During the week of April 1, 2013 we read a couple of curious wall street analyst observations. The first of these appeared on Tuesday morning, April 2, 2013. An analyst from Goldman Sachs, Bill Shope, downgraded Hewlett Packard from a “hold” to a “sell”.
We don’t subscribe to Goldman Sachs’ analyst reports. But from what we read of Mr. Shope’s report from the blogs of other commentators (who, presumably, do have access to the full report), the current popular theme is, once again, the PC sales slowdown versus the sales figures for what we refer to as “small mobile devices”.
We think the sales slowdown is overblown. We also think wall street analysts over estimate the importance of revenue growth as an indicator of the vitality of technology businesses. We point to IBM and Microsoft as examples of healthy mature businesses, with massive revenue streams. Neither company is growing anywhere near as fast as Apple, Amazon or Salesforce.com. But the quarter after quarter profit numbers for both companies continue to be very impressive. Will these “legacy” tech businesses just drop off the face of the earth anytime soon? We don’t think so. But we do think either Microsoft, IBM, Oracle, or EMC will eventually get it right and start to claim market share from the revenue high flyers on their own ethereal turf in the cloud.
The second report we questioned appeared on Wednesday afternoon, April 3, 2013 in the online Wall Street Journal. In an article titled Apps Fall Far From Apple’s Tree. The author of this article, Mr. Rolfe Winkler cites data from “app charts”, which he characterizes, aptly, as “The Billboard of the mobile era” pointing to games as the most popular “apps” on smart phones.
We just called Mr. Winkler’s analogy to “Billboard” (presumably he means the trade publication of the entertainment industry) “apt”. We don’t think statistics on the popularity of games on smart phones provide any indicators, whatsoever, about the presumed popularity of desktop computing applications. But these statistics are certainly useful as a basis of comparing sales of television sets, game terminals, to sales of smart phones and tablets (please note, we do think tablets more “aptly” correlate to desktop computers. These mobile devices have a big toehold in the consumer entertainment market, too). Therefore, we ask why Mr. Winkler’s article included a mention ” . . .that smartphones have become the dominant computing device. Last year, nearly 700 million of them were shipped world-wide, according to Strategy Analytics, a research firm. That was nearly double IDC’s estimate for PC shipments of 352 million. As recently as 2010, PCs were still the bigger market.”
We disagree with Mr. Winkler’s conclusion and hope other readers will do the same. The popularity of games on smart phones have nothing to do with enterprise businesses using PCs. The comparisons in his article between smart phones as the world’s most popular computing device and PCs do not make sense.
© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved