Abhir Dayaram

Blackberry Likely to Remain Niche Despite Positive Reviews

One of the most followed sagas within the technology industry during 2012 was the survival of Canadian smartphone manufacturer RIM, with serious questions being asked as to whether the company has lost so much ground to Apple and Samsung to have any relevance in the market. RIM responded to this by urging the market to keep an eye on its BlackBerry 10 platform as it will be the savior of the company.

However, despite early positive sentiment, BlackBerry is likely to remain a niche company.

RIM launched the BlackBerry 10 platform on January 30 amidst much fanfare and high expectation. The launch of the service, as well as a number of new products, generated mostly positive reviews with a number of customers and analysts. However, there are some analysts and phone manufacturers feel the new platform is not compelling enough to move the company beyond being a niche player, saying its services are not enough to appeal to a market outside of its existing customers.

Adam Leach, principal analyst at Ovum, said the BlackBerry 10 platform offers a differentiated user experience in today’s crowded and homogenous smartphone market, and the Z10 and Q10 will “stand out” from the Android handsets and look distinct from Apple’s iPhone.

“The user experience of BlackBerry 10 introduces some nice new features but importantly builds on BlackBerry’s user interface (UI) heritage and therefore will certainly appeal to existing BlackBerry users,” Leach said.

Technology website zdnet.com took to the streets of Singapore to gage public opinion on the news services and products and many were not impressed.

The site pointed out that William Foo, who owns an iPhone as well as a company-issued BlackBerry smartphone, said it was a combination of factors that make BlackBerry devices less compelling. “It’s not my primary phone, the screen is too small for any use, and there aren’t many interesting apps.”

The best way to determine whether the company will make an impact outside of its existing user base is to base it on sales. Informa Telecoms & Media principal analyst Malik Saadi said the company should aim to sell at least 1-million units of its newly launched Z10 device within the first quarter of its launch date, as anything below this figure would question the company’s ability to execute its marketing strategy.  Saadi adds that anything above 3-million units would be a spectacular performance and would significantly lift consumers and investors confidence in the company.

RIM is pinning all of the company’s revival hopes on the success of BlackBerry 10, so much so that at the launch of the new platform the company announced that it would be rebranding itself as BlackBerry. I feel that the sales target of 1-million units is ambitious but is achievable if the company can prove that the BlackBerry 10 platform is reliable and its user interface offers benefits that Apple and Android don’t. I would like to hear your thoughts below.

French Authorities Push for Laws to Fight Immoral Business Practices

If the French government has its way, the days of the ‘Double Irish with a Dutch Sandwich’ will be over as law makers have come up with an innovative way to curb the ‘immoral’ practice. The effects on the industry may be far reaching and companies like Google may find themselves scrambling to make deals with authorities to soften the blow such laws would have on the company.

According to a report by arstechnica.com, under the proposed law, technology companies operating in France would be required to pay taxes based on the amount of personal data the company collects from users. For a site like Google or Facebook, this would be determined on how many users belong to the site and how much information is exchanged through these sites.

French authorities point out that this will counter the tendency of technology companies to legally move money around Europe – between Ireland, Bermuda and the Netherlands. The arstechnica.com report points out that British and French officials have gone after Google in particular. Margaret Hodge, the United Kingdom’s Public Accounts Committee chair, slammed Google’s Northern European Operations Chief last year, saying, “We’re not accusing you of being illegal, we are accusing you of being immoral.”

Although the practice of Double Irish with a Dutch Sandwich is legal, one questions its future validity after the noises being made by European authorities. This would have a significant impact on the companies as they will have to foot extremely high tax bills. Despite an estimated $2 billion in ad revenue in France, Google pays almost no taxes in the country.

The impact of paying high tax bills may be too much for companies who may look for other ways to keep authorities happy. A way around this is to establish social economic programs which can be set up in poor communities and include a help centre and a skills development programme. Although this is a small price to pay, authorities may see the benefits of such projects and seriously consider the positive impact they may have on the country. Alternatively, these companies may look to push for an out of court settlement as Google is currently doing in its Google News case that it is fighting in France. I would like to hear your thoughts below.

Despite Strong Results Concern Builds over Apple’s Future

Even though Apple is seemingly riding the crest of the wave in terms of profitability, there are serious concerns over demand for the company’s products, as well as Apple’s future product pipeline. What does this mean for the future of the industry and what does Apple need to do to ensure its dominance?

Apple released the iPhone 5 in September 2012 and initial demand for the product has been high. So high in fact that Apple is about to announce that due to the demand for the iPhone 5, the company’s profits in the final three months of the year is $12.4 billion.

However, there is significant anxiety over the future of the company. This is driven mainly by the fact that although demand for Apple’s products is high, there is also significant demand for its competitor’s products.

Apple’s main competitor in the global smartphone market is the Samsung’s Galaxy line. Like Apple, Samsung also released the Galaxy SIII last year and while Apple can boast about the high demand for its product, Samsung can boast sales of close to 500 phones a minute during the last quarter of 2012, bringing the company’s profits to $7.9-billion over the quarter.

Apple is also losing ground in key market indicators. In January 2012, it was reported that Chinese manufacturer ZTE overtook Apple in the number of phones that are shipped on an annual basis. It will only be a matter of time then that ZTE’s numerical advantage will start to give Apple sleepless nights.

The other Apple product which has proved profitable for the company has been the iPad. The tablet market is the only market which Apple truly dominates with a 60% market share. The company released a smaller version of the iPad in October 2012 which has garnered a lot of attention.  However, the time period in which Apple is still able to dominate this market is questionable as there are rumors of Samsung and Sony producing tablets specifically designed to compete with the iPad Mini.  

Apple has always been famous for producing high end products tailor made to suit user demand. However, this has always come at a high price because the company insists on using high end components to produce these products. The problem Apple now faces is that its rivals, such as Samsung and ZTE, have been able to produce a product similar in quality to any Apple product at a fraction of the cost because of the slightly cheaper components being used.

How then does Apple overcome this? Annual upgrades of its products are proving ineffective in redefining the market in the way that its rivals products are. What does Apple need to do to ensure its dominance of the industry? I would like to hear your thoughts

Sony unveils Tablet Z in New Product Strategy

In a bid to revive the company and save it from bankruptcy, Japanese electronics giant Sony has unveiled Tablet Z, the new tablet in its Xperia range. However, will this be enough to help the company recover from the downward spiral it finds itself in?

What is important about the product is that, like the rumored new Google Nexus 7 tablet, Tablet Z will compete for the same share of the market as the Apple iPad Mini. But with only one version reported to be coming out (32GB of internal storage) once again, pricing will be key as fans of the Xperia range won’t have two options to choose from.

Reports show that the new tablet has been the subject of rumors for some time now and is Sony’s first real manufacturing step towards trying to revive the company’s fortunes.

Sony has been on a major campaign to cut costs in an effort to avoid bankruptcy. Most recently, the company sold its headquarters in Manhattan, New York for $1.1 billion in order to generate cash that will tide the company over while it is in the process of implementing its new product strategy.

Sony has been ambiguous about this strategy, but the company has suffered in the same way other top Japanese manufacturers have suffered. Japanese companies are known for producing high-end products tailor made to suit user’s expectations. However, rivals have been able to produce carbon copy products at a fraction of the price without compromising too much on quality.

Because Tablet Z is the first product in what will be a new chapter for the company, there will be some consumers who will judge Sony’s recovery efforts based on this product. But what do devices like the Tab Z mean for Sony going forward? The Tablet Z announcement comes barely a week after Xperia product manager Stephen Sneedon noted that the company was considering pulling out of the low-end smartphone market entirely. A similar strategy for the company’s tablet products won’t be impossible to imagine. I would like to hear your thoughts below.

Microsoft may have the solution to the future survival of PC companies

In a world of declining PC sales, the most pertinent question for the world’s largest PC manufacturers is how to design a product that will be able to compete with the massive demand that the consumer market has for mobile products such as smartphones and tablets. The answer to this question may have been uncovered by Microsoft, but what will the cost of development be?

In order to make the company relevant in a technology industry that is embracing mobile technology, as the future of the industry, technology heavyweight Microsoft released its Surface Pro Tablet in October 2012.

The tablet is unique in that it comes standard with a physical keyboard attached to the unit. However, the screen can detach itself from the keyboard to offer tablet functionality. Although sales of the Surface and Surface Pro have been slow, the International Data Corporation points out that by 2016, Windows operated tablets will hold a 10.3% share of the market.

Because of these expectations, Microsoft feels confident that they have the solution to the question of the survival of the PC.

There are two main reasons why Microsoft is confident that its product is the best template for the new PC age. The first reason is that the electronics that drive the PC should go behind the screen converting the PC into a larger fixed unit of a user’s tablet.

The second reason that Microsoft is confident about its product is its processor. The company made a big decision to go with a mainstream third generation Core Intel “Ivy Bridge” chip as opposed to the slower Atom processor that most Windows 8 tablet and detachable makers have opted for.

This then paints a picture of what Microsoft thinks PC should look like in the future. Compact units with the electronics housed behind the screen driven by a serious processor. However, these units have to be detachable crossovers as they should still offer the ability to go mobile.

This would in essence be a complete change of mindset for PC manufacturers and will be expensive to implement as there needs to be a significant amount of research and development involved in the process. Already PC manufacturers are resorting to drastic measures to secure survival. The world’s third largest PC manufacturer Dell is even is privatization talks with a number of interested parties.

Perhaps then this is the answer to how PC manufacturers will fund growth in this new direction. This will also be important to Microsoft as the majority of PC manufacturers operate off the Windows operating system. The ability of companies to produce a product that can compete with tablets will be key to Microsoft securing the 10% that the IDC say Microsoft will have by 2016. I would like to hear your thoughts below.

Facebook unveils a search engine to challenge Google’s supremacy

After months of speculation, Facebook has launched its own search engine. This will reportedly increase the site’s functionality and hopefully improve its bottom line, as it is the first major step towards monetization diversification. But will it pose a threat to Google and Bing? Indications are that over the short term, it won’t; over the long term, however, the service does have a lot of potential.

Facebook has been hinting at a search engine since early 2011 and in a previously published article I pointed out the possibility of this service and looked at its possible functionality. However, Facebook has taken a completely novel approach to its service, called Graph Search.

Reports show that Graph Search allows users to search within his/her group of friends in order to gain information on restaurants, movies, book reviews or places of interest. But unlike Goggle’s search engine, Facebook will use phrases as opposed to key words to generate a search result.  For example, a user can search: “My friends who live in Palo Alto and like Game of Thrones”, thus generate a set of results on friends who live in the area and watch Game of Thrones. Graph Search will also provide the user with just the answer and not a set of links to a possible answer.

At the unveiling of the service, Facebook CEO Mark Zuckerberg said that Graph Search will occupy a prominent position on Facebook’s home page and will become the third pillar of Facebook after News Feed and Timeline.  He also assured investors and media that the company will still respect the privacy of its users. He pointed out that people searching will only see content that has been shared with them and noted that Facebook has added an alert to users’ News Feeds asking them to review their privacy preferences before the search tool is launched.

A beta version of the service will first be offered to users in the USA before it is rolled out in phases across the world.

Graph Search will not challenge Google’s supremacy over the short term as it is a locally based search function. However, it has the potential to become a major money spinner for its investors.

Facebook has a close relationship with Microsoft’s search engine Bing. Any results that can’t be found by Graph Search will automatically be deferred to the site. Microsoft also includes a number of Facebook results in its Bing searches.

Market analysts Bank of America Merrill Lynch points out that Facebook can generate as much as $500-million in annual revenue if it generates one paid click per user per year. This would be the answer that Facebook has been looking for to substantiate its high valuation at its IPO.

As pointed out above, in its present form Graph Search will not threaten Google’s supremacy as the world’s premier internet search engine. However, the fact that Facebook is using a different algorithm to generate its search results may present users with a more rounded answer than that of Google. The fact that Graph Search also provides just results as opposed to links to possible results could be a major draw card with users. It will now all depend on monetization and Facebook launching a mobile product, as half of all searches on mobile products are for local information. I would like to hear your thoughts below.

Apple reports decreased demand for iPhone components. Will this herald in a new market dynamic?

In the past, Apple and Microsoft were seen as the top technology companies in the world, with Apple being able to boast about its ability to design products using top quality materials while still keeping up with user trends and demands. However, 2013 may be the year of change and the company may find it difficult to continue to be as profitable in light of cheaper products coming onto the market, which also cater for consumer demands. A new market dynamic, which may not include Apple, could possibly be established this year.

For the first time since the launch of the iPhone range in 2007, orders of screens have been cut, apparently decreasing them by half of its original projected target.

Demand for the latest version of the iPhone has not been as high as it was with previous models. To add to that, Apple has had to deal with a lot of side issues while trying to increase this demand. The biggest of these occurred when Apple released its new operating system iOS6, which did not include Google Maps. This would have been fine if Apple’s own mapping system didn’t have any problems associated with it. However, the company came under heavy criticism when it offered the public a vastly inferior product.

Added to this have been recent challenges at its main production partner Foxconn. Apple has been outsourcing production of its product since the debut of the phone, and up until now there haven’t been any major issues. However, last year Apple needed to work through a major worker strike at Foxconn’s major factory and already in 2013 there are allegations of bribery and worries over further strikes.

Apple has to manage all of this while its biggest rival, Samsung, is reporting that it is selling 500 smartphone devices a minute and that the company has just sold its 100-millionth unit of its Galaxy S smartphone.

What does this mean for the market? Will it see a new dynamic being established? I think that although challenging, the fact that Apple needs to revitalize user demand is a wake up call rather than a train smash for the company. However, Apple must be conscious that competitors such as Samsung and Microsoft are producing products that are fresh and are capturing the imagination of consumers. Apple needs to look to its core strengths and possibly launch a product this year that will be able to make up for the decreased demand for the iPhone that the company has had to manage. I would like to hear your thoughts below.

Level heads pave way for possible industry precedent

Throughout 2012, the technology industry has been characterized by some high profile court cases mainly centered around the use, or abuse, of patents. However, a new deal between Apple and Google may go a long way in setting a precedent for future cases and the way in which they can be resolved. The deal may also benefit the public downstream.

Apple and Google have been competing in the same arena for ailing photographic giant Kodak’s sought-after patents. Kodak filed for Chapter 11 bankruptcy in January 2012 and has $830-million in exit financing provided it sells its patent portfolio for $500-million.

Neither Google nor Apple were prepared to put up that kind of money by themselves, but a recent alliance between the two will see them put up a strong bid to be joint owners of the estimated 1 100 patents.

The reason why I feel that this is the best situation for all parties concerned takes me back to when Apple had a high profile victory earlier in August. The courts found that Samsung was guilty of illegally using some of Apple’s patents. But instead of trying to detract away from Samsung’s popularity, the demand for the Galaxy SIII (one of the infringing products in question) has grown. Apple will also be mindful of the fact that although it did win a $1-billion judgment against Samsung, the legal fees it took to win that judgment were high.

The deal will also benefit the industry in that besides Microsoft; Apple and Google are two of the largest technology companies in the world. The money spent on research and development on improving the service as well as the expertise used to achieve this will make the product state of the art.

To me this is the perfect way in which to avoid future patent disputes as well as the lengthy court battles associated thereto. It also may avoid lengthy out of court settlements similar to the one struck between Apple and HTC.

Facebook offers free chat in large scale membership drive

Two months after it achieved the one billion user mark, the world’s largest social media network, Facebook, has announced it will be going on a major membership drive in 2013, by offering Facebook chat to non-members. If the social media behemoth is able to accomplish this, it will be a major victory as it tries to diversify its user base in the hope of growing its revenue stream. However, it will face stiff competition from other social media platforms, such as Twitter and Pinterest (to name a fe­w) that have shown their intent to grow their user bases as well.

To elaborate on Facebook’s new offering, reports show that mobile users will be able to sign into the site with their mobile number and subsequently be able to access the service. Facebook will begin to offer free access to its chat service on Google-based Android phones in India, Indonesia, Australia, Venezuela and South Africa. Further reports indicate that Facebook is planning a global launch of the service and that it will be accessible across all mobile operating systems.

This will increase Facebook’s exposure as India is Asia’s second most populated country with a historically strong and growing technology industry. The Australian technology industry is well established and Indonesia, Venezuela and South Africa are seen as key growth markets for the company.

Facebook hopes that the free access to its chat service will attract more users to its platform, enabling the company to market its monetization services such as Facebook Gifts to a larger audience. Increased membership will allow advertisers on the site access to a larger user base, which could mean a possible increase in Facebook’s advertising rates. I would like to hear your thoughts.

BHP Billiton’s Surprising Share Movements

2012 been a year to forget for BHP Billiton, the multi-national mining and petroleum giant which has seen it make over $3 billion in write downs and been hit by big commodity price falls. Yet despite its poor performance there have been some very unusual movements in its share price. At the start of January it was worth $74.76 a share on the NYSE and this rose to $82.15 a share by the start of February. However a reported 5.5% drop in net profits due to lower iron ore prices, forecasted difficulties due to the European debt crisis and slowing demand from China all caused the share price to slip to $77 a share. The price continued to fall and reached $60.87 in June on the back of falling mineral prices.

From this low something very strange happened. The price starting climbing and today BHP is worth $72.66 a share, closing the year at pretty much the same price it started it. What’s unusual about this, is that this recovery happened during a period of major problems at BHP. In August they announced they had shelved more than $60 billion in expansion projects due to falling commodity prices and slowing global economic growth. They also announced some major write downs which included $2.84 billion from its Fayetteville shale gas facility, $450m from its Nickel West assets in Australia and a $200 million loss from the sale of EKATI Diamond Mine and Diamonds Marketing operation in Canada for just $500 million.

How BHP’s share price is growing despite its mounting problem is a mystery. The only positive to happen to the company is that the iron ore price has recovered from $86.70 a tonne in September to $115.30 a tonne this week, however this is more than counteracted by mounting costs in all its mining activities and low coal prices, which have fallen to their lowest level since 2010. To further underscore the problems at BHP, in November its CEO Marius Kloppers announced his surprise resignation. Many industry analysts see this as a cynical attempt to exit the business ahead of an anticipated period of difficulty for the mining giant, with many expecting it to be at least another five years before it equals its 2011 performance figures.

That the share price is not falling but actually growing in these circumstances is very suspicious and I suspect the reason is that the stock price is being artificially manipulated. Whether the truth is revealed or not remains to be seen.