Ronnie05's Blog

Will History overwhelm the Wintel Platform?

Posted in Computing and Operating Systems by Manas Ganguly on December 3, 2010

For as long as I remember, Computers meant Windows and “Intel Inside” to me. This was called the “Wintel” platform because the Microsoft Windows operating system and Intel processors were virtually synonymous. In an era of rapidly increasing mobility, though, Intel and Microsoft are facing an uphill task. Their de facto dominance has been challenged and are now faced with potential irrelevance. Both Microsoft and Intel are fending off competitors in their core markets, while also struggling to establish a presence on smaller, mobile platforms.

History doesnot favour Wintel
To many, this is the history of computing revisited. Each wave of computing had its share of Goliaths (Large and Powerful incumbents) loosing out to Davids. There was mainframe first, which was dominated by IBM, then came the mini computer dominated by DEC in the second wave, then came the third wave with workstations dominated by Sun and Apollo, then the PC which is where Wintel had a free and undisputed run. Now it’s the mobile architecture that is going to be the main computing platform at least on the terminal side with the cloud backing it as the Data dump.

Android driving Windows Irrelevant
Android is also subtly shifting our understanding of the purpose of an operating system. Android is a means to an end for Google. The better Android is and the more it lets us do, the more of our data Google can potentially get access to. And data is Google’s raison d’être. By way of comparison, Windows is an end in itself–a dead end. Microsoft gains little benefit from Windows other than the income from software licenses, which is starting to sound like a very old-fashioned way of thinking in this age of mobile devices and data clouds. Windows Mobile 7.0 and its suit of services have been launched and have received some traction. However, challenging the Android would be mean WinMo 7.0 would have to play at a different level altogether.

ARM severely challenges Intel
What smartphones and tablets have in common is that they are almost universally built using ARM processor technology rather than Intel. ARM also powers the next big category of products: Tablets, EBooks and Internet TVs (Google). It is not that Intel is unaware of the benefits of the ARM architecture on mobility platforms. The tablet processor architecture unveiled by Intel codenamed Oak Trail–is a system on a chip (SoC) that promises to consume 50 percent less power while also enabling full HD video playback. This however is not expected to go into production until early 2011. In the mean time, ARM steam rolls establishing very key strategic partnerships that would take it to the next level.

Both Microsoft and Intel have been late to react to subtle shifts in the landscape which have suddenly cascaded into a all embracing powerful wave. Both these powerhouses are making and effort to re-orient and re-invent their businesses. However, the falls of greats in computing history is a telling story.

One thing is for sure, though–the fight for market share and market relevance will be good for business professionals and consumers because it creates competition which will force all parties to be innovative in their designs, and appealing in their pricing in order to set their smartphone or tablet apart from the crowd.

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Hey Google! Why buy Groupon? (Part I)

Posted in Internet and Search, Value added services and applications by Manas Ganguly on December 3, 2010

Google has offered $6 billion to acquire Groupon, a 2 year old e-commerce portal. Opinions around this effort is vastly divided. The exorbitant $6 billion cost of acquisition would make this the second most expensive sale in history, only exceeded by sale of Cerent to Cisco in 1999 for $7billion in the thick of the Dot Com bubble. Google will be acquiring Groupon at almost double the price that it paid for DoubleClick. Groupon is expected to report $500 revenue for the year.Groupon was last evaluated at $1.35 billion 7 months back and the $6 billion price tag implies a 500% increase for Groupon valuation.

What is Groupon?
Groupon is a e-commerce portal which works on direct discount deals to consumers by local advertisers through eMail. It has about 35 million subscribers who receive email based ads and discount offers from local advertisers and uses the user base as a sales channel to generate bulk order deals. To that extent, the 35 million subscribers are also the distribution nodes for Groupon.

With $500 million revenues in 2 years, the distribution and discount model is fairly working for Groupon. However, given the fast and brilliant developments in the Web 2.0 domain, one is tempted to think if e-mail is really the best way to generate leads and revenue and the sustainability of the business.

Ironically, Groupon’s viral design (Subscribers getting bulk buying from their own social networks) is more closer to the Facebook P2P references and likes. To that extent, Groupon has a threat from Facebook which is also developing a product which will help merchants present discounts and offers to its 600 million users. If Facebook were to launch that service today, subscription could quickly ramp up to 35 million! Amazon is also looking to buy out Living Social. Living Social is a clone of Groupon in terms of e-commerce business models.

Thus Groupon’s only barrier to entry for other competition is only its first mover advantage which translates into critical mass. Facebook or Amazon could easily surmount this entry barrier with their huge subscription bases.

Thirdly, Groupon is waning in terms of influence and usage. Traffic has dropped by 33% in the last 4 months as reported by Quantcast. Refer to the chart below:

Given these facts, it certainly looks that Google is over-enthusiastic and overpaying for Groupon. Unless Google is seeing some other synergistic elements that we are blind about.

Part II: Google’s (possible) motives behind Groupon acquisition.

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