A cautionary tale: What can we learn from HTC’s current troubles?
Oct15

A cautionary tale: What can we learn from HTC’s current troubles?

HTC has been around since 1997. Watching them evolve has easily been one of the most exciting things I’ve ever seen as a fan of the mobile industry. For those not familiar with HTC’s history, they started out making mobile devices for other companies. Back then we called such a company an “ODM”, which stands for original design manufacturer. HTC didn’t have a brand in the 90s, but that didn’t matter since they would happily take money from just about anyone and then slap whatever logo they were presented with on the front of their devices. Fast forward a decade and the launch of TouchFLO 3D was when HTC began realizing that they had to step up their game and stop letting others take responsibility for their work. TouchFLO 3D was a Windows Mobile 6.1 skin that premiered on HTC’s Touch Diamond smartphones. Those handsets were the first phones to actually be branded as HTC devices. Remember, this was back in 2008, the same year that the T-Mobile G1, the world’s first Android phone, also hit store shelves. One year later, the HTC Hero was unveiled, otherwise known as the first phone with Sense UI. HTC basically took what they learned with Sense, ported it over to Android, and made good use of all the new enthusiasm surrounding Google’s up and coming mobile operating system. So let’s recap, because it’s important to stress the transitions. HTC spent a little over a decade making phones for other people. They bought components, built assembly lines, manufactured devices, and the only customization work they had to do was slap a Compaq or Verizon logo on the front of their hardware. Then, possibly inspired by Apple, we’ll never really know, HTC decided to put their brand front and center. Their key differentiator would be the software skin that they installed on their devices. The problem was that they bet on the wrong platform in 2008. One year later, with Android starting to pick up steam, HTC changed the horse they were riding and practically started printing money. Sounds like a great story, right? So why is it then that HTC’s profits are down nearly 80% and revenue is roughly half what it was compared to the same time a year ago? To understand that you have to see why today’s major players, Apple and Samsung, are healthy. They might make devices that look absolutely nothing alike, but both companies are organized with the same vertically integrated mentality. Starting with Apple, here’s how they attack the market: All that money they made from the iPod back at the turn of the century, they give...

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Why is LG such a failure in the mobile phone business and can they turn things around?
Oct10

Why is LG such a failure in the mobile phone business and can they turn things around?

LG is a company that I love to beat up, not because they don’t have any talented engineers, but because they consistently fail to make full use of resources that they have. The company’s business strategy, as far as I and the rest of the world can tell, is to clone everything Samsung makes as quickly as humanly possible and hope for the best. The most recent example of this type of behavior is the LG Vu, a 5 inch 4:3 smartphone/tablet hybrid with a stylus that was clearly inspired by the Galaxy Note. Forgetting about specific phone models for a second, let’s talk about some hard data. At the end of the first quarter of 2012, LG lost their position as the fourth largest handset maker to the Chinese company ZTE. During the first three months of the year, LG managed to ship 13.7 million devices. That’s 44.1% less than the same quarter a year ago. Meanwhile, ZTE shipped 19.1 million devices, up 27% year on year. Looking at more recent numbers, LG’s shipments slipped even further to 13.1 million units during the second quarter. Now that’s not the bad news. The bad news is that 44% of those devices were actually smartphones. Do the math and that comes out to a little over 5.75 million devices. To put that figure into some context, Nokia shipped 6.2 million Symbian handsets during the same quarter. Yes, you read that right, Nokia’s Symbian portfolio outsold LG’s Android lineup. Research in Motion, makers of the BlackBerry, also miraculously managed to sell 11.1 million devices during the same time. That’s nearly double! So why is it that this company can’t succeed in the mobile phone game? Like Samsung, LG makes televisions. Like Samsung, LG makes refrigerators. Like Samsung, LG makes screens for smartphones and tablets. Back in April 2011, LG even announced that they licensed ARM’s Cortex A15, so pretty soon the company is going to start making their own processors. All the parts are there, so what’s missing? Let’s start with the obvious, LG’s software. If Samsung’s TouchWiz is a direct ripoff of Apple’s iOS, and LG’s skin is a clone of TouchWiz, that means LG’s phones effectively have a user interface that’s as bad as those cheap Chinese iPhone clones you see running a custom Android ROM. Rumor has it that LG’s upcoming flagship device, the Optimus G, will come in a Nexus flavor. There’s nothing more I’d like to see happen than for sales of the Nexus G to surpass sales of the Optimus G, thus making LG finally realize just how much people hate their work. Speaking about...

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Thinking Out Loud: What does Apple have in store for the iPhone 5S and the iPhone 6?

Apple’s iPhone 5 is less than two weeks old, yet for some strange reason we feel like it’s been out for months already. It has a taller screen so you can see more apps. Wonderful. It also has 4G LTE so you can upload photos faster. Amazing, but phones have been doing that for years already. The new iPhone is just so … boring because it’s such a safe and predictable product. That got me thinking, what’s Apple going to do next year to wow us? And what about the year after that? If we take a look at the iPhone 3G, the successor to that device, dubbed the 3GS, looked exactly the same, but it came with some tweaks under the hood. It’s the same story between the iPhone 4 and the 4S. So when the iPhone 5S comes out next year, assuming Apple is going to call it that, you can expect it to look like a perfect clone of the 5. It’s an uncomfortable truth that many of you are going to try and reject, but history has shown that the only way Apple can continue to ship millions upon millions of smartphones every week is to recycle the same physical design. Now the aluminum frame in the iPhone 5 makes NFC nearly impossible to implement, so you can forget about tapping to pay for things in 2013. All Apple can really do next year is improve the software. They need widgets, something that’s been a part of Android since the beginning of time. They also need a better way to multitask, because double tapping the home button is not only inelegant, but no one really figures out how to do it until the feature is demoed to them. What iOS 6 really needs, however, is some sort of settings pane that makes it easier for consumers to replace the bundled applications. When you click on a hyperlink in iOS 6 today, Safari opens up. When you click on an email address, Mail opens up. Make no mistake, that needs to change in iOS 7. The ability to set default applications is something we’ve been doing on our personal computers for decades, and something we’ve been able to do with Android since the birth of the platform. Now yes, we know iOS is all about simplicity, making things easier for users, and crafting a bulletproof system, but every year that iOS keeps looking like iOS makes Apple look that much more fearful of trying something new. Looking even further out, the iPhone 6 is where things potentially become really interesting. Apple’s going to introduce a new...

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Apple sold 5 million iPhone 5s over the weekend. What should we make of this number?
Sep25

Apple sold 5 million iPhone 5s over the weekend. What should we make of this number?

Apple’s just announced that they’ve sold over 5 million iPhone 5 units between Friday and Sunday. Is that an impressive number? Is that number that will make invest firms short Apple stock? Does the answer lie somewhere in the middle? Let’s look at the last iPhone, the 4S, to get some perspective. Apple sold 4 million of those during the device’s opening weekend. Now an extra million with the iPhone 5 sure does sound good, but then again the 4S launched in 7 countries, whereas the iPhone 5 launched in two additional markets, Singapore and Hong Kong. Tim Cook, Apple’s CEO, said that the company “sold out” of their initial iPhone 5 supply, and that they’re hard at work making more. So was Apple unprepared to feed customer demand or is there more to the story? Again, let’s look at the last iPhone to get a better sense of what’s going on. The 4S is, for all intents and purposes, the iPhone 4, but with a new set of guts. That means increasing production wasn’t probably all that difficult from a logistical point of view. Meanwhile the iPhone 5 has a new screen, it’s made out of new materials, and it has new guts, which means there likely wasn’t a lot of sharing of resources taking place during the manufacturing process. That should help explain the sell out. But still, 5 million, doesn’t that sound a bit low? Horace Dediu, one of the most quoted online personalities covering Apple, guessed that 6 million units would be sold during opening weekend. Piper Jaffray’s Gene Munster, another highly quoted personality in the Apple community, said 6 million iPhone 5 units on opening weekend would be the “worst case” scenario. Sorry to say this guys, but Apple ended up about a million short. Compared to everyone else though, there’s very little, if anything, to complain about. Take Nokia for instance, who bet the company on Windows Phone in early 2011. Their best quarter, in terms of Lumia sales, was the second quarter of this year. Any guesses as to how many Windows Phones they sold during that time? Barely 4 million. In other words, Apple sold more units of their flagship device in one weekend in a single digit number of countries than Nokia sold an entire portfolio of products (Lumia 610, 710, 800, 900) in three months on the global market. When you compare the iPhone 5 to that, Apple’s practically swimming in champagne. Then there’s Samsung, who said that two months after launching the Galaxy S III, their flagship smartphone, they sold 10 million units. That’s 5 million a month,...

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