August 2010
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Month August 2010

Bond market discounting Nokia's credit rating

The world’s largest mobile-phone maker’s bonds are trading as if Nokia’s rating has been cut, with spreads over government debt widening as the company strives to develop devices with the same mass appeal as the iPhone, Research In Motion Ltd.’s BlackBerry and devices based on Google Inc.’s Android software.

There’s a “significant amount of risk overall with Nokia’s business model,” said Scott Shiffman, who directs bond research at Chapdelaine Credit Partners in New York. “Credit spreads should move wider over time and ratings will continue to move lower. We think the ratings agencies will play catch-up to the business deterioration.”

via Nokia’s Credit Rating in Jeopardy on Falling Profit, Bonds Show – Bloomberg.

Management response continues to be that Nokia is “by a very wide margin the largest supplier of smartphones and small computers in the world.”

Microsoft's billion dollar bonfire

Microsoft executives told Goldberg during a recent visit to company headquarters that the company, carriers, and manufacturing partners, would spend “billions” of dollars in the first year on marketing and development of Windows Phone 7. Another source estimated a $1 billion price tag for the launch, with half of it going to marketing.

via AppleInsider | Microsoft to spend over $500m to catch up to iPhone, Android.

Note the scale of spending here.  The number quoted is twice Apple’s yearly ad budget, for all its products.

$500 million is roughly the equivalent of Apple’s entire advertising budget for its 2009 fiscal year. In its 2009 Form 10-K filing to the SEC, the Cupertino, Calif., company listed $501 million in advertising expenses. Microsoft’s fiscal 2009 advertising budget was $1.4 billion.

But beside the unrepentant destruction of Microsoft’s shareholder wealth, one other thing jumps out at me: why are the operators and vendors going along with this?

300k apps have been approved for the iTunes app store

Following up on the 300k app prediction:

  • Total Apps Approved: 301316
  • Total Available Apps: 252076
  • Total Available iPhone Apps: 239210
  • Total Available iPad Apps: 23742

via iPad Apps, iPhone Apps, Deals and Discovery at App Shopper – Popular Recent Changes.

Note the near 24k apps for iPad.

Announcing Asymco Data Downloads

Much of what is published here relies on data, lots of data. It’s important that data be published along with conclusions, but data in spreadsheets is often difficult to read. Spreadsheets are not “productized” so they are hard to explain and therefore impossible to share.

However, I am considering sharing the data I have in a format that is easier to read than a spreadsheet but richer than a screen shot of a chart.

To that end I’ve begun experimenting with a solution based on a service called Roambi. Interested readers can download Asymco authored “roambi” files which I call ADDs (Asymco Data Downloads) will display rich data sets on iOS devices. These representations are interactive and easy on the eyes.

Rather than bore with details, the following images should be sufficiently descriptive.

The End of Management – WSJ.com

When I asked members of The Wall Street Journal’s CEO Council, a group of chief executives who meet each year to deliberate on issues of public interest, to name the most influential business book they had read, many cited Clayton Christensen’s “The Innovator’s Dilemma.” That book documents how market-leading companies have missed game-changing transformations in industry after industry—computers (mainframes to PCs), telephony (landline to mobile), photography (film to digital), stock markets (floor to online)—not because of “bad” management, but because they followed the dictates of “good” management. They listened closely to their customers. They carefully studied market trends. They allocated capital to the innovations that promised the largest returns. And in the process, they missed disruptive innovations that opened up new customers and markets for lower-margin, blockbuster products.

via The End of Management – WSJ.com.

Here is the book: http://amzn.to/9jycyp

The Android SKU paradox

Next month will be the 24th since the first Android device launched in October 2008. The G1 was followed by another HTC device in February of 2010 and a few others in the spring. The summer of ’09 showed a steady release of up to four new phones every month. Since then the number of Android phone stock keeping units (SKUs, uniquely identifiable stockable products) increased dramatically, with the release rate increasing to 26 per month during July of this year (source: pdadb.net).

Altogether, there are have been

Mobile devices overtaking PCs

Smartphones, or Mobile devices, will soon become the dominant computing platform for humanity and supplant the PC which has reigned since Apple ignited the Personal Computer revolution in the late 1970’s.

via The numbers don’t lie: Mobile devices overtaking PCs – Google 24/7 – Fortune Tech.

I guess Gartner didn’t get the memo. By keeping the two categories separate, it implies no overlap in consumption and hence no need to worry if you’re in the PC business.

Motorola's Android 2.2 Rollout: What a Mess – PCWorld

From a comment in the article below:

I installed HTC’s leaked version of 2.2 on my incredible last month. It has been noticeably faster, has better battery life, and the extra features are nice. As expected, Verizon put a lock down on the wifi tethering feature, and if I want to use it I have to pay an ADDITIONAL $25/month, which is completely ridiculous. Luckily, my phone has been rooted (it was the only way to get froyo on there) and I can use a number of FREE wifi tethering applications that don’t cost anything extra per month either.

It’s pretty sad that the only way to enjoy an android phone is to hack the crap out of it, and doing so requires relative technical expertise.

via Motorola’s Android 2.2 Rollout: What a Mess – PCWorld.

Reminds me of Windows Mobile in another way: the only real fans were those who could play with cooked ROMs. Conversely, imagine if the only iPhone fans were those who jailbroke/unlocked iPhones.

See also: The Android abdication

Microsoft CIO on Android vs. iPhone: Windows Phone will dominate

The OS market in the mobile space is dominated by other players. Is that a cause of worry?

I think it’s a temporary issue. I don’t put a lot of face and snapshot and time into what is going on. On a global basis, I see what is growing and what is shrinking. Text messaging is the fastest-growing on simple phones part of the mobile market. That’s where growth is. The smart phone part of the market, or the premium market, is in the downward part of the market. It will not be there for a long time in the future.

People want something that’s simple. The design goal for the Windows Phone 7 is that with rich experience you get simple stuff easily. Great keyboard or touch or both – so you can have that. It is too early to talk about dominating, but I’m excited about it. Android coming into the market says there is room for more innovation and we see ourselves playing a role in that space. People talked about the iPhone and thought that was the end of the world for OS. Windows Phone 7 will prove there is more room for innovation.

via Q&A: Tony Scott, Chief Information Officer, Microsoft.

In other words, Android’s entry in the market and remarkable growth, there is room for Windows Phone. And because Windows Phone is easy to use and has a keyboard and touch it will have a chance at dominating.

Microsoft’s enthusiasm for yet another mobile platform joining the fray (along with iOS, Android, RIM, Symbian, Windows Mobile, Meego, various sundry Linux and Bada) is not just delusion. I’m sure that they gathered positive feedback from operators. By this time next year there will be dozens of Windows Phone devices on the market. After all, Windows Mobile attracted 1700 licenses.

The Android abdication

When I wrote about Android’s pursuit of the biggest losers, I made the explicit claim, backed by data, that Android was most attractive to device vendors who were in financial distress. Android is a lifeline to sustain failing business models. But underlying that claim was the more sinister implication that Android is sustaining to the incumbent operator business models. That means that Android is subject to operator manipulation and its market access as well as those of competing platforms will be throttled to maintain control.

The article below makes an even stronger case.

As a result, we now have a situation where the U.S. telecoms are reconsolidating their power and putting customers at a disadvantage. And, their empowering factor is Android. The carriers and handset makers can do anything they want with it. Unfortunately, that now includes loading lots of their own crapware onto these Android devices, using marketing schemes that confuse buyers (see the Samsung Galaxy S), and nickle-and-diming customers with added fees to run certain apps such as tethering, GPS navigation, and mobile video.

The dirty little secret about Google Android | Tech Sanity Check | TechRepublic.com.

I would not say that Android is enabling the consolidation of operator power. I would say that operator power never wavered.

The article concludes:

Despite the ugly truth that Android is enabling the U.S. wireless carriers to exert too much control over the devices and keep the U.S. mobile market in a balkanized state of affairs, Android remains the antithesis of the closed Apple ecosystem that drives the iPhone and so it’s still very attractive to a lot of technologists and business professionals.

But, the consequence of not putting any walls around your product is that both the good guys and the bad guys can do anything they want with it. And for Android, that means that it’s being manipulated, modified, and maimed by companies that care more about preserving their old business models than empowering people with the next great wave of computing devices.

That sounds about right.