Google and Samsung are working on Wintel like alliance to dominate mobile computing
Jan30

Google and Samsung are working on Wintel like alliance to dominate mobile computing

There is something huge happening in Android world. Two key platform players – Google and Samsung – are working on a broad set of agreements to align their interests and activities for the future development and promotion of Android. Things under discussion right now include Samsung scaling down its UI and app store/content developments in favor of Google Play, revenue sharing for all apps and content sold through Google Play on Samsung phones, joint Google Samsung development of certain features for Samsung flagships, that will later be integrated into Android, closing of Nexus program in 2015 and more. The discussions, first reported by Mobile –Review’s Eldar Murtazin and now partly confirmed by Re/Code, are in the very early stages and haven’t progressed much beyond the broad outlines. But if both companies succeed to come to terms, the result may be the creation of an alliance similar to Wintel, that could dominate the mobile computing for many years. The sale of Google’s Motorola unit to Lenovo is probably the part of the strategic shift in Google’s thinking about the future of Android that brought about the alliance discussions with Samsung. The first tangible result of Google/Samsung alliance, now confirmed both by Murtazin and Re/Code, will be the gradual shutdown of Samsung app store on Android, including its movie, music and other content offerings in favor of Google Play. In exchange, according to Murtazin, Google will now offer Samsung branded section in Play for special deals, features and promotions. And, most importantly, the revenue share for all apps and content sold through Google Play on Samsung devices. The companies are now negotiating exact amounts of Play income that Google will share with Samsung. After the deal is done, it will serve as a blueprint for Play Store arrangements with other Android vendors who are investing in their own, or third party app stores and content offerings. Also, confirmed both by Murtazin and Re/Code, Samsung’s will significantly scale down its TouchWiz and Magazine UX Android skin  development efforts. According to Murtazin, neither TouchWiz nor Magazine UX will be cancelled outright anytime soon. But Samsung will gradually reduce the amount of time and resources it allocates for Android UI, while expanding the line-up of Google Play Edition devices. Then it will watch the market reception and will decide how to proceed further, depending on results. Instead of investing heavily in its own Android user interface, Samsung will focus on creating the unique features to differentiate its smartphones and tablets. The examples of such features shipping already are advanced multitasking, enhanced pen/stylus functionality, multi-window support, etc; available only on Galaxy Notes. Furthermore, Google and Samsung are discussing ways to incorporate Samsung innovations directly...

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Microsoft may pay $2.6 billion to Samsung, Huawei, Sony, others to make Windows Phones (Update: MSFT response)
Jan15

Microsoft may pay $2.6 billion to Samsung, Huawei, Sony, others to make Windows Phones (Update: MSFT response)

Update: Microsoft’s communications lead Frank X. Shaw responded to the numbers provided in this post. Scroll down to the bottom to check it out. When Microsoft persuaded Nokia to go Windows Phone, one of key reasons for the  switch was the $1 billion a year in “platform support” payments Ballmer offered to Finns. While the partnership had a very rocky start, by the end of 2013 we could call it a moderate success. At least for Microsoft. Even if from very low base, Windows Phone is growing nicely. Android and iOS still rule mobile, but if the viable third ecosystem ever emerges, most experts agree that it will be Microsoft who will own it. There’s only one problem. Nokia now ships 70 to 90% of all Windows Phones worldwide. And when Microsoft finally acquires Nokia’s mobile division, it will be them making 9 out of ten Windows Phones. While Ballmer&Co may have some hardware ambitions to show off the best Windows can offer and push OEM partners to innovate more, becoming the sole maker of mobile Windows devices is not what they want. So now they are doubling down on “platform support” payments and will start offering a pile of money to smartphone OEMs to make Windows Phones. According to Mobile Review’s Eldar Murtazin, who was the first to tell us about Microsoft’s plans to merge Windows Phone and Windows RT and a major redesign of Metro UI,  Samsung is on board and will get $1.2 billion from Redmond this year. There’s also Huawei, in line for $600 million and Sony with $500 million for their WP8 handsets.  Another $300 million are earmarked to others. That’s $2.6 of hard cash doled out to smartphone vendors to push WP8. Conspicuously absent from the list of major WP8 smartphone OEMs is HTC. But with their current troubles and declining smartphone volumes, they are probably lumped among others. Panasonic’s upcoming rugged Windows Phone might be part of this program too. Will platform support payments work? There’s no way to tell right now. It sort of worked with Nokia and helped to get Windows Phone off the ground. Windows Phone is also getting better and is gaining some consumer traction, especially in the low-end. The key question is what will smartphone vendors do with Microsoft’s money and how committed they will be to their Windows Phone success. The key reason Lumias are doing ok today, is that after it abandoned its own platforms, Nokia didn’t have anywhere else to go. It had to put it al out there to make Windows Phone work. That level of commitment is obviously not in the cards with other OEMs....

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Samsung’s 10 million Galaxy Note 3s sold is another sign of a very challenging 2014 coming up
Dec10

Samsung’s 10 million Galaxy Note 3s sold is another sign of a very challenging 2014 coming up

Samsung shipped 10 million Galaxy Note 3 phablets in about two months, according to their official blog. Which is an impressive number, and trounces already great sales of its predecessor – Galaxy Note 2. There’s no question about it, after inventing the category 2 years ago, Samsung still rules the phablets with nobody else able to come close. On the other hand, there are some worrying signs that Galaxy Note 3 will follow the pattern of Galaxy S4 flagship. Which,  after initial sales surge, headed for a serious slowdown. The first two months after launch looked great for SGS4, too. Samsung managed to ship 20 million flagships between late April and July 2013. But if you look at the details, the sales slowdown was already apparent back then. While it took Sammy 26 days to ship the first 10 million units of SGS4, the second 10 million batch required 40 days, or 2 weeks longer. And we are talking shipments to carrier partners and wholesalers here, not the end user sales. Usually this distinction between end user sales and partner shipments does not matter much. Everybody, including Apple, reports shipments – not the end sales. Except in cases like these, when you have a really hot handset coming up, and every local carrier and reseller is begging for its share of new devices, and as many as early as possible. When forecasted end user demand doesn’t materialize, the OEM is in for some serious order revisions in the month #3 and onwards. This is exactly what happened to Samsung Galaxy S4. Rumors about flagship component order reductions started showing up in late June,  and were confirmed in October. By the time Samsung was able to report 40 million Galaxy S4s shipped, it was selling them at a rate of 5-6 million units a month. Still a very impressive number, but nowhere near the original internal projections. And, what’s worse, less than Galaxy S III at the same time a year before. Samsung Galaxy Note 3 is on the same trajectory. It took them about 34 days to report the first 5 million units shipped, and now its about 41 days for the second 5 million batch. The slowdown is not nearly as serious as with Galaxy S4, but its there nonetheless. And we are again talking about the shipments to carriers and wholesalers. At the height of Holiday Shopping Season, with most of pre-Christmas orders already in. Samsung has put on a brave face during investor and analyst day in November, leaking the plans to sell 360 million smartphones and 100 million tablets during 2014. But those plans have already been revised down...

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With 500K units shipped in Q3, Moto X is a success for Google and Motorola
Nov12

With 500K units shipped in Q3, Moto X is a success for Google and Motorola

Today  Wall Street Journal reports that according to research firm Strategy Analytics, Motorola sold 500 000 units of its flagship Moto X device. What? With all the hype surrounding the first true Motorola’s Google smartphone, they only managed to ship 500K units in Q3? What a pathetic figure that is. Or at least that’s what a lot of tech blogs will have you believe. When in truth, considering when, where and how Moto X launched, it is a real success for Google and Motorola. While evaluating the success or failure of any smartphone, everyone is very  quick to compare it to the numbers of Apple’s or Samsung’s bestsellers. The XX was able to ship only YY smartphones, when Apple sold 9 million iPhones during the opening weekend. Or when Samsung sold 10 million Galaxy S4s, or 5 million Galaxy Note 3s in a month… But do these comparisons give any useful insights about how any one smartphone or company is really doing? Certainly not. Due to their success over the last few years, Samsung and Apple are special cases today, which exist in their own universe and are judged by very different criteria than anyone else. That’s why shipping 40 million Galaxy S4s in 5 months, or 31 million iPhones in a quarter, is a disappointing result for them. While shipping 10 or 12 million smartphones in 3 months is great news for Sony and LG. And, that’s why 500K Moto Xs sold during the third quarter by Motorola, is a great success for Google. (If indeed they sold that much– we only have Strategy Analytics say so on this). Motorola only had 5 weeks to sell those half a million Xs before Sept. 30th –  the end of Q3. Moto X started shipping on August 23d. And only on two carriers – AT&T and Verizon. It got to T-Mobile on Sept 9th, and to Sprint and U.S. Cellular on Sept. 6th. That’s only 3 weeks of sales on 1/3 of its target market. And about 1.4 million unit run rate for a full quarter. Compare this number to the competition. Let’s take LG’s G2. LG is on record that they expect to sell 3 million G2s before the end of the year. G2 started shipping in Korea in August, rolled out internationally in September, and was offered by 130 carriers worldwide before October began. But LG still expects to sell less than a million of them per month. Or how about Nokia? That will be more fair comparison, since we know how many Lumias they sold in U.S. in Q3. About 1.4 million, or 460K units a month. Just about the same...

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Microsoft: smart watches/glasses 3-5 years away from mainstream. Google preps Glass 2&smartwatch launch
Oct29

Microsoft: smart watches/glasses 3-5 years away from mainstream. Google preps Glass 2&smartwatch launch

Microsoft has been notorious for missing some major computing trends over the last decade, then spending years and billions of dollars trying to catch up. Usually without much success. And, if wearable computing in the form of smart watches and glasses takes off in a year or two, they may do it again. Because at least some of Microsoft execs are pretty skeptical about the hype surrounding Google Glass and various smart watch efforts. According to Focus Taiwan, Microsoft corporate VP and chairman of the company’s Asia-Pacific research group, Zhang Ya-qin, had this to say about wearables during Global Views Business Forum in Taipei: “I think wearable devices require more time, maybe three to five years in development, before they can become mainstream. We expect to see a lot of try-outs of the devices in the coming years, in forms that include watches and eyeglasses” Maybe it is a misdirection, because Microsoft most definitely has a lot of wearable stuff cooking in its R&D labs: Or maybe Zhang Ya-qin is right, and technology for a mainstream consumer wearables is just not there yet. But Google has been testing a real Glass device with real people in real life for more than half a year now, collecting a lot of valuable usage data, and has a version 2 almost ready to ship. While WSJ reports that Google smart watch will enter mass production within a few months. Apple  also is all in on wearables and will, most likely, have a consumer ready iWatch out before the end of 2014. Sitting still on the commercialization of wearable computing devices, playing with the concepts and prototypes in R&D labs, waiting for the right technology to come around, while major competitors around you are busy launching real devices, sounds like a recipe for another disaster for Microsoft. Microsoft had almost monopoly in browsers, a lot of other Internet properties and yet it ignored the importance of search and search advertising until it was way too late to catch up with Google. After the decade of devlopment and tens of billions invested, Microsoft Bing is still a distant second in the field. They’ve been in smartphones since the beginning of this age. And yet, when the new true mobile computing paradigm came along, Steve Ballmer laughed at iPhone right until the moment he had to kill Windows Mobile and start fresh with Windows Phone. 3 years later and billions down the drain, the results of Microsoft mobile efforts are pathetic. Even if wearable computing is just a hype today and is not ready for prime time, can Microsoft risk to be wrong on this? I hope the new CEO in...

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Samsung walks the Nokia path. I wonder where does it lead?
Oct09

Samsung walks the Nokia path. I wonder where does it lead?

There is this huge industry giant, let’s call it “X”, that dominates smartphone/mobile device market. And collects almost half of all industry profits. Billions and billions of dollars a year. Every year  they come out with a new flagship device, each one more successful than previous one. This flagship very quickly becomes one of the most popular mobile handsets that year, with very few other vendors capable of producing a device to match or exceed it in unit sales volume. But while the flagships are extremely profitable, this mobile giant is no one trick pony. It actually produces mobile devices at every price point, in every popular form factor. And does so profitably. In fact, its financial resources, logistics, supply, manufacturing and distribution is of such a scale, that only small regional upstarts with pre-baked device designs from Schenzen China are able to compete with it. But only locally, and barely. They have no close competitor on Global scale. Sometimes X misses a hot new trend, and smaller competitor releases a device that becomes a big hit. That doesn’t bother the X in the least. They simply muster their manufacturing and logistics base, and quickly come up with an answer, copying the most important features of the hot gadget. Then it start replicating that successful design up and down the price tiers, adding better spec’d more expensive stuff, removing features or using cheaper components to produce cheaper variations, etc; And floods the market with a plethora of models for every taste. In a few quarters it’s X, who is the biggest player in the hot new category. Speaking about the number of models X is able to churn out each year. It’s simply mindboggling. Even the most ardent fans can not easily name even half of them. X is also not afraid to take risks. Sometimes these risky products are complete duds, but sometimes they can create, define and then dominate new category for years. And X has a very good idea where the mobile industry is headed. They can see the ever increasing importance good software/platforms and online services will have on their business. X has already made getting good at software and creating world class online services one of strategic goals for the whole company. Few years ago, X also got the first taste of what having a winning software platform might mean for business. But they didn’t own that smartphone platform, which was made and owned by another company, and available on the same terms to everyone else. They then tried to get into mobile software platform game themselves, by creating mobile OS of their own. Complete with its own app store and and SDK. While busy trying to make their first...

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LG’s new battery tech: denser batteries, curved batteries, cable batteries tied into a knot
Oct08

LG’s new battery tech: denser batteries, curved batteries, cable batteries tied into a knot

The key bottleneck in smartphone development today, are batteries. It doesn’t matter how fast the CPU is, what a bright and high resolution display the mobile device has, it all goes to naught if you run out of the stored power after a 3 or 4 hours of use. And despite the big promises coming form this or that startup or university research lab, no Moore’s law level breakthrough for battery tech is on the horizon. But there is some progress and steady incremental improvements in battery tech.  Just look at the battery top of the line smartphone of 2010- Nexus One- came with: 1400 mAh. Today we complain if the new smartphone has less than 2500 mAh of electric charge stored. And flagship devices with more than 3000 mAh batteries are now commonplace. Part of that, of course, comes from increase of the physical size of modern smartphone, with more place for larger batteries. But yearly increases in battery density are also a fact. Today LG decided to tell us what their LG Chem battery tech subsidiary has in store for us in the next year or three. And it is some pretty interesting stuff. They are now touting 3 new battery technologies. The stepped battery, which they already put into their G2 flagship smartphone, increases capacity by 16% over traditional design of the same size. They do that by putting two batteries on top of each other, filling the dead space in the device. With this kind of battery, LG says they increased G2’s endurance by 3 hours. Now LG plans to move to 3 and 4 step designs, to pack even more punch into the same package. LG has also developed and is about to start the mass production of curved batteries for curved display phones like upcoming G Flex, smart watches and other devices that want to break out of the rectangular brick design limitations of today. Just like with flexible displays, these are very early days of curved battery designs, and commercial availability will be very limited for now. But the technology is now mature enough to enter mass production, and you will see more and more curved devices during next year. And then there’s some pretty far-out stuff. LG’s Cable Battery. It is shaped like a piece of wire, which is waterproof, can be bent in any direction and even tied into a knot. It is meant to power various wearable electronics and could be integrated into various accessories and clothes. The problem is, that for now it can store very limited amount of power, and can operate at very low voltages to avoid heating up. Also, LG’s cable batteries are still in prototype/testing...

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Stephen Elop’s $25M conspiracies debunked. How, why and when Nokia CEO received his equity grants. Pt2
Oct02

Stephen Elop’s $25M conspiracies debunked. How, why and when Nokia CEO received his equity grants. Pt2

The fierceness of the accusations directed towards Nokia board over Stephen Elop’s $25 million golden parachute last week, was nothing short of a witch-hunt. According to the accusers- at best, independent Nokia directors were dumb incompetents for signing a contract with Elop in 2010, that created a set incentives for him to run Nokia’s mobile business into the ground and sell it cheaply to Microsoft. At worst- they colluded with American hedge funds and Microsoft on a secret, hostile and illegal Nokia takeover. The problem is, when you look at the publicly available facts, how when and why Elop was compensated the way he was, those accusations turn out to be an absolute nonsense. Here’s the detailed breakdown of facts that helped me arrive at conclusions I made in part 1 of this post. All the numbers are from Nokia annual reports you can find here, and from Proxy materials for shareholder meeting, found here. _______________________________________________ There are 3 types of equity that Nokia board awards its CEO and other execs. Stock options – a right to buy Nokia shares at a certain price, usually a market price on around the day of the grant. This is the least controversial equity grant, since if you underperform and company stock goes down, your options become worthless. There’s no point of having a right to buy stock for a certain price, when that stock trades freely in the market, below it. Restricted shares. These are part of executive compensation package, and are awarded to company’s top officers instead of cash, as part of their salary. They are mostly meant to keep important company employees financially motivated to work for Nokia. The shares are granted, but usually not delivered to the exec for 3 years after the award, and are forfeited if he or she leaves the company, or is fired in the meantime. But if the exec stays put for those 3 years, no matter how company performed or where the stock price is, restricted shares will still be worth something. Looking at how restricted shares were awarded, it seems that the amount of the compensation Elop received in them, was part of his contract. This amount was approximately 1.2 million Euros a year, and the number of actual shares he received depended on Nokia price when they were awarded. Performance shares. Like the name implies – these shares are awarded to company employees and execs, based on a company performance. There are some strict criteria/goals, based on combination of Nokia annual sales numbers or growth, and earnings per share. Limited amount of shares is awarded for the performance over the certain number of years....

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Enough with the witch-hunt already. There was no incompetence or conspiracy in Nokia board’s $25M Elop deal
Sep26

Enough with the witch-hunt already. There was no incompetence or conspiracy in Nokia board’s $25M Elop deal

Last week Nokia filed their proxy materials for the Shareholder Meeting to approve the sale of its mobile division to Microsoft. Buried in the documentation were a few paragraphs regarding the compensation Nokia CEO Stephen Elop will receive when the sale goes through. A whopping $25 million! Or 18.8 million Euro ($25.3M), to be exact. Internet erupted in righteous indignation. What, after he destroyed Nokia, this $%^%&% Trojan horse Elop gets a quarter of a hundred million dollars?! What a travesty! Over the weekend things got worse. Enterprising Finnish journalists dug up a mention of  “change of control “  clause in Elop’s contract. It said that if Nokia, or significant part of Nokia gets sold, all of the options and restricted/conditional shares that Stephen Elop has been granted during his tenure as CEO vest early, and will be bought from him for a price of 4.2 Euro per. Which was the biggest part – $19.6 million – of his $25M windfall. And all the hell broke loose. “Elop was a trojan horse” conspiracy theorists suddenly felt vindicated: “You see – even before hiring Elop, they’ve already wrote the  contract so that his main goal will be to destroy Nokia, and sell it cheaply to Microsoft! It explains everything!!!” Even respectable Forbes joined in: “This effectively means that the board hired a man who was given a giant carrot to drive down Nokia’s overall valuation and phone volumes while preparing a sale to Microsoft. What could possibly be a reason to structure Elop’s original contract in this manner? Did the board in fact end up promising Elop more compensation in case he sells the phone division than if he runs it with modest success?” And Tomi Ahonen concocted a 9000 word fairy tail about how Big Bad Elop swindled the clueless Board and killed Nokia. The problem is –it is all nonsense. Yes, the $25 million compensation for Stephen Elop, for what is an ultimately failed tenure as CEO, looks and is excessive. But in these days of hugely compensated rock-star CEOs, is that news? Did you hear about Thorsten Heins payday after Blackberry gets sold? Do you know how much Hewlett-Packard CEO Leo Apotheker took home after only 11 months of running HP PC and Palm divisions into the ground? Yes, Nokia board made a lot of mistakes over the years.  Before and after Feb. 11th. Most grievous of which was to bet the company 100% on Windows Phone. But to accuse them of gross incompetence, or even ill intent/conspiracy to destroy Nokia over Elop’s contract incentives? A simple look at the publicly available Nokia annual reports and proxy...

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CyanogenMod is now a business. I hope it’s next WordPress/Automattic or Xiaomi, and not Twitter/Obvious
Sep18

CyanogenMod is now a business. I hope it’s next WordPress/Automattic or Xiaomi, and not Twitter/Obvious

CyanogenMod – one of the most popular Android ROMs, is now a business. The team behind this Android ROM has formed a company, Cyanogen Inc., and raised $7 million from Benchmark Capital and Redpoint Ventures. Their goal? To become the third mobile operating system, ahead of Windows Phone and Blackberry, no less. Can they do it? Maybe. While #1 and #2 slots among mobile platforms are firmly held by Google and Apple, #3 is certainly in flux, with no less than 4 viable contenders –Windows Phone, Blackberry 10, Firefox and Tizen –  vying for the spot. And, according to some metrics, e.g. number of active users – which Cyanogen estimates to have 20 million of – they are already a solid #4. And that’s with a horrific installation process that only works on a fraction of available Android devices, and may require 23 steps, that only really dedicated geeks can get through. If history is any guide, it shows that no amount of previous experience, developer and financial resources is a guarantee of success in this this business. Microsoft has been trying to break through with Windows Phone for 3 years now, and their user base is comparable to what a team behind CyanogenMod achieved. So how will Cyanogen do it? Basically, by doing the same thing they have been doing since 2009, only better and faster. Most of the key ROM developers are now part of Cyanogen Inc., as founders and/or employees. With Steve Kondik as CTO and Koushik Dutta as VP of Engineering, and a total team of 17 working full-time on CyanogeMod. You may have noticed an increased pace of CyanogenMod development in the past few months, with new versions, updates and new phones appearing faster than ever. Well, that’s the result of Cyanogen becoming a business and having a full-time paid staff working on stuff. They closed the financing deal in April and have been quietly hiring and building since then. Now they are almost ready to deliver the first product – CyanogenMod installer – to Google Play, and decided it is time to announce themselves to the world. The installer should drastically simplify ROM loading process on Cyanogen friendly Android phones. Future steps include growing the list of compatible devices, expanding user friendly features of CyanogenMod and no plans to charge the users. A deal with hardware manufacturer is almost ready to go, too. But how will they make money if CyanogenMod stays free?    That’s a good question. And the answer is – they will, hopefully, figure it out. Eventually. According to Kirt McMaster, co-founder of Boost Mobile and CEO of Cyanogen Inc.: “If you’re the default OS on a device...

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