Story first appeared on ABC News -
The two biggest — and bitterest — rivals in the smartphone market will have to endure another bruising trial after a federal judge ruled that jurors miscalculated nearly half the $1 billion in damages it found Samsung Electronics owed Apple Inc. for patent infringement.
U.S. District Judge Lucy Koh wiped out $450 million from the verdict and ordered a new trial to reconsider damages related to 14 Samsung products including some products in its hot-selling Galaxy lineup jurors in August found were using Apple's technology without permission. Koh said jurors in the three-week trial had not properly followed her instruction in calculating some of the damages.
She also concluded that mistakes had been made in determining when Apple had first notified Samsung about the alleged violations of patents for its trend-setting iPhone and IPad.
"We are pleased that the court decided to strike $450,514,650 from the jury's award," Samsung spokeswoman Lauren Restuccia said.
Koh didn't toss out the jurors underlying finding that two dozen Samsung products infringed patents Apple used to develop its iPad and iPhone products. The new jury will be tasked with only determining what Samsung owes Apple.
Apple declined to comment on the Koh's ruling, which still did leave Samsung with a bill to just under $599 million. The judge said the tab will probably increase after the appeals of both companies are resolved.
Apple is seeking more damages and Samsung a complete dismissal of the case in the U.S. Court of Appeals for the Federal Circuit, the Washington, D.C.-based court that handles all patent appeals. The new trial to recalculate the damages could also increase the award.
Still, the ruling was the second significant setback in Koh's courtroom since the headline grabbing verdict was announced.
In December, Koh refused to order a sales ban on the products the jury found infringed Apple's patents. She said Apple failed to prove the purloined technology is what drove consumers to buy a Samsung product instead of an Apple iPhone or iPad. Samsung says that it is continues to sell only three of the two dozen products found to have infringed Apple's patents.
After a three-week trial closely followed in Silicon Valley, the jury decided that Samsung ripped off the trailblazing technology and sleek designs used by Apple to create its revolutionary iPhone and iPad. Jurors ordered Samsung to pay Apple $1.05 billion.
Apple filed another lawsuit last year accusing Samsung's newer line of products of continuing to use technology controlled by Apple. Koh has scheduled trial in that case for early next year. She has implored both companies on several occasions to settle their difference with little success.
Apple filed its patent infringement lawsuit in April 2011 and engaged legions of the country's highest-paid patent lawyers to demand $2.5 billion from its top smartphone competitor. Samsung Electronics Co. fired back with its own lawsuit seeking $399 million.
The jury found that several Samsung products illegally used such Apple creations as the "bounce-back" feature when a user scrolls to an end image, and the ability to zoom text with a tap of a finger.
Samsung has mounted an aggressive post-trial attack on the verdict, raising a number of legal issues that allege the South Korean company was treated unfairly in a federal courtroom a dozen miles from Apple's Cupertino headquarters. Samsung alleges that some of Apple's patents shouldn't have been awarded in the first place and that the jury made mistakes in calculating the damage award.
Samsung has emerged as one of Apple's biggest rivals and has overtaken it as the leading smartphone maker. Samsung's Galaxy line of phones run on Android, a mobile operating system that Google Inc. has given out for free to Samsung and other phone makers.
Apple and Samsung have filed similar lawsuits in eight other countries, including South Korea, Germany, Japan, Italy, the Netherlands, Britain, France and Australia.
Showing posts with label iPhone. Show all posts
Showing posts with label iPhone. Show all posts
Monday, March 4, 2013
Thursday, January 24, 2013
Turbulence! Apple’s speeding profit rocket slams into air pocket
Apple's multi-year profit-building streak hits air pocket as holiday earnings go flat -
Apple's blockbuster revenue growth is slowing drastically, as iPhone sales plateau and the company finds itself lacking revolutionary new products.
The company's warning, issued Wednesday as part of its financial results for the holiday quarter, sent Apple Inc.'s stock plunging by more than 10 percent, wiping out a year's worth of gains.
Analysts said the warning suggested Apple can no longer sustain its growth without some completely new products. Its last revolutionary creation, the iPad, was launched in 2010. Co-founder Steve Jobs, who was the engine behind the creation of the iPod, iPhone and iPad, died in 2011.
"It has been an overriding concern with Apple that they would not be able to generate revenue growth just rolling out new versions of old products," said Jeff Sica, president and chief investment officer of SICA Wealth Management. "Now they've proven it in their numbers."
On a conference call with analysts, Apple CEO Tim Cook rebutted that idea, but as usual, gave no details.
"We're working on some incredible stuff. The pipeline is chock full," he said.
Before he died in 2011, Apple co-founder Steve Jobs told biographer Walter Isaacson that he had figured out how to create a groundbreaking, easy-to-use TV set. Since then, company watchers have been waiting for the company to bring out something in that vein to re-energize sales. Cook said the company was still working on it.
"I tend to believe that there's a lot we can contribute in the space, and so we continue to pull the string and see where it leads us," he said.
Apple said it expects sales of between $41 billion and $43 billion in the current quarter, which ends in March. That would usually be little cause for concern, even though analysts were expecting $45.6 billion, because Apple usually lowballs its forecasts. But Chief Financial Officer Peter Oppenheimer said the company is changing its practices and providing a reasonable range rather than a single, easily achievable number.
That means Apple is looking at sales growth of about 7 percent from last year's January to March quarter, a striking number for a company that's posted double-digit increases in every quarter except one since 2008.
Apple's stock fell $55.58 to $458.43 in extended trading, after the release of the results. The shares are down 35 percent from their all-time high, hit Sept. 21, when the iPhone 5 launched.
Fueled by earlier versions of the iPhone, Apple's market capitalization decisively overtook that of Exxon Mobil in early 2012, making it the world's most valuable company. With Wednesday's drop, Apple is worth just 5 percent more than Exxon.
Apple's enviable profit growth also hit a wall in the October to December quarter. It said net income in the fiscal first quarter was $13.1 billion, or $13.81 per share, flat with a year ago. That still beat expectations, as analysts polled by FactSet had forecast earnings of $13.48 per share.
Revenue was $54.5 billion, up 18 percent from a year ago. Analysts were expecting $55 billion. Sales were held back by the fact that the latest quarter had 13 weeks, one less than the corresponding 2011 quarter.
Apple shipped 47.8 million iPhones in the quarter, about 1 million less than analysts were expecting, and 22.9 million iPads, also about 1 million short.
Most surprisingly, Mac sales were also 1 million short, at 4.1 million. That's a 22 percent drop from shipments a year ago. Oppenheimer said this was because Apple couldn't get the new iMac desktops out before December.
Cook said iPhone supplies were short too, and the company could have sold more of both the iPhone 5 and older iPhone 4 if it had been able to make more.
Most technology companies would be ecstatic if they posted 18 percent sales growth and $13 billion in profit for a single quarter, but Apple is held to a high standard, set by the shocking, iPhone-propelled success of the last few years.
"Apple has been growing tremendously and that level of growth can't be sustained by any company," said Sarah Rotman Epps, senior analyst at Forrester Research.
Investors have already been concerned that Apple's strategy of keeping the price of the iPhone high means it's losing out on sales, particularly overseas. Consumers are instead opting to buy cheaper smartphones running Google Inc.'s Android software, which has propelled South Korea's Samsung Electronics to the world's largest maker of smartphones. The average wholesale price of the iPhone is $640, hundreds of dollars more than smartphones with comparable hardware.
There's speculation among company watchers that the company will produce a cheaper iPhone, but that would cut into its profit margin and could tarnish the company's image as a purveyor of premium products.
Apple had warned that the holiday quarter's profits would be lower than Wall Street was initially expecting, because it had so many new products coming out, including the iPhone 5 and iPad Mini. New production lines are more expensive to run and yield more defective products that need to be redone or thrown out rather than sold.
Thursday, August 9, 2012
Sprint CEO Talks About iPhone Decision, Other Challenges
Story first reported from USA Today
OVERLAND PARK, Kan. – By his own admission, Sprint CEO Dan Hesse isn't ready to hang out a "Mission Accomplished" sign yet. The No. 3 wireless company is in the midst of a turnaround. But, he says, "we're showing good success" in retaining customers, improvements in customer service and other metrics. Sprint last month reported a second-quarter loss of $1.37 billion on revenue of $8.84 billion. "It's blocking and tackling, quarter after quarter, year after year." Hesse hosted a group of journalists at Sprint headquarters this week. Here are highlights of the conversation, edited for space and clarity:
Q: What about the decision to sell the Apple iPhone even though Sprint had to spend billions to get that opportunity?
A: I've said everything has to make sense economically. But we knew our customers wanted the ability to choose the iPhone. We clearly looked at economics both short-term and long-term. Over time it starts to be cash-flow positive. We saw no reason to bet against Apple. You really don't want to be on the outside of that. From a brand perspective, you like having your brand associated with very strong great brands, and nobody can debate just what a great brand Apple has. We thought the benefits greatly outweighed the risks.
Q: You were a vocal opponent of the AT&T/T-Mobile merger. Are you satisfied you can compete now that the merger did not go through?
A: We're certainly working very hard. There's no question that the industry does have an issue with the size of the duopoly of AT&T and Verizon. I believe that over time we'll see more consolidation in the industry outside of the big two, because the gap in size between two and three is so enormous. Consolidation is healthy for the industry as long as it's not AT&T and Verizon getting larger.
Q: What are your thoughts on Google's acquisition of Motorola Mobility?
A: There'll be protections between the Android organization and Motorola. I can't say what will happen internally. But I honestly believe they will try very hard to keep Android's independence. We're actually looking forward to seeing what new devices the new Motorola will bring to the market.
Q: How are you positioning the Virgin and Boost brands, which offer prepaid wireless service?
A: Right now, generally the Boost brand is more kind of "talk and text." Virgin is focused a bit more on data and text. Boost tends to be a bit more urban; Virgin more suburban. Those are the basic differences.
Q: How does the growth of traditional wireless plans with contracts (postpaid) compare with the prepaid business?
A: We see increasingly that prepaid will be an opportunity for value and for customers who don't necessarily want to be tied into a contract for a couple of years. The iPhone on Virgin is an example of what we think is possible.
The (traditional wireless) business is the largest segment of the industry and, historically, it has been the most profitable. The Sprint brand is basically our (vehicle) to go after that industry. The prepaid business is growing more rapidly than the postpaid business. We doubled-down on the prepaid business a few years ago when we acquired Virgin. And we are expanding our offerings. As hockey great Wayne Gretzky reportedly once said, skate not to where the puck is but where it's going. The puck is going more to prepaid.
Q: Do you see a day when the typical household has multiple devices on the Sprint network?
A: As we look at growing overall revenue in the industry, what we're counting on is many more devices than one. We used to think five years ago that growth in the wireless industry is dead when you get to 100% penetration. Now we see numbers much north of that as customers have a variety of devices — wireless chips in your shirts, in your car, in many other areas. It's just another opportunity for us to increase revenues as an industry. We hope that over time there are a number of devices that are enabled by the Sprint platform.
Q: Will Sprint have an iPad, especially as you move to faster LTE networks?
A: I can't comment on that. But it's a very good question.
OVERLAND PARK, Kan. – By his own admission, Sprint CEO Dan Hesse isn't ready to hang out a "Mission Accomplished" sign yet. The No. 3 wireless company is in the midst of a turnaround. But, he says, "we're showing good success" in retaining customers, improvements in customer service and other metrics. Sprint last month reported a second-quarter loss of $1.37 billion on revenue of $8.84 billion. "It's blocking and tackling, quarter after quarter, year after year." Hesse hosted a group of journalists at Sprint headquarters this week. Here are highlights of the conversation, edited for space and clarity:
Q: What about the decision to sell the Apple iPhone even though Sprint had to spend billions to get that opportunity?
A: I've said everything has to make sense economically. But we knew our customers wanted the ability to choose the iPhone. We clearly looked at economics both short-term and long-term. Over time it starts to be cash-flow positive. We saw no reason to bet against Apple. You really don't want to be on the outside of that. From a brand perspective, you like having your brand associated with very strong great brands, and nobody can debate just what a great brand Apple has. We thought the benefits greatly outweighed the risks.
Q: You were a vocal opponent of the AT&T/T-Mobile merger. Are you satisfied you can compete now that the merger did not go through?
A: We're certainly working very hard. There's no question that the industry does have an issue with the size of the duopoly of AT&T and Verizon. I believe that over time we'll see more consolidation in the industry outside of the big two, because the gap in size between two and three is so enormous. Consolidation is healthy for the industry as long as it's not AT&T and Verizon getting larger.
Q: What are your thoughts on Google's acquisition of Motorola Mobility?
A: There'll be protections between the Android organization and Motorola. I can't say what will happen internally. But I honestly believe they will try very hard to keep Android's independence. We're actually looking forward to seeing what new devices the new Motorola will bring to the market.
Q: How are you positioning the Virgin and Boost brands, which offer prepaid wireless service?
A: Right now, generally the Boost brand is more kind of "talk and text." Virgin is focused a bit more on data and text. Boost tends to be a bit more urban; Virgin more suburban. Those are the basic differences.
Q: How does the growth of traditional wireless plans with contracts (postpaid) compare with the prepaid business?
A: We see increasingly that prepaid will be an opportunity for value and for customers who don't necessarily want to be tied into a contract for a couple of years. The iPhone on Virgin is an example of what we think is possible.
The (traditional wireless) business is the largest segment of the industry and, historically, it has been the most profitable. The Sprint brand is basically our (vehicle) to go after that industry. The prepaid business is growing more rapidly than the postpaid business. We doubled-down on the prepaid business a few years ago when we acquired Virgin. And we are expanding our offerings. As hockey great Wayne Gretzky reportedly once said, skate not to where the puck is but where it's going. The puck is going more to prepaid.
Q: Do you see a day when the typical household has multiple devices on the Sprint network?
A: As we look at growing overall revenue in the industry, what we're counting on is many more devices than one. We used to think five years ago that growth in the wireless industry is dead when you get to 100% penetration. Now we see numbers much north of that as customers have a variety of devices — wireless chips in your shirts, in your car, in many other areas. It's just another opportunity for us to increase revenues as an industry. We hope that over time there are a number of devices that are enabled by the Sprint platform.
Q: Will Sprint have an iPad, especially as you move to faster LTE networks?
A: I can't comment on that. But it's a very good question.
For more national and
worldwide Business News, visit the Peak News Room blog.
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state of Michigan Business News, visit the Michigan
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For more Electronics News, visit the Electronics
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Tuesday, August 7, 2012
Apple Closing in on All-Time High
Story first reported from CNN.com
Remember all the investor disappointment about Apple's latest earnings report? That's no longer an issue. Shares of Apple were up nearly 1.5% Monday to about $625. The stock has rebounded more than 8% since a 4% pummeling the day after it missed forecasts and guided lower. In fact, the stock is now just 3% below the all-time high of $644 it set back in April.
It appears that any lingering concerns about Apple's rare case of under-performing and under-delivering have been replaced by excitement about new products (iPhone 5 is rumored to be unveiled and go on sale next month) and the upcoming dividend payment to shareholders. As such, several traders on StockTwits believe that it would be a mistake to bet against Apple.
Research firm analyzes 6 million social conversations to conclude:"the launch of the
Apple may one day screw up royally and release a product that nobody wants.
But take one look at the share prices of Research in Motion, Nokia, Hewlett-Packard and Dell and ask yourselves if you think any of them will soon make hardware that's sexier than iEverything? (Or that EL James book it seems everybody but me is reading.) Didn't think so.
Sure, Microsoft, Google and Samsung are all fierce competitors too. But Apple deserves the benefit of the doubt ... assuming there still are any doubts of course.
Apple's $2.65 per share dividend will be paid out on August 16 to any shareholders of record as of August 13. So if you are silly enough to be shorting Apple, it makes sense to cover before the dividend is paid. Otherwise you would have to return (i.e. buy back) the shares you borrowed and also pay the dividend on top of that.
I'm still not sure I believe the stock split chatter though ... even though a split could make the shares even more attractive to retail investors and the people who manage the Dow Jones Industrial Average.
It will be interesting to see what Apple's stock does once the iPhone 5 is released. The next milestone for the company would be exceeding $600 billion in market value. Apple is currently only about 3% below that level. That may seem obscene. But as I've said repeatedly in Buzz columns, videos and over on Twitter -- aka the thing that Apple is never going to buy no matter what the NY Times and other media outlets are reporting -- Apple remains a cheap stock.
Apple is valued at just 14 times fiscal 2012 earnings estimates -- despite its market dominance, stellar growth prospects (forecasts of 20%+ EPS growth on average for the next few years) and squeaky-clean balance sheet with well north of $100 billion in cash. Now you add on the dividend -- which will yield a relatively 1.7% -- to boot?
I had my colleague David Goldman ask Siri if it's a good idea to short Apple stock. (I merely possess a Siri-less iPhone 4.) Her response? "I cannot help you pick stocks, Dave." That was very diplomatic of her. But trust this lowly carbon-based life form. The answer is no.
Remember all the investor disappointment about Apple's latest earnings report? That's no longer an issue. Shares of Apple were up nearly 1.5% Monday to about $625. The stock has rebounded more than 8% since a 4% pummeling the day after it missed forecasts and guided lower. In fact, the stock is now just 3% below the all-time high of $644 it set back in April.
It appears that any lingering concerns about Apple's rare case of under-performing and under-delivering have been replaced by excitement about new products (iPhone 5 is rumored to be unveiled and go on sale next month) and the upcoming dividend payment to shareholders. As such, several traders on StockTwits believe that it would be a mistake to bet against Apple.
Research firm analyzes 6 million social conversations to conclude:"the launch of the
Apple may one day screw up royally and release a product that nobody wants.
But take one look at the share prices of Research in Motion, Nokia, Hewlett-Packard and Dell and ask yourselves if you think any of them will soon make hardware that's sexier than iEverything? (Or that EL James book it seems everybody but me is reading.) Didn't think so.
Sure, Microsoft, Google and Samsung are all fierce competitors too. But Apple deserves the benefit of the doubt ... assuming there still are any doubts of course.
Apple's $2.65 per share dividend will be paid out on August 16 to any shareholders of record as of August 13. So if you are silly enough to be shorting Apple, it makes sense to cover before the dividend is paid. Otherwise you would have to return (i.e. buy back) the shares you borrowed and also pay the dividend on top of that.
I'm still not sure I believe the stock split chatter though ... even though a split could make the shares even more attractive to retail investors and the people who manage the Dow Jones Industrial Average.
It will be interesting to see what Apple's stock does once the iPhone 5 is released. The next milestone for the company would be exceeding $600 billion in market value. Apple is currently only about 3% below that level. That may seem obscene. But as I've said repeatedly in Buzz columns, videos and over on Twitter -- aka the thing that Apple is never going to buy no matter what the NY Times and other media outlets are reporting -- Apple remains a cheap stock.
Apple is valued at just 14 times fiscal 2012 earnings estimates -- despite its market dominance, stellar growth prospects (forecasts of 20%+ EPS growth on average for the next few years) and squeaky-clean balance sheet with well north of $100 billion in cash. Now you add on the dividend -- which will yield a relatively 1.7% -- to boot?
I had my colleague David Goldman ask Siri if it's a good idea to short Apple stock. (I merely possess a Siri-less iPhone 4.) Her response? "I cannot help you pick stocks, Dave." That was very diplomatic of her. But trust this lowly carbon-based life form. The answer is no.
For more national and
worldwide Business News, visit the Peak News Room blog.
For more local and
state of Michigan Business News, visit the Michigan
Business News blog.
For more Health News, visit the Healthcare and Medical
News blog.
For more Electronics News, visit the Electronics
America blog.
For more Real Estate News, visit the Commercial and
Residential Real Estate blog.
For more Law News, visit the Nation of Law blog.
For more Advertising News, visit the Advertising,
Marketing and Media blog.
For more Environmental News, visit the Environmental
Responsibility News blog.
Tuesday, April 24, 2012
Don't Sell Your Old Smartphone
Story first appeared in The Detroit Free Press.
Thinking of selling your smartphone or laptop computer? If you have a BlackBerry or an iPhone, go right ahead.
If you were planning to sell an Android phone or a computer running Windows XP, however, you may want to think again, according to a McAfee identify theft expert.
The expert recently purchased 30 electronic devices from Craigslist -- mostly smartphones and laptops -- to see how effective normal people are at removing personal information from their gadgets before selling them.
After he got the devices home he, did some digging around in the phones and computers himself and then sent the machines to a forensics expert to see what personal data he might glean.
Fifteen devices revealed no information about the previous owner's identity, no matter how thoroughly the experts looked. But as for those other 15 devices -- they coughed up plenty of private data.
The expert was able to get bank account information, Social Security numbers, court documents, credit card account log-ins and a host of other personal data off those devices with not much effort.
And the worst part? Most of those devices had already been "wiped" by their previous owner -- meaning all personal files had been deleted and the user had restored the device's factory settings as per the manufacturer's instructions. The data is still there after following manufacturer protocol.
So, what's the difference between the devices that still reveal personal information after being wiped and those that don't?
It came down to the type of device that was sold and what kind of operating system it was running.
BlackBerrys were totally impenetrable. Resetting to factory settings on a Blackberry totally wiped any and all personal data from the machine. Similarly, he was unable to get data off devices running iOS such as the iPad and the iPhone. Devices running Windows 7 that are wiped by their owners also got his vote of confidence.
As for smartphones running the Android system and computers running Windows XP, it is recommended that people don't sell them at all.
You don't want to sell your identity for $50. Either put the device in storage indefinitely, or put holes in the hard drive to make certain that the information cannot be pulled.
For more technology and electronics related news, visit the Electronics America blog.
For national and worldwide related business news, visit the Peak News Room blog.
For local and Michigan business related news, visit the Michigan Business News blog.
For healthcare and medical related news, visit the Healthcare and Medical blog.
For law related news, visit the Nation of Law blog.
For real estate and home related news, visit the Commercial and Residential Real Estate blog.
For organic SEO and web optimization related news, visit the SEO Done Right blog.
Thinking of selling your smartphone or laptop computer? If you have a BlackBerry or an iPhone, go right ahead.
If you were planning to sell an Android phone or a computer running Windows XP, however, you may want to think again, according to a McAfee identify theft expert.
The expert recently purchased 30 electronic devices from Craigslist -- mostly smartphones and laptops -- to see how effective normal people are at removing personal information from their gadgets before selling them.
After he got the devices home he, did some digging around in the phones and computers himself and then sent the machines to a forensics expert to see what personal data he might glean.
Fifteen devices revealed no information about the previous owner's identity, no matter how thoroughly the experts looked. But as for those other 15 devices -- they coughed up plenty of private data.
The expert was able to get bank account information, Social Security numbers, court documents, credit card account log-ins and a host of other personal data off those devices with not much effort.
And the worst part? Most of those devices had already been "wiped" by their previous owner -- meaning all personal files had been deleted and the user had restored the device's factory settings as per the manufacturer's instructions. The data is still there after following manufacturer protocol.
So, what's the difference between the devices that still reveal personal information after being wiped and those that don't?
It came down to the type of device that was sold and what kind of operating system it was running.
BlackBerrys were totally impenetrable. Resetting to factory settings on a Blackberry totally wiped any and all personal data from the machine. Similarly, he was unable to get data off devices running iOS such as the iPad and the iPhone. Devices running Windows 7 that are wiped by their owners also got his vote of confidence.
As for smartphones running the Android system and computers running Windows XP, it is recommended that people don't sell them at all.
You don't want to sell your identity for $50. Either put the device in storage indefinitely, or put holes in the hard drive to make certain that the information cannot be pulled.
For more technology and electronics related news, visit the Electronics America blog.
For national and worldwide related business news, visit the Peak News Room blog.
For local and Michigan business related news, visit the Michigan Business News blog.
For healthcare and medical related news, visit the Healthcare and Medical blog.
For law related news, visit the Nation of Law blog.
For real estate and home related news, visit the Commercial and Residential Real Estate blog.
For organic SEO and web optimization related news, visit the SEO Done Right blog.
Wednesday, April 18, 2012
Wireless Market Headed for a Wall
Story first appeared on Bloomberg Business Week
The U.S. wireless market, long the fastest-growing sector in the telecommunications industry, looks like it’s headed for a wall.
Sales of wireless contracts, the most lucrative segment of the business because it locks in monthly payments over long periods, may have shrunk for the first time ever in the first quarter. One big reason for the sharp reversal: Soaring iPhone sales in late 2011 may have satiated consumers’ appetites for wireless plans.
A decline would mark a turning point for the previously rapid-growth business, leaving carriers such as AT&T Inc., Verizon Wireless and Sprint Nextel Corp. fighting over a shrinking pool of customers. A slowdown also forces device manufacturers such as Apple Inc. and Samsung Electronics Co. to battle more intensely for customers.
The huge fourth quarter fueled by the iPhone took all the air out of the first quarter. It’s now a saturated market.
U.S. wireless carriers shed a combined 20,000 contract customers in the first quarter.
The decline forces carriers to seek revenue gains at the expense of weaker players. That may mean increasing promotional activity by carriers who already are selling smartphones at a loss to lure users into two-year contracts, a practice that has reduced profit margins.
To offer the iPhone, for instance, carriers already pay Apple about $600 per phone and then collect $199 from retail customers, subsidizing the difference with revenue from monthly service charges.
These subsidies have narrowed wireless operating income margins at AT&T to 15.2 percent in the fourth quarter, down from 30 percent in the first quarter of 2010.
‘Milestone’
What you’ll see in a saturated market are the forces of consolidation and price pressure. Margins in the U.S. have already been shrinking at a faster rate than any other time in the wireless industry. The possibility that the contract-user number dropped in the first quarter could also be factored in.
The industry is maturing. Given that the pie isn’t growing rapidly any longer, it’s now a game of share-shifting.
IPhone Surge
Within the industry, AT&T and Verizon Wireless probably kept winning users from smaller rivals T-Mobile USA and Sprint Nextel Corp. T-Mobile probably lost 600,000 contract customers and Sprint 125,000 last quarter. Verizon Wireless added 500,000 contract users and AT&T gained 225,000 such customers.
The potential first-quarter drop follows exceptionally strong gains in the previous period, when holiday sales of Apple Inc.’s new iPhone 4S boosted subscriber numbers. The first quarter also is traditionally the slowest sales period for the industry, and contract-subscriber growth may resume after that.
Some analysts say the market may have avoided a contraction in the first quarter. The big four carriers -- Verizon Wireless, AT&T, Sprint and T-Mobile USA -- added 380,000 contract customers collectively.
Sprint, based in Overland Park, Kansas, rose 4 percent to $2.61 yesterday, and AT&T added 0.9 percent to $30.89. Verizon Communications Inc., which owns Verizon Wireless with Vodafone Group Plc, advanced 0.8 percent to $37.74. T-Mobile is a unit of Deutsche Telekom AG.
Market Penetration
Gains in the prepaid market -- a smaller, faster-growing part of the mobile-phone business -- means the wireless industry as a whole kept adding users in the first quarter. Still, in that market, which includes carriers MetroPCS Communications Inc. and Leap Wireless International Inc., the growth also is slowing.
The number of new prepaid customers added by the industry in the first quarter was an estimated 2.5 million, an 18 percent decline from the year-earlier growth rate.
If you take out every kid under 10 and every adult over 80, you have a market with 125 percent penetration. It’s no surprise the industry is maturing.
For more technology and electronics related news, visit the Electronics America blog.
For national and worldwide related business news, visit the Peak News Room blog.
For local and Michigan business related news, visit the Michigan Business News blog.
For healthcare and medical related news, visit the Healthcare and Medical blog.
For law related news, visit the Nation of Law blog.
For real estate and home related news, visit the Commercial and Residential Real Estate blog.
For organic SEO and web optimization related news, visit the SEO Done Right blog.
The U.S. wireless market, long the fastest-growing sector in the telecommunications industry, looks like it’s headed for a wall.
Sales of wireless contracts, the most lucrative segment of the business because it locks in monthly payments over long periods, may have shrunk for the first time ever in the first quarter. One big reason for the sharp reversal: Soaring iPhone sales in late 2011 may have satiated consumers’ appetites for wireless plans.
A decline would mark a turning point for the previously rapid-growth business, leaving carriers such as AT&T Inc., Verizon Wireless and Sprint Nextel Corp. fighting over a shrinking pool of customers. A slowdown also forces device manufacturers such as Apple Inc. and Samsung Electronics Co. to battle more intensely for customers.
The huge fourth quarter fueled by the iPhone took all the air out of the first quarter. It’s now a saturated market.
U.S. wireless carriers shed a combined 20,000 contract customers in the first quarter.
The decline forces carriers to seek revenue gains at the expense of weaker players. That may mean increasing promotional activity by carriers who already are selling smartphones at a loss to lure users into two-year contracts, a practice that has reduced profit margins.
To offer the iPhone, for instance, carriers already pay Apple about $600 per phone and then collect $199 from retail customers, subsidizing the difference with revenue from monthly service charges.
These subsidies have narrowed wireless operating income margins at AT&T to 15.2 percent in the fourth quarter, down from 30 percent in the first quarter of 2010.
‘Milestone’
What you’ll see in a saturated market are the forces of consolidation and price pressure. Margins in the U.S. have already been shrinking at a faster rate than any other time in the wireless industry. The possibility that the contract-user number dropped in the first quarter could also be factored in.
The industry is maturing. Given that the pie isn’t growing rapidly any longer, it’s now a game of share-shifting.
IPhone Surge
Within the industry, AT&T and Verizon Wireless probably kept winning users from smaller rivals T-Mobile USA and Sprint Nextel Corp. T-Mobile probably lost 600,000 contract customers and Sprint 125,000 last quarter. Verizon Wireless added 500,000 contract users and AT&T gained 225,000 such customers.
The potential first-quarter drop follows exceptionally strong gains in the previous period, when holiday sales of Apple Inc.’s new iPhone 4S boosted subscriber numbers. The first quarter also is traditionally the slowest sales period for the industry, and contract-subscriber growth may resume after that.
Some analysts say the market may have avoided a contraction in the first quarter. The big four carriers -- Verizon Wireless, AT&T, Sprint and T-Mobile USA -- added 380,000 contract customers collectively.
Sprint, based in Overland Park, Kansas, rose 4 percent to $2.61 yesterday, and AT&T added 0.9 percent to $30.89. Verizon Communications Inc., which owns Verizon Wireless with Vodafone Group Plc, advanced 0.8 percent to $37.74. T-Mobile is a unit of Deutsche Telekom AG.
Market Penetration
Gains in the prepaid market -- a smaller, faster-growing part of the mobile-phone business -- means the wireless industry as a whole kept adding users in the first quarter. Still, in that market, which includes carriers MetroPCS Communications Inc. and Leap Wireless International Inc., the growth also is slowing.
The number of new prepaid customers added by the industry in the first quarter was an estimated 2.5 million, an 18 percent decline from the year-earlier growth rate.
If you take out every kid under 10 and every adult over 80, you have a market with 125 percent penetration. It’s no surprise the industry is maturing.
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Wednesday, January 25, 2012
Holiday Sales Didn't Help Microsoft
First appeared in NY Times
Weak sales of personal computers made for a tough holiday selling season for Microsoft.
The results, released Thursday after the markets closed, are a sign of the challenges that Microsoft, which is based in Redmond, Wash., faces as it tries to adapt to deep changes in the technology industry. While Microsoft continues to reap profits from products like Windows and Office, growth is shifting away from the personal computer industry on which those two software franchises rest toward mobile devices like tablets and smartphones.
The company said net income in its second quarter, which ended Dec. 31, declined slightly to $6.62 billion, or 78 cents a share, from $6.63 billion in the year-earlier period. The company said revenue was up 5 percent at $20.89 billion.
The earnings exceeded the expectations of Wall Street analysts, who had predicted 76 cents a share, though Microsoft fell short of their revenue forecast of $20.93 billion, according to a survey of analysts by Thomson Reuters.
The PC market is looking increasingly shaky. Microsoft said revenue from Windows, one of the pillars of its profits, fell 6 percent, to $4.74 billion, in the quarter.
Brendan Barnicle, an analyst at Pacific Crest Securities, said that most analysts had braced for poor Windows sales but that the actual numbers were worse than most had expected.
“We were negative 4 percent, and they still missed,” he said.
In an interview, Microsoft’s chief financial officer, Peter S. Klein, said the decline in Windows sales was the result of problems in the consumer market, not purchases of PCs by businesses, which continued to grow during the quarter. He said the sales of the inexpensive laptops known as netbooks were especially bad, falling to 2 percent of worldwide consumer PC shipments in the quarter, from 8 percent a year earlier.
Worldwide shipments of PCs fell 0.2 percent during the fourth quarter from the year-earlier period, while PC shipments in the United States fell 5 percent for all of 2011, the worst showing since 2001, according to the International Data Corporation. IDC attributed the anemic results to weak economic conditions and shortages of hard disks caused by flooding in Thailand, a manufacturing center for those devices.
The weakness in Microsoft’s report also reflects competition from cellphones and tablets like Apple’s iPad.
After stumbling in mobile phones and tablets in recent years, Microsoft finally has software products for these devices that are winning positive early reviews. But Microsoft’s tablet and cellphone plans have not yet begun to produce big sales.
The company released its redesigned mobile operating system, Windows Phone, in fall 2010, but the first smartphones that used the software were lackluster and had tepid support from wireless carriers. Microsoft is betting that a partnership with Nokia, the Finnish cellphone maker, will help turn around its mobile business. The first devices from their collaboration went on sale only recently.
Meanwhile, Apple’s iPhone and smartphones based on Google’s Android operating system are devouring most of the market. During the fourth quarter, Android phones accounted for 51.7 percent of the smartphones acquired by United States consumers within three months, while the iPhone accounted for 37 percent, according to estimates by Nielsen. Phones running Microsoft software, including an older operating system it is no longer developing, accounted for 3.8 percent, Nielsen said.
Microsoft is also developing a new version of its flagship operating system, Windows 8, to run tablet computers. Early test versions of the software have been praised by developers and technophiles. The software is not expected to go on sale until late this year, though.
Other parts of Microsoft’s business are performing well, especially its entertainment and devices division, dominated by sales of the Xbox video game system and related products. Revenue from that division grew 15 percent to $4.24 billion from the year-earlier period, reflecting strong sales of the Xbox 360 console, the Kinect game sensor and the Xbox Live online game service.
Another standout was Microsoft’s server and tools division, which sells databases and other software to businesses. That division’s sales rose 11 percent, to $4.77 billion.
Weak sales of personal computers made for a tough holiday selling season for Microsoft.
The results, released Thursday after the markets closed, are a sign of the challenges that Microsoft, which is based in Redmond, Wash., faces as it tries to adapt to deep changes in the technology industry. While Microsoft continues to reap profits from products like Windows and Office, growth is shifting away from the personal computer industry on which those two software franchises rest toward mobile devices like tablets and smartphones.
The company said net income in its second quarter, which ended Dec. 31, declined slightly to $6.62 billion, or 78 cents a share, from $6.63 billion in the year-earlier period. The company said revenue was up 5 percent at $20.89 billion.
The earnings exceeded the expectations of Wall Street analysts, who had predicted 76 cents a share, though Microsoft fell short of their revenue forecast of $20.93 billion, according to a survey of analysts by Thomson Reuters.
The PC market is looking increasingly shaky. Microsoft said revenue from Windows, one of the pillars of its profits, fell 6 percent, to $4.74 billion, in the quarter.
Brendan Barnicle, an analyst at Pacific Crest Securities, said that most analysts had braced for poor Windows sales but that the actual numbers were worse than most had expected.
“We were negative 4 percent, and they still missed,” he said.
In an interview, Microsoft’s chief financial officer, Peter S. Klein, said the decline in Windows sales was the result of problems in the consumer market, not purchases of PCs by businesses, which continued to grow during the quarter. He said the sales of the inexpensive laptops known as netbooks were especially bad, falling to 2 percent of worldwide consumer PC shipments in the quarter, from 8 percent a year earlier.
Worldwide shipments of PCs fell 0.2 percent during the fourth quarter from the year-earlier period, while PC shipments in the United States fell 5 percent for all of 2011, the worst showing since 2001, according to the International Data Corporation. IDC attributed the anemic results to weak economic conditions and shortages of hard disks caused by flooding in Thailand, a manufacturing center for those devices.
The weakness in Microsoft’s report also reflects competition from cellphones and tablets like Apple’s iPad.
After stumbling in mobile phones and tablets in recent years, Microsoft finally has software products for these devices that are winning positive early reviews. But Microsoft’s tablet and cellphone plans have not yet begun to produce big sales.
The company released its redesigned mobile operating system, Windows Phone, in fall 2010, but the first smartphones that used the software were lackluster and had tepid support from wireless carriers. Microsoft is betting that a partnership with Nokia, the Finnish cellphone maker, will help turn around its mobile business. The first devices from their collaboration went on sale only recently.
Meanwhile, Apple’s iPhone and smartphones based on Google’s Android operating system are devouring most of the market. During the fourth quarter, Android phones accounted for 51.7 percent of the smartphones acquired by United States consumers within three months, while the iPhone accounted for 37 percent, according to estimates by Nielsen. Phones running Microsoft software, including an older operating system it is no longer developing, accounted for 3.8 percent, Nielsen said.
Microsoft is also developing a new version of its flagship operating system, Windows 8, to run tablet computers. Early test versions of the software have been praised by developers and technophiles. The software is not expected to go on sale until late this year, though.
Other parts of Microsoft’s business are performing well, especially its entertainment and devices division, dominated by sales of the Xbox video game system and related products. Revenue from that division grew 15 percent to $4.24 billion from the year-earlier period, reflecting strong sales of the Xbox 360 console, the Kinect game sensor and the Xbox Live online game service.
Another standout was Microsoft’s server and tools division, which sells databases and other software to businesses. That division’s sales rose 11 percent, to $4.77 billion.
Tuesday, November 29, 2011
Problem with iPhone Battery
Story first appeared in USA TODAY.
Apple concedes there's a problem with the new iPhone 4S battery life after all — a snag that apparently extends to other devices running the new iOS 5 mobile operating system software.
A small number of customers have reported lower-than-expected battery life on iOS 5 devices. Apple has found a few bugs that are affecting battery life, and they will release a software update to address those in a few weeks.
Apple didn't reveal the nature of the bugs or go into any other specifics.
Apple's statement follows a rash of complaints in various online Apple forums from customers upset about battery woes on the new iPhone 4S. As previously reported in USA TODAY, users said they've lost as much as 15% of the battery power per hour, even when the phone is not in active use. Last Friday, TheGuardian reported that Apple engineers contacted iPhone 4S owners seeking an answer to the battery issue.
Some speculation has centered around a location setting involving a "time zone" function that is useful for customers who travel a lot but that may potentially sap the battery. Also, iOS 5 brings a systemwide Notification Center that keeps users constantly informed of missed calls, messages, appointments, reminders and more.
Apple touted great battery life for the iPhone 4S — up to eight hours of 3G talk time — when it introduced the phone last month.
Creative Strategies President Tim Bajarin believes the fact that the issue can be resolved through a software fix makes a big difference and that sales won't be hurt. Apple tends to wait until they're certain of a problem and then works very fast to try and correct it.
The fact that Apple said the bugs lie within iOS 5 suggests other products may be affected, including the iPad, iPod Touch and iPhone 4 and 3GS.
Apple concedes there's a problem with the new iPhone 4S battery life after all — a snag that apparently extends to other devices running the new iOS 5 mobile operating system software.
A small number of customers have reported lower-than-expected battery life on iOS 5 devices. Apple has found a few bugs that are affecting battery life, and they will release a software update to address those in a few weeks.
Apple didn't reveal the nature of the bugs or go into any other specifics.
Apple's statement follows a rash of complaints in various online Apple forums from customers upset about battery woes on the new iPhone 4S. As previously reported in USA TODAY, users said they've lost as much as 15% of the battery power per hour, even when the phone is not in active use. Last Friday, TheGuardian reported that Apple engineers contacted iPhone 4S owners seeking an answer to the battery issue.
Some speculation has centered around a location setting involving a "time zone" function that is useful for customers who travel a lot but that may potentially sap the battery. Also, iOS 5 brings a systemwide Notification Center that keeps users constantly informed of missed calls, messages, appointments, reminders and more.
Apple touted great battery life for the iPhone 4S — up to eight hours of 3G talk time — when it introduced the phone last month.
Creative Strategies President Tim Bajarin believes the fact that the issue can be resolved through a software fix makes a big difference and that sales won't be hurt. Apple tends to wait until they're certain of a problem and then works very fast to try and correct it.
The fact that Apple said the bugs lie within iOS 5 suggests other products may be affected, including the iPad, iPod Touch and iPhone 4 and 3GS.
Tuesday, July 26, 2011
Verizon Business Rises With New iPhone Subscribers
Story first appeared in USA TODAY.
Verizon is seeing a big boost from the iPhone, adding more new subscribers on contracts in the second quarter than it has in two and half years.
Yet AT&T, which was been the exclusive seller of Apple's iconic phone in the U.S. until February, still activates three iPhones for every two Verizon does.
When posting a profit for the second quarter on Friday, Verizon also said Chief Operating Officer Lowell McAdam will take over from long-time CEO Ivan Seidenberg, 64, on Aug. 1. The company has signaled the succession for the past year. McAdam, 57, is the former head of Verizon Wireless.
Seidenberg will remain chairman of the company. He became the CEO of Bell Atlantic in 1998. It changed its named to Verizon in 2000 after a major acquisition.
Verizon added 1.26 million wireless subscribers under contract in the April to June period, a result that flies in the face of the slowdown in new subscribers across the industry in the last two years. Since nearly everyone already has a cellphone, gaining new subscribers is chiefly a matter of luring them over from other carriers. A year ago, Verizon added just 665,000 subscribers under contract.
Verizon activated 2.3 million iPhones, well below the 3.6 million AT&T reported for the same period. Verizon sells only the iPhone 4, starting at $200, while AT&T also sells the older iPhone 3GS for $49.
McAdam said iPhone sales haven't quite been as good as the company expected, chiefly because it believed a new iPhone model would arrive this summer, as it usually does. Apple hasn't said why there's no new phone yet.
Even with relatively slow iPhone sales, Verizon is handily outdoing AT&T, which recruited only 331,000 new contract subscribers in the quarter. The iPhone is AT&T's chief draw, while Verizon has other advantages on its side, like a broader "3G" data network and new, ultra-fast "4G" network in many cities. In the quarter, Verizon sold 1.2 million devices that use the 4G network, including laptop modems and the HTC Thunderbolt smartphone.
Verizon ended the quarter with 106.3 million devices connected to its wireless network, making it the largest carrier in the country. No. 2 and chief rival AT&T is trying to leapfrog Verizon in size by buying No. 4 T-Mobile USA for $39 billion.
Verizon said its net income was $1.61 billion, or 57 cents per share, in the three months ended June 30. A year ago, it posted a loss of $1.19 billion, or 42 cents per share.
Analysts polled by FactSet were expecting earnings for 55 cents per share, on average.
Revenue rose 2.8% to $27.5 billion, in line with analysts' expectations.
Excluding the sale of phone lines in 14 states at the end of last year's second quarter, Verizon's revenue grew 6.3% on the back of its thriving wireless operations.
However, only 55% of Verizon Wireless' profits flow to Verizon Communication's bottom line, because British carrier Vodafone owns 45% of the cellular carrier.
Verizon shares fell $1.02, or 2.7%, to $36.55 in morning trading.
Verizon is seeing a big boost from the iPhone, adding more new subscribers on contracts in the second quarter than it has in two and half years.
Yet AT&T, which was been the exclusive seller of Apple's iconic phone in the U.S. until February, still activates three iPhones for every two Verizon does.
When posting a profit for the second quarter on Friday, Verizon also said Chief Operating Officer Lowell McAdam will take over from long-time CEO Ivan Seidenberg, 64, on Aug. 1. The company has signaled the succession for the past year. McAdam, 57, is the former head of Verizon Wireless.
Seidenberg will remain chairman of the company. He became the CEO of Bell Atlantic in 1998. It changed its named to Verizon in 2000 after a major acquisition.
Verizon added 1.26 million wireless subscribers under contract in the April to June period, a result that flies in the face of the slowdown in new subscribers across the industry in the last two years. Since nearly everyone already has a cellphone, gaining new subscribers is chiefly a matter of luring them over from other carriers. A year ago, Verizon added just 665,000 subscribers under contract.
Verizon activated 2.3 million iPhones, well below the 3.6 million AT&T reported for the same period. Verizon sells only the iPhone 4, starting at $200, while AT&T also sells the older iPhone 3GS for $49.
McAdam said iPhone sales haven't quite been as good as the company expected, chiefly because it believed a new iPhone model would arrive this summer, as it usually does. Apple hasn't said why there's no new phone yet.
Even with relatively slow iPhone sales, Verizon is handily outdoing AT&T, which recruited only 331,000 new contract subscribers in the quarter. The iPhone is AT&T's chief draw, while Verizon has other advantages on its side, like a broader "3G" data network and new, ultra-fast "4G" network in many cities. In the quarter, Verizon sold 1.2 million devices that use the 4G network, including laptop modems and the HTC Thunderbolt smartphone.
Verizon ended the quarter with 106.3 million devices connected to its wireless network, making it the largest carrier in the country. No. 2 and chief rival AT&T is trying to leapfrog Verizon in size by buying No. 4 T-Mobile USA for $39 billion.
Verizon said its net income was $1.61 billion, or 57 cents per share, in the three months ended June 30. A year ago, it posted a loss of $1.19 billion, or 42 cents per share.
Analysts polled by FactSet were expecting earnings for 55 cents per share, on average.
Revenue rose 2.8% to $27.5 billion, in line with analysts' expectations.
Excluding the sale of phone lines in 14 states at the end of last year's second quarter, Verizon's revenue grew 6.3% on the back of its thriving wireless operations.
However, only 55% of Verizon Wireless' profits flow to Verizon Communication's bottom line, because British carrier Vodafone owns 45% of the cellular carrier.
Verizon shares fell $1.02, or 2.7%, to $36.55 in morning trading.
Wednesday, November 10, 2010
Report: Hasbro Device to Bring 3D to iPhone, iPod
PC Mag
As if you needed more of an excuse to waste time on smartphone games, Hasbro is reportedly developing a device that will enable 3D gaming on the iPhone or iPod touch.
The toy company on Tuesday was scheduled to show its investors a handheld device known as the My3D, according to the Associated Press. It apparently looks like a pair of binoculars and lets people attach their iPhone or iPod for 360-degree gaming, as well as travel and entertainment options.
It would retail for $30 and be sold next spring wherever iPhones and iPods are available. The App Store will then add My3D content, some of which will be free. Hasbro is working with Dreamworks, Discovery, Sony, and Imax on content for the My3D, AP said. On the travel front, Hasbro will partner with the LA Visitors Bureau for virtual tours.
Hasbro did not respond to a request for comment.
From the Kansas City Star
Hasbro unveils device that promises 3-D on iPod
Hasbro Inc. is betting that iPod and iPhone users want 3-D viewing on the go.
The nation's second-largest toy maker is set to unveil to investors on Tuesday a handheld device called My3D that attaches to the two Apple Inc. devices. It promises three-dimensional content that offers a 360-degree experience in gaming, virtual travel experiences and entertainment content. It's aimed at both children and adults.
The device, which resembles a pair of binoculars with a slot in which users insert their iPod or iPhone, will be priced at $30. It will be available starting next spring at stores where Apple's iPhones and iPod Touches are available.
Shoppers can then visit Apple's App store, which will allow shoppers to browse for additional My 3D content. Content varies in price; some apps will be free.
Hasbro said it was guided by Apple during development and believes there's nothing available that matches the quality and 3-D experience on the iPhone or iPod Touch.
If it catches on, it has big potential. More than 125 million iPod Touches and iPhones have shipped, according to Shaw Wu, senior research analyst at Kaufman Bros. L.P. He predicts that will hit 200 million by end of 2011.
"The issue with this is whether they are going to get enough content for it," Wu said.
Hasbro is confident it will and says it has teamed up with Dreamworks Animation, whose movie "Megamind" hit theaters last weekend, to develop material.
Separately, Hasbro's My3D will use content from a 3-D television network from Discovery, Sony and Imax scheduled to make its debut next year. Viewers will be able to see trailers and exclusive behind-the-scenes snippets from films for up to 20 minutes. Hasbro says the device will be a key way to market its own brands in a 3-D experience, though details haven't been set.
Meanwhile, Hasbro worked with LA Inc., the Los Angeles Convention and Vistors Bureau, to create virtual travel experiences that include visits to the Wax Museum and the Santa Monica Pier.
Through other apps, users can feel like they're immersed in deep water, exploring coral reefs or playing a shark attacking a tuna, while all along learning facts about sea life. There are also shooter games in a virtual galaxy.
"The idea of being able to be somewhere in Los Angeles, in this 360-degree environment, to be in the shark tank, to be able to swim with the fish and chase after the fish. These are really breakthrough immersive experiences," said Brian Goldner, president and CEO of Hasbro.
Hasbro Inc. is betting that iPod and iPhone users want 3-D viewing on the go.
The nation's second-largest toy maker is set to unveil to investors on Tuesday a handheld device called My3D that attaches to the two Apple Inc. devices. It promises three-dimensional content that offers a 360-degree experience in gaming, virtual travel experiences and entertainment content. It's aimed at both children and adults.
The device, which resembles a pair of binoculars with a slot in which users insert their iPod or iPhone, will be priced at $30. It will be available starting next spring at stores where Apple's iPhones and iPod Touches are available.
Shoppers can then visit Apple's App store, which will allow shoppers to browse for additional My 3D content. Content varies in price; some apps will be free.
Hasbro said it was guided by Apple during development and believes there's nothing available that matches the quality and 3-D experience on the iPhone or iPod Touch.
If it catches on, it has big potential. More than 125 million iPod Touches and iPhones have shipped, according to Shaw Wu, senior research analyst at Kaufman Bros. L.P. He predicts that will hit 200 million by end of 2011.
"The issue with this is whether they are going to get enough content for it," Wu said.
Hasbro is confident it will and says it has teamed up with Dreamworks Animation, whose movie "Megamind" hit theaters last weekend, to develop material.
Separately, Hasbro's My3D will use content from a 3-D television network from Discovery, Sony and Imax scheduled to make its debut next year. Viewers will be able to see trailers and exclusive behind-the-scenes snippets from films for up to 20 minutes. Hasbro says the device will be a key way to market its own brands in a 3-D experience, though details haven't been set.
Meanwhile, Hasbro worked with LA Inc., the Los Angeles Convention and Vistors Bureau, to create virtual travel experiences that include visits to the Wax Museum and the Santa Monica Pier.
Through other apps, users can feel like they're immersed in deep water, exploring coral reefs or playing a shark attacking a tuna, while all along learning facts about sea life. There are also shooter games in a virtual galaxy.
"The idea of being able to be somewhere in Los Angeles, in this 360-degree environment, to be in the shark tank, to be able to swim with the fish and chase after the fish. These are really breakthrough immersive experiences," said Brian Goldner, president and CEO of Hasbro.
Monday, August 23, 2010
Hon Hai Pushes Into Chinese Market
The Wall Street Journal
TAIPEI—Hon Hai Precision Industry Co., whose Chinese factories produce many of the world's most popular electronics products, including iPads and iPhones is making a push to sell gadgets in China's own fast-growing consumer market.
Starting later this year, Hon Hai plans to open at least 10 large electronics stores in the Shanghai area by the end of 2011, under a partnership initiated last year with Germany retailer Metro AG. Louis Woo, the senior Hon Hai executive in charge of the retail push, outlined the plans in an interview.
Hon Hai also intends to open 45 to 50 branches of Cybermart, a small retail chain it purchased a decade ago but which has seen little growth. Cybermart currently operates 34 stores in 20 Chinese cities.
And Mr. Woo said the company plans to open another 200 electronics booths in hypermarkets in Chinese cities, while also providing funding for Chinese employees who return to their hometowns to start small shops through which Hon Hai can distribute products.
Hon Hai's retail push comes as it is facing challenges in its core manufacturing business after decades of rapid growth. The Taiwan-based company, which also uses the trade name Foxconn, assembles iPhones and iPads for Apple Inc., mobile phones for Nokia Corp., and personal computers for Hewlett-Packard Co., among others.
Its nearly one million employees and revenue of $61.9 billion last year makes it by far the world's biggest contract manufacturer of electronics, bigger by sales in the first quarter than its 10 biggest competitors combined, according to research firm iSuppli.
But having gained such dominance, Hon Hai must increasingly look far afield for growth. Revenue last year was flat, although analysts expect it to increase again this year. Meanwhile, Hon Hai is having to adjust its main business to rising costs. In June, Hon Hai announced sharp pay increases for its workers in the wake of a spate of employee suicides at its massive Shenzhen operations, where more than half of its nearly 900,000 Chinese staff work.
Hon Hai has said it is stepping up expansion of manufacturing operations in China's less expensive hinterland provinces, and it plans to discuss with clients the possibility of raising product prices to offset planned wage increases, which are part of a broader wave of wage increases affecting many foreign companies.
The flip side of rising wages in China is that workers will have more spending power, meaning Hon Hai's expansion in retail could enable it to benefit from the very trend that is squeezing its costs in the core manufacturing business.
"Wage increases will directly and definitely link to higher domestic consumption," said Mr. Woo, who is chairman of NCIH International Holdings Ltd., Hon Hai's retail subsidiary. Hon Hai's sales strategy is in line with that of the Chinese government's to reduce the economy's reliance on exports in favor of stronger domestic demand, he notes.
Mr. Woo said Hon Hai plans to distribute products it makes for big brands as well as goods from other factories. Hon Hai hasn't finalized plans with companies like Apple to determine exactly which of their products it will carry.
H-P and Nokia declined to comment. Apple didn't respond to a request for comment.
Mr. Woo says the company could offer start-up capital of about $25,000 each to the employees who want to return home to start mom-and-pop electronics shops in China's smaller cities and towns.
China's electronics market is already huge, with some $135 billion in sales expected this year, according to a forecast by Pully Brand Technology Consulting, a Chinese consultancy focused on electronics. China is the world's largest handset market by number of subscriber accounts and the second-largest personal-computer market after the U.S. by unit sales.
The retail market is dominated by big Chinese chains including Gome Electrical Appliances Holdings Ltd., which operates 726 stores in 198 Chinese cities as of the end of last year, and Suning Appliance Co., which aims to have 1,200 stores nationwide by year's end.
Some analysts doubt that retail is a good fit for Hon Hai. Most of its clients already have their own retail strategies in China, and building new sales channels takes time and requires different know-how than manufacturing, said Michael Palma, a senior analyst at IDC who covers electronics manufacturers.
"The question is how well they can operate a retail operation and drive new sales. Hon Hai has a poor track record on the retail side of things and the organization's DNA may not help with the effort," he said. Mr. Palma says Hon Hai has the resources to fund the operation, attract the right people, and sustain operations for a period of time. But if it can't drive sufficient sales, "it may just muddy the water for their clients' existing retail strategies."
Hon Hai doesn't disclose Cybermart's annual revenue, but analysts said it isn't a meaningful contributor to Hon Hai's revenue.
Mr. Woo said Hon Hai believes retail sales of electronics are growing fast enough that Hon Hai will be able to grab market share. He plans to focus on China's smaller cities, which he thinks will benefit from China's urbanization policies.
"We see there is a lot of opportunity to organize small format retailing, especially in the fourth, fifth and sixth-tier cities," he said.
Retail also lets Hon Hai capture more of its clients' spending. "It is almost like we can take care of the whole product sample from design development to manufacturing and to selling it to consumers," said Mr. Woo.
Starting later this year, Hon Hai plans to open at least 10 large electronics stores in the Shanghai area by the end of 2011, under a partnership initiated last year with Germany retailer Metro AG. Louis Woo, the senior Hon Hai executive in charge of the retail push, outlined the plans in an interview.
Hon Hai also intends to open 45 to 50 branches of Cybermart, a small retail chain it purchased a decade ago but which has seen little growth. Cybermart currently operates 34 stores in 20 Chinese cities.
And Mr. Woo said the company plans to open another 200 electronics booths in hypermarkets in Chinese cities, while also providing funding for Chinese employees who return to their hometowns to start small shops through which Hon Hai can distribute products.
Hon Hai's retail push comes as it is facing challenges in its core manufacturing business after decades of rapid growth. The Taiwan-based company, which also uses the trade name Foxconn, assembles iPhones and iPads for Apple Inc., mobile phones for Nokia Corp., and personal computers for Hewlett-Packard Co., among others.
Its nearly one million employees and revenue of $61.9 billion last year makes it by far the world's biggest contract manufacturer of electronics, bigger by sales in the first quarter than its 10 biggest competitors combined, according to research firm iSuppli.
But having gained such dominance, Hon Hai must increasingly look far afield for growth. Revenue last year was flat, although analysts expect it to increase again this year. Meanwhile, Hon Hai is having to adjust its main business to rising costs. In June, Hon Hai announced sharp pay increases for its workers in the wake of a spate of employee suicides at its massive Shenzhen operations, where more than half of its nearly 900,000 Chinese staff work.
Hon Hai has said it is stepping up expansion of manufacturing operations in China's less expensive hinterland provinces, and it plans to discuss with clients the possibility of raising product prices to offset planned wage increases, which are part of a broader wave of wage increases affecting many foreign companies.
The flip side of rising wages in China is that workers will have more spending power, meaning Hon Hai's expansion in retail could enable it to benefit from the very trend that is squeezing its costs in the core manufacturing business.
"Wage increases will directly and definitely link to higher domestic consumption," said Mr. Woo, who is chairman of NCIH International Holdings Ltd., Hon Hai's retail subsidiary. Hon Hai's sales strategy is in line with that of the Chinese government's to reduce the economy's reliance on exports in favor of stronger domestic demand, he notes.
Mr. Woo said Hon Hai plans to distribute products it makes for big brands as well as goods from other factories. Hon Hai hasn't finalized plans with companies like Apple to determine exactly which of their products it will carry.
H-P and Nokia declined to comment. Apple didn't respond to a request for comment.
Mr. Woo says the company could offer start-up capital of about $25,000 each to the employees who want to return home to start mom-and-pop electronics shops in China's smaller cities and towns.
China's electronics market is already huge, with some $135 billion in sales expected this year, according to a forecast by Pully Brand Technology Consulting, a Chinese consultancy focused on electronics. China is the world's largest handset market by number of subscriber accounts and the second-largest personal-computer market after the U.S. by unit sales.
The retail market is dominated by big Chinese chains including Gome Electrical Appliances Holdings Ltd., which operates 726 stores in 198 Chinese cities as of the end of last year, and Suning Appliance Co., which aims to have 1,200 stores nationwide by year's end.
Some analysts doubt that retail is a good fit for Hon Hai. Most of its clients already have their own retail strategies in China, and building new sales channels takes time and requires different know-how than manufacturing, said Michael Palma, a senior analyst at IDC who covers electronics manufacturers.
"The question is how well they can operate a retail operation and drive new sales. Hon Hai has a poor track record on the retail side of things and the organization's DNA may not help with the effort," he said. Mr. Palma says Hon Hai has the resources to fund the operation, attract the right people, and sustain operations for a period of time. But if it can't drive sufficient sales, "it may just muddy the water for their clients' existing retail strategies."
Hon Hai doesn't disclose Cybermart's annual revenue, but analysts said it isn't a meaningful contributor to Hon Hai's revenue.
Mr. Woo said Hon Hai believes retail sales of electronics are growing fast enough that Hon Hai will be able to grab market share. He plans to focus on China's smaller cities, which he thinks will benefit from China's urbanization policies.
"We see there is a lot of opportunity to organize small format retailing, especially in the fourth, fifth and sixth-tier cities," he said.
Retail also lets Hon Hai capture more of its clients' spending. "It is almost like we can take care of the whole product sample from design development to manufacturing and to selling it to consumers," said Mr. Woo.
Monday, August 9, 2010
Apple Executive Exits After Antenna Flap
The Wall Street Journal
Mark Papermaster, Apple Inc.'s senior vice president for iPhone engineering, is leaving the company, signaling a change in leadership after criticism erupted over the iPhone 4's unique antenna.
Mr. Papermaster's duties will be shouldered by Bob Mansfield, the company's senior vice president of computer engineering, Apple spokesman Steve Dowling said. He added that Mr. Mansfield already manages some aspects of Apple's mobile device technologies, such as the touch screen and A4 processing chip.
Mr. Papermaster couldn't be reached for comment, and Apple wouldn't say under which conditions Mr. Papermaster left.
The move comes after a series of uncharacteristic missteps for the popular consumer electronics maker. Earlier this year, photos of the iPhone's new design were published on a popular technology blog after an engineer allegedly left a test unit in a bar.
Then, after the phone's release, the device was dogged by complaints of reception issues related to its unique new antenna design. Apple eventually was forced to respond with a press conference hosted by CEO Steve Jobs, at which the company said it would supply free bumpers to iPhone 4 purchasers.
Mr. Papermaster's departure was reported earlier by the New York Times.
Mr. Papermaster joined Apple in April 2009 after the company reached an agreement with International Business Machines Corp. IBM was arguing that Mr. Papermaster, who had managed Big Blue's PowerPC chip business, shouldn't be allowed to join Apple because he had signed a noncompete agreement.
The dispute took several months to resolve. As part of the settlement, Mr. Papermaster was required to certify at a couple of prearranged times last year that he had complied with his legal obligations not to disclose IBM's confidential information.
Mr. Papermaster's duties will be shouldered by Bob Mansfield, the company's senior vice president of computer engineering, Apple spokesman Steve Dowling said. He added that Mr. Mansfield already manages some aspects of Apple's mobile device technologies, such as the touch screen and A4 processing chip.
Mr. Papermaster couldn't be reached for comment, and Apple wouldn't say under which conditions Mr. Papermaster left.
The move comes after a series of uncharacteristic missteps for the popular consumer electronics maker. Earlier this year, photos of the iPhone's new design were published on a popular technology blog after an engineer allegedly left a test unit in a bar.
Then, after the phone's release, the device was dogged by complaints of reception issues related to its unique new antenna design. Apple eventually was forced to respond with a press conference hosted by CEO Steve Jobs, at which the company said it would supply free bumpers to iPhone 4 purchasers.
Mr. Papermaster's departure was reported earlier by the New York Times.
Mr. Papermaster joined Apple in April 2009 after the company reached an agreement with International Business Machines Corp. IBM was arguing that Mr. Papermaster, who had managed Big Blue's PowerPC chip business, shouldn't be allowed to join Apple because he had signed a noncompete agreement.
The dispute took several months to resolve. As part of the settlement, Mr. Papermaster was required to certify at a couple of prearranged times last year that he had complied with his legal obligations not to disclose IBM's confidential information.
Wednesday, July 14, 2010
Apple Silent after Consumer Reports Critique
Associated Press
A decision by Consumer Reports against endorsing the latest iPhone because of reception problems threatens to tarnish Apple Inc.'s reputation, yet fans who have braved poor reception for years are likely to keep buying the product.
In fact, some analysts say Apple could simply ignore calls by bloggers and others to recall the iPhone 4 or offer free cases to mitigate the problems.
As of Tuesday evening, Apple hadn't returned phone calls or e-mails about the Consumer Reports critique, which the venerable arbiter of product quality posted on its website Monday. While some Apple watchers find the company's responses to the reception issue objectionable, they don't see any penalties for Apple if it does nothing further.
People buy iPhones for emotional reasons, not because they're the best phones, said Deborah Mitchell, executive director of the Center for Brand and Product Management at the University of Wisconsin.
"People see you using the iPhone, and they think you are a certain type of person - hip, fresh and youthful in attitude," she said. "It's a brand that helps you identify yourself."
The iPhone has also been ahead of competitors when it comes to features such as easy Web browsing and shopping for music, movies and applications to download.
Greg Brown, a retired Philadelphia Eagles football player who lives in Sicklerville, N.J., said he has overlooked the iPhone's propensity for dropping calls because of congestion on the network of AT&T Inc., the iPhone's exclusive U.S. wireless carrier.
"When I am talking on the phone I like to finish the conversation before the phone call ends," Brown said. "But I forgive it because of all the features."
Consumer Reports said it won't endorse the iPhone 4 as "recommended" because tests show that simply holding the gadget can cause reception to fade. Although Consumer Reports only recommends a handful of phones that it considers exceptional, this was the first time the publication isn't giving an iPhone its "recommended" stamp of approval.
The publication's tests confirmed suspicions from many iPhone customers. Hours after the iPhone 4 launched on June 24, people were writing on Apple's support website that gripping the phone a certain way made it show fewer "bars" of cell signal strength and even caused calls to disconnect.
The company's first response came in a curt note attributed to CEO Steve Jobs, who told one iPhone buyer to either hold the phone a different way or buy a case.
After complaints persisted, Apple issued a formal letter saying an illusion caused by software was the culprit. For years, the iPhone had been showing people too many bars, a problem Apple says it plans to fix with a software update. At least then, dropped calls in areas with weak networks wouldn't come as a surprise.
Apple also said all phones, not just the iPhone, have reception problems when a user's hand covers the antenna.
Consumer Reports, however, believes Apple is dodging responsibility for a larger hardware problem.
This doesn't mean Consumer Reports believes the iPhone 4 is all bad, editor Mike Gikas said. It outperformed every other smart phone on the market in other regards. And avoiding the problem is as simple as buying a $30 "bumper" case from Apple that goes around the edges. Consumer Reports says even a simple a strip of duct tape would work (though one can imagine Jobs shuddering at such aesthetic blasphemy).
"It's like finding a dream home but then finding a leak in the basement," Gikas said.
Carolina Milanesi, an analyst for Gartner Inc., said she believes Jobs' early e-mail was an atypical public-relations blunder on Apple's part.
"Reception is pretty crucial. You can't tell people, 'You can't hold the phone that way,'" Milanesi said.
A year or two ago, his comments might have prompted jokes, she said. But now, Apple is the world's largest technology company by market capitalization, and Jobs' remarks are being perceived as arrogant. But while that could turn off new customers, Milanesi thinks most people won't recall this flap when it comes time to buy an iPhone 4 - more likely, they'll be agonizing over whether to buy the white or black model.
Brian Marshall, a Gleacher & Co. analyst who is typically very positive about Apple, was horrified when Apple said it had used a bad formula for calculating signal strength.
"That, to me, is atrocious," Marshall said. "It's so un-Apple-like. It shows a lack of attention to detail. Apple is a company that doesn't mess things up."
But neither Marshall nor Milanesi see the matter hurting Apple in the long run, even though its shares slipped about 2 percent to close Tuesday at $251.80.
Marshall said the most likely scenario is that Apple does nothing beyond the software update it promised. Offering free cases or issuing a recall would amount to Apple admitting a problem.
"I don't believe for a second that they're shipping what they view as a faulty product," Marshall said.
Even if Apple does go beyond a software update, it's not likely to hurt the company.
"We think $100 million here and there for a bumper or maybe a recall is a drop in the bucket for Apple," Standard & Poor's equity analyst Clyde Montevirgen said. "Sure, it might affect the company on a headline level, but from a financial standpoint we really don't see much of an impact."
In fact, some analysts say Apple could simply ignore calls by bloggers and others to recall the iPhone 4 or offer free cases to mitigate the problems.
As of Tuesday evening, Apple hadn't returned phone calls or e-mails about the Consumer Reports critique, which the venerable arbiter of product quality posted on its website Monday. While some Apple watchers find the company's responses to the reception issue objectionable, they don't see any penalties for Apple if it does nothing further.
People buy iPhones for emotional reasons, not because they're the best phones, said Deborah Mitchell, executive director of the Center for Brand and Product Management at the University of Wisconsin.
"People see you using the iPhone, and they think you are a certain type of person - hip, fresh and youthful in attitude," she said. "It's a brand that helps you identify yourself."
The iPhone has also been ahead of competitors when it comes to features such as easy Web browsing and shopping for music, movies and applications to download.
Greg Brown, a retired Philadelphia Eagles football player who lives in Sicklerville, N.J., said he has overlooked the iPhone's propensity for dropping calls because of congestion on the network of AT&T Inc., the iPhone's exclusive U.S. wireless carrier.
"When I am talking on the phone I like to finish the conversation before the phone call ends," Brown said. "But I forgive it because of all the features."
Consumer Reports said it won't endorse the iPhone 4 as "recommended" because tests show that simply holding the gadget can cause reception to fade. Although Consumer Reports only recommends a handful of phones that it considers exceptional, this was the first time the publication isn't giving an iPhone its "recommended" stamp of approval.
The publication's tests confirmed suspicions from many iPhone customers. Hours after the iPhone 4 launched on June 24, people were writing on Apple's support website that gripping the phone a certain way made it show fewer "bars" of cell signal strength and even caused calls to disconnect.
The company's first response came in a curt note attributed to CEO Steve Jobs, who told one iPhone buyer to either hold the phone a different way or buy a case.
After complaints persisted, Apple issued a formal letter saying an illusion caused by software was the culprit. For years, the iPhone had been showing people too many bars, a problem Apple says it plans to fix with a software update. At least then, dropped calls in areas with weak networks wouldn't come as a surprise.
Apple also said all phones, not just the iPhone, have reception problems when a user's hand covers the antenna.
Consumer Reports, however, believes Apple is dodging responsibility for a larger hardware problem.
This doesn't mean Consumer Reports believes the iPhone 4 is all bad, editor Mike Gikas said. It outperformed every other smart phone on the market in other regards. And avoiding the problem is as simple as buying a $30 "bumper" case from Apple that goes around the edges. Consumer Reports says even a simple a strip of duct tape would work (though one can imagine Jobs shuddering at such aesthetic blasphemy).
"It's like finding a dream home but then finding a leak in the basement," Gikas said.
Carolina Milanesi, an analyst for Gartner Inc., said she believes Jobs' early e-mail was an atypical public-relations blunder on Apple's part.
"Reception is pretty crucial. You can't tell people, 'You can't hold the phone that way,'" Milanesi said.
A year or two ago, his comments might have prompted jokes, she said. But now, Apple is the world's largest technology company by market capitalization, and Jobs' remarks are being perceived as arrogant. But while that could turn off new customers, Milanesi thinks most people won't recall this flap when it comes time to buy an iPhone 4 - more likely, they'll be agonizing over whether to buy the white or black model.
Brian Marshall, a Gleacher & Co. analyst who is typically very positive about Apple, was horrified when Apple said it had used a bad formula for calculating signal strength.
"That, to me, is atrocious," Marshall said. "It's so un-Apple-like. It shows a lack of attention to detail. Apple is a company that doesn't mess things up."
But neither Marshall nor Milanesi see the matter hurting Apple in the long run, even though its shares slipped about 2 percent to close Tuesday at $251.80.
Marshall said the most likely scenario is that Apple does nothing beyond the software update it promised. Offering free cases or issuing a recall would amount to Apple admitting a problem.
"I don't believe for a second that they're shipping what they view as a faulty product," Marshall said.
Even if Apple does go beyond a software update, it's not likely to hurt the company.
"We think $100 million here and there for a bumper or maybe a recall is a drop in the bucket for Apple," Standard & Poor's equity analyst Clyde Montevirgen said. "Sure, it might affect the company on a headline level, but from a financial standpoint we really don't see much of an impact."
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