Nokia is Losing. And Faster Than it Seems.

Jul 22

Posted by eldade in Mobile Industry | 1 Comment

As is slowly becoming common-knowledge, Nokia’s handset business seems to be slowly decaying. Their margins are eroding, and their market presence is shifting towards the very bottom of the mobile handset food chain. Today we got just a few more indicators on how this is happening.

Nokia likes to push their massive sales volumes as evidence of their market domination (110 million units in Q3 of 2010), but that number only proves that Nokia is only selling low-margin commodities, and that their competitors have taken over the lucrative high-end sectors of the market.

Comparing the average handset sale price of Apple vs. Nokia is quite interesting. Based on latest figures from both companies, it looks like Apple is getting an average of $635 per unit, while Nokia is bringing in a measly $78. In my book, this means Nokia is now officially a low-end player.

I’d also completely ignore their smart-phone market presence figures, as they are clearly bogus. They reported 24 million smartphones sold this last quarter. Truthfully, I’d like to know the average sale price of those units, but I’m guessing it’s well below $200, and that they are absolutely NOT smartphones, and are therefore not comparable to Android and Apple devices sold in that same period. I believe Nokia has actually lost the smartphone battle a while ago, and are now holding on to low-end Symbian devices that are not in any way comparable to iPhone and Android devices.

How many real $400+ smartphones has Nokia sold from it’s high-end portfolio? I’m guessing it’s an embarrassing number.

Still, it’s clearly too early to write Nokia’s eulogy just yet — can it reinvent itself and get back in the game? Time will tell.

Tags: market, mobile, nokia

Why Amazon’s eBooks-outsell-hardcovers announcement is misleading

Jul 20

Posted by eldade in Content & Media | No Comments

I’m always amazed by how easily the press and my favorite, respectable bloggers tend to naively buy into certain announcements without even wondering whether or not they make sense. Case in point: Amazon’s recent announcement about them selling more Kindle ebooks than good old hard cover books.

Sure, that’s an impressive and important milestone, but people seem to be reinterpreting it to mean that “Kindle books are now outselling hard cover books”, or, even worse “Kindle books are now outselling paper books”. That’s amazing to me because that’s not the case. Kindle books are not even close to outselling hard covers, and certainly not paper books in general.

Kindle books are now outselling hardcover books within Amazon, but we need to remember that Amazon is the only store offering Kindle books, and it has many competitors in the US that also sell hard covers. Hence, hard cover books are still outselling Kindle books, probably by a lot. If we want to get a feel for how close the Kindle is to surpassing hardcover book sales overall, we need to know Amazon’s market share in worldwide hardcover book sales.
Hard cover books make up a relatively small portion of total book sales due to their high price. Paperbacks general outsell hardcovers many to one.

Bottom line, Kindle is making great progress, but is nowhere near outselling paper books. Not in the US, and certainly not globally. I’d guess it’s currently not even at 10% market penetration in the US.

Update: Blogger Jay Yarow has posted an interesting article which estimates that Amazon’s latest numbers add up to a 6% market share for Kindle books.

The Price of Greed

Jun 2

Posted by eldade in Business | No Comments

Lately I have repeatedly fallen victim to amazingly overpriced accessories sold by the major manufacturers, in a strategy that is starting to become truly annoying. I see countless companies that market high-priced, premium items (cameras, laptops, etc.) that are sold without some fundamentally required accessory that 90% of customers will simply have to buy, whereas said accessory is priced at a 2000% margin. Examples include the various connector adapters from Apple (VGA adapter on the iPad, DVI output on the MacBooks, etc.), lens hoods on Canon lenses, etc.

These are all essentially little pieces of plastic that typically cost below $1 to make, and are often sold at between $20-$50. The simple answer is that companies do this because they can, and because it’s just easy money. Their customers, in most cases, have already spent hundreds, if not thousands, of dollars on the main attraction, and will be, almost in all cases, willing to pay an extra $50 for something they simply must have, even if that something is ridiculously overpriced.

The question I am asking is, how can a company gauge the true long-term cost of this model: Customer annoyance. How likely am I to start hating Canon after I find myself paying $200 for four lens hoods that should have been free to begin with? Is it enough to consider dumping Canon for their competitor? Probably not, but who knows, it might be the final straw for people who are considering such a move for other reasons. In Canon’s case, I believe their competitors have a similar policy so for them it’s probably a no-brainer, but in Apple’s case, they are selling overpriced connectors that are actually built-into their competitors laptops!

Why Apple is Winning

Jun 2

Posted by eldade in Apple | No Comments

In trying to gauge and estimate market forces, I find that people often fail to recognize the importance of corporate values, and just how strongly they affect the outcome of various ongoing industry battles: Android vs. iPhone vs. Nokia, Apple vs. Flash, etc., are all far better understood when viewed from a company values standpoint. You see, a corporation is like an individual human being in the sense that it has core values — top priority issues that matter the most to its top brass, and therefore (hopefully) also to its very last employee. As a side-note, companies that fail to convey such values to their employees usually fail at the outset, and are not part of this discussion.

You might assume that in every major corporation, those values are identical: Making money. I think that’s absolutely not the case. Sure, revenues and profitability are key, but ultimately it depends on what matters most to the company’s leaders, and surprisingly enough, money isn’t always it. Take Steve Jobs, for instance. It seems rather clear to me that he doesn’t spend his days pondering what he can do to generate more revenue for Apple. He spends them thinking how he can make Apple “win the game”, deliver superior user-experiences, etc.

This is critically important because it helps us understand what drives the various decisions made by these companies. Take Google, for example. Clearly Google is a engineering-driven company, with an emphasis on technological innovations and openness. This hugely impacts their various product decisions, and is evident when looking at Android, for example. Android is open in a way that only makes sense to someone who places openness as a value. Unfortunately, openness and user experience often conflicts, which is why Apple tends to design their products to be as open as they need to be, but no more. That is why Apple’s products tend to be pretty closed.

The reason for the phenomenal success Apple has seen in recent years is just how amazingly focused it’s been, and just how right its values turned out to be. Apple focuses on user experience, and pretty much on nothing else. That has allowed them to produce, overall, vastly superior products compared to their competitors. It has also driven them to create smaller, focused product lines with clear differentiation.

For instance, Lenovo currently offers over 13 unique laptop product lines, each with its own configuration options. By comparison, Apple offers three such laptop product lines. They choose to compromise flexibility in favor of simplicity, thereby simplifying the customer’s selection process and ensuring a more enjoyable shopping experience.

When looking at Apple’s competitors, I see strong focus on revenue generation through massive technological investment, the creation of vast product lines to suit any type of customer, and investment in endless feature lists, in the belief that features ultimately sell products. This is how Microsoft, Nokia, Samsung, LG, and countless other companies seem to think about their business. The reason why Apple is growing so much faster than all of these companies, is that their values just seem to make more sense.

Another example: Looking at the average Windows laptop, I find it mind boggling that Microsoft still allows their hardware partners (Lenovo, Dell, HP, and the others) to install all of their redundant software on top of Windows 7. A separate WiFi management tool, display settings tool, various control panel applets, product advertisements, you name it. Windows 7 includes excellent tools for managing all of these features, why on earth does Microsoft allow their partners to damage their customer’s user experience for their own selfish interests? Surely Microsoft is powerful enough to force (or incentivize) them to sell their hardware with plain vanilla Windows systems?

The reason, once again, is values. Microsoft is thinking of business relationships and politics, and placing that consideration ahead of user experience. It’s even possible that they might not see it as a compromise, but rather as a natural arrangement with their hardware partners. Apple takes the other extreme, completely hiding the existence of their various partners in their products (notice the lack of any kind of Intel sticker on Intel Macs, for example), because it typically makes the products simpler to use and nicer to look at.

My theory? Companies will continue to have a challenging uphill battle against Apple, until they realize that they need to rethink their core values, and place a far greater emphasis on user experience, placing it before other considerations such as feature lists, huge product lines to accommodate all tastes, and yes, even revenues.

Tags: Android, Apple, Business, Google, Mac, market, Microsoft

Has Apple been developing some battery optimization tricks?

Jun 8

Posted by eldade in Apple | No Comments

20070

In the midst of a flurry of announcements from Apple, I’ve been particularly interested in the little 13″ Macbook Pro. I currently use the Aluminum Unibody 13″ MacBook and I was curious about Apple’s “7 hour” battery claim for the new model. The first thing I did once the Apple Online Store came back online was to check the battery size of the new model versus the old one, and ensure they kept the same size and weight.

The conclusion is that the new 13″ MBP is the exact same size and weight, but that its battery stores about 29% more energy than the Aluminum Unibody model it replaces (58 watts in the new non-removable battery, versus 45 watts in the old model’s removable battery). This means that the real world numbers for the 13″ MBP are going to be excellent — 7 hours is probably an unrealistic number, but 5 hours of real-world use is very likely.

The thing that makes me wonder is, how do they do it? Is it possible that 30% of the battery’s weight and volume is in its removable enclosure? Or has Apple perhaps learned some neat chemical tricks that allow them to pack a bit more energy into a given amount of space? Is that also how they managed to upgrade the new iPhone 3GS’s battery life the way they did?

Tags: Apple, Battery, iPhone 3GS, MacBook, Power

Could we survive an EMP attack?

May 5

Posted by eldade in Science & Technology | No Comments

Nuclear_fireball

In my never-ending hunt for apocalyptic novels of any kind, I’ve recently read One Second After, by William R. Forstchen. As a work of fiction, I can say I found it to be rather mediocre. Admittedly fun, but mediocre nonetheless. The reason I mention this is that I did find the issues raised by One Second After to be of critical importance, and it taught me a lot about a shadowy topic that truly threatens the safety of the western world: Large scale Electromagnetic Pulse (EMP) attack.

What is an EMP?

For those who haven’t watched Tom Cruise in War of the Worlds, an EMP, or Electromagnetic Pulse, is a brief ultra-powerful electromagnetic surge that destroys virtually all electronics in its path (EMPs travel through the air, just like any other electromagnetic waves). EMPs were discovered sometime mid last century through nuclear tests conducted at the height of the cold war. As a side effect of the nuclear blasts, it was discovered that a ultra-high-energy surge gets released, and that this surge has a devastating effect on all electronics within its range: city power grids, phone systems, and almost any other electronic device within range gets immediately “bricked”. More importantly, when a nuclear weapon is detonated in high altitude, something called the Compton effect comes into play. This means that much more of the nuclear weapon’s energy goes into an EMP than it would have otherwise, resulting in a far more powerful EMP.

The end result is that a small nuclear device detonated in high altitude can cripple any electronics in a radius of over 1000 km, without causing any direct human casualties. Just to put this in perspective, the estimate is that two or three such devices detonated in the atmosphere could essentially cripple all electronics in an area as large as the continental United States. If losing all power and electronics sounds harmless or somehow minor, it is not. An EMP would disable all modern day communications, transportation, and electronics. This means no cars, no planes, no phones, no Internet, no computers, etc. Our increased reliance on technology, coupled with the the huge impacted area means that the potential effect this could have on a western society is absolutely devastating.

Imagine a situation where one day, without warning, all electronics shut down, all cars die, and essentially all technology becomes useless. Additionally, these devices would not be fixable — definitely not in the short term, and most likely not even in the long term. On the most immediate level, the meaning is that the only food you’d have access to is whatever is walking distance from your present position. Now imagine that unless you happen to live in an agricultural area, that food would most likely last for no more than a couple of days. Add that to the fact that no one would be coming — all form of government would come to an instant halt without communications… Starting to get the picture?

Just to give an idea, One Second After describes such an attack over the United States, and describes how within weeks after the attack starvation becomes commonplace and barbaric tribes are formed, looting and scavenging for any food they can get their hands on. I honestly don’t think that’s an exaggeration. Western societies rely so heavily on technology that at this point we’ve simply forgotten how to live without it.

How Likely is it?

The next question we must ask ourselves is, how difficult would it be for terrorists or rouge nations to carry out such an attack? Unfortunately, the answer is that it’s not that difficult. The fact is that it is within the means of any nation equipped with ballistic missiles and nuclear warheads. From the enemy’s standpoint this might be a far more effective use of their nuclear arsenal because it causes widespread devastation, unlike a conventional atmospheric detonation of a typical nuclear weapon, which can generally destroy a large city, at the most. Sure, the destruction of an entire city sounds unthinkable and horrifying, but it most likely wouldn’t defeat a powerful nation. A large scale EMP can easily disable even the largest and most powerful countries, possibly for good.

What Can Be Done?

While completely defending against EMPs is impractical, it turns out that there are relatively cheap ways for governments to prepare and minimize the potential damage. For example, power plants and communication systems can be hardened against EMPs. So can vehicles and commercial airliners. The point is that this is one of those things where governments can invest a little bit right now and dramatically minimize the potential damage caused by this kind of attack. At the very minimum, be prepared to the point of having the ability to recover from such an attack, should it ever take place.
As an individual, there is very little we can do, other than complain to our governments and drive them to action. My only advice would have been to buy EMP-hardened cars and radios, but those don’t appear to exist…

Learn More

If you’d like to learn more, you could give One Second After a read to get a more dramatized view of the potential consequences, with some decent entertainment value. Alternatively, if you prefer the raw details you could take a look at the executive report written by the EMP Commission. It’s not as dramatic, but it’s just as scary…

Tags: Book, EMP, Nuclear, Terrorism, Threat, War

Susan Boyle: 100 million people getting a demo of why stereotypes are bad.

Apr 20

Posted by eldade in Social Media | No Comments

By now if you’re human and happen to be connected to the Internet, you’ve heard of Susan Boyle, that awkward, strange, overweight woman from Britain’s Got Talent who dazzled the world when she gave a stunning performance of I Dreamed a Dream from Les Misérables. Beyond the utterly astonished reaction of the judges and the audience during the performance, what was more interesting obviously was the online response. With nearly 100 million views and counting, Susan Boyle must be one of the fastest rises to popularity the Internet has ever produced.

But that’s all old news. The real question is: why? Sure, she’s a great singer, but she’s not that great. I mean, there are countless other unknown singers who sing amazingly well, I really don’t think that’s the issue here. The issue is that the audience and judges in the show so clearly misjudge her due to her appearance, and that while watching the YouTube videos, every single viewer of that video had the exact same reaction while watching it. In a way, this video should be titled “Watch How Your First Impressions Don’t Work”. I think the real fun part about that video is to watch the stunned faces — stunned by their own misjudgment.

I recently read Blink, by Malcolm Gladwell, and I find Susan Boyle’s case to be living proof of his theories. In case you’re not familiar with that book, it talks about how people should (and can) make quick judgment of situations, and how these judgements tend to be more accurate or just as accurate as long term studies conducted afterwards. Gladwell contends that our instincts might be far more powerful (and certainly faster) than our conscious intelligence. Of course, Gladwell explains that our ability to perform these kinds of snap judgements is limited by our prejudice and predispositions, which is exactly what happens in Susan Boyle’s case. Our deeply ingrained stereotypes tell us one thing about her, yet our eyes and ears tell us something completely different. It’s just a powerful demo of stereotypes working on an almost universal scale.

Additionally, we are amazed by seeing how it happens to everybody else (audience, judges) at the same time. Bottom line, this is a fascinating little social experiment that reveals, yet again, just how stereotypes can be misleading.

Wake up people: Facebook owns us.

Apr 16

Posted by eldade in Social Media | 1 Comment

In the past few years we’ve all gotten used to a pretty incredible phenomenon. Online social engines gather phenomenal popularity and become the talk of the day, at which point the companies behind them also achieve phenomenal billion dollar valuations. Of course, it’s no big secret why companies behind services such as Facebook, Twitter, MySpace, etc. are worth billions: it’s us, you and me.

Consider that the average social network is a rather simple web application. Take Twitter for example: a lovely idea, implemented in Ruby over a period of just a couple of months! How does it get to be worth over $500 million? Again, the user base.

What’s the problem you wonder? My problem is that we’re letting these corporations own us outright. By supporting these services we’re granting them ownership of our most precious information, instead of putting this information in the public’s hands — in our own hands. If that sounds socialist or, god forbid, communist, I assure you it is not. I am one hell of a capitalist, but I do believe in certain things being public. I think the kind of information stored by social networks cannot and should not belong to one corporation, and the idea of it being acquired by some even bigger corporation for billions of dollars sounds absolutely absurd.

The solution? Start a powerful, generic, non-profit social network infrastructure that relies on a 100% open-source engine, where the servers are donated by corporations and by the public, just like Wikipedia. This service will be used for storing everybody’s information, and will have a completely open API to allow anyone to create their own service around it.

IM service? Just build applications and use the open social server for the accounts. Social network? Just build the web application with endless creative possibilities, and use the open social server as the underlying engine.

The immediate benefit to us is that despite offering a potentially endless variety of features, all services would share the same login information (single sign-on), the same friend list, and possibly the same content (pictures, files, etc.) It would be your one true online persona. Just look at the countless sync tools we have nowadays that attempt to connect the various networks together, to bring some unity to your countless online personas — why??

Where would business opportunities come from you ask? From the applications that would be created around this system. You could create brand new applications that would have completely different look and feel and functionalities. The important point is that your user account, data, friend list, etc. would always be kept on the public servers.

This reminds me of the mobile number portability acts passed in most countries. Instead of letting mobile operators own us by owning our phone number, legislators wisely decided to let consumers roam between operators while keeping our phone numbers. Needless to say, this is hugely beneficial to the public because it makes operators work harder for our business.

Now I ask you the following: How big of an effort is it to distribute one’s mobile phone number vs. how much effort it is to build your online persona, collecting friends, building profiles, etc.? I think it’s not even comparable.

Building a profile in a social network is often an incredibly time consuming task. Let’s put this information somewhere safe, where we can make the most out of it in the long run.

The end of books as we know them?

Apr 12

Posted by eldade in Content & Media | No Comments

kindle 2

Back in the day when the audio world was making its big transition from analog to digital, many consumers and audio engineers were complaining about the “cold sound” and the lack of “feel” that digital audio exhibited. At the time I was one of those who mocked those people and argued that this so-called “feel” they’ve gotten used to is really the distortion exhibited by their less-than-ideal mediums. They’ve gotten so used to the crackle of vinyl that they can’t live without it, whereas digital audio is pure and unblemished.

Now I find myself on the other side of this argument in yet another media that’s getting digitized: books. I’ve recently purchased an Amazon Kindle 2, and while I find the device to be overall usable and effective, I find myself yearning for that natural, organic feel that books have. I miss looking at their beautifully printed covers and that lovely feeling of paper between my fingers. Have I turned into one of the old farts I was arguing with on the digital audio issue?

The more I think about it, I realize that Kindle is still a very immature product. You really lose a lot in the transition from a paper book to the Kindle. The screen is much smaller than the average book page, contrast and resolution are significantly lower than what you get on a printed page, images and diagrams are black and white and still look very poor, etc. These limitations might explain part of why I miss reading a printed book, but there is also a less tangible element at work here.

The Kindle is just a huge downgrade from the experience standpoint. Yes it’s practical and convenient, but it’s kind of like switching from an expensive Jaguar with beautiful wood interior to a cheap Hyundai with plastic interior. The Kindle just feels cheap and plastic, and I wonder if that aspect of the product couldn’t have been better implemented. One explanation might be that I, and others like me, are just used to paper, and that this “cheapness” I feel with plastic is something younger people just don’t experience. If that’s the case, would the younger generation ultimately embrace the Kindle or Kindle-like products and completely abandon the concept of books as we know them?

It seems sad, but it also seems very likely.

Opinions on technology

Nokia is Losing. And Faster Than it Seems.

Why Amazon’s eBooks-outsell-hardcovers announcement is misleading

The Price of Greed

Why Apple is Winning

Has Apple been developing some battery optimization tricks?

Could we survive an EMP attack?

What is an EMP?

How Likely is it?

What Can Be Done?

Learn More

The end of books as we know them?

@eldade via Twitter

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