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Connected Devices and Android’s 1 billion – Gartner

Posted in Industry updates by Manas Ganguly on January 7, 2014

Gartner forecasts that Android is poised to surpass 1.1 billion users across all devices in 2014 even as Worldwide combined shipments of devices (PCs, tablets, ultramobiles and mobile phones) are projected to reach 2.5 billion units in 2014. This represents a 7.6% increase in volumes for connected devices from 2013. In terms of Android, the figures represent a 26% increase in volumes compared to 2013. 75% of the Android activations will happen in emerging markets – which by extension means that the Android story is not slowing down any time soon.

Connected Devices - Gartner

1. Smartphones will be the key to the new connected devices paradigm contributing 75% of the total volumes in connected devices. Smart phones will continue to grow but at a slower pace, with opportunities moving away from the top-end premium devices to mid-end basic products
2. PC’s will drop in volumes by 8% per year and will loose almost a fourth on volumes. The evolution to ultra slim and light form factors would be key to the existence of the laptop category – since laptop users find tablets to have limited usability
3. Tablets will be one of the highest growth categories over the next 3 years though tablets will gravitate to the 5”/6” phablet form factor with usage which is more akin to smartphones.
4. However, the interesting category to watch out for are Ultra Mobiles – essential form factors such as hybrids, clamshells, watches, consoles or Google Glass which has a significant growth potential through the next 3 years horizon.

On the popularity of Android as a platform, there is a volume versus value equation, with Android users also purchasing lower-cost devices compared to Apple users. Android holds the largest number of installed-base devices, with 1.9 billion in use in 2014, compared with 682 million iOS/Mac OS installed-base devices. In terms of OSs, Gartner predicts Windows to have the toughest fight from iOS in CY 2014, post which Windows would gain on iOS basis its growing presence in the smartphone segment.

The tale of two Steves- Bee and Jay

Posted in Computing and Operating Systems, Device Platforms by Manas Ganguly on August 28, 2013

The two Steves- Bee and Jay have been vanguards of technology – and yet the difference between them couldnot have been stark. Everything Jay was Bee wasn’t. Bee’s accomplishments are an antithesis of the achievements of Jay. This is the follow up on my earlier post – Microsoft’s lost decade and it looks down upon (Literally) on Bee’s big judgement errors….

Bee and Jay

A good part of the 90s and early 2000s will be remembered as Microsoft’s decade – and Microsoft was the most dominant force in the technology space, the Alpha-male in technology. The ubiquitous Wintel partnership as it was then however fell behind the Moore’s law and grossly underestimated the migration from desk stationed devices to handhelds. Even while Microsoft had launched its Windows Mobile in 2000 and brought out the first tablet in 2000, Gates, Ballmer & Co misread the shifting sands in personal computing and were unable to capitalize on both these fronts. On hindsight, Microsoft did not open up to the eco-system effects and benefits – and were more happy selling proprietary licenses – A lack of flair and foresight there, which precipitated into a losses that we see today. Put simply – The world has moved faster that Microsoft’s licensed software business model could respond (Analyst Ted Sandler)

Here’s comparing how the two Steve’s measure up on different and yet common device, technology and platform initiatives-

Apple versus Microsoft - the story of two Steves

The list doesnot quite stop there – There’s Microsoft’s wasteful effort on Bing versus Google and its advetures with XBox and Kinect versus Playstation. To me Xbox and Kinect were ideal innovations – but Microsoft and Bee failed to push it… across platforms. Microsoft worked across disparate platforms and was never able to integrate the customer experience across devices and platforms. And then again, projects such as Microsoft courier never saw the light of the day – the plug pulled out through half way.

Bluntly put – Technology is one thing – the ability to conceptualize the portfolio, integrating the services in a manner of user experience that is engaging and habit forming, a layer by layer structured format of business allowing scalability of services and devices into different domains is something that Ballmer missed upon very completely. Take an Apple for instance – It started with an iPod, created a layer of services around it (iTunes), scaled the device into new form factors , upstaged the Music industry, leveraged the design into a smartphone (iPhone), scaled up another service layer (Application Store), upstaged the industry and leveraged it yet again for new device/dimension (iPad) and upstaged the industry all over again – there is this continuity in design, form factor, service, portfolio and monetization streams. Instead Microsoft had a Windows media Player, a Zune, a Zune Media Store, an Xbox and a Kinect, a Surface – they are all great pieces plagued by a discontinuity. The best examples being xBox and Kinect – good innovations, mind numbing possibilities and yet these innovations have struggled to give Microsoft worthwhile mileage.

What they said ... when Steve was asked to retire is not all that great!

What they said … when Steve was asked to retire is not all that great!

Steve (Jay) put the Microsoft problem in a neatly worded statement: “ The trouble with Microsoft is they have no taste. They have no taste and I don’t mean that in a small way, I mean that in a big way.” Absolutely right Steve! Ballmer’s successor clearly has an awful lot of work to do….

Steve Ballmer & Microsoft’s Lost Decade

Steve_Ballmer_peace

Steve Ballmer, CEO Microsoft since January 2000 is to retire from his post within the next 12 months. Rumours are that our man was asked to march since the board was not too please about the $900 Million write offs on a spate of current projects. Within a few hours of this release, Microsoft stock jumped by $2.36 (7.3%) over a broad trade of 223.3 million shares. The news of Ballmer’s exit added an immediate $20 billion to Microsoft’s capitalization.

The movement of the MSFT scrip shows a variance of 97 cents on 23rd August with the share touching $34.97 post Ballmer's Announcement. Initial Euphoria?

The movement of the MSFT scrip shows a variance of 97 cents on 23rd August with the share touching $34.97 post Ballmer’s Announcement. Initial Euphoria?

Over the course of last 14 years, Microsoft hasn’t really done significantly different – besides sharing the spoils with investors in terms of dividends. Yes, it has increased the market capital of Microsoft – but as far as results go – there is hardly anything much on the board. With Ballmer at the helm – Microsoft has actually offered negative returns. Ballmer can be credited with an effort to shift strategies at Microsoft – but it didnot really pay off.

MS Share Prices

If you compare the indices of Microsoft versus Dwo Jones, NASDAQ and S&P500, the picture that comes through is an eye opener.

Microsoft Compared

To put the numbers – Dow Jone outperformed Microsoft by 3X in Ballmer’s Decade, S&P outdid Microsoft by 10% through the Decade. The face saver was NASDAQ, the technology index itself dropped by 10%. Compare Microsoft’s stagnant share price to 700% increase in Gooogle’s share price value and a 1600% escalation in share price of Apple.

Microsoft versus Apple & Google

Microsoft S&P NASDAQ DJ

Infact, Apple’s Get a Mac campaign was a very clever lampoon of the archetypical Ballmer personality. In Ballmer’s decade, Apple overshadowed the Redmund giant and emerged as the quintessential technology business after bringing the revolutionary iPod, iPhone, and iPad platforms to market. To date, only Google Android has emerged as a formidable rival to the popular Apple iOS operating system. Meanwhile, Microsoft and Ballmer have been literally caught with their pants down. In hindsight – Ballmer never really estimated the eco-system effects and advantages and consequentially was never able to capitalize.

Ballmer met some degree of success with the Microsoft XBox and Kinect – the only game changers. However, XBox and Kinect have not translated into any huge seismic impact – quite unlike the other Steve in town – the one from Apple.

Steve Ballmer’s greatest gambit (and his greatest failure in course) was Windows 8 – The equivalent to the promised land for Microsoft – the back bone of Microsoft’s future in personal computing from Tablets to Laptops to Smartphones. A year of Windows 8 later –

1. Windows 8 has not even nudged the cash registers at Microsoft
2. Reports have suggested that Windows 8 sales and adoption has trailed behind Vista at similar points of Product Life cycle chronologies
3. Windows is still some distance from being able to make a mark in the Tablet segment even while PC Desktops and Laptops keep getting written off… PC Markets have been shrinking for 5 consecutive quarters and there appears no hope of recovery in the horizon
4. At low single digits market shares in Smartphones and Tablet markets – Microsoft is a relative non factor. At Microsoft’s scale – they ought to be looking at upstaging Android and not be overjoyous about the decline in Apple.

It is perhaps ironical, that Microsoft and its Wintel partnership must fail to Moore’s law. Wintel understood the law pretty well in terms of size and power management principles – but miscalculated the consumption shift towards smartphones and tablets.

To sum up, Steve Ballmer has been very instrumental and effective in running existing product lines – but in terms of innovation and new products – Ballmer has been less than good and the 13 years at helm of Microsoft have been years of opportunity loss – Microsoft’s lost Decade.

Why Intel doesnot inspire any much confidence any more?

Posted in Industry updates, Mobile Computing, Mobile Devices and Company Updates by Manas Ganguly on August 7, 2013

photo

As tablets continue to pound on Laptop and Netbook segments – and the Laptop/Netbook segment is at best projected to be stagnant if not decreasing in terms of y-o-y shipments it is difficult to harbor any significant optimism about Intel. Intel has been trying to migrate its business to the Handhelds given the impending fall of the Wintel Franchise. It is clearly trying to move away from the Wintel Monogamy to separate alliances with Android, Samsung (Tizen) apart from the Windows Phone platform. However, creating a platform with meaningful revenue stream to replace its Wintel franchise is a long shot – something it has not been able to do for a very long time.

Highlights of Intel’s Performance
Full-Year 2012 Key Financial Information and Business Unit Trends
Full-year revenue of $53.3 billion for FY2012
PC Client Group had revenue of $34.3 billion, down 3 percent from 2011.
Data Center Group had revenue of $10.7 billion, up 6 percent from 2011.
Other Intel architecture group had revenue of $4.4 billion, down 13 percent from 2011.
Gross margin of 58% not broken down by group.

I am listing out a few thoughts on the Intel prospects going forward-

1. Intel Versus Qualcomm: Qualcomm with its leadership of the mobile space is possibly Intel’s biggest competitor in the mobile space. What works for Qualcomm is its economies of scale – hence allowing it to price itself very suitably. Intel chips in its current state would be 5X costlier than Qualcomm.
2. Intel’s specialty was the Windows platform and its complete monopoly. I don’t think they can repeat the same success with Google’s Android because the spots are already taken.
3. The low end growth in volumes will be typically driven in low price markets such as India, SE Asia. In this segment, there are pretty strong guerillas such as MTK, Allwinner and even Qualcomm has a spot of bother targeting these segments
• The problem with these markets is that none of them seems to offer the kind of margins that Intel has become accustomed to–even *if* Intel is successful in those markets
4. Either in terms of competing with Qualcomm or finding new markets, If Intel was to beat the market by considerably pricing itself lower (assuming very high volumes) – it would impact its profit margins dearly.
5. Intel has been innovating at the high end of the market. Thus, the cleverness that has gone into Intel’s current generation of high-end processors is simply stunning, but the market that benefits from that cleverness, and the margin that goes with it, is disappearing.
6. The only saving grace to this equation could be Microsoft – but the platform had its share of problems with Windows 8 and I am not sure if Windows Blue can reverse the tide.
7. Intel’s share of the server markets is also under threat with the ARM architecture and Atom like low margin chips being purported to be lopping off a big chunk of the server markets in near future. The driver is the cost of electricity and of cooling data centers. (Low power rules)
8. The third of Intel’s strengths – high-reliability enterprise computing and high-end analytics for business or national security applications is also moving the IBM way. IBM doesnot make any profits on its processors – its makes it dough from the services.

Finally, from cumulative experience of high end technology industry – any incumbent Goliath who missed one technology cycle – cannot by any means play catch up unless it re-invents the whole industry yet again. Intel doesnot have to look too far – beyond Microsoft – to learn missing out a technology cycle and losing the plot.

The 2012 Intel Results
09082013

Surface RT: Writing down Microsoft

Posted in Device Platforms by Manas Ganguly on July 16, 2013

Microsoft has been in mobile since Windows CE for PDAs in 1998. Inspite of 15 yrs of presence, the latest reports don’t inspire any much confidence at Microsoft writes down huge losses on its ambitious Surface RT tablets

Microsoft-Surface-RT

1. Microsoft’s Surface tablet generated $853million revenues in 8 month period (Launched late October 2012 to End of Q2, 2013). However, Microsoft has written off $900 on the Surface line – thus re-iterating that the whole premium pricing strategy was to no vain.
a. To put the $853 million in perspective, Surface revenue equaled about 5.5% of the Windows Division’s $16 billion in sales in the last three quarters, and just 3.3% of the $25.8 billion that Apple’s iPad generated in the same period.
2. Microsoft cut the price of Surface RT by as much as 30% in July 2013 and given that the number for the $899 Surface Pro have been poorer, there could be another inventory write down of Surface Pro over the next few quarters
3. Surface RT has also seen a huge attrition of OEMs which starts with HP & Toshiba (Committed to Surface RT- but never launched a device), Samsung (Which cited lack of demand for ditching the platform in January 2013), Acer, Lenovo and Asus (Mid July 2013).
a. There may be a few backers in terms of Qualcomm, Nvidia and Dell – But the fact remains – Windows RT is challenged and OEMs are simply not interested in RT.
b. This could be a spanner in the works of Windows RT 8.1 – It already is out of all momentum.
4. Microsoft has the choice of continuing on the Surface RT Tablets – but it is very highly unlikely that they would be able to turn the platform around. Keeping Surface RT alive would be a game of diminishing returns and would bleed Microsoft.

Microsoft may have deep pockets – but that really doesnot justify the undying faith on Windows RT.

Is there room for more than 3 OSs in Mobile?

Posted in Computing and Operating Systems by Manas Ganguly on February 27, 2013

Gary Kovacs, CEO Mozilla wants a piece of the action in enabling the next 2 billion people graduate to the internet. Thus the Firefox OS. Over the last couple of weeks there have been increasing number of claims to divergence in the Mobile OS space- Blackberry 10, Tizen, Ubuntu and now Mozilla. Additionally Samsung is shutting off Bada and HP is selling off WebOS (to LG).

Mobile OS logos

1. Android being the 70% market leader is working on economies of scale and scope – spreading the open platform across multiple domains – TV, Project Glass, Set Top Boxes, Refridgerators, Cars and more. Thus Android is emerging as the truly “connected OS” in the age of convergence
2. Apple still rules as the king of experience and if the experiments in India are replicated across emerging nations – and if the low cost iPhone is in works – Apple will multiply its market share in the mid range ($200) segment in the emerging nations.
3. Historically, OSs have largely oligopolistic/monopolistic in nature. Windows has ruled the PC wave and Android/iOS share the spoils in Mobile devices (Smartphones and Tablets). Even in the feature phone category – Symbian ruled the roost before the advent of Smartphones.
4.While the promise of a diversified OS experience and OS fatigue is a promised land – most of the experiments in this field have returned without encouraging results. (The Palm and HP experience with WebOS and the Samsung experience with home grown Bada being key examples)
5. Even a Goliath like Microsoft is unable to turn the RT platform with a reasonably decent Windows8 experience. Currently all it has is just a toe-hold in the industry even with a Office monopoly out there.
6. Operators – the key market facing entities in the telecom eco-system support the concept of multi OS but the consumer ask is converging to 2 or maximum of 3 OSs. Apple, Android and Blackberry/Windows take those spaces.
7. OEMs and Developers on the other hand would like to be working on 2/3 OSs – OEMs get their economies of scale and Developers have lesser customization requirements for their apps (Agree that HTML5 may change a bit of this)

There’s yet another promise of a light OS with cloud support supported by HTML5 – but even that experience is far from mainstream currently. Many of the fledgeling OSs plan to ride the HTMl5 wave. However, HTML5 and its features are also key to Android and Apple’s iOS – all the more relevant with over 600K apps each.

All these factors put together- my feeling is that there isn’t much room for multi-OS play. I had love to be proven wrong such as the way Windows explorer ceded the browser space to Chrome, Safari and Mozilla.

So to answer Mr.Kovacs narrative – “Apple and Google have led the way in the smartphone market but can’t cover the whole thing- it (is) impossible to understand how 3, 4, 5, or 6 billion people are going to get their diverse needs satisfied by one or two or five companies, no matter how delicious those companies are… Is the farmer in the Indian countryside going to have the same needs and requirements as a lawyer sitting in New York?

Yes, Mr.Kovacs- there is very limited need divergence in the age of convergence- and then there is scale!

Gartner: Q4, 2012 Mobile Phone and Smartphone Market shares

Posted in Industry updates, Mobile Devices and Company Updates by Manas Ganguly on February 16, 2013

Long time back, i had written a blog on the subject of smartphones becoming the key handheld at the cost of feature phones. If the Gartner 2012 numbers are to be considered, the saturation point for feature phones has been reached and the 2012 feature phones numbers – have been on a 1.66% decline as against 2011.

Gartner 4Q 2012 2

Incidentally, i see another trend – that of smaller players/ white-labelled OEMs- and a fragmented market emerging – a far cry from the Nokia and Samsung dominance days. The rise of Android is but actually a testimony to this trend with the exception of Samsung. With no malevolence to Samsung – it does seem to me that Samsung is holding on to a untenable position in shares in mobile devices with the white labeled OEMs on the prowl.

Gartner Q4, 2012 - 1

While Apple will still hold on to the smartphone ground (because of its ability to leverage hardware, software , services and experience), Samsung doesnot hold that ace with Android. This inspite of the fact that Samsung Galaxy series was the first high end Android that has challenged and now dethroned technology leadership of the iPhone.

Gartner Q4 2012 3

The end result looks like an Android dominated market, though there could be a case of Android fatigue setting in with the audiences. However with the low end $50 smartphones on Android’s the numbers for Android will continue to add up especially in APAC and African markets. Thus Android is expected to still rule the volumes game on smartphones. It would be interesting to see how Windows and Blackberry go after Android – but the key still remains that – Android is the undisputed choice in smartphones in the fastest growing markets across the world. Windows and Blackberry will take time reversing this trend.

Q4, 2012 Smartphone Market shares- IDC

Posted in Industry updates, Mobile Data & Traffic by Manas Ganguly on February 15, 2013

The new IDC report for smartphone shipments in Q4, 2012 hands it over to Android – which seems to have reached more dizzying heights than what Symbian/Nokia ever reached in their near monopolistic regime heydays. the two systems accounted for 91.1 percent of operating systems on all smartphone shipments during the fourth quarter of 2012. For the year 2012, Android and iOS accounted for 87.6 percent of operation systems on smartphones shipped.

SmartPhone OSs II

Android smartphone vendors and Apple shipped a total of 207.6 million units worldwide during Q4 which is a 70.2 percent increase from the 122.0 million shipments of Q4 2011.

Android Saw triple-digit growth for the year. According to IDC, Samsung was the biggest contributor to Android’s success as 42.0 percent of all Android smartphone shipments during the year were by Samsung. The report notes that the intra-Android competition has not stifled companies from keeping Android as the cornerstone of their respective smartphone strategies.
At the end of 2012, Android had a 68.8 percent of market, with over 497.1 million shipments. In 2011, Android’s market share was 49.2 percent with 243.5 million shipments.

IDC- Smartphone

iOS also continued to register strong growth. But the report notes that iOS’s year-over-year growth has slowed compared to the overall market. Of course the report also mentions the growing buzz around a large-screen iPhone and a cheaper variant, which it says would help sustain growth. iOS shipments for 2012 stood at 135.9 million smartphones which represents an 18.8 percent market share. This is a 46 percent growth compared to 2011 when iOS smartphone shipments stood at 93.1 million at a market share of 18.8 percent.

BlackBerry OS: The report states that the decision to postpone the release of BB10 to 2013 left the platform vulnerable in 2012 and reliant primarily on older smartphones running on BB7. As a result, BlackBerry’s tight grip on enterprise users has loosened. BlackBerry had 32.5 million shipments for 2012, which gives it a market share of 4.5 percent. This is down 36.11 percent from 2011 where it had 51.1 million shipments and a market share of 10.3 percent.

Windows Phone/Windows Mobile: The report notes that this has made some progress in Q4 of 2012. Nokia’s Lumia phones were the key driver in Microsoft’s success, says IDC. Windows Phone/Windows Mobile had a 17.9 million shipments and represents a 2.5 percent market for mobile OS on smartphones. This is 98.9 percent increase from 2011 when it had only 9.0 million shipments which was a market share of 1.8 percent.

Elop – Whose line is he towing?

Posted in Mobile Devices and Company Updates by Manas Ganguly on October 19, 2012

If the results from Nokia are any indication, Stephen Elop is in a tight spot – and unless the Lumia launches in Q4, 2012 reap a rich harvest, Elop may be under a huge pressure. Nokia has reported a third-quarter net loss of $1.27 billion as revenue plunged 19% and sales of its flagship Windows Phone fell to 2.9 million units. Revenue dropped to $9.45 billion and furthermore, Nokia has given a grim outlook for the rest of the year. While the numbers seem to have reversed as against Q2, 2012, Nokia is now pinning all its hopes on the Lumias – a desperate and a dire situation to be in. Given the dominance of the iPhone5 and the Androids, Nokia’s comeback kid, Lumia may risk a lukewarm response which may not re-kindle the comeback hopes for Nokia.

Nearly 20 months after the announcement of the Windows smartphone polarization, Stephen Elop really hasn’t much to show in terms of smartphone numbers. While Nokia’s reliance on the strategy of third platform option against Apple and Android is definitely true, but Elop just seems to be talking more Microsoft. As a phone maker, Windows has not really turned things around for Nokia. Has it? Instead over the last 2 years, Elop has steadily and unfailing ditched every other promising option – be it Meego, Maemo, Meltemi and now Symbian Belle in favour of Microsoft Windows.

So, Q4 is now the crunch quarter – Nokia will have to our perform with the Lumias – make it a smashing success. Anything less than smashing success will not inspire anyone. Given the Apple iPhone5’s 58 million numbers and the march of Samsung Android’s, it is difficult to imagine customer interest and instore-purchase of Nokia Lumias to be moonbound in the 1st quarter of its launch. What really beats me – is that Nokia has now put Symbian in maintenance mode and all the future roadmap of Symbian is cancelled. Nokia Symbian devices still outsells Windows-powered Lumias, by 3.4 million to 2.9 million, in Q3, 2012. Pulling the (investment and development effort) plug on your cash cow isnt the wisest thing – is it?

The question for Elop remains – Whose line is he towing? Nokia? Or Microsoft? And is Microsoft really planning a take-over

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Tablets – the continuing growth!

Posted in Industry updates by Manas Ganguly on September 20, 2012

Global tablet demand will continue to surge in the next 4 years inspite of all the ongoing economic concerns shrouding most regions in the world. IDC expects tablet shipments to grow at a CAGR 25% over the next 4 years to cap 261 million units by 2016.

IDC upped its forecasts for 2012 from 107 mln units to 117 mln units and its forecasts for 2013 from 142mln units to 166 mln units.Apple iPad will continue to dominate where as Android and Windows will expand the markets. Apple’s lead will slip, but only slightly, from 60 percent of the market this year to 58 percent by 2016. Soon to be released Apple’s 7” iPad will wrestle the low cost Android’s at the economy end of the market. Android’s share will also decline, from 35 percent this year to 30.5 percent in another four years. Windows Tablets will turn out 11% of the market in 2016 as against the 4% in 2012. Cost is seen as a major stumbling block to Windows Tablets. However in times to come, Windows tablet will provide the requisite momentum to the tablet category as a whole especially in the enterprise segment.

On the same note, iHS iSuppli has provided an estimate of 126.6 million units tablet shipments in 2012. That is a robust 56 percent annual increase in shipments for the tablet market in 2012, from 82.1 million units in 2011. Even while 59% sales will be from the 9.7” form factor (Growth in 9.7” segment is forecast to rise 35 percent from 55.2 million units in 2011), the fastest-growing portion of the market will the 7” screens tablets. n the seven-inch segment, which Apple is expected to enter later this year, sales are expected to nearly double from 20.8 million units last year.

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