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Android’s patent quagmire (Part II)

Posted in Mobile Devices and Company Updates by Manas Ganguly on December 23, 2011

Continued from an earlier post

Patents: How it could help (Protect) and injure (the not so ready)

The theory of protection because of Collateral damage
A lot of times just the sheer volume of patents [is] sufficient to deter someone from filing suit against you. When you have the potential to get a court order that will exclude a competitor’s product from the marketplace, that is a very powerful thing. Apple and Microsoft both had lots of patents that could potentially do that with respect to the Android products. And unless and until Google is in a position where they have patents to raise those same threats, there’s no reason for Apple and Microsoft to back off. They’re either going to get the products excluded or they’re going to get damages and/or royalties going forward.

Patent as an instrument of Doom
Even more threatening, perhaps, is the specter of rulings preventing Android phones and tablets from either being sold or using certain types of functionality. Apple and Samsung and then Apple and HIC have been at war on Patents with Apple insisting import ban on Samsung on Samsung smartphones and Tablet in certain states.

Making Android uncompetitive
Also what could hurt Google is the fact that the patent holders may choose to impose unreasonable fees for the patents in which case the open source zero cost Android could become uncompetitive in the markets. As long as Android lacks proper patent protection, Microsoft can demand licensing fees from hardware vendors. With a stronger patent portfolio, Google and partners could negotiate cross-licensing deals that don’t require payments. However, the point of these lawsuits is to raise the price of Android so that it is no longer able to compete. If Google and partners have to pay licensing fees, or change functionality due to infringement findings, “then all of a sudden Android is not as strong a competitor.”

Google/Android left its ranks uncovered in its charge for marketshares

Google’s rush into the smartphone market as an outsider “seeking to get to the front ranks” very quickly afforded it little time to build a defensive portfolio or negotiate cross-licensing deals to head off lawsuits. The key for Android will likely be in Motorola’s patent portfolio, when and if Google officially takes ownership of the company. None of this will be positive for Android. If enough of these lawsuits get through in which Android is found to infringe some of these patents, the question is what could Android do. If they could not design around the patents that could be a problem. Analysts bet that Google is hoping that they can design around all these patents, but certainly the infringement cases are a concern.

Apple and Microsoft share a similar approach in patenting technology quickly and frequently, a more common strategy for commercial software than for open source software such as Android.But the use of open source software and a smart, defensive patent strategy are not mutually exclusive. Red Hat, in the enterprise server market, has shown that an open source company can publicly oppose the software patent system while building up a portfolio of its own, offering customers indemnification against lawsuits, settling with patent trolls when a fight wouldn’t be worthwhile, and battling aggressively in other lawsuits when core issues are at stake.

Impact Analysis: Google buys out Moto (Part IV- Would the operator become more redundant)

Posted in Mobile Devices and Company Updates by Manas Ganguly on August 21, 2011

Read Part I, Part II and Part III

Google is pulling off an acquisition that is larger than any that Microsoft, Apple, or any of their other main competitors ever have. The Moto acquisition is either the smartest thing Google has ever done, or the dumbest. A $12.5 billion deal in cash, with a $2.5 billion collapse clause? There is no in-between
In a series of blogs over the next few days, I would be analyzing the impact of the Google-Moto deal in terms of:
1. Patents Leverage
2. Platform/Hardware Competence
3. Eco-system view
4. Impact on Telcos

Impact on Telcos

There are some interesting potential side effects of this deal, such as in the broader consumer electronics space. Motorola could help Google turn around the disaster that has been Google TV. Motorola makes a huge percentage of the set top boxes that the cable companies use to push their over-priced content at you.

This then brings us to another interesting fall-out of this deal- How will the telcos react to Google taking over the role of content provider as well as the device maker. Google has long harboured intent of becoming a media business with emphasis on the content delivery. Google would still be riding on the Telco pipes, which would further re-inforce dumb pipe syndrome. This deal is just another blow to the traditional telcos, pushing them further towards commoditization and being a pipe. How will they fight back? Is their future only in providing the connection? This will be interesting.

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Impact Analysis: Google buys out Moto (Part III- Impact on the present day partners and eco-system)

Posted in Mobile Devices and Company Updates by Manas Ganguly on August 17, 2011

Read Part I and Part II

Google is pulling off an acquisition that is larger than any that Microsoft, Apple, or any of their other main competitors ever have. The Moto acquisition is either the smartest thing Google has ever done, or the dumbest. A $12.5 billion deal in cash, with a $2.5 billion collapse clause? There is no in-between

In a series of blogs over the next few days, I would be analyzing the impact of the Google-Moto deal in terms of:
1. Patents Leverage
2. Platform/Hardware Competence
3. Eco-system view/ Impact on OEM partners
4. Impact on Telcos

Eco-system view/ Impact on OEM partners

Google says they will continue to run Motorola as a separate business. Again, given its size, that’s about all they can do. Google also says that this will not change their commitment to Android being “open” and to their other OEM partners. Another compelling argument in favour of the Google-Moto deal is that, this is a strategic buy for Google in order to exert more control over the Android eco-system. Google says they will continue to run Motorola as a separate business. Again, given its size, that’s about all they can do. Google also says that this will not change their commitment to Android being “open” and to their other OEM partners. Many including myself, however, believe that it will not be very practical and possible to keep the Android “open” and as impartial given the $12.5 investment in Moto. Beneath all the sweet talk with the other partners, all the larger partners of the eco-system are disingenuous with their positive statements and sentiments. Carrots rarely work in the “open” Android eco-system. With Motorola in their back pocket, Google now has another stick to use when the carrots don’t work: Control on the Google device. With Moto, Google has the capability and competence in devices, which in turn is pretty handy to apply to pressure the other OEMs to force them to do better work.

What this means for the other significant partners of the Android eco-system: Samsung, Sony-Ericsson and HTC. There are two points on that
1. The OEMs were not dumb not to have anticipated this move. Thus Samsung moved into making the Bada.
2. The World of OEMs would now split into Loyalists (Moto for Android, Nokia for Microsoft) and the multi-platform vendors (Samsung, HTC, SE). This move could drive some of those OEMs to give a second look at Windows Phone as Android alternatives. Microsoft will have to deliver a truly competitive consumer mobile operating system to take advantage of this opportunity and chip away a few of the big OEMs from the Android camp.

With the loyalists (Samsung, SE and HTC) now moving into frienemy space, Android may loose some momentum in the numbers that it kept on pilling for sometime now. The decider or qualifier for Android’s success will be the pace of Android’s extension across multiple other platforms, eco-systems and device categories. For instance, Google TV will necessarily have to fire to keep the Android registers ringing… V2V systems will be another decider in terms of number of Android activations. The trade-off that Android will have is its capability to extend across platforms versus the rate at which its partners desert it.

Apple dominates profits with 57% profit share in Mobiles Globally

Posted in Industry updates by Manas Ganguly on May 17, 2011

I had first blogged about the wealth, margins and profit distribution between smartphone makers 9 months back. Read Global Smartphone markets: Of disruptive competition and wealth distribution.

Asymco has come out with another sequential set of figures that focus on share of margins and profits for 8 of the largest smartphone vendors in the world.

1. The ever familiar change of guard in smartphones is a cliche.With Nokia Loosing out on a YoY and Sequential growth and high rises from the Apple and the Androids.

2. The surprise kid here is RIM, which is positive on 3 yr CAGR, Y-O-Y and Sequential. This is more to do with Blackberry’s growing markets in Asia mostly. On its home turf, BB has been taking the pounding from both Apple and Android.

https://ronnie05.files.wordpress.com/2011/05/opearting-margins-8-vendors.png

https://ronnie05.files.wordpress.com/2011/05/profit-shares-8-mobile-phone-vendors.png

3. With 19% smartphone (Canalys) Market share, and 5% Mobiles (IDC) market share, Apple takes a disproportionate 45% of the industry profits. Blackberry (25% of Industry Margins), HTC (15%), Samsung (12%) and Nokia (8%) complete the list.

https://ronnie05.files.wordpress.com/2011/05/asymco-profits-margins-smartphones.png

The mobile industry has historically been unforgiving. Companies that fall into unprofitability tend to stay there or exit/merge. This has claimed many: Ericsson, Siemens, Alcatel, BenQ, Palm, Sony, Toshiba, Handspring, NEC, Hitachi, Casio. LG, Moto and Sony Ericsson are all in the same precarious situation. We’ll have to watch carefully whether a recovery is possible for any of them and whether Nokia will reach the same rocky position.

https://ronnie05.files.wordpress.com/2011/05/profit-shares-8-mobile-phone-vendors-ii.png

Looking at operating profit shares; While RIM, Samsung and HTC have maintained profit share, between 2007 and now, profit share has mostly shifted from Nokia to Apple. Nokia has declined from 47% in 2007 and Apple has come from 0% to 57% of Industry profits.

Not that it surprise too many: It’s become routine to see Apple at the top of the list of profit earners from mobile phones.

Smartphone showdown:The Gap between iPhone and others is reducing fast

Posted in Mobile Devices and Company Updates by Manas Ganguly on June 9, 2010

There have been 4 iPhone launches over the last 3 years. Every launch bettered the previous one and put the game way beyond any of the other handset players in the market. iPhone was always a league of its own way above the Blackberrys, Nokias and Samsungs of the world. When the iPhone was launched in 2007 nobody had heard of Android and HTC was one of the usual and ordinary Taiwanese OEMs. Over the last 2 years Android was born and has grown by leaps and bounds. Late in 2009, HTC who was doing the WinMo decided to do the Android for a change. HTC has never looked back ever since and have provided ideal planks for Android releases including Google’s own Nexus One.

The eagerly awaited launch of iPhone 4G in June 2010 saw iPhone sweating it out for it habitual “best” title. The Challenger is HTC EVO 4G, an Android 2.2 powered smartphone which has some cracking and brilliant specs that measure up equal or even better than the iPhone. For Android, which almost got its act together with the Motorola Droid/Milestone (over the iPhone 3GS), the HTC EVO 4G could be the tipping point where it would nudge ahead of the iPhone. (Please note, neither of these two products have been tested and used, and the discussion is basis the specs that have been made available to the techies).

A quick comparison of the HTC EVO 4G versus the iPhone 4G:

The chart above produces a dead heat between the EVO and the iPhone 4G. The factors that weigh in next is AT&T notoriety versus Sprint’s ability to handle the EVO. There are people who would swear by iPhone’s OS and UI capabilities and the Apple Apps store. However, Android is seen to be steadily making improvements towards UI, Graphics and the Android Marketplace is also beginning to show numbers. Opinion is divided on the fact whether the EVO is the proverbial iPhone killer finally. I would say this that, whether or not the EVO is the iPhone killer is not the point. The EVO just proves one point: Apple cannot breathe easy.


Even the wall street acknowledges the competition. While the iPad launch was the reason for Apple stock soaring to No.1 position beating Microsoft, iPhone 4G it seems has not enthused investors as much.

Smartphone market share update

Posted in Industry updates, Mobile Devices and Company Updates by Manas Ganguly on March 12, 2009

The fourth quarter of 2008 saw Smartphone sales growth rate dip to 3.7% (versus 4Q,2007). The report compiled by Gartner, says that the worldwide sales of Gartner reached 38.1 million units, and slowed down considerably due to the fewer compelling devices and a worsened economic climate. Sales in 4Q were marginally better than the Q3, 2008 number of 36.51 million. As a proportion of all mobile device sales, Smartphones bettered the 4Q, 2007 number of 11% by 1 percentage point i.e 12%.

Global sales of smartphones reached 139.3 million units for the year 2008, which betters 2007’s smartphone sales (122.3 million units) by 13.9%!

smartphone-ms

 

The iconic Apple iPhone doubled its market share from 5.2% to 10.7%. It sold 4.1 Million iPhone against a 1.9 million number in 4Q, 2007. http://www.electronista.com/articles/09/03/11/gartner.on.q4.2008.sphones/. The buzz around this device is almost unreal, with Operators rooting for it. AT&T (Read Article) has declared iPhone 3G a success after the inroduction of the Iphone served as a catalyst for a shift towards data on its networks. It has reported a 51.2% jump YOY renue from data usage on its networks. For the full year of 2008, iPhone has reported a 245% jump in units shipped (3.3 Million in 2007 and 11.4 Million units in 2008).

 

iphone_large1

 

Canadian based Telco Rogers, has also reported 36% boost to its data revenues because of iPhone in its portfolio. iPhone now contributes 33% to Roger’s Smartphone sales. (Read Article)

Boosted by the Blackberry Bold and the Storm, RIM’s market shares went from 10.9% in 4Q 2007 to 19.5% in 4Q,2008. It registered a 85% growth in number of units from 4 million in 4Q,2007 to 7.4 million in 4Q,2008. Over the full year, RIM bettered its 11.6 Million sales number in 2007 to 23.1 Million in 2008 (a jump of 97%).

The T-mobile G1, the first Android operating system powered mobile, and the Touch Diamond helped HTC better its sales from 1.3 million (4Q,2007) to 1.6 million(4Q,2008), a jump of 20%.

tmobile-g1-uk2Samsung’s Omnia and its other touchscreen devices have finally led its break through into the top 5, displacing Sharp. Samsung registered a 138% growth in 4Q,2008 over 4Q,2007 taking its Smartphone number from .67 million to 1.6 million!

The looser for a while and this time as well, is Nokia, who has lost 10% market share in smartphones (from50.9% to 40.8%). While it is still the market leader by a mile, Nokia was the only compnay in the top 5 to have registered negative growth of 17% (from 18.7 million in 4Q,2007 to 15.56 million in 4Q,2008). On a year basis, Nokia stagnated and registered .8%growth in a market which grew 13%. Its full year market share reduced from 49.4% (in 2007) to 43.7% (in 2008). The numbers shipped were 60 million in both years.

S 743: HTC’s new Android phone

Posted in Mobile Devices and Company Updates by Manas Ganguly on February 12, 2009

The G1 was 10th in the best smart phones list for US in 2008. So then, HTC is looking to do an encore with Android + HTC S743 . Though it isnt a touch screen device, it takes design cues from the HTC diamond! It comes with a 3.2 MP camera, 2.4 inch QVGA, a second VGA for video calls, a numeric key pad and a slide out QWERTY key board!

Ultraslim smart phone at 4.6 * 1.7 * 0.6 inches and 4.9 ounces, this phone will come unbundled which makes it steeply price at $743! However it provides other consumers to buy it and use it on other networks as well!
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