Lot of people have said a lot of things about Jobs. In many articles and web forums, there is a section of people that consider Jobs to be in the same league as Edison, Henry Ford, Walt Disney, etc.
However, I feel Jobs is absolutely streets ahead of anyone else - even the visionaries named above.
The thing is, Edison, Henry Ford, and Walt Disney operated in an era where the state of advancement of technology and business was insignificant. There were no entrenched competitors to fight against, no barriers to success, etc. It was pretty much a given that there would be a dozen companies that would be pathbreaking successes. For the simple reason that pretty much anything anyone did was pathbreaking.
Jobs and Apple on the other hand have succeeded in a totally different era. Where the pace of innovation is mindboggling. Where change is measured in years, not decades. Where even something as revolutionary as the iPhone was challenged by competing devices within 18 months. And in this competitive environment, Jobs has created and/or reengineered several industries. PC (multiple times!), animation (Pixar), music (again multiple times), retail (pushing the envelope in design, performance metrics, etc), telecom (single handedly changed the industry into a different orbit), movies (from how they are made, to how they are sold), publishing (offering the first credible e-device that gave same experience as physical magazines), manufacturing (unibody) and even basic materials (transparent aluminium!), and even shipping (engraved in China, and shipped to your home, in 3 days, for free!).
He has started from scratch multiple times, and created huge successes. Whether it is the original Apple in 1976, or Next in 1986, or Pixar in 1990, or the second innings at Apple in 1997. For that matter, he has started from scratch in several industries and shaken them up completely. Within 3 years, Apple went from 0% to over 50% of the profits of the entire mobile phone industry!
In each one of these areas, Apple has succeeded in the face of exceptionally strong competition. Almost every single time Apple came up with a radical product, the existing players have ridiculed it as a toy or a gimmick.
I dont think there is any parallel anywhere in the world, in any industry, of a company that has consistently challenged the status quo and succeeded.
Thursday, August 25, 2011
Monday, August 15, 2011
Google's desperate bid
My previous post dealt with the impending downfall of Android. Even if you ignore all the legal issues of Android, there is one thing you cannot ignore. Most Android licensees are either barely breaking even, or even losing money on their Android strategy. Despite whatever happens on the legal front, Android is always going to be about the latest greatest handset that will be released next. With models getting outdated so soon, it is tough to make money. Especially if your primary sales strategy is to give away a phone for every phone sold!
There is speculation in the blogosphere about this being a ploy by Google to acquire patents to defend themselves. And that with these 25000 odd patents, Google can defend Android better.
Why that explanation doesn't make any sense
- Whatever ammo Motorola had, they have already fired at Apple. These two have been suing each other for over a year now. Very unlikely that Motorola either forgot some patents or held them back for a later day.
- Most of Motorola's patents have either passed the 20 year protection limit or have been already incorporated into standards that Apple can license on FRAND terms. So these 25000 patents really boil down to a few thousand at most.
- Over last 6 years Motorola has been battling for survival. Their hey day was in the 90's. It is very likely that most of Motorola's patents cover 2G and 3G. And not so much on 4G. We are rapidly moving to 4G. Makes these patents less worthy.
The real reason for the bid
As Android was getting dicey, Motorola realized they were in trouble. They were making losses, so could not really spend massive money to build an alternative OS. And even if they did build an alternate OS, it would not be easy competing against Apple with a fledgling OS, zero marketshare and no ecosystem. So they had to do something drastic and quick.
Over last few months, Motorola has been seeking licensing from other Android partners. They were also threatening to take these vendors to court. This is the sort of civil war that could have hurt Android even more than the legal issues. Google had absolutely no choice but to stop Motorola from suing.
It is clear from the breakup fee on this deal that this is Motorola's deal all the way. If Google walks away, they owe Motorola $2.5B, whereas Motorola pays only $375M if they walk away.
Why this deal is not of much use
It is difficult to say whether or not this deal will have any impact on Apple's suits against Android makers. However one thing is absolutely clear. This deal has zero impact on Oracle. None of Motorola's patents have any connection to Oracle. The biggest threat to Android today comes from Oracle, especially with all the smoking gun emails that the discovery process has unearthed. It has become obvious that if Oracle wins, they can easily get triple damages. This will hurt Google big for all devices already sold plus all devices sold going forward.
Even if the patents are worth something to Google, they have paid almost 5 times what Apple paid ($2.6 B) for the Nortel patents. In fact it is very likely that this $12.5B might have covered any potential licensing costs of all Android licensees for the next 2-3 years which would have given Google enough time to work around the Java issues, etc.
And this potentially opens Google to direct legal liability from Android. If Android devices are found to infringe patents of Microsoft or Apple, Google could have exposed itself to law suits.
And the final nail in Android's coffin...
Microsoft already has Nokia tied up to use Windows Phone 7. They are finding it difficult to get other partners for WP7. Here is a golden opportunity for Microsoft - they can spend (say) $15B to get one of the most prominent licensees of Android and convert them to WP7. And in the process, they can get a massive arsenal of patents that Motorola was anyway planning to use against other Android licensees! This would nudge more Android licensees away from Android and towards WP7! And they can at least force Google to up the bid significantly higher, and make it even more painful than it already is.
Google has already gone on the record that defending Android is worth spending $12.5B on - if Microsoft ends up buying Motorola, the impact on Google would be even worse than the present situation. The best part is that Microsoft does not even need to succeed in this bid - Google will have no choice but to raise their bid for Motorola - they cannot wait for the DoJ to shoot down Microsoft's bid.
The benefit to Microsoft is actually significantly more than the benefit to Google - Google already is a winner, and is looking to defend its position - Microsoft on the other hand has lost massively in mobile, and buying Motorola would be the best way for them to improve their position.
There is speculation in the blogosphere about this being a ploy by Google to acquire patents to defend themselves. And that with these 25000 odd patents, Google can defend Android better.
Why that explanation doesn't make any sense
- Whatever ammo Motorola had, they have already fired at Apple. These two have been suing each other for over a year now. Very unlikely that Motorola either forgot some patents or held them back for a later day.
- Most of Motorola's patents have either passed the 20 year protection limit or have been already incorporated into standards that Apple can license on FRAND terms. So these 25000 patents really boil down to a few thousand at most.
- Over last 6 years Motorola has been battling for survival. Their hey day was in the 90's. It is very likely that most of Motorola's patents cover 2G and 3G. And not so much on 4G. We are rapidly moving to 4G. Makes these patents less worthy.
The real reason for the bid
As Android was getting dicey, Motorola realized they were in trouble. They were making losses, so could not really spend massive money to build an alternative OS. And even if they did build an alternate OS, it would not be easy competing against Apple with a fledgling OS, zero marketshare and no ecosystem. So they had to do something drastic and quick.
Over last few months, Motorola has been seeking licensing from other Android partners. They were also threatening to take these vendors to court. This is the sort of civil war that could have hurt Android even more than the legal issues. Google had absolutely no choice but to stop Motorola from suing.
It is clear from the breakup fee on this deal that this is Motorola's deal all the way. If Google walks away, they owe Motorola $2.5B, whereas Motorola pays only $375M if they walk away.
Why this deal is not of much use
It is difficult to say whether or not this deal will have any impact on Apple's suits against Android makers. However one thing is absolutely clear. This deal has zero impact on Oracle. None of Motorola's patents have any connection to Oracle. The biggest threat to Android today comes from Oracle, especially with all the smoking gun emails that the discovery process has unearthed. It has become obvious that if Oracle wins, they can easily get triple damages. This will hurt Google big for all devices already sold plus all devices sold going forward.
Even if the patents are worth something to Google, they have paid almost 5 times what Apple paid ($2.6 B) for the Nortel patents. In fact it is very likely that this $12.5B might have covered any potential licensing costs of all Android licensees for the next 2-3 years which would have given Google enough time to work around the Java issues, etc.
And this potentially opens Google to direct legal liability from Android. If Android devices are found to infringe patents of Microsoft or Apple, Google could have exposed itself to law suits.
And the final nail in Android's coffin...
Microsoft already has Nokia tied up to use Windows Phone 7. They are finding it difficult to get other partners for WP7. Here is a golden opportunity for Microsoft - they can spend (say) $15B to get one of the most prominent licensees of Android and convert them to WP7. And in the process, they can get a massive arsenal of patents that Motorola was anyway planning to use against other Android licensees! This would nudge more Android licensees away from Android and towards WP7! And they can at least force Google to up the bid significantly higher, and make it even more painful than it already is.
Google has already gone on the record that defending Android is worth spending $12.5B on - if Microsoft ends up buying Motorola, the impact on Google would be even worse than the present situation. The best part is that Microsoft does not even need to succeed in this bid - Google will have no choice but to raise their bid for Motorola - they cannot wait for the DoJ to shoot down Microsoft's bid.
The benefit to Microsoft is actually significantly more than the benefit to Google - Google already is a winner, and is looking to defend its position - Microsoft on the other hand has lost massively in mobile, and buying Motorola would be the best way for them to improve their position.
Friday, August 5, 2011
The Apple Advantage
Either by luck or by design, Apple has created the perfect company for consumer electronics. Because of these advantages, it is difficult for their competition to compete with Apple today, and in the near future as well. Most of these advantages are unique to Apple, and very difficult for the competition to replicate.
- They have a strangle hold on supply of components, giving them very low costs. The really expensive stuff like Flash Memory is shared across most of Apple's product line, giving them extremely good volumes - unmatchable by their competition.
- They are sitting on a massive pile of cash where they earn very low rates of interest. This gives them the power to make strategic moves because the hurdle rate on return on investment is very low. For instance, on the Nortel patents, Apple invested $2.6B. They earn only about $50M as interest on this money - so even if they can make $50M in licensing fees on these patents each year, it is a good deal for Apple - and they can easily make several times this amount each year! They recently prepaid for $4B worth of equipment - if they even get a 2% discount on pricing, it is a par return for Apple - and in reality they can get several times that discount!
- They have invested tons of time and money on things like battery chemistry, materials like Liquid Metal, processes like Unibody construction, Transparent Aluminium (laser thinning used for the battery indicator of the Mac Book line), etc. While their software patents might be violated, these process and product patents are a lot easier to defend. Things like dynamic processor clock speed in the A5, and tight integration between Software and Hardware gives Apple a huge edge in battery life compared to the competition.
- They have an excellent split between design and manufacturing, where they get the best benefits of integration as well as cost savings of outsourcing. They have optimized this so well that they can make custom machines in China and air ship direct to their customers in the US, for free!
- They have a complete ecosystem to add value to their products, so their products are a lot more usable out of the box. Every app purchased from the App Store, and every song or video purchased from the iTunes store has a lock in effect to keep the customer tied to Apple for the future as well.
- They own the distribution chain, right down to the Apple Store and Apple Website, so they keep all the margins inhouse
- They gets millions worth of free advertising, as pretty much every one in the media publishes every small rumor and story about Apple's forthcoming products.
- They have excellent customer satisfaction, because of which people are ready to buy their products sight unseen.
- They usually have just one problem - they cannot make enough of their products to meet demand - which is a good problem to have!
- They have successfully straddled both the luxury market and the mass market, without diluting itself in any way in either market. This allows Apple to have huge volumes and high margins, without depending on a monopoly - which is unique not just in the computer or consumer equipment space, but in any industry.
- They have a strangle hold on supply of components, giving them very low costs. The really expensive stuff like Flash Memory is shared across most of Apple's product line, giving them extremely good volumes - unmatchable by their competition.
- They are sitting on a massive pile of cash where they earn very low rates of interest. This gives them the power to make strategic moves because the hurdle rate on return on investment is very low. For instance, on the Nortel patents, Apple invested $2.6B. They earn only about $50M as interest on this money - so even if they can make $50M in licensing fees on these patents each year, it is a good deal for Apple - and they can easily make several times this amount each year! They recently prepaid for $4B worth of equipment - if they even get a 2% discount on pricing, it is a par return for Apple - and in reality they can get several times that discount!
- They have invested tons of time and money on things like battery chemistry, materials like Liquid Metal, processes like Unibody construction, Transparent Aluminium (laser thinning used for the battery indicator of the Mac Book line), etc. While their software patents might be violated, these process and product patents are a lot easier to defend. Things like dynamic processor clock speed in the A5, and tight integration between Software and Hardware gives Apple a huge edge in battery life compared to the competition.
- They have an excellent split between design and manufacturing, where they get the best benefits of integration as well as cost savings of outsourcing. They have optimized this so well that they can make custom machines in China and air ship direct to their customers in the US, for free!
- They have a complete ecosystem to add value to their products, so their products are a lot more usable out of the box. Every app purchased from the App Store, and every song or video purchased from the iTunes store has a lock in effect to keep the customer tied to Apple for the future as well.
- They own the distribution chain, right down to the Apple Store and Apple Website, so they keep all the margins inhouse
- They gets millions worth of free advertising, as pretty much every one in the media publishes every small rumor and story about Apple's forthcoming products.
- They have excellent customer satisfaction, because of which people are ready to buy their products sight unseen.
- They usually have just one problem - they cannot make enough of their products to meet demand - which is a good problem to have!
- They have successfully straddled both the luxury market and the mass market, without diluting itself in any way in either market. This allows Apple to have huge volumes and high margins, without depending on a monopoly - which is unique not just in the computer or consumer equipment space, but in any industry.
Friday, July 15, 2011
Android - beginning of the end
Yesterday Google was in the news directly and indirectly for multiple reasons. On the positive side, the stock shot up 12% as Google reported record Quarterly Earnings, and over $9B in revenue. However, there were couple of news items that were major negatives as well.
Firstly, a judge of the ITC ruled against HTC in 2 patents - in a complaint that Apple had filed against HTC over a year back. These 2 patents are fundamental to computing in general, and do not just target HTC, but literally every other Android phone maker. Both these patents are crucial to smartphones - so it is unlikely that HTC/Google can work around these patents easily.
But the other news, is possibly much more significant. Oracle filed a notice seeking to depose Larry Page as part of Oracle's law suit against Google. The reasoning Oracle put forth, was that Larry Page led the team that was negotiating with Sun regarding licensing Java for Android, and later on decided to go ahead without a Java license when they realized that it would be quite expensive. If Oracle's claims are true, it opens the door for triple damages - if Oracle can show that Dalvik/Android violate any of Java's patents, they can also show that Google was fully aware of this right in the beginning, but decided to chance its luck and not get a license, just to save costs. This is the sort of willful violation that can cost Google real bad.
Getting a sworn deposition from Larry Page strengthens Oracle's case massively - Larry Page cannot afford to lie about events that he was part of - because the consequences of that would be bad, not just legally, but even in the court of public opinion. Now the only hope for Google is that they can place some sort of procedural obstruction and hope that the judge decides against allowing Oracle to depose Larry Page - or just play innocent victim and drum up support from the open source community.
Also, a few weeks back, Apple was granted the "iPhone patent" - a massive patent covering several of the technologies that made the iPhone unique when it was launched in 2007 (before everyone copied those technologies). This patent has opened Google and its Android partners to significant risk. Even before this patent, HTC agreed to license several OS and smartphone technologies from Microsoft. After this patent was granted, several other companies have agreed to pay Microsoft between $5-$15 as "protection" money - hoping that Microsoft's massive patent pool and its cross licensing deal with Apple back from 1997 would protect them from Apple.
However, it is dubious whether Apple's cross licensing deal with Microsoft covers iPhone patents. The terms of that deal covers all past technologies, and going forward 5 years. So very likely that the iPhone patents are not covered by that deal. Secondly, even if the iPhone patents are covered, it is extremely unlikely that Microsoft would have the rights to sub-license Apple's technology. So in all likelihood, Apple could still go after these companies for violating iPhone technologies.
Google has made it a habit of skating on thin ice when it comes to IP/copyright issues. Whether with respect to Google Books, or Google News, or Youtube, or Dalvik or WebM, Google has always paid scant regard to the underlying IP issues. Even the recent launch of Google Music subscriptions went ahead without the approval of the music industry. At some point, such behavior would have consequences, and it looks like the time has come.
Google could have protected itself well if they had succeeded in buying Nortel's patents. However, they failed on two counts - on the one hand, they could not stop Apple from consolidating all the anti-Android forces into a formidable coalition, and more importantly, they could not forge a coalition of their Android partners to fight against Apple's coalition. Even Sony and Ericcson, who are Android partners, decided to team up with Apple rather than Google.
Not just Sony Ericsson, other Android partners are also showing worrying signs over Android. Motorola is rumored to be working on an secret project to come up with an alternative to Android. Samsung, the most important Android licensee is already hedging its bets on Android with its Bada OS. Even the geek/developer community has become frustrated with Android - for small developers, making money from just ads is proving to be difficult - and the combination of piracy, and the ease with which Ads can be blocked (just a simple change to DNS servers can block all ads on Android), makes it difficult to make money on Android Apps. The cost of building for Android is also relatively high, because of fragmentation. Also, despite ever increasing activations/day, it is becoming clear that only the top 10% or so of Android phones have the ability to run complex apps. Most of the Android phones actually cannot run complex games, etc. So even though Android has massive marketshare, the addressable part of the market is much lesser than that for iOS.
Back in the nineties and early noughties, Microsoft was the common enemy for all IT companies - and companies like Sun, IBM, Google, Oracle, banded together to support open source initiatives to fight this common enemy. Today, it has become obvious that Google is the common enemy - they have even managed to bring Apple, Microsoft and RIM into the same bed, something that was unthinkable even 5 years back!
Firstly, a judge of the ITC ruled against HTC in 2 patents - in a complaint that Apple had filed against HTC over a year back. These 2 patents are fundamental to computing in general, and do not just target HTC, but literally every other Android phone maker. Both these patents are crucial to smartphones - so it is unlikely that HTC/Google can work around these patents easily.
But the other news, is possibly much more significant. Oracle filed a notice seeking to depose Larry Page as part of Oracle's law suit against Google. The reasoning Oracle put forth, was that Larry Page led the team that was negotiating with Sun regarding licensing Java for Android, and later on decided to go ahead without a Java license when they realized that it would be quite expensive. If Oracle's claims are true, it opens the door for triple damages - if Oracle can show that Dalvik/Android violate any of Java's patents, they can also show that Google was fully aware of this right in the beginning, but decided to chance its luck and not get a license, just to save costs. This is the sort of willful violation that can cost Google real bad.
Getting a sworn deposition from Larry Page strengthens Oracle's case massively - Larry Page cannot afford to lie about events that he was part of - because the consequences of that would be bad, not just legally, but even in the court of public opinion. Now the only hope for Google is that they can place some sort of procedural obstruction and hope that the judge decides against allowing Oracle to depose Larry Page - or just play innocent victim and drum up support from the open source community.
Also, a few weeks back, Apple was granted the "iPhone patent" - a massive patent covering several of the technologies that made the iPhone unique when it was launched in 2007 (before everyone copied those technologies). This patent has opened Google and its Android partners to significant risk. Even before this patent, HTC agreed to license several OS and smartphone technologies from Microsoft. After this patent was granted, several other companies have agreed to pay Microsoft between $5-$15 as "protection" money - hoping that Microsoft's massive patent pool and its cross licensing deal with Apple back from 1997 would protect them from Apple.
However, it is dubious whether Apple's cross licensing deal with Microsoft covers iPhone patents. The terms of that deal covers all past technologies, and going forward 5 years. So very likely that the iPhone patents are not covered by that deal. Secondly, even if the iPhone patents are covered, it is extremely unlikely that Microsoft would have the rights to sub-license Apple's technology. So in all likelihood, Apple could still go after these companies for violating iPhone technologies.
Google has made it a habit of skating on thin ice when it comes to IP/copyright issues. Whether with respect to Google Books, or Google News, or Youtube, or Dalvik or WebM, Google has always paid scant regard to the underlying IP issues. Even the recent launch of Google Music subscriptions went ahead without the approval of the music industry. At some point, such behavior would have consequences, and it looks like the time has come.
Google could have protected itself well if they had succeeded in buying Nortel's patents. However, they failed on two counts - on the one hand, they could not stop Apple from consolidating all the anti-Android forces into a formidable coalition, and more importantly, they could not forge a coalition of their Android partners to fight against Apple's coalition. Even Sony and Ericcson, who are Android partners, decided to team up with Apple rather than Google.
Not just Sony Ericsson, other Android partners are also showing worrying signs over Android. Motorola is rumored to be working on an secret project to come up with an alternative to Android. Samsung, the most important Android licensee is already hedging its bets on Android with its Bada OS. Even the geek/developer community has become frustrated with Android - for small developers, making money from just ads is proving to be difficult - and the combination of piracy, and the ease with which Ads can be blocked (just a simple change to DNS servers can block all ads on Android), makes it difficult to make money on Android Apps. The cost of building for Android is also relatively high, because of fragmentation. Also, despite ever increasing activations/day, it is becoming clear that only the top 10% or so of Android phones have the ability to run complex apps. Most of the Android phones actually cannot run complex games, etc. So even though Android has massive marketshare, the addressable part of the market is much lesser than that for iOS.
Back in the nineties and early noughties, Microsoft was the common enemy for all IT companies - and companies like Sun, IBM, Google, Oracle, banded together to support open source initiatives to fight this common enemy. Today, it has become obvious that Google is the common enemy - they have even managed to bring Apple, Microsoft and RIM into the same bed, something that was unthinkable even 5 years back!
Friday, June 10, 2011
Apple's slow attack on Google
When Google entered the Mobile phone space and blatantly copied Apple, the relationship between the two companies soured. From being partners and friends, they soon became sworn enemies.
For a long time, Google was the one taking all the pot shots at Apple. Then last year, Apple announced iAd. This was the first direct response from Apple, targetting Google's biggest revenue streams. However, iAd focussed only on the top end of the advertising market - with a minimum ad budget of $1 million - so it never really took off in a large way.
At the same time, Apple also introduced a feature in the Safari browser - called the Reader. Reader strips out ads, unneccessary pictures, and formats the text content into an easy to read "black-text on white" format. Considering Google makes most of its money from ads, this attempt to sidetrack the ads was another attack on Google. However, Safari has a very small share on the desktop, so it did not really hurt Google much.
Last week however, Apple announced some things that would directly hurt Google and hurt Google bad. Firstly, they announced that the Reader feature would be available on Safari on iOS 5. While Safari has a small marketshare on the desktop, in the smartphone segment, Safari has a massive market share. Apple has 18% of the global smartphone market, but this 18% has a disproportionately high share of mobile browsing market. Considering that most of the installed Blackberry and Symbian phones have pathetic browsers that aren't really used much, and considering that a lot of the cheap Android phones don't even sell with data plans (when you buy an Android phone, you get another one free - and most of these free phones end up being used like iPod touches at home), Apple's share of mobile browser works out over 50%.
The Reader functionality on iOS 5, is going to hurt Google massively. And I would not be surprised if future versions of iOS5 offered the Reader functionality as the default behavior in Safari - or maybe add an option to "Open in Reader" - in the same list that offers "Open in New Tab", "Add to Reading List", etc. If this is done, the user would never ever see the ads - meaning, the value of ads would drop significantly.
The second major initiative is the iCloud announcement. Google is the king of the cloud space, offering a lot of free services. However, everyone and their dog knows that Google uses these Cloud services to learn more about you, and target ads more effectively. The privacy implications of this are enormous. With Apple, the privacy fears are a lot less - because ads are not that important to Apple. Apple makes enough money on its devices, and can afford to offer iCloud as a way to make their devices more attractive. Even if Apple offers Ads, their track record on privacy is much better than Google's, and customers are likely to trust Apple more than Google.
I wonder when Apple is going to take on Google directly - and get into Search. That will be the mother of all battles!
For a long time, Google was the one taking all the pot shots at Apple. Then last year, Apple announced iAd. This was the first direct response from Apple, targetting Google's biggest revenue streams. However, iAd focussed only on the top end of the advertising market - with a minimum ad budget of $1 million - so it never really took off in a large way.
At the same time, Apple also introduced a feature in the Safari browser - called the Reader. Reader strips out ads, unneccessary pictures, and formats the text content into an easy to read "black-text on white" format. Considering Google makes most of its money from ads, this attempt to sidetrack the ads was another attack on Google. However, Safari has a very small share on the desktop, so it did not really hurt Google much.
Last week however, Apple announced some things that would directly hurt Google and hurt Google bad. Firstly, they announced that the Reader feature would be available on Safari on iOS 5. While Safari has a small marketshare on the desktop, in the smartphone segment, Safari has a massive market share. Apple has 18% of the global smartphone market, but this 18% has a disproportionately high share of mobile browsing market. Considering that most of the installed Blackberry and Symbian phones have pathetic browsers that aren't really used much, and considering that a lot of the cheap Android phones don't even sell with data plans (when you buy an Android phone, you get another one free - and most of these free phones end up being used like iPod touches at home), Apple's share of mobile browser works out over 50%.
The Reader functionality on iOS 5, is going to hurt Google massively. And I would not be surprised if future versions of iOS5 offered the Reader functionality as the default behavior in Safari - or maybe add an option to "Open in Reader" - in the same list that offers "Open in New Tab", "Add to Reading List", etc. If this is done, the user would never ever see the ads - meaning, the value of ads would drop significantly.
The second major initiative is the iCloud announcement. Google is the king of the cloud space, offering a lot of free services. However, everyone and their dog knows that Google uses these Cloud services to learn more about you, and target ads more effectively. The privacy implications of this are enormous. With Apple, the privacy fears are a lot less - because ads are not that important to Apple. Apple makes enough money on its devices, and can afford to offer iCloud as a way to make their devices more attractive. Even if Apple offers Ads, their track record on privacy is much better than Google's, and customers are likely to trust Apple more than Google.
I wonder when Apple is going to take on Google directly - and get into Search. That will be the mother of all battles!
Monday, January 24, 2011
Android in trouble!
Over the weekend, the blogosphere has been buzzing with "evidence" of Google having copied code from Sun/Oracle's Java and even worse, changing the license terms on that code. While some people see this as a nail in the Android coffin, several others see this as irrelevant, as the code in question is only related to testing, and unlikely to have ever found its way into shipping devices.
The point is, it is entirely irrelevant whether the code in question is important, or whether Google really copied the code, or some third party copied the code, or whether this code ever found its way into any shipping devices. The findings over the weekend will hurt Google quite bad in more important ways.
In these sort of cases, it is entirely upto the plaintiff (Oracle) to prove that Google violated their patents/copyrights. And this is a stiff hurdle. Very rarely is there a smoking gun that can be used as evidence. Especially in a project like Android, that has roots in Apache Harmony Project, and has also seen some third party contributions, it is difficult to pin the blame on Google, even if some violations can be proven. So Oracle has a really tough job on had.
That being said, Oracle has one real big advantage in this situation - time is working for Oracle. The more delay there is in resolving this court case, the more uncertainty there will be in the Android community and amongst hardware manufacturers. And this weekend's news only serves to increase that uncertainty. Already we are seeing articles on Android friendly sites - that things are not looking good for Android. This is the sort of PR that Android just cannot afford. This is the sort of situation that can easily go out of control and start impacting Android.
Microsoft Windows Phone 7 could be the unexpected beneficiary of this confusion. I expect manufacturers to start hedging their Android bets with either WP7 or other alternatives like Bada.
From a legal standpoint also, Google is on weak ground.
- The Counter-suit approach is not viable here - Google has very limited patent portfolio, and that is concentrated heavily around search. They can't find anything to beat Oracle with.
- The clean room defense will not fly - Google has hired way too many Java engineers from Sun - including Sun's former CTO - Eric Schmidt.
- "We didn't do it" will not fly - When it came to the original lawsuit, Google tried to blame Apache Harmony for the 6 pages of code that were alleged to have been copied. Apache promptly pointed out that that code did not come from Apache, and is from Google itself.
- Delayed enforcement will not fly - Oracle sued within months of acquiring Sun. Android itself has just been around for 2 years, and over those 2 years, Sun has made enough noises about not being happy with what Google has done with Java.
But all this is not important now - the main thing is, PR and sentiment tide just turned against Google!
The point is, it is entirely irrelevant whether the code in question is important, or whether Google really copied the code, or some third party copied the code, or whether this code ever found its way into any shipping devices. The findings over the weekend will hurt Google quite bad in more important ways.
In these sort of cases, it is entirely upto the plaintiff (Oracle) to prove that Google violated their patents/copyrights. And this is a stiff hurdle. Very rarely is there a smoking gun that can be used as evidence. Especially in a project like Android, that has roots in Apache Harmony Project, and has also seen some third party contributions, it is difficult to pin the blame on Google, even if some violations can be proven. So Oracle has a really tough job on had.
That being said, Oracle has one real big advantage in this situation - time is working for Oracle. The more delay there is in resolving this court case, the more uncertainty there will be in the Android community and amongst hardware manufacturers. And this weekend's news only serves to increase that uncertainty. Already we are seeing articles on Android friendly sites - that things are not looking good for Android. This is the sort of PR that Android just cannot afford. This is the sort of situation that can easily go out of control and start impacting Android.
Microsoft Windows Phone 7 could be the unexpected beneficiary of this confusion. I expect manufacturers to start hedging their Android bets with either WP7 or other alternatives like Bada.
From a legal standpoint also, Google is on weak ground.
- The Counter-suit approach is not viable here - Google has very limited patent portfolio, and that is concentrated heavily around search. They can't find anything to beat Oracle with.
- The clean room defense will not fly - Google has hired way too many Java engineers from Sun - including Sun's former CTO - Eric Schmidt.
- "We didn't do it" will not fly - When it came to the original lawsuit, Google tried to blame Apache Harmony for the 6 pages of code that were alleged to have been copied. Apache promptly pointed out that that code did not come from Apache, and is from Google itself.
- Delayed enforcement will not fly - Oracle sued within months of acquiring Sun. Android itself has just been around for 2 years, and over those 2 years, Sun has made enough noises about not being happy with what Google has done with Java.
But all this is not important now - the main thing is, PR and sentiment tide just turned against Google!
Friday, January 21, 2011
What can $3.9B do?
In Apple's latest results conference, Tim Cook mentioned that Apple has invested $3.9B to get an edge on the competition. He also compared this to Apple's move in 2005 to prepay for enormous amounts of Flash Memory, to not only get a very good price, but to also create scarcity for the competition.
I think the comparison to 2005 is very ingenious. This time around, I don't think most of the money has gone into prepayments, but towards Capital expenditure. Like partnering with other companies to setup factories to make components exclusively for Apple requirements.
For instance, take the iPad - there are rumors going around about the resolution of the iPad going up 4 times - to Retina range (even though it will be only 260 pixels per inch, the iPad is generally held further away from the eyes than an iPhone - so even 260 pixels qualifies as Retina). Displays in this league are currently used for Medical monitor purposes, and for professional film and photo editing - and can cost several thousand dollars a unit. So talk of Apple using a Retina display on the iPad seems improbable. However, the point to be noted, is that if production is done at massive volumes, there is no reason an iPad Retina display cannot be produced at a cost that is just marginally higher than the current display cost. This is the sort of thing that Apple would invest in.
My guess is that the 3.9B is spent on following areas:
- Partnering with Samsung on a Chip Fab Plant for A4 and its successors. Considering a new fab plant costs $2B, Apple is likely to have invested $1B in this. This is likely to be an aggressive move to take the A4 to 28 nm process for now, with plans to move to 22 nm eventually. We should see dual core processors with dual/quad graphics cores integrated. For iPhone and iPad, this chip will be clocked at 1GHz, while for Apple TV, this chip will be clocked at 1.6GHz (which will make the AppleTV a viable alternative as a full fledged gaming platform - able to hold its own against the PS3, Wii, and XBox 360).
- Partnering with LG to make Retina displays for iPad to begin with, and later on for Mac Book and iMac as well. Again, Apple is likely to have invested $1-1.2B in this. I expect a move to E-IPS to reduce power consumption via more efficient backlighting, despite higher resolution.
- Partnering with Samsung or Toshiba to build Flash memory. The thing is, everyone knows that the future of storage is Flash, and that Flash is likely to replace HDD for most purposes in about 5 years time. This is the sort of thing that Apple has the power and clout to make happen a lot quicker. All the technology is in place and is mature - the only thing required is to migrate the technology to a more efficient process, and to scale up volumes dramatically. My guess is that this takes about $750M USD.
- With aggressive moves on processors and display, the new iPad will likely see much higher power requirements. Unless Apple dramatically ups Battery efficiency, this will the battery life would drop. I see this happening with two approaches. A big investment to make custom batteries for iPad, with marginal improvement in chemistry. Any increase in weight of the device because of extra battery capacity would be offset with reduced case weight because of moving to LiquidMetal/carbon composite. Should cost about $500B in terms of capital investment.
- The other, and more interesting technique that we are likely to see is the move to integrate Solar Power in the devices. In case of the iPhone, the move to have a Glass back for the case is a clear indication of the intent to harness Solar Power. The only reason we did not see it in the iPhone 4 already, is that the efficiency of the Solar Panels was too low (< 5% efficiency), and therefore made very little sense from a cost benefit perspective. Apple is likely to invest in Nano Technology based Solar Film Panels that will have an efficiency of around 22% or more. In the iPhone, this can be done easily by placing the film behind the glass on the back - but on iPad, I expect a more innovative approach, placing this screen under the backlight - thereby recapturing some of the wasted energy from the backlight. This positioning will also allow the device to charge itself from ambient light when not in use. I expect this to cost about $750B.
With these moves, Apple will distance itself further away from the competition. Already, no one is able to match the prices of the iPad with even remotely close to the specs of the iPad, and with these moves, Apple will make it tougher for everyone else.
I think the comparison to 2005 is very ingenious. This time around, I don't think most of the money has gone into prepayments, but towards Capital expenditure. Like partnering with other companies to setup factories to make components exclusively for Apple requirements.
For instance, take the iPad - there are rumors going around about the resolution of the iPad going up 4 times - to Retina range (even though it will be only 260 pixels per inch, the iPad is generally held further away from the eyes than an iPhone - so even 260 pixels qualifies as Retina). Displays in this league are currently used for Medical monitor purposes, and for professional film and photo editing - and can cost several thousand dollars a unit. So talk of Apple using a Retina display on the iPad seems improbable. However, the point to be noted, is that if production is done at massive volumes, there is no reason an iPad Retina display cannot be produced at a cost that is just marginally higher than the current display cost. This is the sort of thing that Apple would invest in.
My guess is that the 3.9B is spent on following areas:
- Partnering with Samsung on a Chip Fab Plant for A4 and its successors. Considering a new fab plant costs $2B, Apple is likely to have invested $1B in this. This is likely to be an aggressive move to take the A4 to 28 nm process for now, with plans to move to 22 nm eventually. We should see dual core processors with dual/quad graphics cores integrated. For iPhone and iPad, this chip will be clocked at 1GHz, while for Apple TV, this chip will be clocked at 1.6GHz (which will make the AppleTV a viable alternative as a full fledged gaming platform - able to hold its own against the PS3, Wii, and XBox 360).
- Partnering with LG to make Retina displays for iPad to begin with, and later on for Mac Book and iMac as well. Again, Apple is likely to have invested $1-1.2B in this. I expect a move to E-IPS to reduce power consumption via more efficient backlighting, despite higher resolution.
- Partnering with Samsung or Toshiba to build Flash memory. The thing is, everyone knows that the future of storage is Flash, and that Flash is likely to replace HDD for most purposes in about 5 years time. This is the sort of thing that Apple has the power and clout to make happen a lot quicker. All the technology is in place and is mature - the only thing required is to migrate the technology to a more efficient process, and to scale up volumes dramatically. My guess is that this takes about $750M USD.
- With aggressive moves on processors and display, the new iPad will likely see much higher power requirements. Unless Apple dramatically ups Battery efficiency, this will the battery life would drop. I see this happening with two approaches. A big investment to make custom batteries for iPad, with marginal improvement in chemistry. Any increase in weight of the device because of extra battery capacity would be offset with reduced case weight because of moving to LiquidMetal/carbon composite. Should cost about $500B in terms of capital investment.
- The other, and more interesting technique that we are likely to see is the move to integrate Solar Power in the devices. In case of the iPhone, the move to have a Glass back for the case is a clear indication of the intent to harness Solar Power. The only reason we did not see it in the iPhone 4 already, is that the efficiency of the Solar Panels was too low (< 5% efficiency), and therefore made very little sense from a cost benefit perspective. Apple is likely to invest in Nano Technology based Solar Film Panels that will have an efficiency of around 22% or more. In the iPhone, this can be done easily by placing the film behind the glass on the back - but on iPad, I expect a more innovative approach, placing this screen under the backlight - thereby recapturing some of the wasted energy from the backlight. This positioning will also allow the device to charge itself from ambient light when not in use. I expect this to cost about $750B.
With these moves, Apple will distance itself further away from the competition. Already, no one is able to match the prices of the iPad with even remotely close to the specs of the iPad, and with these moves, Apple will make it tougher for everyone else.
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