31
Dec

Is the Android Operating System Safe for Use in Automobiles?

According to an article written by Neal E. Boudette, Daisuke Wakabayashi, titled Google, Apple Forge Auto Ties (http://online NULL.wsj NULL.com/news/articles/SB10001424052702304591604579288670734733740?mod=WSJ_Tech_LEADTop), Google and Audi will announce a joint effort at the Consumer Electronics Show in Las Vegas, in early January, 2014. This effort will include installing smart devices powered by the Android O/S in automobiles.

Interested parties need to look closely into two broad areas of concern about this notion:

  1. What’s the content, and how will users handle communication? The information exchanged over person to person conversations, regardless of whether they transpire over cellular telephone calls, text messaging, emails, etc, can be a powerful threat to mobile safety. So any plans to add an extensive list of other ways for people to communicate while they are mobile will be (and, I might add, should be) closely scrutinized by regulatory bodies charged with ensuring public safety. Any announcement of new features must include some details about methods of controlling and limiting the content of these conversations, as well as how the conversations will transpire
  2. Why is the planned Android O/S different? and Why should we have confidence in its security? In its Security Threat Report 2013 (http://www NULL.sophos NULL.com/en-us/security-news-trends/reports/security-threat-report/android-malware NULL.aspx), Sophos, Inc. identified the Android O/S as “Today’s biggest target” for malicious software. It doesn’t take much to conceptualize the great danger represented by an automobile traveling at speed. So, if Android is to be seriously considered for an important role as an O/S for smart cars, there better be a lot of detail of new security features in the announcement. If these details are not provided, the notion is not likely to proceed much further than merely a method to build hype.

Both of these areas of concern contribute to a perception of a “smart car” as a potentially deadly device. The Journal’s article had little to say about security. This oversight should be corrected. The public should be informed of the dangers of “smart cars” if the discussion is to be fair and balanced.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

30
Dec

Does Twitter Stock Mania Tell Us Markets Don’t Understand the True Potential of Cloud Products?

As Steven Russolillo wrote in an article titled Twitter Downgraded: Nothing Has Changed . . . ., which was published in the Wall Street Journal on Friday, December 27, 2013 (http://blogs NULL.wsj NULL.com/moneybeat/2013/12/27/twitter-downgraded-nothing-has-changed-to-justify-the-rise-in-valuation/?KEYWORDS=twitter), “Twitter’s high-flying stock has gone too far, too fast.”

But when one considers the Twitter stock price phenomenon within the context of a few other recent nonsensical events (for example, the increase in the stock price of Adobe despite its well publicized security problems, and its comparatively unprofitable transition to a cloud, Software as a Service (SaaS) subscription model for its leading Creative Suite product set), it shouldn’t be difficult to see the difficulty markets are having identifying real lasting value in cloud product offers. The distance between stock market valuation and actual profitability for publicly traded cloud businesses, including Twitter, Facebook, or LinkedIn, along with mature ISVs like Adobe, will not last more than a week, month, or, perhaps, a quarter or two. Inevitably the prices will have to come down, perhaps via a very hard landing.

Equipping Twitter with an advertising component at once attractive for customers, and promising from a profitability perspective, is not likely to be an easy proposition. What will work for a retailer looking to move closeout stock, is not going to work for a market commentator with a small circle of readers. Each of these Twitter pages requires a different type of advertising feature. But market analysts seem to be looking for click advertising banners to simply pop up all over Twitter pages. At the same time, the most optimistic of these analysts are also expecting a lot of clicks on those ads. Not so fast is what I have to say on the subject.

Analysts like Macquarie Equities Research (the subject of Mr. Russolillo’s short article in the Journal) are sensitive to the danger. But rating the stock an “underperform” for the future, is, perhaps, too understated. I think it makes more sense to rate it a “sell.” Investors fortunate enough to have a position in the stock as it made its move should sell to lock in gains. The future for the stock prices of Twitter, and its peers, doesn’t look so bright.

I have no current investment, whatsoever, in Twitter, or any other publicly traded business mentioned in this post.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

27
Dec

Sometimes It Makes Sense for a Fortune 500 Company to Closely Manage an Acquisition

On December 24, 2013 the online Wall Street Journal published an article, Fortune 500 Companies Seek Startup Mojo (http://blogs NULL.wsj NULL.com/cio/2013/12/24/fortune-500-companies-seek-startup-mojo/?mod=wsj_ciohome_cioreport), which was written by Rachel King.

Ms. King quotes Peter Diamandis, ” . . . executive chairman of Singularity University and CEO of X Prize Foundation”: “‘We’re living in an interesting time where the rate of innovation around the world is exploding, and a company that is dependent upon innovation within their four walls is ultimately going to fail . . . “.

Perhaps Mr. Diamandis is correct, but once innovation has been achieved, I think it makes sense for a mature tech business to blend whatever results from innovation into its existing business infrastructure. A “hands off” policy is likely to meet the same unproductive end (meaning a failure) Mr. Diamandis mentions as he prods businesses to proceed in the manner he’s after.

On October 13, 2011, Microsoft announced the completion of its acquisition of Skype, SRL (http://www NULL.microsoft NULL.com/en-us/news/press/2011/oct11/10-13skypepr NULL.aspx). But now, 26 months after the acquisition, it’s still not possible for a customer to reach a Skype Customer Service Agent via a telephone call. But Microsoft customers for Office 365, or its Surface 2 tablets can avail of a telephone call to reach a customer service agent. Does it make sense to juggle different customer service policies?

I don’t think so and think Microsoft is losing business as the result of this policy. I pay for Skype premium accounts for my business, but decided, recently, to remove “auto renew” from my subscriptions. Bottom line, my subscriptions are not configured as I want them to be, and can’t achieve my objective with the level of customer service I’m receiving from Skype. I’m sure my smaller business is not alone. It doesn’t make sense for Microsoft to tarnish its own brand with a wholly owned subsidiary incapable of providing levels of customer service consistent with those offered for core products.

Skype’s voice and video calling over Ethernet was a great new product for Microsoft. But please add in the top notch customer service Microsoft customers have come to expect, to keep markets happy.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

26
Dec

What Can We Learn As Adobe Stock Defies Gravity?

On October 3, 2013, Adobe notified the public of a breach of its security system for customer IDs, and even source code for a number of its most popular products. On December 12, 2013, Adobe announced its Q4 2013 earnings and issued guidance. Y/Y revenue dropped 9.7%, while profits dropped over 13%.

But the next day Adobe stock hit a 52 week high of $61.09. The disconnection between actual business performance, and stock prices for an important mature ISV like Adobe points to an unsupportable high premium priced into stock prices for the technology sector, merely to reward growth in cloud subscriptions, and little else.

An important segment of large consumers of technology (enterprise businesses, and their peers in the public and not-for-profit sectors) located in North America, Western Europe, and Australia/New Zealand continue to require on premises computing solutions. My assumption is not the result of mere conjecture. I base my position on a number of conversations I’ve recently had, on behalf of clients, with contacts participating in some substantial purchases for solutions to enterprise document management, content management and collaboration requirements.

With one exception, all of these contacts have directly expressed a need for on premises computing solutions. Our conversations have not included any mention of the Adobe security issue, but I cannot avoid reaching an important conclusion: information technology buyers have slowed down the pace of cloud/SaaS purchasing as the frequency of bad news on cloud/SaaS offers has increased.

This slowdown has bitten not only Adobe, but also Salesforce.com. I can’t help but think Salesforce.com’s recent “Internet of Things” branding campaign is nothing more than camouflage over product marketing’s fallback to tried and true customer service applications for its CRM tracking infrastructure.

I think a large portion of subscribers to services like Adobe Creative Cloud are either retail customers, or personnel connected to large organizations in the market for remote computing resources capable of supporting the BYOD trend. These subscribers will be the first to abandon subscriptions should security issues worsen.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

24
Dec

Product Development Assumptions Must Factor In Predictable Regulatory Positions

I’ve posted to this blog on earlier dates on the topic of Google Glass. I don’t like the product for a number of reasons. This list includes concerns about regulatory agencies efforts to prohibit sale of the product. I think it’s mandatory for technology businesses to factor in the stance of regulatory agencies when they think about building solutions for markets. So, with Google Glass, and the new text to speech email reader products automotive manufacturers have announced, any useful product plan must anticipate likely regulatory action to ban the sale of these products for specific markets. Further, this type of product plan should include an assumption of how likely regulatory efforts will affect market size. The most notorious example of computing solutions crossing the regulatory line is, of course, Napster.

So where, if at all, does it make sense for technology businesses to undertake development for these markets? I think this type of “edgy” product development only makes sense for very large businesses, like Google. They have the financial resources to weather the losses likely to result from these types of efforts. The only legitimate driver, in my opinion, is an effort to brand the company as the leading edge of product innovation, and, further, one with the courage to question the positions taken by regulatory agencies.

This type of branding effort carries with it the “rebel” label, which has proven itself to be a very attractive label for the U.S. consumer market. Apple wielded the “rebel” brand to great positive effect. Perhaps Google is after the same territory.

But it’s very risky for early stage technology businesses, especially those running on self-financing, to challenge regulatory agencies. There are better ways to achieve a rebellious brand as a market leader than this type of effort. One last word on this topic: from what we’ve read recently, it looks as if European regulators may soon enforce privacy policies likely to substantially raise the cost of operating cloud services in an approved and legal manner.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

23
Dec

Gauge Market Behavior to Choose Products for Development

Technology products should never be developed simply on a hunch about important problems markets need to solve. Business intelligence must be gathered from markets to support allocating any resources to build products.

I think products like Google Glass are an example of how not to develop products. Google appears to have designed this product to solve a common need for a less obtrusive method of maintaining a constant bi-directional connection to electronic communications than currently offered by smartphones, tablets and PCs. But I don’t think this need actually exists. In fact, if one reads an article authored by Matt Haber and published to The New York Times website back on Sunday, July 7, 2013, A Trip to Camp to Break a Tech Addition (http://www NULL.nytimes NULL.com/2013/07/07/fashion/a-trip-to-camp-to-break-a-tech-addiction NULL.html?ref=technology) one gets the sense the market is waking up to the debilitating nature of constant bi-directional electronic communication. Numerous studies point to much lower levels of productivity for people who do not take breaks from work.

My conclusion also applies to a new trend in automotive features development, which is proceeding in precisely the same direction. In other words, the major automobile manufacturers are adding text to speech computing systems to vehicles. The purpose of these systems is to permit drivers and passengers to listen to email, and text messages read to them while in transit. Once again, I don’t think there is a pressing need in the market for mobile data communications for this type of device.

Interestingly enough, in both the case of Google Glass and the automotive text to speech systems, there are serious questions about whether regulatory agencies will even permit the marketing of either device. Regulatory agencies are seriously concerned about the chance for driver distraction implicit to either product. So whether market participants actively pass up on buying these products, or not, may be entirely inconsequential. Regulatory agencies may prohibit sales of these products, altogether.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

20
Dec

Dell’s Growth Forecast Pointed to the end of the Desktop PC Computing Era Back in March, 2013, But What About Now?

Michael Dell appeared on CNBC this week. Included in his generally optimistic comments about his business, Dell, which recently became a private company, were some comments about the PC business. Michael Dell spoke about the excellent potential for sales of very high contrast displays to the desktop PC computing market.

But back in March, 2013, in a document mysteriously titled Going private transaction by certain issuers (http://services NULL.corporate-ir NULL.net/SEC/Document NULL.Service?id=P3VybD1hSFIwY0RvdkwyRndhUzUwWlc1cmQybDZZWEprTG1OdmJTOWtiM2R1Ykc5aFpDNXdhSEEvWVdOMGFXOXVQVmhNVXlacGNHRm5aVDA0T0RNd09URTJKbk4xWW5OcFpEMDFOdz09JnR5cGU9MSZmbj1EZWxsSW5jLnhscw==) Dell Corporation provided the US Security and Exchange Commission (SEC) with a voluminous (the PDF file is over 40MBs in size) set of information about management’s decision to take the company private. On page 242 of the 758 pages of this document, Evercore Partners (http://evercore NULL.com), the investment bank and advisory firm, published a financial projection, through 2017, for the legal entity taking Dell private, “Denali”. By 2017 the BEST projection of the four included on the spreadsheet has the private company growing at an annual rate of 2.2 percent. So when I compare the two public statements, I can’t miss a striking contrast between them, and need to look a bit further into what’s causing the gap.

Back in March, when I added IBM’s revenue growth over the last 5 years (1.13%) (https://eresearch NULL.fidelity NULL.com/eresearch/evaluate/fundamentals/keyStatistics NULL.jhtml?stockspage=keyStatistics&symbols=IBM) into the mix, I couldn’t escape a difficult conclusion: Neither consumers, nor businesses using desktop computers appeared to be buying innovation. These markets seemed to be standing still.

But ISVs continue to innovate computing methods. The hot spots, back in March of this year, were the small mobile device hardware market. and the market for automated applications offered on a multi tenant model (cloud and SaaS). These conclusions are hardly news, but until we had a chance to look at the numbers, included in Dell’s explanation to the US SEC, we weren’t getting the message. Dell, IBM, HP, and their peers were just not growing.

In contrast, Apple demonstrated revenue growth of 45% over the last 5 years, Amazon 32.44% over the same period, and Salesforce.com by the same. Almost all of Apple’s growth is attributable to the small mobile device hardware market, while Amazon and Salesforce.com have done very well in the cloud and SaaS application area.

But Dell’s March, 2013 argument appeared to make sense. I couldn’t find much of a rosy upside for the business over the next 4 to 5 years. Evercore’s “Upside” Assessment depended on Dell successfully selling more premium desktop and laptop hardware. Selling more copies of Quest software products, or SonicWall firewall products, or even Wyse VDI technology just wouldn’t fill in the enormous revenue loss attributable to a substantially smaller market for PCs.

It all looked very grim to me back then. But now I find myself confused after Mr. Dell’s “glowing” remarks this week. Of course, the difficulties Salesforce.com, Amazon and Adobe are finding demonstrating profitability from cloud, SaaS products aren’t helping the notion of “go Cloud” as a universal panacea, either.

Finally, with Apple hiring the ex CEO of ultra high end Burberry’s retail operation to run “Apple Stores”, everywhere, there is certainly an increasingly clear image of an end to at least the high end of the smartphone/tablet market on my horizon.

Could it be the future of PC Computing isn’t really bleak at all?

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

19
Dec

No Breaks for AMD in Market Frenzy for PlayStation 4 and XBox One

Despite manufacturing the CPUs (Jaguar 64 Bit) and GPUs (Radeon) for both the Sony PlayStation 4, and Microsoft Xbox One, AMD (http://www NULL.amd NULL.com) has failed to attract any positive interest from investors. Since hitting a 2013 high of $4.64 per share on July 18th, the stock has dropped 21.3% and closed at $3.65 per share on December 6th.

At the same time both video game consoles have sold out for their respective manufacturers. Market demand for these products is enormous. So, one would think, the System on a Chip (SOC) technology built into these processors, which AMD has perfected over the last few years, should be one of the hottest items in the computer hardware business. But the opposite is the case, at least if one takes the current AMD stock price to be a meaningful indicator of the true condition of the company.

The clear disconnection between the fortunes of AMD, and at least Microsoft (as the result of the holiday 2013 blow out for Xbox One) is a subject thoroughly covered by industry commentators. On November 18, 2013, Dan Gallagher published an article on this topic on the Wall Street Journal website, titled Console Bet is Played Out at AMD (http://online NULL.wsj NULL.com/news/articles/SB10001424052702303755504579206191576916168?mod=WSJ_qtoverview_wsjlatest).

Mr. Gallagher focuses on three problems facing AMD:

  1. The company still looked to its PC chip business for “64% of total revenue in the first nine months of 2013, down from 74% a year earlier” (quoted from Dan Gallagher’s article, a link to which has been provided above)
  2. AMD owes a lot of cash to GlobalFoundries, “the chip-fabrication business it spun off in 2009. AMD will owe about $404 million to GlobalFoundries under a “wafer-supply agreement” in the current quarter and another $250 million in the first quarter of 2014.” (ibid)
  3. A persistent lack of profitability. The stock is trading, even at its December 6, 2013 closing price of $3.65, “at about 33 times projected 2014 earnings” (ibid)

I like the third of Mr. Gallagher’s reason as the most telling of the set. A very useful example of AMD’s consistent failure to win truly substantial profits out of its chip deals can be found in the webcast of their most recent quarterly earnings conference. During this call the CFO mentioned very tight margins on the first sales of this SOC architecture to Sony and Microsoft.

There’s talk now of a new SOC technology from AMD. Pundits claim this technology renders the PlayStation 4 and Xbox one devices just yesterday’s hardware. One would hope AMD will negotiate truly lucrative deals when it presents these products to its OEMs.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

18
Dec

Curious Case of Christmas 2013 Hot, But Sold Out Consumer Tech Products

Three smart consumer electronic devices released for the 2013 Holiday Shopping Season attracted very favorable reviews. Sony manufactures the PlayStation 4. Microsoft manufactures the remaining 2:

  • XBox One
  • and the Surface 2

But all 3 of these devices were sold out for most of this Christmas season. As of my last check, back on December 6, 2013 all 3 were apparently sold out everywhere.

Note: last weekend, on December 15, 2013, My local BestBuy had inventory of the XBox One.

Another note worth considering: I spoke with the Microsoft Online Store crew back on December 6, 2013. They told me the Surface 2 would be back in stock on December 14, 2013. To the best of my knowledge this new inventory never showed up. Once again, my trip to BestBuy on December 15, 2013 produced an availability date in mid January 2014 for the Surface 2.

AMD manufactures the 64 bit Jaguar CPUs and the Radeon graphics GPUs powering both the PlayStation 4 and the XBox One. The huge demand for both of these devices may translate into some good news on the actual volume of units AMD will be able to sell, for the first year, into this market.

The actual profitability of these sales is a point of discussion among AMD analysts. Nevertheless, the Q3’13 AMD CFO Commentary (http://phx NULL.corporate-ir NULL.net/External NULL.File?item=UGFyZW50SUQ9MjA2NTkwfENoaWxkSUQ9LTF8VHlwZT0z&t=1) includes the following point worth considering: “Graphics and Visual Solutions (GVS) segment revenue was $671 million, up 110% compared to the prior quarter, driven by our semi-custom business.

  • GVS segment revenue was up 110% sequentially due to Sony and Microsoft next generation products”

Tegra CPUs power the Surface RT (Tegra 3) and the Surface 2 (Tegra 4) Microsoft tablets. NVidia manufactures these CPUs. Recent positive press reception of the Surface 2 product, together with generally favorable early consumer reviews, may fuel more demand for the Surface 2 tablet than analysts have estimated. Of course, if this proves to be true, then NVidia’s shipment volume for Tegra 4 chips may exceed analyst estimates.

But I also need to note comments made during NVidia’s latest quarterly earnings report, where management disclosed tighter margins for the Tegra chips. So greater volume should not be construed, necessarily, as an indicator of greater profitability. Nevertheless, the chip should attract added interest from other OEMs, as a result of the explosive market interest in the Surface 2. There is still room for competitive tablets and other touch screen driven computing devices in this consumer market.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

17
Dec

On Recent Enhancements to the VisualVisitor Anonymous Website Visitor Recognition Service

VisualVisitor (http://www NULL.visualvisitor NULL.com) is a comparatively low cost option businesses can use to mine more information from visits to their websites. At $39.00 per month, the subscription should be within the reach of most businesses. Some recent enhancements to the product are worth a mention.

The visit report template now includes historical information. So sales team are not only notified about current visits, but are also presented with a summary of earlier visits, from the same internet end point, to a given website. Knowing who’s been to your website before, and the amount of time between visits can be useful information. This historical information is also valuable as a method of determining return on investment in email marketing campaigns. The VisualVisitor tagging system can be incorporated into email campaigns, to provide a richer set of data about email recipient behavior.

Customer service organizations should welcome this feature. If, for example, specific information has been exposed on a website to mentor customers about important product features, then a review of historical visit information should determine whether customers are finding the information, and using it as intended, or not. The process of modifying the way information is exposed on a website becomes much easier when data, like the VisualVisitor historical information, is available to test assumptions. Certainly any organization benefits when no more than a few modifications need be made to website branding to deliver a targeted visitor experience. Best of all, less work usually translates into lower costs.

There are many other variations on the above example likely to be attractive to businesses considering a solution like VisualVisitor. A free trial is available, which may be the “right way” to determine whether or not this service fits with the needs of your specific business.

We have clients actively using the service, and can attest to its value.

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved