Story first appeared on eWeek.com.
Amazon.com (NASDAQ:AMZN) could sell anywhere between 3 million and 5 million Google (NASDAQ:GOOG) Android tablets in the fourth quarter, making it far and away the most successful slate provider on the open-source platform, according to Forrester Research.
The e-commerce giant is expected to introduce a tablet based on Google's Android "Honeycomb" operating system in October. To compete with Apple's iPad, which has sold more than 30 million units to date, Amazon is expected to leverage its expertise in content distribution.
The company will sell applications from its Android Appstore, movies through Amazon Instant Video and MP3 downloads supported by the Amazon Cloud Player storage service for consumption on its media tablet.
Forrester analyst Sarah Rotman Epps, who has first predicted an Amazon tablet in March, said that while she believes the e-tail giant could find success with a tablet, the company would have to price it under $300 and make sure that it has enough devices to meet consumer demand.
Epps' report comes two weeks after Creative Strategies analyst Tim Bajarin said the Amazon tablet might cost $300 to make, but Amazon would discount it by $51 to entice consumers to buy it. Amazon could make up the difference in movie rentals, music downloads, Kindle book sales, other application purchases and advertising.
Amazon, using its one-click buying method as an easy-on-ramp to customers to make purchases through its Android Appstore and regular e-commerce offerings, could make back the $51 difference within six months and make a profit between 10 percent and 30 percent over the last 18 months of the device's accounting period, Bajarin noted.
One interesting caveat to this punditry: Even if the Amazon tablet is built with Google's Android "Honeycomb" operating system, Epps said they shouldn't market it as such. In fact, Amazon might want to take a page out of Barnes & Noble's playbook and play down the Android software on the slate.
Apparently, product strategists from Android tablet OEMs have expressed frustration with the bugginess of the Honeycomb software and the weak user experience of the Android Market.
Only 9 percent of consumers considering buying a tablet actively prefer an Android tablet—compared with 16 percent who prefer iOS and 46 percent who prefer Windows. Barnes & Noble has chosen to emphasize its own brand and user experience on the Nook Color rather than emphasize the Google or Android brands, even though the Nook is built on Android. Amazon may not wish to go that far on the curation spectrum, but it does need to differentiate its flavor of Android from all the rest, and that may come from emphasizing the Amazon experience over the Google one.
On the other hand, the benefit of hitching itself to Android is that Amazon can over time provide its software and services on slates from Samsung, Motorola, Asus, Acer, Toshiba and others.
In a year from now, we could see a range of “Amazon tablets” made by different hardware manufacturers. That is, of course, assuming Apple won't successfully sue to block Android tablet distribution the way it has with Samsung overseas.
Tuesday, August 30, 2011
Thursday, August 25, 2011
Apple Icon Steps Down
Story first appeared in USA TODAY.
Jobs, the iconic tech visionary who co-founded Apple and recently made it the most valued U.S. corporation, abruptly resigned as chief executive Wednesday night.
Jobs, 56, who has battled pancreatic cancer the past few years and looked noticeably weaker recently, told Apple's board of directors in a brief note that he could no longer meet his duties and expectations as CEO.
The company in recent days overtook Exxon for the title of most-valued corporation but is now a close No. 2.
Jobs wrote that he hereby resign as CEO of Apple, and he would like to serve, if the board sees fit, as chairman of the board, director and Apple employee. He added that as far as his successor goes, he strongly recommends that they execute their succession plan and name Tim Cook as CEO of Apple.
Apple's board quickly named Cook, a 13-year Apple veteran, as CEO and elected Jobs chairman.
But Jobs' passing of the CEO mantle is a seminal moment in corporate history.
Jobs' decision to step down is the latest jaw-dropping news to rock Silicon Valley. Last week, Hewlett-Packard said it was exploring options to sell or spin off its multibillion-dollar PC division — just as the PC industry was celebrating its 30th anniversary. Jobs played a key role in the formation, and maturation, of that industry.
A former Apple senior vice president who worked closely with Jobs from 1980 to 1985 said Hewlett-Packard has given up because of what Apple has done, and the reality is this guy was so committed to making the best products in the world.
Perhaps no tech figure in recent history — or U.S. executive, for that matter — carries as much sway as or has made more of an imprint on his company than Jobs. Since returning to the PC pioneer in late 1997, he almost single-handedly has resurrected the company from near-extinction to a company worth more than $330 billion.
Apple is widely expected to unveil the iPhone 5 this fall and a successor to its popular iPad 2 tablet shortly thereafter. Apple stock is expected to take a blow this morning, and many in the past have openly wondered whether Apple can maintain its mojo and innovative streak without Jobs at the helm.
Shares closed Wednesday at $376.18, up $2.58. But in after-hours trading, after Jobs' resignation, the stock dipped 5% to $358.50.
Taipei-based Foxconn Technology Group, which makes Apple iPhones and iPads, said in a statement that despite Jobs' resignation as CEO, it has every confidence in Apple's leadership and its ability to continue to innovate and to drive much of the global technology industry's growth.
Analysts also expect a smooth transition. Cook, 50, has earned kudos for his steady stewardship of Apple, filling in as temporary CEO, while Jobs was on medical leave. Apple is also renowned for its deep roster of engineers, marketers and other executives.
Gartner's Michael Gartenberg says that despite Jobs being considered by consumers as Apple incarnate, No individual does it alone.
The tech market has been one of the few industries largely immune to the prolonged downturn in the U.S. economy, and Apple had a lot to do with that by churning out eye-catching, popular products such as the iPad and iPhone.
Jobs' run of smash hits has been unprecedented in modern times, says Richard Doherty, an analyst at The Envisioneering Group. He said it's the power to say, “No. " He added that a lot of products could have gotten to market earlier, but he wanted it better. So many products fail because they're not ready, referring to HP's decision last week to ditch its TouchPad tablet computer less than two months after its debut.
Apple's DNA
Jobs' departure from the CEO role won't bruise Apple in the near term, though, experts say.
"The next wave of Apple products are well into the product-development cycle," says Charles Golvin, analyst at Forrester Research. "The next iPhone is certainly done. The next iPad is certainly along the way."
Financial analysts who cover Apple have repeatedly cited the unknown status of Jobs' health among risk factors to the company. That's because Jobs is viewed as a unique category of leader with a hands-on approach tied to much of the company's success.
Jobs has installed a focused and pervasive culture at the company, with people who share his passions. Nonetheless, three senior executives who reported to Jobs have left the company in the past six months. Just last week, vice president Andy Miller stepped down as mobile ad chief to join Highland Capital Partners.
In June, J.C. Penney poached Apple retail chief Ron Johnson, who will become its CEO Nov. 1. And in March, Bertrand Serlet, a senior vice president responsible for development of the Mac operating system, bolted.
What many industry experts express, however, is uncertainty about how Apple will fare without Jobs as CEO in the long term. Though he brought simple, elegant technology to the masses, the reclusive Jobs — even before his illness — rarely spoke publicly, except at Apple events.
But in one interview, in his Pixar office in 1998, he offered a rare insight into who he is. Jobs said he identified with Flik, the idealistic ant in ABug's Life, the animated movie from his Pixar Animation Studios. Flik saves his colony from an army of grasshoppers that bears an eerie resemblance to Microsoft.
Jobs discovered he had a form of pancreatic cancer in October 2003, informed Apple employees in 2004 and acknowledged the cancer during a commencement speech at Stanford University in 2005. In 2009, Jobs took a medical leave. Cook took over day-to-day operations in Jobs' absence then. Jobs later returned to the helm but then in January this year took an indefinite medical leave.
The beginning
At age 21, Jobs co-founded Apple Computer with Steve Wozniak. By 25, Jobs was a millionaire, and he made the cover of Time magazine at 26. But by 30, the prickly Jobs was unceremoniously booted from Apple, in 1985.
During the ensuing dozen "wilderness years," as they were called by Jobs followers, Jobs bought what became Pixar Animation Studios for $10 million from director and producer George Lucas in 1986 and started NeXT Computer in 1988. NeXT struggled to sell its high-priced machines, but Apple acquired it for more than $400 million in 1996, setting the stage for Jobs' return to Apple. Disney bought Pixar in 2006 for $7.4 billion.
Still, there was controversy. Later that same year, Apple — whose stock would soar past $200 per share in 2007 — appointed a special committee that discovered irregularities with roughly one in seven stock grants that Apple issued from 1996 to 2004. Apple was forced to restate earnings and took a pretax charge for unreported compensation expenses of $105 million. Disney also investigated and found backdating at Pixar during Jobs' stint as CEO. Yet the events at the two companies did not cost Jobs his job, as it did dozens of executives at other tech firms. Jobs did not directly benefit from backdated options.
Jobs, the iconic tech visionary who co-founded Apple and recently made it the most valued U.S. corporation, abruptly resigned as chief executive Wednesday night.
Jobs, 56, who has battled pancreatic cancer the past few years and looked noticeably weaker recently, told Apple's board of directors in a brief note that he could no longer meet his duties and expectations as CEO.
The company in recent days overtook Exxon for the title of most-valued corporation but is now a close No. 2.
Jobs wrote that he hereby resign as CEO of Apple, and he would like to serve, if the board sees fit, as chairman of the board, director and Apple employee. He added that as far as his successor goes, he strongly recommends that they execute their succession plan and name Tim Cook as CEO of Apple.
Apple's board quickly named Cook, a 13-year Apple veteran, as CEO and elected Jobs chairman.
But Jobs' passing of the CEO mantle is a seminal moment in corporate history.
Jobs' decision to step down is the latest jaw-dropping news to rock Silicon Valley. Last week, Hewlett-Packard said it was exploring options to sell or spin off its multibillion-dollar PC division — just as the PC industry was celebrating its 30th anniversary. Jobs played a key role in the formation, and maturation, of that industry.
A former Apple senior vice president who worked closely with Jobs from 1980 to 1985 said Hewlett-Packard has given up because of what Apple has done, and the reality is this guy was so committed to making the best products in the world.
Perhaps no tech figure in recent history — or U.S. executive, for that matter — carries as much sway as or has made more of an imprint on his company than Jobs. Since returning to the PC pioneer in late 1997, he almost single-handedly has resurrected the company from near-extinction to a company worth more than $330 billion.
Apple is widely expected to unveil the iPhone 5 this fall and a successor to its popular iPad 2 tablet shortly thereafter. Apple stock is expected to take a blow this morning, and many in the past have openly wondered whether Apple can maintain its mojo and innovative streak without Jobs at the helm.
Shares closed Wednesday at $376.18, up $2.58. But in after-hours trading, after Jobs' resignation, the stock dipped 5% to $358.50.
Taipei-based Foxconn Technology Group, which makes Apple iPhones and iPads, said in a statement that despite Jobs' resignation as CEO, it has every confidence in Apple's leadership and its ability to continue to innovate and to drive much of the global technology industry's growth.
Analysts also expect a smooth transition. Cook, 50, has earned kudos for his steady stewardship of Apple, filling in as temporary CEO, while Jobs was on medical leave. Apple is also renowned for its deep roster of engineers, marketers and other executives.
Gartner's Michael Gartenberg says that despite Jobs being considered by consumers as Apple incarnate, No individual does it alone.
The tech market has been one of the few industries largely immune to the prolonged downturn in the U.S. economy, and Apple had a lot to do with that by churning out eye-catching, popular products such as the iPad and iPhone.
Jobs' run of smash hits has been unprecedented in modern times, says Richard Doherty, an analyst at The Envisioneering Group. He said it's the power to say, “No. " He added that a lot of products could have gotten to market earlier, but he wanted it better. So many products fail because they're not ready, referring to HP's decision last week to ditch its TouchPad tablet computer less than two months after its debut.
Apple's DNA
Jobs' departure from the CEO role won't bruise Apple in the near term, though, experts say.
"The next wave of Apple products are well into the product-development cycle," says Charles Golvin, analyst at Forrester Research. "The next iPhone is certainly done. The next iPad is certainly along the way."
Financial analysts who cover Apple have repeatedly cited the unknown status of Jobs' health among risk factors to the company. That's because Jobs is viewed as a unique category of leader with a hands-on approach tied to much of the company's success.
Jobs has installed a focused and pervasive culture at the company, with people who share his passions. Nonetheless, three senior executives who reported to Jobs have left the company in the past six months. Just last week, vice president Andy Miller stepped down as mobile ad chief to join Highland Capital Partners.
In June, J.C. Penney poached Apple retail chief Ron Johnson, who will become its CEO Nov. 1. And in March, Bertrand Serlet, a senior vice president responsible for development of the Mac operating system, bolted.
What many industry experts express, however, is uncertainty about how Apple will fare without Jobs as CEO in the long term. Though he brought simple, elegant technology to the masses, the reclusive Jobs — even before his illness — rarely spoke publicly, except at Apple events.
But in one interview, in his Pixar office in 1998, he offered a rare insight into who he is. Jobs said he identified with Flik, the idealistic ant in ABug's Life, the animated movie from his Pixar Animation Studios. Flik saves his colony from an army of grasshoppers that bears an eerie resemblance to Microsoft.
Jobs discovered he had a form of pancreatic cancer in October 2003, informed Apple employees in 2004 and acknowledged the cancer during a commencement speech at Stanford University in 2005. In 2009, Jobs took a medical leave. Cook took over day-to-day operations in Jobs' absence then. Jobs later returned to the helm but then in January this year took an indefinite medical leave.
The beginning
At age 21, Jobs co-founded Apple Computer with Steve Wozniak. By 25, Jobs was a millionaire, and he made the cover of Time magazine at 26. But by 30, the prickly Jobs was unceremoniously booted from Apple, in 1985.
During the ensuing dozen "wilderness years," as they were called by Jobs followers, Jobs bought what became Pixar Animation Studios for $10 million from director and producer George Lucas in 1986 and started NeXT Computer in 1988. NeXT struggled to sell its high-priced machines, but Apple acquired it for more than $400 million in 1996, setting the stage for Jobs' return to Apple. Disney bought Pixar in 2006 for $7.4 billion.
Still, there was controversy. Later that same year, Apple — whose stock would soar past $200 per share in 2007 — appointed a special committee that discovered irregularities with roughly one in seven stock grants that Apple issued from 1996 to 2004. Apple was forced to restate earnings and took a pretax charge for unreported compensation expenses of $105 million. Disney also investigated and found backdating at Pixar during Jobs' stint as CEO. Yet the events at the two companies did not cost Jobs his job, as it did dozens of executives at other tech firms. Jobs did not directly benefit from backdated options.
Thursday, August 18, 2011
GOOGLE TO BUY MOTOROLA MOBILITY
Article First Appeared in New York Times:
In a bid to strengthen its mobile business, Google announced on Monday that it would acquire Motorola Mobility Holdings, the cellphone business that was split from Motorola, for $40 a share in cash, or $12.5 billion.
The offer — by far Google’s largest ever for an acquisition — is 63 percent above the closing price of Motorola Mobility shares on Friday. Motorola manufactures phones that run on Google’s Android software.
Android has become an increasingly important platform for Google, as global smartphone adoption accelerates. The platform, launched in 2007, is now used in more than 150 million devices, with 39 manufacturers.
The acquisition would turn Google, which makes the Android mobile operating system, into a full-fledged cellphone manufacturer, in direct competition with Apple.
“This is an emphatic exclamation point that Google is a mobile company,” said Ben Schachter, an analyst with Macquarie Capital. “This is clearly a defensive deal, they were backed in a corner and they had to protect the Android platform.”
Google, Motorola and Mobile
Both companies have met with both successes and struggles as they adapt to and influence a changing market for mobile phones.
The deal answers a big question about Google’s next strategic step in wireless. Google has been battling with Apple and Microsoft over patents.
Last month, Apple and Microsoft led a consortium of technology companies in a $4.5 billion purchase of roughly 6,000 patents from Nortel Networks, the Canadian telecommunications maker that filed for bankruptcy in 2009. Google, which lost out in the bidding, criticized the deal as an anticompetitive strategy. Several weeks later, Google acquired more than 1,000 patents from I.B.M.
Motorola holds more than 17,000 patents.
While the acquisition will move Google directly into the telecommunications hardware business, Larry Page, Google’s chief executive, said in a blog post that “this acquisition will not change our commitment to run Android as an open platform. Motorola will remain a licensee of Android and Android will remain open. We will run Motorola as a separate business.”
Still, the deal is certain to attract significant antitrust scrutiny. The Federal Trade Commission is already investigating Google’s dominance in several areas of its business. The company has agreed to pay a $2.5 billion reverse termination fee, if it walks away, and Motorola will pay a $375 million break-up fee if it takes another offer, according to a person close to the transaction, who was not authorized to speak.
In a conference call on Monday morning, Google said it was confident that it will be able to win regulatory approval, since the deal will ultimately improve competition in the smart phone market.
“We think this is a competitive transaction,” David Drummond, the company’s chief legal officer said. “This is not a horizontal transaction, Google has not materially been in the handset business.”
The acquisition of a major handset maker may still pose a significant challenge to the search giant, which has not specialized in manufacturing or marketing of smartphones. Last year, it closed down the online store for its first Google-branded phone, the Nexus One, citing the store’s underwhelming performance. A Motorola tie-up may also irk other phone manufacturers, like Samsung and HTC, which will now be competing directly with Google.
“Can they convince their competitors that Motorola will truly operate as a standalone business?” Mr. Schachter said.
And while Google has made dozens of acquisitions in recent years, most of them have been for less than $1 billion — despite a current war chest of some $40 billion in cash. On the company’s official blog, Mr. Page said Google was purchasing the handset maker to bolster its Android mobile operating system and increase the number of patents it owned.
Android accounted for 43.4 percent of smartphone sales in the second quarter, according to Gartner Research, a major increase from the year ago period, when it made up about 17 percent of sales.
“Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anticompetitive threats from Microsoft, Apple and other companies,” Mr. Page said.
Carl C. Icahn, Motorola Mobility’s second-largest shareholder, had urged the company last month to “explore alternatives regarding its patent portfolio to enhance shareholder value.” Mr. Icahn owns 9.03 percent of Motorola Mobility.
On Monday, he applauded the transaction, calling it “a great outcome for all shareholders of Motorola Mobility, especially in light of today’s markets.”
Lazard and the law firm of Cleary Gottlieb Steen & Hamilton advised Google. Frank Quattrone’s investment bank, Qatalyst Partners, Centerview Partners and the law firm Wachtell, Lipton, Rosen & Katz advised Motorola Mobility.
The acquisition has been approved by both boards.
In a bid to strengthen its mobile business, Google announced on Monday that it would acquire Motorola Mobility Holdings, the cellphone business that was split from Motorola, for $40 a share in cash, or $12.5 billion.
The offer — by far Google’s largest ever for an acquisition — is 63 percent above the closing price of Motorola Mobility shares on Friday. Motorola manufactures phones that run on Google’s Android software.
Android has become an increasingly important platform for Google, as global smartphone adoption accelerates. The platform, launched in 2007, is now used in more than 150 million devices, with 39 manufacturers.
The acquisition would turn Google, which makes the Android mobile operating system, into a full-fledged cellphone manufacturer, in direct competition with Apple.
“This is an emphatic exclamation point that Google is a mobile company,” said Ben Schachter, an analyst with Macquarie Capital. “This is clearly a defensive deal, they were backed in a corner and they had to protect the Android platform.”
Google, Motorola and Mobile
Both companies have met with both successes and struggles as they adapt to and influence a changing market for mobile phones.
The deal answers a big question about Google’s next strategic step in wireless. Google has been battling with Apple and Microsoft over patents.
Last month, Apple and Microsoft led a consortium of technology companies in a $4.5 billion purchase of roughly 6,000 patents from Nortel Networks, the Canadian telecommunications maker that filed for bankruptcy in 2009. Google, which lost out in the bidding, criticized the deal as an anticompetitive strategy. Several weeks later, Google acquired more than 1,000 patents from I.B.M.
Motorola holds more than 17,000 patents.
While the acquisition will move Google directly into the telecommunications hardware business, Larry Page, Google’s chief executive, said in a blog post that “this acquisition will not change our commitment to run Android as an open platform. Motorola will remain a licensee of Android and Android will remain open. We will run Motorola as a separate business.”
Still, the deal is certain to attract significant antitrust scrutiny. The Federal Trade Commission is already investigating Google’s dominance in several areas of its business. The company has agreed to pay a $2.5 billion reverse termination fee, if it walks away, and Motorola will pay a $375 million break-up fee if it takes another offer, according to a person close to the transaction, who was not authorized to speak.
In a conference call on Monday morning, Google said it was confident that it will be able to win regulatory approval, since the deal will ultimately improve competition in the smart phone market.
“We think this is a competitive transaction,” David Drummond, the company’s chief legal officer said. “This is not a horizontal transaction, Google has not materially been in the handset business.”
The acquisition of a major handset maker may still pose a significant challenge to the search giant, which has not specialized in manufacturing or marketing of smartphones. Last year, it closed down the online store for its first Google-branded phone, the Nexus One, citing the store’s underwhelming performance. A Motorola tie-up may also irk other phone manufacturers, like Samsung and HTC, which will now be competing directly with Google.
“Can they convince their competitors that Motorola will truly operate as a standalone business?” Mr. Schachter said.
And while Google has made dozens of acquisitions in recent years, most of them have been for less than $1 billion — despite a current war chest of some $40 billion in cash. On the company’s official blog, Mr. Page said Google was purchasing the handset maker to bolster its Android mobile operating system and increase the number of patents it owned.
Android accounted for 43.4 percent of smartphone sales in the second quarter, according to Gartner Research, a major increase from the year ago period, when it made up about 17 percent of sales.
“Our acquisition of Motorola will increase competition by strengthening Google’s patent portfolio, which will enable us to better protect Android from anticompetitive threats from Microsoft, Apple and other companies,” Mr. Page said.
Carl C. Icahn, Motorola Mobility’s second-largest shareholder, had urged the company last month to “explore alternatives regarding its patent portfolio to enhance shareholder value.” Mr. Icahn owns 9.03 percent of Motorola Mobility.
On Monday, he applauded the transaction, calling it “a great outcome for all shareholders of Motorola Mobility, especially in light of today’s markets.”
Lazard and the law firm of Cleary Gottlieb Steen & Hamilton advised Google. Frank Quattrone’s investment bank, Qatalyst Partners, Centerview Partners and the law firm Wachtell, Lipton, Rosen & Katz advised Motorola Mobility.
The acquisition has been approved by both boards.
Thursday, August 4, 2011
HP IS CHOSEN FOR GOVERNMENT CONTRACT
Story first appeared in the Silicon Valley News.
HP Enterprise Services, a division of Hewlett-Packard Co, said Monday it has been picked for a U.S. Department of Justice contract to provide information technology support services.
The Palo Alto-based company said its enterprise services division is one of 20 companies that may compete for task orders under the $1.1 billion contract, which has unspecified delivery and quantities.
HP is expected to offer application development, systems and software engineering, Web development and other IT services.
The senior vice president and general manager, U.S. Public Sector, HP Enterprise Services said the government needs to obtain high-quality technical expertise at a reasonable cost. He added HP has experts with significant technological proficiencies who can provide the Department of Justice with innovative information technology solutions while helping them achieve their cost-savings goals.
The award provides for a base year period of performance that ends Sept. 30, with six available one-year option periods.
HP Enterprise Services, a division of Hewlett-Packard Co, said Monday it has been picked for a U.S. Department of Justice contract to provide information technology support services.
The Palo Alto-based company said its enterprise services division is one of 20 companies that may compete for task orders under the $1.1 billion contract, which has unspecified delivery and quantities.
HP is expected to offer application development, systems and software engineering, Web development and other IT services.
The senior vice president and general manager, U.S. Public Sector, HP Enterprise Services said the government needs to obtain high-quality technical expertise at a reasonable cost. He added HP has experts with significant technological proficiencies who can provide the Department of Justice with innovative information technology solutions while helping them achieve their cost-savings goals.
The award provides for a base year period of performance that ends Sept. 30, with six available one-year option periods.
Tuesday, August 2, 2011
MOTOROLA’S PROBLEMS THAT HURT IN THE THIRD QUARTER
Story first appeared in Reuters.
Chief Executive Sanjay Jha said Motorola's Bionic, a high-speed device for Verizon Wireless, would be delayed until September, which was later than analysts had expected for the device whose launch had already been delayed to the summer from its original target for a second quarter launch.
The delay, which also involves a Motorola tablet computer, will put Motorola under ever more pressure to compete with Apple Inc, which is expected to launch a new iPhone this fall at Verizon Wireless.
Analyst Lawrence Harris said tt would have been nice if Motorola had a clear window prior to the release of the new iPhone. Motorola had announced the product on January 5 at the consumer electronics show.
Harris said it's highly unusual to have a product delayed this long. They really had to go back to the drawing board in this, and he noted that many people on Wall Street had hoped for an August launch of the phone.
A high-speed version of Motorola's Xoom tablet, also announced in January, will also be delayed until September, Motorola said. It had also originally slated that product launch for the second quarter.
Gross profit margins will also be worse than expected this quarter, because Motorola was forced to cut the price of its first version of Xoom to compete with rivals such as Apple Inc's iPad and Samsung Electronics's Galaxy Tab.
DELAYS AND PRICE CUT
Motorola cut the price of Xoom to $499 from $799 at Verizon Wireless on July 25 to compete with iPad and tablets like Galaxy as consumers weren't willing to pay a premium for the Motorola device, which like Galaxy is based on Android software from Google Inc. It launched Xoom at Verizon on February 24.
The company gave a third-quarter earnings target ranging from break-even to 10 cents per share, excluding unusual items, compared with analyst expectations for 24 cents a share.
Motorola's full year forecast for 2011 of 48 cents to 60 cents per share missed Wall Street expectations for 71 cents per share.
Jha said he had misjudged pricing in the highly competitive tablet market but vowed that Motorola's profit would be back on track in the fourth quarter, when he promised to introduce more competitive products.
Jha said they now recognize where the price points are. For the fourth quarter they will launch very good, new tablets and we'll have a good quarter.
By year end, Jha promised that Motorola would have five devices based on Long Term Evolution (LTE) -- the high-speed technology both Verizon Wireless and AT&T Inc are using.
This will include at least one more LTE handset besides the Bionic and two more tablets besides the LTE version of Xoom, Jha said.
For the second quarter, it reported a loss of $56 million, or 19 cents per share, compared with a profit of $80 million, or 27 cents per share, a year earlier.
Excluding unusual items Motorola earned 9 cents per share in the quarter, ahead of analyst expectations for 6 cents a share.
Revenue rose to $3.3 billion, beating the average analyst estimate of $3.12 billion, according to Thomson Reuters I/B/E/S.
Motorola said on Thursday it shipped 4.4 million smartphones in the quarter, in line with expectations from six analysts contacted by Reuters. It has also sold 440,000 tablet computers, ahead of analyst expectations for about 366,000.
The company tweaked its full year sales estimate for Android tablets and smartphones to a range of 21 million to 23 million from 20 million to 23 million.
Verizon Wireless is a venture of Verizon Communications and Vodafone Group Plc.
Motorola shares fell to $22.01 in after-hours trading, down 3.9 percent for their $22.91 close on the New York Stock Exchange.
Chief Executive Sanjay Jha said Motorola's Bionic, a high-speed device for Verizon Wireless, would be delayed until September, which was later than analysts had expected for the device whose launch had already been delayed to the summer from its original target for a second quarter launch.
The delay, which also involves a Motorola tablet computer, will put Motorola under ever more pressure to compete with Apple Inc, which is expected to launch a new iPhone this fall at Verizon Wireless.
Analyst Lawrence Harris said tt would have been nice if Motorola had a clear window prior to the release of the new iPhone. Motorola had announced the product on January 5 at the consumer electronics show.
Harris said it's highly unusual to have a product delayed this long. They really had to go back to the drawing board in this, and he noted that many people on Wall Street had hoped for an August launch of the phone.
A high-speed version of Motorola's Xoom tablet, also announced in January, will also be delayed until September, Motorola said. It had also originally slated that product launch for the second quarter.
Gross profit margins will also be worse than expected this quarter, because Motorola was forced to cut the price of its first version of Xoom to compete with rivals such as Apple Inc's iPad and Samsung Electronics's Galaxy Tab.
DELAYS AND PRICE CUT
Motorola cut the price of Xoom to $499 from $799 at Verizon Wireless on July 25 to compete with iPad and tablets like Galaxy as consumers weren't willing to pay a premium for the Motorola device, which like Galaxy is based on Android software from Google Inc. It launched Xoom at Verizon on February 24.
The company gave a third-quarter earnings target ranging from break-even to 10 cents per share, excluding unusual items, compared with analyst expectations for 24 cents a share.
Motorola's full year forecast for 2011 of 48 cents to 60 cents per share missed Wall Street expectations for 71 cents per share.
Jha said he had misjudged pricing in the highly competitive tablet market but vowed that Motorola's profit would be back on track in the fourth quarter, when he promised to introduce more competitive products.
Jha said they now recognize where the price points are. For the fourth quarter they will launch very good, new tablets and we'll have a good quarter.
By year end, Jha promised that Motorola would have five devices based on Long Term Evolution (LTE) -- the high-speed technology both Verizon Wireless and AT&T Inc are using.
This will include at least one more LTE handset besides the Bionic and two more tablets besides the LTE version of Xoom, Jha said.
For the second quarter, it reported a loss of $56 million, or 19 cents per share, compared with a profit of $80 million, or 27 cents per share, a year earlier.
Excluding unusual items Motorola earned 9 cents per share in the quarter, ahead of analyst expectations for 6 cents a share.
Revenue rose to $3.3 billion, beating the average analyst estimate of $3.12 billion, according to Thomson Reuters I/B/E/S.
Motorola said on Thursday it shipped 4.4 million smartphones in the quarter, in line with expectations from six analysts contacted by Reuters. It has also sold 440,000 tablet computers, ahead of analyst expectations for about 366,000.
The company tweaked its full year sales estimate for Android tablets and smartphones to a range of 21 million to 23 million from 20 million to 23 million.
Verizon Wireless is a venture of Verizon Communications and Vodafone Group Plc.
Motorola shares fell to $22.01 in after-hours trading, down 3.9 percent for their $22.91 close on the New York Stock Exchange.
Monday, August 1, 2011
IS BLACKBERRY A DINOSAUR
Story first appeared in USA TODAY.
With this week's announcement that Research in Motion is cutting 10 percent of its workforce, the BlackBerry death watch moved into high gear.
The smartphone that's been a corporate status symbol for more than a decade faces a rapidly declining market share amid new competition, while the company has suffered a series of missteps in both strategy and execution.
Even the management shakeup announced on Monday wasn't what Wall Street had been hoping for. RIM's stock is down more than 50 percent this year.
With Apple's iPhone and smartphones based on Google's Android operating system stealing RIM's thunder in both the consumer and corporate spaces, the BlackBerry's outlook appears grim.
One analyst says surviving in the context of being a formidable force across the industry as it was in its glorious days is not going to happen.
That doesn't mean all is lost for RIM and the BlackBerry platform. It's still wildly popular in international markets, and smartphones powered by a new operating system are coming next year.
But analysts say the company needs to act quickly and effectively, which it's had a hard time accomplishing over the past several years.
Judging from the numbers, it's obvious that fewer people want BlackBerrys.
According to market research firm comScore, RIM held 24.7 percent of smartphone subscribers in the three-month period ending in May, down 17 percent from a year ago.
In the corporate market, traditionally RIM's bread and butter, IT departments are increasingly allowing individual users to choose their own mobile devices, and more of them are choosing iPhones.
The company has taken notice. RIM is set to unveil smartphones based on version 7 of the BlackBerry operating system.
But critics have long complained that BlackBerry OS has gotten long in the tooth, especially compared with sophisticated platforms like Android and Apple's iOS.
Next year, RIM will unveil BlackBerry devices based on QNX, the operating system that powers RIM's PlayBook tablet. QNX promises to deliver performance and features that better compete with iOS and high-end Android devices.
But RIM has been snakebitten by a series of execution missteps, including product delays and releasing new devices that seem half-baked, such as the PlayBook's curious lack of built-in e-mail capabilities.
Most alarming to Wall Street, there's a sense of sluggishness in a company that operates in a rapidly changing industry.
One analyst stated that with QNX they have a real next-gen operating system. He added that those phones that come out next year will be much more competitive with the high end of the market.
But Doradla, who maintains a "Hold" rating on RIM shares, says there's little reason to be excited about the BlackBerry platform in the near term.
He says the question is between now and early next year when the QNX comes in, what is holding a customer to stick with a BlackBerry phone
Dominance Lost
Despite the near-term gloom, analysts point out there are factors that work in RIM's favor.
Although BlackBerry smartphones are falling out of favor in the United States, they're still wildly popular overseas.
Also, businesses have made significant investments in BlackBerry Enterprise Servers, so they're not likely to abandon the platform completely.
McCourt sees the corporate market playing out as a duopoly with BlackBerry and the iPhone. Doradla points out that given RIM's strong presence in corporate enterprises, the company is likely to remain viable in the long term.
Earlier this year, RIM opened its BlackBerry Enterprise Server to enable support for iPhone and Android smartphones, enabling IT departments to centrally manage those devices on a single system. The move addresses the reality that more organizations are supporting multiple mobile platforms.
But Mark McKechnie, an analyst at ThinkEquity, believes the company needs to go farther by opening up its network operations center, or NOC, to other smartphone platforms.
He says they've created this great infrastructure that all the corporations use to secure their e-mails. They collect about $5 per month per subscriber. But if you're going to have a problem competitively with your handsets, then that asset—the NOC—is a declining asset, he added
In a recent research note, McKechnie said that of ThinkEquity's $6 earnings-per-share estimate for fiscal year 2013, $4.25 comes from NOC recurring revenue, $1.75 from the handset business.
McKechnie says you could still have RIM be a niche supplier to the BlackBerry servers, but the market's a heck of a lot bigger when you start throwing in the Apples and the Androids and whatever other technologies people want to bring in from their homes and run on the corporate network.
The fall from being the dominant provider to a niche player is nothing new in the technology industry. But analysts say in RIM's case, it's a situation that could have been avoided.
All in all, these were big strategic mistakes that were made years ago and now they're feeling the pain. Ironically they've figured that out now, but it takes a few years for the new strategy to take hold. They probably don't have more than two years to re-engage the high end of the market before their brand is permanently damaged here.
With this week's announcement that Research in Motion is cutting 10 percent of its workforce, the BlackBerry death watch moved into high gear.
The smartphone that's been a corporate status symbol for more than a decade faces a rapidly declining market share amid new competition, while the company has suffered a series of missteps in both strategy and execution.
Even the management shakeup announced on Monday wasn't what Wall Street had been hoping for. RIM's stock is down more than 50 percent this year.
With Apple's iPhone and smartphones based on Google's Android operating system stealing RIM's thunder in both the consumer and corporate spaces, the BlackBerry's outlook appears grim.
One analyst says surviving in the context of being a formidable force across the industry as it was in its glorious days is not going to happen.
That doesn't mean all is lost for RIM and the BlackBerry platform. It's still wildly popular in international markets, and smartphones powered by a new operating system are coming next year.
But analysts say the company needs to act quickly and effectively, which it's had a hard time accomplishing over the past several years.
Judging from the numbers, it's obvious that fewer people want BlackBerrys.
According to market research firm comScore, RIM held 24.7 percent of smartphone subscribers in the three-month period ending in May, down 17 percent from a year ago.
In the corporate market, traditionally RIM's bread and butter, IT departments are increasingly allowing individual users to choose their own mobile devices, and more of them are choosing iPhones.
The company has taken notice. RIM is set to unveil smartphones based on version 7 of the BlackBerry operating system.
But critics have long complained that BlackBerry OS has gotten long in the tooth, especially compared with sophisticated platforms like Android and Apple's iOS.
Next year, RIM will unveil BlackBerry devices based on QNX, the operating system that powers RIM's PlayBook tablet. QNX promises to deliver performance and features that better compete with iOS and high-end Android devices.
But RIM has been snakebitten by a series of execution missteps, including product delays and releasing new devices that seem half-baked, such as the PlayBook's curious lack of built-in e-mail capabilities.
Most alarming to Wall Street, there's a sense of sluggishness in a company that operates in a rapidly changing industry.
One analyst stated that with QNX they have a real next-gen operating system. He added that those phones that come out next year will be much more competitive with the high end of the market.
But Doradla, who maintains a "Hold" rating on RIM shares, says there's little reason to be excited about the BlackBerry platform in the near term.
He says the question is between now and early next year when the QNX comes in, what is holding a customer to stick with a BlackBerry phone
Dominance Lost
Despite the near-term gloom, analysts point out there are factors that work in RIM's favor.
Although BlackBerry smartphones are falling out of favor in the United States, they're still wildly popular overseas.
Also, businesses have made significant investments in BlackBerry Enterprise Servers, so they're not likely to abandon the platform completely.
McCourt sees the corporate market playing out as a duopoly with BlackBerry and the iPhone. Doradla points out that given RIM's strong presence in corporate enterprises, the company is likely to remain viable in the long term.
Earlier this year, RIM opened its BlackBerry Enterprise Server to enable support for iPhone and Android smartphones, enabling IT departments to centrally manage those devices on a single system. The move addresses the reality that more organizations are supporting multiple mobile platforms.
But Mark McKechnie, an analyst at ThinkEquity, believes the company needs to go farther by opening up its network operations center, or NOC, to other smartphone platforms.
He says they've created this great infrastructure that all the corporations use to secure their e-mails. They collect about $5 per month per subscriber. But if you're going to have a problem competitively with your handsets, then that asset—the NOC—is a declining asset, he added
In a recent research note, McKechnie said that of ThinkEquity's $6 earnings-per-share estimate for fiscal year 2013, $4.25 comes from NOC recurring revenue, $1.75 from the handset business.
McKechnie says you could still have RIM be a niche supplier to the BlackBerry servers, but the market's a heck of a lot bigger when you start throwing in the Apples and the Androids and whatever other technologies people want to bring in from their homes and run on the corporate network.
The fall from being the dominant provider to a niche player is nothing new in the technology industry. But analysts say in RIM's case, it's a situation that could have been avoided.
All in all, these were big strategic mistakes that were made years ago and now they're feeling the pain. Ironically they've figured that out now, but it takes a few years for the new strategy to take hold. They probably don't have more than two years to re-engage the high end of the market before their brand is permanently damaged here.
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