace touchscreens is just one sign of the new environment. However, even knowing that the iPhone has caused a revolution doesnt diminish my astonishment at these new numbers from Google

50 Times!

That is how many more Google searches have been performed on the iPhone than any other mobile handset. While this data is obviously skewed by the Apple-Google partnership, the overall trend is backed up by the browser stats that have been released. You can argue endlessly about the merits of the iPhone, but it is indisputable that the iPhone has transformed the mobile internet. The rest of the industry is trying to adapt with the touchscreen S60, Android, and Xperia heading the list of new initiatives. Unfortunately, all three of these were still in very rough form at MWC, so we wont have a very good idea on their progress until the end of the year.

One question I'd like to have answered, does Google split any of their search revenue with Apple? That built-in search box could eventually become a very lucrative piece of real estate for Apple and their search partner.

Wednesday, February 13, 2008

New Version of Android


One of the more odd developments to come out of Barcelona was the varied stages of Android development shown by Google's chipset partners. TI was showing a small form-factor handset running a functional, though limited, Android OS while NEC and Qualcomm had development boards running their versions. The user interface was different but I had assumed that they were just different versions offered in the original SDK.

Well, mystery solved. It looks as though Qualcomm and NEC were actually giving sneak peaks of the next version of the Android OS. Here is a screenshot of Android running on the MSM7201a from Qualcomm.

It looks like the Android is still on schedule to have the first handsets out on the market by late '08 or early '09. HTC is the most likely suspect to win first to market bragging rights.


An interesting report out of Lehman this morning that states that Nokia's N96 actually contains a Nomadik apps processor from STM. The question is if this win is due to missteps out of TI or just indicative of Nokia's ongoing attempts to diversify their supplier base. Regardless though, this is a high profile win for STM and may help them gain some traction in the apps processor market. However, I'd like to learn a bit more about what chip is inside. Is it the 90nm ARM9 enabled STn8815 or an early sampling of the 65nm ARM11 enabled STn8820? In either case, Nokia clearly has some work to do with their apps processor partners in improving the power consumption of their platform.

Implications for TI? Well, this continues the move over the last year of Nokia to diversify away from their dependence on their long-time chipset supplier. TI will need to stay an "ARM" generation ahead of the competition. The Cortex enabled OMAP3430 will do that, but timing will be much more critical than in past design cycles.

Tuesday, February 12, 2008

Nokia's Aging 3G Platform

The Nokia juggernaut rolled over the handset market in 2007. The Motorola collapse was the gift that kept on giving, with new highs in margins and the long-term goal of a 40% share finally achieved. Naturally, analysts have extrapolated this success into 2008.

However, I think the announcements coming out of Barcelona are giving the first signs of storm clouds on the horizon. The four handsets that Nokia has launched have some relatively impressive specs, but those mask the fact some underlying problems with Nokia's 3G platform are starting to show. You can see the evidence in just one number from the Nokia N96.

150 minutes.

Yes, that is the 3G talk time for Nokia's new wonder phone. It is also the 3G talk time for the 6220 classic. Now, two and a half hours might be good enough for the anorexic 10mm fashion models that are pumped out of Samsung on a regular basis, but it is an awful number for work horse handsets like the 6220 Classic and the N96. The threshold for acceptability for battery life in handsets is for it to last a full day under heavy usage, and these handsets are very unlikely to meet that challenge. Worst of all is the release date for these two handsets....a Q3 release means that the underlying platform for these handsets is likely to represent the bulk of the units for this Christmas selling season.

So what has gone wrong? Simply put, Texas Instruments is late with their next generation OMAP processor and getting later by the day. The OMAP3 was originally supposed to ship in volume in 2007, but that slipped into "early 2008". No big deal, the competition was just catching up to the multimedia specs of Nokia's Nseries and OMAP3 would allow them to reassert their lead. However, the timing of the 6220 Classic and the N96 means that it is very likely that OMAP3 has slipped again. The question is how late? Word out of Barcelona is the 2nd half of '08 with substantial volumes showing up in '09.

This is going to represent a real problem for Nokia in the high-end during the 2nd half of the year. The N95 was a monster hit during '07 with consumers overlooking its thick dimensions and awful battery life for the privilege of getting a 5 megapixel camera, GPS and multimedia player all in one package. The N96 will still have a lead in some specs versus the competition, but the gap has pretty much been closed. As consumers shift their focus from the features to the battery life and size, competitors such as LG, Samsung, SE, and HTC are going to pick up share in this lucrative market.

Does this spell the end for Nokia in '07? Clearly not, but I dont think analysts are forecasting this erosion for Nokia on the high-end. It will mean a small hit to share, but a larger hit to margins and earnings.

Monday, February 11, 2008

Qualcomm Confirmed

I love it when a plan comes together :-).

Engadget confirmed that the Xperia is a HTC product and I can now say with certainty that the processor powering the Xperia is the MSM7200a. This is the 65nm version of the original MSM7200 and has a 528MHz ARM11 processor as well as ATI Imageon video acceleration hardware.

Of course, the question now shifts to whether Qualcomm can leverage this design win to grab any more share within Sony Ericsson. EMP has already announced the U380 which will integrate TI's OMAP3430 to support Windows Mobile as well as Symbian and UIQ. It is scheduled for the 1st half of '09.

Regardless though, this is a very big win for Qualcomm and shows just how well they are doing against the competition. TI's OMAP processors had absolutely dominated the high-end of the WCDMA/HSDPA market, but it looks like the MSM7xxx series is changing that.

Sunday, February 10, 2008

Sony Ericsson's latest...Qualcomm inside?

Xperia, the new flagship handset from Sony Ericsson, is interesting on all kinds of levels. Most intriguingly, this is the first handset from SE that boast Windows Mobile. This leaves Nokia alone in their continued thumbs down to Softie's mobile offerings. It will be interesting to hear SE's executives reasons for choosing this path.

I would also add that this is SE's most direct response to the iPhone revolution. I love the iPhone, but this combination of large scale touchscreen with a slide out keyboard is going to represent an interesting challenge for Apple. The iPhone's interface is good enough for short messages/emails, but I dont think it can compare to a full QWERTY keyboard for anything in long-form. Of course, the OS on the touchscreen is going to be key. Has Sony Ericsson been able to transfer their successful Walkman UI to the Xperia? The Walkman line of handsets has been a monster hit outside of the US and the music player is considered to be very good in offering both ease of use and advanced options for mobile users. This will repsent quite a challenge for Apple as the iPhone has failed to gain much traction in Europe. This, along with the various new handsets from LG and Samsung, really place the pressure on Apple to get v2 of the iPhone to market well ahead of Christmas '08.

Moving onto a slightly more speculative topic, this looks like confirmation of the rumor last year that HTC would be supplying Sony Ericsson with Windows Mobile devices. The form factor of the Xperia is very much like a variety of HTC products. The use of an ODM for what looks to be a flagship device might just give investors an idea as to how much handset manufacturers want to have a response to the iPhone in '08. While the identificiation of HTC as the supplier is a relatively easy call, it leads to something more substantive....the likelihood that Qualcomm is supplying the baseband for this handset. HTC's 3G lineup is universally based on Qualcomm basebands. It is possible that Sony Ericsson mandated the use of EMP for this handset, but some other specs add to the possibility of Qualcomm. When was the last time Sony designed a product that didnt support Memory Stick? I would also add that AGPS is a Qualcomm standard enabled feature but something that hasnt been seen to date with EMP enabled products. This looks like a HTC design, and that means that Qualcomm may have found a back door design win into a major new product from one of their traditional European adversary's. This would be a huge win for Qualcomm as SE's 20% WCDMA market share has generally been seen as closed to their chipset.

If confirmed, this new win would be a real feather in the cap for the chipset team at Qualcomm. They have been laboring under a market cap ceiling of about 35%, and the share price has reflected that. An opening into another 20% of the market would provide a very nice boost to Q's long-term outlook.

Wednesday, February 6, 2008

Motorola's Saviors?

These look like early prototypes of handsets that should be announced next week. The rumor mill is focusing on the bottom handset which is the new Z12. Specs supposedly include a 2.8" touch screen with VGA resolution, 5 megapixel camera with Xenon flash, GPS and WiFi. Though a year later, it looks like a beautiful answer to the N95. This type of announcement should be an investable event if we could be sure about the timing of the product release. Anything within the next six months would likely be well received by the market.

Friday, February 1, 2008

The Gang that couldnt shoot straight

Considering their track record, Motorola's announcement that they are looking to restructure their handset shouldnt be a surprise, and yet, this takes the cake for this once proud company. The timing simply couldnt be worse. The division is bleeding money, the capital markets are closed, and we are likely entering a recession. It will be impossible for Motorola to extract any value out of a transaction.

Why not wait until after the glimmers of a turnaround have been established? In addition to Kodak, Freescale also confirmed that Motorola's new platform is on track for a summer release. The only explanation is very ugly indeed....the internal schedules for the platform release must be much worse than those given by their suppliers or those expected by the Street. An '09 release for new products would mean the losses in the mobile division would reach truly horrendous proportions during the Christmas quarter.

So take your pick, either Motorola's management has created a new standard for "selling low" or the platform group is going to need at least another six months to complete a turn around that was supposed to have occurred over a year ago. An ugly choice indeed.

Thursday, January 31, 2008

Timing Motorola's Turnaround

As usual, the key questions for Motorola all center on their handset division. The utterly dismal post-RAZR performance has even brought speculation that Motorola would eventually sell the handset division. I see that as a woefully short sighted type of, of course, I cant discount the possibilty that Motorola's management will go down that path.

However, as an investor I see an opportunity. Motorola still has the brand, distribution and manufacturing prowess to be competitive in handsets. The problem is one of design. They dont need a RAZR, but they do need something along the lines of the Triplet handsets (V300/V500/V800) which spurred the turn around after the Startec had faded. The current buzz has centered around the following leaked pictures which are supposed to represent a portion of Motorola's 2008 lineup.

Unfortunately, this picture first showed up last October and there has been no further word on the possible timing of the introduction of these handsets. However, I believe that Eastman Kodak shed some light on the schedule during their earnings call, saying that they expect their CMOS image sensors to be in commercial products within six months. If confirmed, this timetable would put to rest some of the worst concerns about Motorola's fall handset lineup. It could be the light at the end of the long post-RAZR tunnel that investors have been looking for....stay tuned to 3GSM for more rumors and even the possibility of an announcement.

Tuesday, January 29, 2008

What's next for Apple?

So for the first time in recent memory, Steve Jobs's RDF failed to take hold at MacWorld. While the MacBook Air looks like a beautiful notebook, it is also a niche product. The compromises that Apple was forced to take to get the product down to its desired thinness insured that the vast majority of people will love to look, but decline to purchase. So the question is, what's next for Apple? The stock price is down 35% from its recent high and questions are now being raised about the sell-through of the iPhone.

Luckily, the future isn't lost, and absent a prolonged recession, I think Apple's near-term pipeline is going to serve it well in the 2nd half of the year. The first two products are relative no-brainers, and the only question is timing. The 3G iPhone has already been confirmed for '08, and a summer launch would do wonders for European/Asian adoption. I also think that the MacBook Air has given us a clear view of the coming MacBook and MacBook Pro revamps. We will see an emphasis on new thin style but without the feature compromises made in the Air. The most interesting new feature will be the larger multitouch trackpad. If Apple can create a compelling new user experience, as they have done with the iPhone, they could accelerate their current marketshare gains.

More interesting than both of the above products is going to be the evolution of the iPod Touch. When announced, it looked like just a derivative of the existing iPhone. However, during the last conference call, Apple gave some broad hints that they see the iPod Touch differently. Calling it a "the first mainstream WiFi mobile platform", Apple is giving clear indications that they see this as a stand-alone product. Future revisions will no longer concentrate on figuring out new ways to present music/videos, but rather on taking advantage of the computing power and internet access that is now possible in a mobile package.

Could this be the long-awaited Apple tablet? Not quite, I anticipate more of a MID that will take full advantage of the flexibility offered by the touchscreen OS in the Touch/iPhone. This is Apple's key advantage over all of its competitors. While iPhone imitators galore are coming to market, I have yet to see or hear of one that comes anywhere near the ease of use or smooth feel of Apple's OS. This is going to serve them well as they expand the Touch into a powerful new mobile computing platform. While there have been some rumors along these lines, I don't think that the Street has discounted even a portion of this new revenue stream. I expect an Apple announcement sometime in the summer/early fall timeframe.

Monday, January 28, 2008

Yet another blog

So the inevitable question is, why? There are already a huge number of blogs out there, why add another voice to the wilderness? Well, after almost a decade of participating in internet investing message boards (which I will continue to do), I decided to try my hand at a new medium. Blogging provides a different platform and different audience than the message boards and hopefully will provide new ideas as well. In general, my focus in investing has been in the wireless sector, though anything in tech has been fair game. I see a ton of opportunities over the next few years as devices come to market that bring about the long awaited convergence of handsets, PMP's, internet appliances, cameras, and more. The iPhone is obviously a large milestone in this trend and I imagine that I will be discussing both the short and long-term impact of Apple's entry into the handset market. I also see the efforts to bring aspects of the PC/internet into the living room as creating a plethora of different winners in the hardware, software and content spaces.

Of course, as with any blog, we'll just have to see where this goes....