28
Nov

A bump on the road to consumer tech heaven worth a mention

Anyone with a keen interest in consumer computer technology should quickly learn to study, carefully, the gap between what a manufacturer claims about a product and what is actually experienced. The point of the exercise is to develop a sober view about the likely performance of products they may introduce in the future, and, subsequently to at least save some time, if not some money.

Here’s a case in point:

  1. Solid State Drives (SSDs) and PCs with a Redundant Array of Independent Disks (RAID) managed by Intel Matrix Storage Manager

Consumer Grade SSDs and PC Software RAIDs don’t mix

We own a Dell T1500 Workstation, with 2 80 GB Samsung Drives in a RAID 0 configuration. The holidays are approaching. We thought we’d give ourselves a present and swap out the 2 Samsung Drives in this computer for a pair of Crucial (consumer brand for Micron) 500GB SSDs. This swap looked great on paper. We checked with Microsoft to ensure we wouldn’t experience problems backing up the current RAID architecture and restoring it to a RAID 1 (which would give us a Disaster Recovery option should one of the drives fail). We also checked with Dell (actually we downloaded their version of the PC Doctor diagnostic tool) and determined the BIOS for the T1500 was absolutely current.

But once we put our cash on the line and paid over $420 for the pair of Crucial SSDs, and physically received them, we learned the configuration wasn’t going to work. Crucial support let us know the consumer grade SSDs don’t get along well with the Intel Matrix Storage Manager at all, regardless of whether the SSDs are configured as a RAID or not.

Readers thinking of making a similar effort to “upgrade” older computers are advised to think otherwise. The only option, for the record, is to purchase the commercial grade version of these SSDs, which carry the Micron brand. But we can’t claim to have verified the accuracy of this option. The fact is we can’t reach Micron to confirm our assumption (in 2014 pre-sales support for a commodity product like SSDs is, apparently, not available from Micron).

Does all of the above give this writer cause for concern? Certainly. So we are thinking very carefully about how we will proceed on the renovation we have in mind, and may just end up purchasing a pair of old fashioned spindle driven WD hard disks (1 TB each) and simply configure them into the RAID we are after.

What’s the bottom line impact on the manufacturer vis a vis the consumer market? It would be better for the manufacturer’s marketing communication content to speak to the kind of configuration we had in mind, so consumers, like us, would have saved the time and thought otherwise before paying for the SSDs.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

14
Nov

Any meaningful feature gap between high end and low end smartphones has been obliterated

Consumer markets for smartphones no longer present any gap, whatsoever, between high end and low end entrants as regard high value features. With this gap obliterated, industry players will do well to implement product marketing strategies with a proven effectiveness in pure commodity markets or else risk extinction. This means product marketers should emphasize methods of lowering the cost of manufacture, and secondary markets to prop up revenue expectations while closely scrutinizing new model planning.

Here’s a case in point. We just purchased, outright, an LG Optimus L90 Smartphone from our wireless data provider, T-Mobile. Our total cost to acquire this device amounted to a one-time charge of $99.99. We should also note we maintain 2 Nokia Lumia 925s, which we purchased from T-Mobile at a cost of approximately $600.00, each. We are still paying, monthly, for each of the Lumias and will likely continue to do so for at least another few months.

But with an Android KitKat O/S, and a very extensive set of app options, we can’t find anything we’ve given away by opting to purchase the LG-D415 instead of a new Lumia, or even an iPhone 6. Sure the Lumia and the iPhone 6 offer many more powerful features than our LG Optimus L90, but we have no need for them. In this writer’s opinion, when features reach a usefulness plateau as they have in the smartphone market, consumers have zero incentive to migrate up the ladder to more expensive versions of the same commodity.

Leading manufacturers of smartphones are already exhibiting a set of strategic moves befitting general agreement about the nature of the market as, in late 2014, entirely commodity driven. Accordingly, Apple is talking about producing a gold version of its iPhone 6, which is already available for custom monogramming. This move makes sense for a manufacturer with a leading product whose principal attractiveness is its position as a status symbol for a highly concentrated set of consumers habituated on only buying the leading product in the category.

At the low end manufacturers like Samsung are feeling the pain as competitors with a substantially lower cost of manufacturing, for example, Xiaomi, seize market share. For this segment of the market, app stores look to be an oasis in a profit desert. No wonder Microsoft is racing to win a place on the radar of app developers as its best hope to capitalize on the smartphone market.

Look for further consolidation in this market as manufacturers either drop out, or consumer rivals.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

3
Oct

iPhone 6 and iPhone 6 Plus consumers are not likely to maintain an insatiable appetite for these devices

On Thursday, September 25, 2014, Barrons ran an article by Tiernan Ray. This short piece, Apple: ‘Bendgate’ Irrational, Says Cantor; Apple Comments via CNBC, which was included in Ray’s Tech Trader daily feature amounted to a quote from an analyst at Cantor Fitzgerald, Brian White, along with some comments from Ray.

White’s quote speaks to the current controversy about these new smart phones, and points to what he refers to as an “insatiable appetite” for these devices on the part of Chinese consumers. No product has ever, or, in this writer’s opinion, will ever stimulate insatiable consumer appetite. Anyone with a keen interest in the fortunes of these newest smart phones from Apple should maintain a skeptical stance about the usefulness of any comments like White’s.

If readers are skeptical about the veracity of our take on White’s comment, we simply point to the fate of Apple’s stock in market activity on Thursday, September 25, 2014. The stock dropped over 3% precisely around the set of concerns White calls “irrational”. If these concerns are, in fact, “irrational”, then why the deep dive on Apple’s stock price?

In this writer’s opinion, consumer concerns about these new smart phones are not irrational. As we have published earlier in this blog, and some other people (who we consider to be astute) have also written, the price of these devices will fall out of the range of the “average” smart phone consumer by a substantial amount. So, with the very high end of the consumer market not only targeted for these products, but, even more, already rapidly consuming them, the market reaction is entirely understandable.

Folks shopping at Burberry’s expect perfection. Sure they are willing to pay for it, but, in return, they are the most demanding of consumers. So market dissatisfaction with Apple’s mistakes and, perhaps, PERCEIVED trickery (why would an affluent consumer throw away a perfectly functional iPhone, albeit a previous model, for a slick new entry, which, nevertheless is “bendable”), should be entirely acceptable.

Further, an analyst who looks at market reaction and attempts to DENY its legitimacy is an analyst whose words will likely receive a lot of careful scrutiny.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

2
Oct

Has Samsung fallen victim to its own product marketing strategy?

Once the leading manufacturer of smart mobile devices (based on volume of units sold), Samsung looks to have fallen on some tough times. But is the stall in its revenue momentum the result of its own product marketing strategy? In this writer’s opinion the answer is yes.

Lots of analysts follow Samsung. The trend in market commentary about this manufacturer is to 1) remark on deceleration in global sales of Galaxy smart phones, and tablets, and 2) to posit notions as to how Samsung is attempting to remedy the slower sales growth based upon public announcements of changes. The latest example of 2) is an article written by Ming-Jeong Lee, which appeared in the online Wall Street Journal on September 24, 2014. The title of this piece is Samsung Drains Software Power from Mobile. Lee interprets Samsung’s decision “to move a number of software engineers out of its mobile unit to other parts of the company” as an indicator its decision to retreat, to some extent, from the competition for smart mobile devices, presumably based on the above mentioned decelerating revenue condition.

But readers may want to consider some other points about Samsung’s decision to move software personnel elsewhere. We maintain a Samsung Galaxy Note 2.1, 10.1. We find the software to be very much below our standard for suitable usability. There are many annoying features of the software, too many, in fact, to mention here. So from our perspective, this decision may actually be good news, and a pointer to Samsung finally deciding to make some long overdue personnel changes in a team responsible for a large segment of how consumers actually engage with Samsung tablets and smart phones.

This writer points to other reasons for Samsung’s current slower pace of revenue growth for these products. The comparatively clumsy user interface (which is also cluttered with overlapping features) pales as a point of weakness when compared to Samsung’s hyper pace of introducing new product, and, thereby, rendering products already consumed obsolete. Again we point back to our own purchase and must note strong dissatisfaction with the paltry resale value of our tablet, should we decide to sell it, and the lack of new software enhancements to the user interface, etc.

We don’t think it’s credible to assume mid market consumers of smart mobile devices will just continue to purchase new models, year after year. Granted, Samsung is not the only advocate this tacit product marketing assumption to cannibalize a current customer base for new product sales. Android certainly has a seat at this table as, this writer would argue, does Apple. Nevertheless, Samsung may have a highly valuable opportunity to recharge revenue growth should they 1) clean up the clunky and ineffective user interface (perhaps when they launch Tizen, which should be a free-of-charge upgrade for any/all existing Samsung customers) and, 2) come to market (after serious premarketing) with a set of new features consumers truly find useful.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

26
Sep

Global Smart Phone Market, at the Low End Trumps the High End for the US, Western Europe and Japan

On Friday, September 19, 2014, Curt Prins (a mobile strategist) posted his thoughts, which were distributed by LinkedIn, on the comparative impact of the launch of the Android One, in India to Apple’s recent, highly publicized debut of the iPhone 6. Prins titled his post Apple just lost the global smartphone war to Google. This writer has written several posts to this blog to voice similar opinions about whether or not all of the media accolades about Apple’s new smart phones really amounts to much, at all. My concern is whether or not Apple will be able to maintain its enormous market capitalization just on the appetite of consumers at the very high end of the market, or not.

But Prins is to be commended for supporting his contention with metrics. I didn’t take the time to put together supporting data for my position, choosing, rather, to articulate it based on my gut instinct about markets and where all the frivolity surrounding the September 9, launch of the new iPhones might be headed.

A quick look at the Android One home page exposes some additional information worth noting: Samsung is noticeably absent from the set of OEMs committed to manufacturing the devices. The same set does include several businesses located in India, including Karbonn, and LavaOne to name just two.

The features of the device can be reviewed on the Android One web page. The quad core processor, all day battery life, and dual SIMs are more typical of smart phones targeted to the high end of the market than the low end. So the $105.00 price Prins claims for the Android One represents a significant move, on the part of Google and its Android OEMs, to lower the cost of entry for emerging markets (with India being the first) to the world of mobile online computing. Further, the actual consumer costs Prins presents, in contrast, for the iPhone 6, etc., lend accuracy to my own comments, earlier this week, on the actual street price for the iPhone 6, “after the emperor has shed his clothes (meaning the carrier subsidies applied to create an artificial consumer price of $199.00)”. Is yet another Apple smart phone, unlocked, worth $649.00? After the rush of the last two weeks, I don’t think so.

The Android One is also some bad news for Microsoft’s efforts to introduce low cost smart phones to the same markets. Ditto for Blackberry. But the real story, likely in the making, is precisely the change in leadership for the smart phone industry Prins alludes to in his post.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

15
Jul

Is Apple Poised to Fare Best on the Smart Phone Plateau?

Samsung’s earnings guidance for the second quarter, 2014 generally disappointed analysts and stimulated some broad downward revisions in likely global market consumption of high end smart phones and tablets. Some of the downward direction indicated by Samsung’s guidance was also attributed to stiffer competition for the low end of these markets from Chinese manufacturers.

Regardless of how one reacts to this guidance announcement, it should be clear global market appetite for smart phones, and, perhaps, tablets, has been generally satisfied. In the opinion of this writer, the slowdown can be attributed to feature exhaustion for the current form factor and chip sets. Consumers have bought up what they need. When hardware OEMs and their ISV partners finally come to market with solutions for the remaining areas of burning need — richer voice feature sets enabling more utility for mobile consumers, and true integration within mobile transportation beyond a peripheral to be plugged in, to name but two of these — then high velocity sales can be assumed to occur.

But for now these features are not available. Apple looks poised to perform the best in these kind of conditions. iOS devices sit at the very top of the smart phone heap. As many analysts have written, despite a much smaller market share than the combined reach of Google’s Android partners, including Samsung, Apple just makes much more money in the market and enjoys much higher margins than its competitors.

Two recent hires: Angela Ahrendts (late of Burberrys) to head the Apple Store operation, and Patrick Pruniaux (formerly the Vice President of sales at Tag Heuer) provide solid support for the notion Cupertino plans on protecting its position as the name brand at the very top of the smart phone market.

Once a commodity technology market plateaus, in this writer’s opinion, brand recognition, price, and reputation all trump technical features for the top cut of consumers. Apple does not look to be giving back any territory in this arena anytime soon.

On the other hand, Microsoft has demonstrated some of the voice features likely to stir up consumer demand (“Cortana”). But the expected release of Windows Phone 8.1 has gotten off track, so consumers have yet to experience, first hand, the improvements Cortana appears capable of delivering. In the meantime, other analysts claim Windows Phone is losing market share globally. As to the Surface Pro 3, this device is positioned as a better solution for the laptop market, rather than a tablet killer.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

14
Jul

Microsoft Starts Selling the First Smart Phone With Its Windows Phone 8.1 Operating System in Europe – Lumia 930

On July 7, 2014, Microsoft® announced it would begin selling the first smart phone built on its Windows 8.1 O/S – the Lumia 930 — in European markets. The announcement on Microsoft’s web site was written by Adam Fraser and titled Lumia 930: on sale this week.

There are a few points about this smart phone worth noting:

  • The hardware includes the same Qualcomm Snapdragon processor powering the Lumia 925
  • a 20 MP Carl Zeiss Lens is included with this device
  • Nokia’s SensorCore technology is incorporated into the Lumia 930

Nokia’s SensorCore technology purports to provide App developers with a better method of obtaining sensor data, with significantly lower demand on smart phone batteries. Microsoft has already developed and released Bing Health and Fitness, which is an example of an App designed to exploit the benefit of the SensorCore technology. Anyone choosing to use this App has the option of reposing the information collected by the App in yet another process — Microsoft’s HealthVault.

HealthVault is designed to act as a hub to networks of hardware (device) and software (Apps) ISVs. A quick review of some of the HealthVault partners revealed some prominent brands, including 148 App ISVs. Prominent among these are:

  • FitBit
  • New York Presbyterian Hospital
  • CVS Caremark
  • Quest Diagnostics
  • Aetna
  • Beth Israel Deaconess Medical Centerr
  • American Cancer Society
  • American Diabetes Association
  • Managed Health Services for Indiana
  • and Buckeye Community Health Plan

On the hardware site, the HealthVault lists 233 devices. Hardware ISVs include:

  • A&D Medical
  • Bayer
  • BodyTel
  • Carematix
  • FitBit
  • Homedics
  • Sinovo
  • and Walgreens

But the new features of the Lumia 930 do not stop with SensorCore. Windows 8.1 also includes “Cortana”, Microsoft’s latest version of its speech technology. A lot has been written about “Cortana” already, but the important takeaway is this example of audible computing has already demonstrated the promise of a higher level of usefulness than its competitors, which, one would hope, is promising as a method of transitioning smart phone consumers from touch screen commands to the kind of hands free commands required to render mobile computing safer when consumers are located in vehicles.

With the Lumia 930 released for European markets, perhaps it won’t be long before Windows Phone 8.0 consumers in the U.S. will receive an upgrade to the new O/S.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

2
Jul

Notes on the Google I/O, 2014, Keynote Presentation

Sundar Pichai, Senior Vice President Android, Chrome and Apps at Google presented the Keynote at Google I/O, 2014. Perhaps the most important piece of information included in Mr. Pichai’s remarks amounted to an enormous increase in what he referred to as “momentum in mobile”, which, he claims, is now propelled by over 1 billion active (30 day active) Android O/S users. In turn, the rate at which this momentum has been building over the last 3 years amounts to doubling, each year. Regardless of one’s opinion of the business value of the mobile market segment connected via this operating system, simply the size of it points to inescapable opportunity, for someone, at some point in time.

As would befit an executive at an online advertising business, Mr. Pichai followed up on this announcement of enormous growth, with some related announcements depicting the absolutely enormous extent of opportunity for advertising represented by recurring points of human engagement with this mobile technology:

  • 20 Billion Daily Text Messages
  • 93 Million selfies taken each day via Android mobile devices
  • an estimated 100 Billion daily checks, by humans, on these devices

Three themes were woven throughout the opening of the Keynote:

  1. Perhaps no other mobile O/S has done more to develop a truly global market than Android. Mr. Pichai’s opened with references to international locations where developers unable to travel to the event were gathered, locally, to attended it. Then, later in his remarks, he made reference to apps built by Android ISVs performing “mission-critical” roles in developing markets; for example, a money transfer and “Micro-financing” App for consumers located in Kenya. Mr. Pichai claimed “40% of Kenya’s GDP” actually flows through this App
  2. Android ISVs are, perhaps, best positioned to capitalize on the opportunity, near term, represented by the enormous growth in the horizontal reach of the global Android mobile user market. While this writer maintains a skeptical position on Google’s ability to monetize the market potential via online advertising methods, he doesn’t dispute the substantial worth of the same market for ISVs, who are, by no means, constrained to simply offering promotional systems to these consumers.
  3. But the great majority of all transactions (the writer is hedging here, as the Amazon and Microsoft Android implementations do not appear to support App transactions through Google’s Play Store) for these Android Apps will flow through Google Play. Anyone following Google will want to factor in some estimate of positive impact on their bottom line

Where can readers obtain more opinion on the impact these statistics and themes may have on Google’s own performance? Some early commentary on the event highlighted point 2) and 3), above. Readers interested in this point should take a look at ‘Play” has much in store.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

26
Jun

Blackberry is Turning Around, But at a Slower Pace Than Previously Expected

Blackberry reported on earnings for the first quarter of fy 2015 on Thursday, June 19, 2014. As reported on the MobileWorldLive web site, John Chen, CEO, mentioned a likely return to profitability in fy 2016. But the pace of improvement is much slower than expected, based on management comments from earlier earnings reports.

Does the gap between the timeline Mr. Chen presented back in December, 2013, as part of his presentation to investors, and his latest pronouncements present a challenge for anyone following the performance of this business? Back then, many proponents of Mr. Chen’s ascendancy to the CEO position at Blackberry spoke positively of his past successful experience turning around Sybase, and seemed to look forward, eagerly to the second phase of his plan — marketing BlackBerry’s Messenger service to the market for enterprise mobile device management (MDM) software.

But, as I wrote earlier to this blog, Gartner has since released its Magic Quadrant for Enterprise MDM. Unfortunately, BlackBerry’s BBM is included, simply, as a “niche solution”, and certainly not one of the market leaders, at least according to Gartner.

So we can only conclude the first phase of Mr. Chen’s December, 2013 plan is still in process. Ken Willard, who wrote this article for MobileWorldLive notes “[t]he remainder of sales was made up by hardware (39 per cent) and software & other revenue (7 per cent).” On the other hand, the services business (not a focus of Mr. Chen’s December, 2013 plan) “represented more than half of Q1 turnover (54 per cent).”

In fact, it looks much more likely Mr. Chen will remain deeply engrossed with the challenge of squeezing profitability out of the hardware business at Blackberry for the next few quarters. Mr. Wieland quotes Mr Chen as using an abstraction to describe the pace of BlackBerry’s progress on this objective, “Chen admitted that BlackBerry had still to hit breakeven point on hardware, but added it was getting ‘very close’.” What may be very close for Mr. Chen maybe very far off for investors. Perhaps it is safe to say simply reporting the numbers, and leaving the task of “connecting the dots” to analysts would have been a better approach.

Disclaimer: I liquidated my entire investment in BBRY back in May, 2014

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

20
May

NVIDIA Provides Scant Detail About Tegra Sales for the Latest Quarter

During NVIDIA®‘s Q1 2015 Earnings Conference Call, Mr. Jen-Hsun Huang, Co-founder and CEO, fielded a question presented by Mr. Mike Burton of Brean Capital about the components of the performance of one of the company’s products. Mr. Burton’s question was on the subject of NVIDIA’s Tegra Processor. He asked about the details of the sales performance, by market segment (smart phones, tablets, and automotive) for this product for Q1 2015.

Mr. Huang did not include a lot of specific detail in his answer, which rolled smart phone and tablet customers for this product into a category named “devices”, while automotive customers were presented as a separate group, with a different profit margin.

If NVIDIA management is unwilling to breakout the specific components of the sales performance for Tegra, how does it make sense, if at all, for analysts to project levels of market penetration for it? One may argue the information can be compiled from customer comments about the product. But for every customer reporting information relative to likely purchases of Tegra processors (for example, Microsoft’s rumored decision to replace Tegra with Qualcomm’s SnapDragon processor for a new model of the Surface tablet), there are many other customers not reporting anything at all, at least not publicly.

So, in my opinion, forecasting the performance of Tegra in the tablet market, at least for the latest reported quarter, and for every quarter, going forward, where management does not provide specific sales detail, will be a very difficult task. The end result, in turn, will not be credible, at least as I see it.

Are sales of Tegra processors to mobile customers in the tablet and smart phone markets an important indicator of NVIDIA’s future performance? Perhaps, if one considers the potential market size represented by these mobile customers to be dynamic, and expansive. In contrast, the same position may consider sales of NVIDIA’s hardware GPUs to the PC gaming market less significant, and less of a reliable forward looking indicator as the result of the comparatively static, and contracting nature of the global market for PCs.

But, in my opinion, NVIDIA’s very strong performance in the latter category for the quarter, when put together with their well attended developer conference for their hardware GPUs, is more of a useful indicator of the health of the business.

Nevertheless, what management does with the revenue, and the rationale behind these actions, is, unfortunately, another subject.

Disclaimer: I recently completely closed a long position in NVIDIA

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved