another tech writer joining the noise of opinion

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Lots of BS In Tech Recently

Apple has credibility. And with credibility, and a loyal following that understands the importance of credibility, Apple continues to achieve success. 

Companies like Google, Microsoft, and Samsung confuse credibility with momentum. They attempt to fake momentum, in hopes that they can fake it until they make it. The truth is, while this plan generally works, you need credibility. 

First, earlier in the week we learned that Nexus 7 outsold iPads in Japan. Except, it didn’t. The report Google quoted ignored Apple Store and online sales. Oops. We learned that Samsung fakes its benchmarks, and Samsung’s water-proof phone is not very water-proof (nor does it warranty cover water damage). Microsoft, on the other hand, tried to tell us how awesome Windows 8 and Surface has been doing until they had no choice but to admit the truth.

The most concerning part about all this: The media continues to eat up the narrative. Gruber’s Fitting the Facts to the Narrative post is a must-read. To further this point, have a look at how little Forbes pays for an article. What sort of quality can anyone really expect? 


Success And the App Store

The App Store Problem Is Not Price is a fantastic post by Elia Insider. The footnote, however, caught interest of Marco Arment:

[1] Listening to Marco Arment talk about this problem is frustrating. The guy has an incredible personal brand, like Loren Brichter, and the things he touch get instant echo in the iOS chamber. Would The Magazine had been such a success if I had built it? No way. His personal echo chamber made that happen. (Note that I am not complaining in the least about his ability to do this. If anything I’m a little jealous.) 

Not only do I agree with Elia, I appreciate the way he phrased it. The Magazine wouldn’t have been a success if not for Marco Arment. It’s a unique step forward for the Magazine App Store that sparked copy-cats. 

Marco’s response is classy. In it he notes that his newest app hasn’t been selling that well, and that this somehow invalidates Elia’s point. I doubt it. Oddly enough, even though I follow Marco’s blog, I didn’t even notice he had a new app out. Perhaps I read the post, and didn’t fully appreciate its background.

Regardless, Bugshot is not an overly interested app. The fact that Marco got as many sales as he did on a simple, not-too attractive, app with a tiny audience is probably proof enough that Marco’s name has pull.

To put differently, Bugshot would get the average person about zero dollars in sales. The fact that Marco has over $3,500 in sales is fairly amazing. No, Marco, your audience won’t absolutely blindly buy a small app they won’t need, but they will certainly build you a ton of momentum on good ideas. Bugshot just wasn’t one of those good ideas. 

And The Magazine would have died had the average person tried to launch in. As Elia says, it’s nothing against Marco Arment. He built a fantastic and loyal following, and he should use his popularity to bring forward new and exciting ideas. However, Marco’s well deserved self-made brand is indeed the reason The Magazine succeeded. 

The irony is, this post all comes via Marco Arment.

No, Android Is Not The New Windows

Comparisons like this from TechCrunch drive me a little nuts. Go ahead and read the craziness. Yes, there’s one similarity between Android and early Windows, in terms of growing market share. Sort of. But not exactly. (Windows had a much higher market share compared to Android!)

It’s a stupid (sorry, hate to be blunt, but really it’s stupid) comparison because of one key factor: Microsoft makes money on Windows, and because it makes money it is encouraged to continue to develop the product. Google, on the other hand, doesn’t nearly make as much money on Android.

For Android to be sustainable, it needs to make a profit for the company that develops it. It’s quite possible that Samsung might eventually be that company, but for the moment there’s no sustainable business plan here for Google. 

Oh, and one other key difference. Apple was nearly bankrupt because Mac sales were terrible. Today, Apple is one of the most profitable companies in the world. And yes, last I checked, profit matters. 

Microsoft and Nokia Stressing In a Tree

The marriage between Microsoft and Nokia seemed desperate from the start. Microsoft was blaming it’s phone troubles on poor hardware manufacturers (which was, at least, half true), and Nokia didn’t want to play the Android game and knew they needed a strong platform. 

From everything I’ve read, Nokia’s hardware is excellent. Is it desirable? I don’t know, not to me, but Nokia definitely has fans. The strategy hasn’t been working, at any rate. Windows Phone manages to get 1.1% market share growth. Sad. Meanwhile, we get news that Nokia is getting frustrated with the relationship. 

This forced marriage is going the wrong way, but at least Microsoft can’t blame its lack of success on Nokia’s hardware. I do worry that Nokia has nowhere to go from here, however. 

Amazon Takes a Net Loss

Jeff Bezos is a true business disrupter. While some companies push for higher profits, Amazon continues to run with a near break-even strategy while it pushes for market share. This has kept investors happy up until this last quarter; Amazon announced an operating loss. $7 million in losses on $15.7 billion (22% year-over-year increase) is a resolvable problem.

While the stock-price dropped originally, it is now back up over its closing price the day before. This makes sense. If you believe in the Amazon strategy, than nothing has really changed. What continues to be baffling is how Amazon is graded on a different curve compared to companies like Apple, Google, and Samsung. I get that Amazon’s business is far different in many aspects, but Amazon is investing a lot of energy and money in the e-book and tablet market with hardware that’s sold at break-even or loss. 

You either believe Jeff Bazos is leading the company to the promised land, or you do not. Regardless, I can’t see this company being truly profitable anytime soon.

Note: I am not a financial advisor! My comments are pure speculation. 

Samsung Smartphone Production Peaks

Financial results from Samsung are curious. Sales rose 21%, and their operating profit is up 48%. Their stock, naturally, dropped 14%. It’s good to know that investors are not just crazy about Apple’s numbers. 

Samsung did announce something rather curious though. They noted that the smartphone market has peaked (a market that’s responsible for two-thirds of the profit), the profits in this division are flat, and Samsung is using its cash to invest in manufacturing memory chips and OLED screens. While these divisions are profitable, they’re certainly not as profitable, and thus the stock price got punished. 

Keeping in mind that iPhone sales continue to grow, even as Apple has not yet really addressed the cheaper smartphone market, the next year should be interesting. iPhone 4 sales have been doing well in growth markets, but the iPhone 4 is not that much cheaper compared to the 5. Should Apple attack the lower-end market with a dedicated phone, Samsung’s smartphone business is likely to be severely hurt by this time next year. 

If Apple Is Failing, Who Is Succeeding?

Analysts bash Apple for not having new or innovative ideas, but what they’re really complaining about is that Apple doesn’t copy other companies that are selling cheaper phones with larger screens. Furthermore, Apple’s future products have always been surrounded by a cloud of mystery, where as competitors constantly brag about their great products that rarely succeed. That’s not an issue of innovation, but rather an issue of Apple deciding it is not yet time to enter this space, and keeping future developments a secret until they are ready.

If you’re an avid reader of Business Insider, Washington Journal, or Bloomberg you’d think that Apple is heading the way of RIM in the late 2000s. Downwards. And fast. Judging by the drops in the stock price (beyond the recent slight upturn), the market agrees.

Let’s assume that Apple is indeed losing. With that assumption in place, let’s consider which company or companies are doing better compared to Apple? Who’s the winner with long-term growth potential? 

Is it Google? 

If you look at their stock price, definitely. If you look at their business model, their profits are mostly based on the desktop browser-based advertising business. A business that’s facing shrinking profits. Sure, Google is working on making each advertisement hit more valuable, but its mobile advertising strategy has not succeeded. Let’s look at the numbers:

  • Google bought Motorola for 12.5 Billion dollars. Motorola has lost money for Google each quarter since purchase
  • Advertisement revenue from the iPhone by far exceeds Android phones even though Android is ‘winning’ the numbers game
  • Most of Google’s new ventures (since Search and gmail) have failed or are in the process of failing miserably. Google + is just the latest example of something Google tries pushing down on users with little actual usage-success.
  • Slogans like ‘don’t be evil’ and Android ‘being open’ are largely smoke and mirrors. 

Google will continue to see an upward trend (So did RIM during the iPhone boom) but there’s significant future risk potential here considering Google is losing out on this trend to mobile advertising. Google does, however, use a shotgun strategy where they get into a lot of businesses in hopes that a few still stick. Which will be the next business to stick? I’m not sure, but I’m sure something will.

Is Microsoft?

Microsoft’s success of late has been based on momentum and the stock market is finally starting to realize this. They do have a large corporate cliental (that continues to look elsewhere) drawing in tons of revenue. Microsoft Windows & Office division is their biggest cash cow, by far. Much like Google with gmail, Microsoft has had a second success with XBox that has been turning a profit. What have their other ventures done?

  • Windows 8 is largely considered a flop on the scale of New Coke. So much so, that Microsoft is going back on its ‘no compromise’ design choices
  • Bing is wasting away money as Microsoft tries (and fails) to buy the business
  • Hotmail took far too long to upgrade to a modern web email client
  • The Surface brand is a clear failure with $900 million in product write-offs (that doesn’t include resources that were focused on this loser)

Microsoft Azure is doing better in cloud services. However, as users move away from Office, what future does Microsoft have? Like Google, Microsoft has launched flops along the way. They’re trying to adapt to the market, but their only recent success has been XBox. Their next XBox update (XBox One) has had a rough start already.

Is it Facebook? 

Facebook is dealing with a lower growth rate of new users, but they’re succeeding in turning more of a profit on a per-user basis. Out of the companies mentioned so far, Facebook continues to innovate their website and keep ahead, or at least not far behind, the curve.

Still, Facebook’s phone ended up flopping terribly, and their Android app is a big miss. The stock price is doing terribly. While Instagram was a good defensive purchase, are when are they going to make a billion dollars back on this buy?

Is it Amazon?

After all these years, they barely make any profit, and their CEO is worth five times more than the stock has made in profit from day one. I like Amazon a lot, I understand their business strategy, but this is not a high profit-growth stock. I don’t think it ever will be. Amazon is an awesome company, and they’re innovating, but they’re not making any money because they refuse to sell their hardware at a profit.

Is it Samsung?

Yes. It’s Samsung. Over the past year Samsung has shown Apple-level growth and they’re dominating the global smartphone market. Samsung is growing revenue and profit.

What’s their not to like about Samsung and their Galaxy line of products? Hey, here’s a few things:

  • They own one part of the solution, just the hardware, and they’re vulnerable to Google with Android
  • Samsung makes TVs, DVDs, phones, alarm clocks, insurance, banking and whatever else they might be doing in Korea. None of these products make them as much money as their Galaxy line of products, and there’s little growth in these other areas
  • Samsung continues to lack original thinking. This isn’t necessarily a bad thing when it comes to making money, but it means that while other companies innovate, Samsung will continue to lag behind while they try to copy other success stories. 

Even Samsung released disappointing numbers last quarter, and they continue to have trouble competing against Apple in the US. Samsung’s continued growth requires innovation, and judging by their business model, Apple will get there first when it comes to the next big product. 

So what about Apple?

Name a product in the last decade that Apple released that was a failure? Sure, there was that speaker dock, and a few other things, but for the most part Apple has seen fantastic growth. There’s the iPod, iPhone, iPad, and their success with their MacBook and iMac lines (the later two are not necessarily growing, but only Lenovo seems to be showing any sign of success here).

Up until the last quarter the iPad was growing at rates faster than the iPhone. The iPad mini is a huge success. The iPhone continues to see fantastic growth. Yes, everyone’s a critic that Apple hasn’t been selling as well into poorer markets, but they continue to grow even with this issue. No one ever asks why Apple isn’t selling more MacBook Pros in India, do they?

Regardless, Apple’s issues are easily resolved should they choose to. Apple can, if they want, compete in the cheaper space with a new phone. Apple can, if they see it feasible, make a phone with a larger screen.

What are Analysts Really Saying?

They’re telling us that while other companies release plenty of products that fail, Apple’s ‘wait until a product is ready’ approach takes too long. They’re ignoring the huge success story of most of the new product Apple has launched in the last decade. And they’re ignoring that Apple has traditionally had a long gap between releasing new innovative products.

The difference between Apple and most of these other competitors is quite simple; we don’t know what Apple is working on because they won’t tell us until the product is ready. We do know all the crap the other companies have been working on, and their new ventures rarely succeed.

Which company would you put your money on?

Jim Dalrymple Mocks CNN

Jim Dalrymple mocks dumb articles all the time, but he rarely responds to them line-by-line. This is good. CNN’s article is loose on facts, and heavy on spin, as Jim points out:

First of all, those are not sales to customers, but shipments to the sales channel. Samsung “shipped” 10 million phones in a month. Apple sold more than 5 million iPhones in three days. See the difference there Andrew? Funny you didn’t mention that.

Apple’s Earnings – Not Bad

Apple’s earnings were not all that disastrous. I mean, few can forget Microsoft employees proclaiming the death of the iPhone, but beyond those fantastic predictive powers, Apple still seems to be making billions of dollars on the iPhone. There’s also this ‘brilliant’ piece from Forbes noting how a cheaper smartphone market marks the end of the iPhone (oh wait, iPhone is still growing, oops). 

The latest proclamation comes from CBS, noting how Apple is a dead company walking. Great! One should really read Bryan Chaffin’s response to this. More interestingly, between the pretty decent results and decent forward outlook, the stock price has gone up in the last day. I found this great piece on Seeking Alpha on how Apple’s inventory fluctuations means 2 billion wasn’t included in this quarter. 

I’m not as well renown as all these ‘great’ financial advisors have been of late, but I would say the doom and gloom around Apple is still a bit premature. 

Which Platform Should You Develop For?

People love picking on the very successful Venture Capitalist, Fred Wilson. Every Apple “fan boy” (stupid term) with a blog continues to write about how wrong Fred was about his pronouncement that Android development is where the future is. This blog, of course, will be no exception to this.

Sure, back in December of 2010 he told everyone to develop for Android first. In April of 2011, Fred Wilson double-downed on his previous statement noting the absolute dominance of the Android marketplace based on some study that didn’t include iPod Touches and other iOS devices (read Gruber’s response to that article).

Note that Fred Wilson’s argument is quite simple – Android is becoming the dominance mobile platform, and therefore developers should develop for the dominant platform. One has to appreciate the simplicity of the argument. It’s too bad it continues to be completely wrong, because study after study shows that Android users are cheapskates. 

It ignores the fact that study after study shows that Apple users browse more on their iOS devices, and they buy more. That’s what a recent study shows, in which it is revealed that the average iPhone users pays 19 cents an app while the average Android user only pays 6 cents an app (when taking into account free download). The spread is even larger when it comes to tablets.

There are many sides to this debate, so I don’t mean to overly simplify the points above, but regardless one day we might get a correction from Fred Wilson. One day. But likely not. 

Counterpoint: Some have noted the success of advertising in the Android marketplace, but if Google isn’t winning on advertising in the mobile space, app developers won’t either.