by Kris_Tuttle on March 4, 2010
Wait until you see the carriers.
At first I was optimistic that the carriers were going to seize an opportunity for a change and create their own, possibly quite good app stores. Part of the reason for that was when I sat down with some representatives of Orange and explained a new mobile application that one of our clients had developed (3D video ringtones) they were very helpful and seemed to grasp what it was all about and why users would love it. Ringtones and now video ringtones are known quantities already.
During the meeting they were practically apoplectic about me making sure that I got the client to submit the application to them so they could get it into their application catalog. (You can probably see where this is headed.)
Okay it was rejected. But that’s not really the point. Sure it actually took them three months to respond. But that’s not it either.
What really struck me was text of the rejection itself. One doesn’t feel very enlightened after reading it (text below) but fortunately we know that the carriers used Franz Kafka frequently as a consultant and I’ve included his original version below the Orange rejection note.
Hello,
Thank you for submitting your application to Orange.
We have reviewed your submission and, unfortunately, your application is not suitable for inclusion in the Orange Application Shop. We reject application submissions for a variety of reasons, including:
- Duplication with existing content
- It does not match current category requirements
- It is not a client-only mobile application
- The application requires IT integration
- Conflicts with existing Orange services and products or those under development
- It may conflict with Orange’s brand values
Your application has been rejected due to one or more of these reasons.
However, we thank you for your interest in working with Orange and please let us know of any future mobile applications that may be suitable.
Kind regards,
Content Acquisition Team
Orange Application Shop
In the original (paraphrased):
A man comes to the door of the Law, seeking admittance. The guard refuses to allow him to pass the door, but says that if he waits long enough, maybe, someday in the uncertain future, he might gain admittance. The man waits and waits and grows older; he tries to bribe the guard, who takes his money but still refuses to let him through the door; the man sells all his possessions to get money to offer more bribes, which the guard accepts — but still does not allow him to enter. The guard always explains, on taking each new bribe, “I only do this so that you will not abandon hope entirely.”
Eventually, the man becomes old and ill, and knows that he will soon die. In his last few moments he summons the energy to ask a question that has puzzled him over the years. “I have been told,” he says to the guard, “that the Law exists for all. Why the does it happen that, in all the years I have sat here waiting, nobody else has ever come to the door of the Law?”
“This door,” the guard says, “has been made only for you. And now I am going to close it forever.” And he slams the door as the man dies.
There is no way to say it better.
Suggests to me that both Apple and Android will be the two application models that work.
[Disclosure: none]
by Kris_Tuttle on March 4, 2010
We’ve had ongoing coverage of the turnaround at Palm, first as a “special situation” back in late 2008 and into 2009. (See Nice short squeeze on PALM! which we posted back then.)
Back then we estimated the intrinsic value (IV) for Palm to be about $11. But the nature of computing IV for a turnaround story is tricky because it’s hard to forecast long-term operating margins of the reinvigorated business in the technology industry and that creates a fairly wide variation in probable scenarios. The range we provided at the time was $6 to $16.
The current situation was detailed more completely here last March when we posted PALM: Worries become more tangible and noted that take up rates and ultimately margins were very uncertain given the current landscape.
One point we made in the note was that for Palm to break out we needed to see other companies license the Palm WebOS. So far that hasn’t happened.
Despite our notes of caution the market and many sell-side analysts jumped on the Palm bandwagon and pushed the stock all the way to $15 which factored in what we saw as a best-case scenario. It’s not that Palm didn’t have a good device and a strong software offering, it was that in a massive, highly rivalrous industry, they were not going to be able to generate high margins at their size.
In the past year though the iPhone has only gotten stronger, Android has erupted on the scene and devices like the Motorola Droid have joined the ranks of “must have” that carriers are scrambling to add to their lineups.
Even Research In Motion is reinvigorated and has a slew of new models and OS upgrades coming this year.
So what can Palm do now? It’s actually not too late to change to a more successful plan. It was pretty clear before that Palm simply lacked the scale and resources to go head-to-head with what has become a very high stakes game in the Mobile Internet.
The key for Palm has to be WebOS and the potential for it in alternative mobile devices. Palm needs to be more than “a better iPhone” for carriers to care. The tablet space could be more open for Palm, especially thanks to WiFi and other broadband networks. We think areas like the connected car are going to be big and drive millions of units per year. That’s a space that Palm could compete in.
At the same time Palm needs to do it with parters and stop trying to go it alone. For example what about partnering with a company like Garmin for automobile cockpits that have both navigation, web and entertainment software?
Maybe they should buy Jolicloud? There’s also a huge set of opportunities in web-connected devices in the home, PalmOS could be a good choice for many of them. We think the user interface on Jolicloud makes it a potential winner for consumer devices.
In short the company needs a total restart. They have quite a few resources and a decent product. Perhaps they got the dose of humility they needed to move to a new level of leadership. We are rooting for them.
Other Related Posts:
Is there any hope for Nokia? October 2009.
[Disclosure: None.]
by Kris_Tuttle on February 12, 2010
Yesterday Motorola announced their plans to split the company into two businesses in 1Q2011. Essentially they will create a consumer-focused company with mobile devices and home networking and another company that handles enterprise and government products and services.
We published an analysis of Motorola positioning strategy that we had prepared for the company in advance of their January board meetings to resolve their long term plans for the company. (available via our research library but requires free registration and approval)
In the end the solution that they came up with looks like a it has real potential, especially in the consumer space given what is happening with 1) mobile Internet and 2) Internet TV.
We already can see strong success for MOT in the mobile Internet space thanks to their Android-based strategy and what will be a full stable of winning devices in the smartphone space set to roll out this year. We’ve been talking a bit about Internet TV (see this post from just yesterday) and will soon be rolling out coverage of the “connected car” as it too goes IP.
Motorola will be in a position to do drive some unique innovation in this new set of spaces. Cisco is strong in home networking but is at a disadvantage to Motorola in mobile. Motorola will have a strong and potentially improving position in both which will matter as consumers will expect to be able to do similar things between their mobile and home devices with their myriad content.
The enterprise business will appeal to investors who are looking more for stability rather than growth and should fit well into GARP type portfolios or perhaps value types depending on where it trades as a separate entity post the split. From a coverage standpoint this part of Motorola will not likely be “our cup of tea” so after the split we will focus our efforts on the mobility and home portion of the company.
It’s *way* too early to know enough detail to be precise but based on our very early and rough analysis we have an IV for the mobile/home division of $12.50 and an IV for the enterprise/networks division of $6.25. However even if we are only 1/2 right on the mobile/home division the stock is a double from here.
The gap between the current share price and what we expect exists for two major reasons: 1) Investors are very concerned about the profitability of the new mobile/home networks division based on the history of it at Motorola and the perceived untested nature of Sanjay Jha as the CEO. 2) Motorola has a history of bad management and poor execution during the last ten years or so and some are calling this just more “moving the deck chairs around on the Titanic.”
Our view on the risk reward is favorable due in part to the massive growth in mobile and home Internet which will put a strong wind at the back of Motorola management in this space and the strong net cash position that helps to limit downside from here.
[Disclosure: The R2 Model Portfolio has a long position in MOT as a "special situation."]
by Kris_Tuttle on February 4, 2010
We’ve been on the Nvidia case for some time now. See some of our past research publications to get caught up.
Semiconductor specialists The Linley Group recently posted some details around the performance of the Nvidia Tegra 2 which we will see in numerous devices this year.
(There’s been plenty of coverage of what’s inside the A4 so I’m not sure why they are playing possum on that one. See other sources on the A4.)
There are so many races in the mobile Internet device space (smartphones, netbooks and now tablets) that it will be a free-for-all. Add to it the fact that even the TV in the living room is going Internet this year and the demand for new processor architectures and capabilities will be mushrooming.
These are interesting times not just for Nvidia but also for Intel, AMD, Qualcomm, and ARM. It’s hard to get excited about Intel here given the risks to their growth and margins unless they can change their stripes and embrace the idea there there is more to life than the CPU.
Our positive views on Nvidia are rooted in the fact that computing is shifting from processing words and numbers into not just video but games, rich content and interfaces that behave with physical properties and the deeper content that 3D provides.
It’s also true that consumers are expecting to be able to do many of these fairly complex things at once; all on a hand-held device with hours and hours of battery life that costs around $500.
Architecturally this suggests we move into a hyper-multi-core kind of processing to be able to parallelize the processing to meet the demands all this software has on the hardware.
Performance per watt remains a major issue in the mobile space and the one area where we think Nvidia still has some strides to make. This is an area where ARM shines and they are making some improvements in their graphics processing ability.
Our conclusion is that investors will want to play this disruption in computing architecture and we find Nvidia to be the most attractive in terms of execution, design wins and software momentum.
If Nvidia could understand and really consolidate their position in software the company and the stock would be a huge winner. However based on all our research we don’t quite see that happening. Our IV on NVDA leads us to expect a share price this year of $19-20 this year.
[Disclosure: The R2 Model Portfolio has a long position in the shares of Nvidia and Qualcomm.]