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.