Monday, October 01, 2007
Navteq with stock price of 78$ is trading at 53 P/E which is huge Compared to even Goggles 49 P/E, Navteq is priced quite high .so why did Nokia which is considered to be conservative company when it comes to acquisitions made this gamble answer according to me lies in 2 factors 1) Its clearly sees Location Based Services as huge opportunity 2) Most importantly it thinks with its ability to sell huge volumes of devices, is in unique position to exploit Navteq and hence justifies the huge premium .
Nokia would like to provide navigation and other location based services in its mobile device both as a way to differentiate from other mobile vendors and also as way to drive separate service revenue stream. Today Nokia already provides navigation services in its high end model like N95 but going further it would like to roll out these kinds of services in most of its mid-high end devices, which basically means that these services need to be made available in hundreds of millions of devices (125-200 million devices annually i.e. 50 % Nokia annual device sales).These numbers are huge compared to approx 30 million standalone navigation devices sold today. The key take way from these numbers is that the volumes and hence opportunity provided by embedded LBS in Mobile devices is very huge and hence its ability to change the present value chain of LBS segment.
Today Navteq and Teleatlas provide maps for all the navigation and map service providers starting from Tom Tom, Garmin (Navigation Device vendors) to Google, Yahoo, Mapinfo (Web Map service providers) .These 2 players not only provide maps to all players but also capture significant chunk of Value chain .TeleAtlas was bought by Tom Tom for 2 billon dollars recently so leaving Navteq as only independent map vendor but Nokia buy this acquisition not only made sure they get maps supply for its planned services in millions of device but also control the most important part of the LBS Value chain .Nokia last year made a deal with Trimble to get exclusive rights for Trembles GPS patent portfolio coupled with Gate 5 (Navigation SW maker ) acquisition gives Nokia all the pieces it requires to rollout LBS services in volumes at most cost effective way .
So it looks like Navteq is great strategic fit for Nokia but weather 8.1B$ is bargain or blunder would be determined by both Nokias ability to roll out LBS services in volumes and also most importantly consumers appetite and willingness to pay for such services.
Wednesday, August 08, 2007
Before going further a brief overview of status of todays mobilephone chipset industry would give good starting point to analyse the impact of todays anouncement.Today for Nokia ,Texas Instrument is the biggest and sole supplier of chipset for WCDMA and Edge technolgies in partcular and also biggest supplier of GSM chipset .Infact there are only 2 real big palyers in entire mobile chip industry namely Qualcomm and Texas instruments who are able to provide complete chipset solutions for entire range of mobile technologies (Qualcomm for CDMA families technologies including WCDMA and TI for GSM family of technolgies EDGE,WCDMA,HSDPA ).Complete chipset solution means both application processor and baseband processor .Application processor vendors spaces is crowded including STmicro ,Broadcomm and infineon but TI and qualcomm are only 2 big players who can provide complete solution .The entry barrier for producing complete solution has been baseband processor part which is not only complex technologies but the basic technologies patents have been held by Nokia ,Ericsson and Qualcomm .Out of the 3 Qualcomm are in the chipset business and prduce thier own complete chipset solution(inclding app processor) which mobile phone vendors like samsung,LG use .Nokia for instance so far has partnered with only TI to produce wcdma chipset that are used in thier handset .Becuase of the factors explained above Qualcomm and TI dominate the mobile phone processor industry .
Today's announcments shows that Nokia is willing to partner with others other than TI i.e with ST Microelectronics ,Broadcomm and Infineon that not only gives flexibility for Nokia but also create 3 more players ,who can provide complete chipset solution in market place for other handset vendors like samsung etc .This invaribly will drive the chipset cost down for the entire mobile industry and also put total pressure on Qualcomm and TI .Qualcomm in particular espcially inlight of ongoing legal battle between Qualcomm and Nokia over WCDMA patents.
Nokia also announced that they woud be licensings its WCDMA ,Edge technolgies to other chipset vendors as well so that they can provide complete chipset solutions .This will not only generate extra revenue for nokia but also sends a clear signal that Nokia no longer on a longer run sees HW chipset as business crtical control point .
Wednesday, May 30, 2007
Surface is basically today a 30” table top computer with multi touch and real objects detection capabilities. These 2 new deadly features enable a new era of computer interactivity and usage. The cost of surface which is available from late 2007 is nearly 10000 dollars. there are couple of companies like T-Mobile who are partners .So initially this would be exclusive devices similar way to Plasma or big LCD displays used to be 5 years back ,seen only in trade fairs or Five star hotels .With time I am sure it would creep into living rooms. I have feeling this might be the next big thing in terms of financial impact to MS results and might even turn out to be the true replacement for windows as cash generating machine.
Let’s see time will tell whether this is truly next big thing from MS or just yet another attempt from Redmond giant which failed to make a mark in real life like tablet PC .My gut feeling is that it might be next big thing.
Tuesday, April 17, 2007
For those of you who have never heard Joost or its previous name Venice Project it’s a P2P technology based TV Client. I have been a beta user of this for already 4 months now and have been amazed by it in all respect starting from usability to quality of video to ever expanding feature set. I am not the only one who has been taken over completely by joost experience Blogosphere is full of such stories. My Idea for this post is just to put my perspective and thinking when it comes to its use case and its potential to be a real IPTV kind of technology killer .By the way right now Joost Beta usage is only Invite only basis but I have couple of Invites left for Joost Beta testing so if anyone is genuinely interested leave a comment to this post with your email address or drop me a line.
Joost is yet another startup by Niklas Zennstrøm and Janus Friis they are same people who started Kaaza and Skype both products created wave and disruption in Music and Telecommunication Industry .Joost is their attempt to do same for TV industry I would say they have almost done exactly that .Joost uses P2P technology the same that is behind Skype and Kaaza but mixes with great TV like user interface and Internet ability to interact and communicate using social networks .In all it uses best of TV combines with best of internet and delvers it on optimized & cost effective P2P network. I would live rest of product experience to you to experience your self.
I read some blogs where people have connected PC to 37 inches LCD TV to watch Joost and their feedback has been extremely positive and their were really amazed at the ability of Joost Software and content to scale to bigger screen size without much compromise on video quality .So my belief is that if Joost or some one comes up with iTV kind of device to connect TV to internet and delver Joost on TV without any hassle (like Vonage does for IP telephony) then we may start to see joost being a real traditional TV displacer .Joost has required features set and technology to deliver really personalized TV content and also unable instant communication with their social network both of which is not possible using tradition Broadcasting TV technologies.
That leads to the title of my post if joost can deliver all and even better than what IPTV has promised what is need of expensive IPTV kind of technologies .The only reason I can think of is that IPTV though is expensive to roll out offers traditional big Telco’s (like Verizon, France Telecom etc) required tool to fight Cable TV providers who are in turn entering Telecoms domain by providing broadband and voip connection via cable. So basically IPTV is technology to support traditional Telco business model but not something that would really provide something new value for customers that cheaper alternative technologies like Joost can’t provide. So I hope finally Joost or similar technology finally survives and not IPTV kind of technologies.
Thursday, January 11, 2007
Before arguing for my case lets compare iPhone feature set with already existing phones feature set, there are billion phones sold every year with hundreds of model so we need a phone to compare with ,since one of the common way to compare is selecting a phone in same price range, so for comparison purpose lets take iPhone 4Gb that should cost 500$ with 2 year Cingular contract so retail price should be around 650-700 $ approximately and Nokia N95 which would retail around same price point or even less including cost of 4GB SD card. I don’t want to rewrite the 2 specs here but key features comparison
5 mega pixel with Carlzeiss optics
2 mega pixel
Capture at 30fps (DVD quality)
2.6" 16M color TFT, 240x320 resolution
3.5” 320 x480
Data access technologies
HSDPA (1.8 Mbps)
Keyboard with joy stick
S60 open (i.e. variety of 3rdparty native apps can be downloaded)
OSx closed (i.e. 3rd party apps cant be added)
Built in maps with GPS for real time routing
Static map no navigation features
Full HTTP browser (Based on safari) with ability to zoom in and zoom out using keys
Full HTTP browser (based on safari) with ability to zoom in and zoom out using touch
As you can see from above N95 beats iPhone a long way in terms of features .Infact apart from Touch and huge screen pretty much any phone in the price range of 250$ retail without any contract would beat iPhone in terms of features and functionality .So which makes you think what is that so great in iPhone it can charge that high price my reasons for it are
- Apple has used high resolution big screen and lots of sensors since the usage of these components are very limited their cost tends to be dispropertionately higher making total BOM cost of iPhone higher.
- Apple thinks its multitouch UI is unique killer feature coupled with its cool design and brand can charge very high premium.
- Apple experience is worth the premium
Having said that personally I don’t think pure touch enabled devices are good for phones .in fact Apple is not the first company to try only touch enabled device many companies have tried before without much success to name a notable few HTC,LG etc .Of course apple claims that they have solved those problems with their new UI but I think touch only has a input has some inherent problems like no tactile response for the user which is very important and secondly you cant design touch only phone for one hand operations (i.e. you can perform tasks using only one hand) which is very important as each one of us have experienced using it in one hand(for example while driving car etc).Then the claim that iPhone user experience is intuitive is also little bit overstretched because whole generation of people esp. in Asia and Europe have grown up sending SMS using keypad for that generation using keypads is more intuitive than touching characters on screen to send SMS.My basic point is intuitive is more to do with how used to you are with a device and system .I would have agreed with Steve jobs if he had introduced first mobile phone in the world and said that its intuitive but unfortunately he is at least one decade late .So it might be that consumers might feel that this whole new touch UI is more difficult to use than keypad based.
I would argue that iPhone if it turns out to be highly successful in spite of problems discussed above would remain as niche segment because of its high price. Many people with whom I discussed this issue of iPhone high price tend to say, wait for some time iPhone prices will go down the same way as iPod prices. I would say iPod price story is different because of one simple reason the most critical component from price perspective in iPod is flash memory the prices of it has fallen drastically not only because of ipod but mainly because of flash memory usage in many other digital devices like camera, phone and even in PC which drove the volume which made prices fall and subsequently apple could drive its cost down .But in case of iPhone the key differentiating component the high resolution big touch screen and sensors are also the most critical from price perspective and today their usage is very limited unless suddenly other phone manufacturers and other segment device vendors start using same component there prices would remain high making very much difficult for apple to bring the prices down .
So in short, I don’t think it is going to change mobile industry landscape. But certainly it’s one of the cool devices I have seen and more importantly managed to raise the level of debate in already established players in this industry like Nokia and Motorola which is great achievement for any company especially if they are new entrant to that segment.
Monday, January 01, 2007
- Nokia announced recently in its investors meet in
Amsterdamthat Mobiledevices convergence with Internet as next big growth opportunity and would like to transform itself as Internet Company.
- Yahoo in 2006 has not performed well to the expectation of investors and also compared to competitors .which has lead to not only changes in yahoo management team but speculation that it is up for sale .Speculation about Microsoft buying a stake in Yahoo was one such news .
Above 2 points are facts combining them lead to the speculative topic for this posting.
Nokia as you all know is the no1 mobile phone manufacturer with around 34% market share. It has around 90 billion $ market capitalization with more than 10 billion $ cash reserves in spite of nearly 3 billion $ annually it spends in share buyback programs. So pure numbers terms it looks like a great company to invest in .But unfortunately the share prices is showing no signs of growth in spite both top line and bottom line for the company is growing quite decently, compared to other players in its industry, of course it pales compared to growth shown by Google .But the basic reason being simple that they are in totally different industries. Google ,Yahoo and MSN are in what is called as xSP or internet based services be it search,e-mail etc segment which are growing at average more than 30% with nearly 50-60 % margins.Were as Mobile phone business though growing at 15% worldwide but much of the growth is coming from low margin business in developing nations so basically dragging down the overall margins even for industry leaders like Nokia infact that is the reason for bad performance of Nokia's share .But if you look further down the line at some point most of the internet services are going to be accessed by mobile devices as both mobile networks speed and device capabilities improves which presents huge opportunity for growth .But it not only provides existing internet big players like Google, Yahoo and Man’s to extend their services to mobile but also provides opportunity for new players to enter and capture market same way as Google and yahoo entered the market .It is this big opportunity that Nokia was talking about in Amsterdam and that it would like to take a big pie of that market .Accessing Gail through mobile phones, Uploading pictures taken by mobile phone directly to photo sharing websites like Flicker are just few example of services that are available in few high end handsets that would be common services in all majority of mobile devices.Nokia's N series high end devices already come with preinstalled software to all the above listed services and many more .Presently Nokia is partnering with Yahoo, Google,eBay to provide those services but in future as it rolls out similar services across all its portfolio it would definitely would like to have those pre installed services to be its own so that it can capture more value in the chain .The reason why it is not launching rival services but partnering with existing players is simple
- Existing players have great brand name already for those services
- Nokia doesn’t have expertise in those service area and it takes time and effort before it has those expertise in house
- Most importantly today’s mobile internet service market size is not big enough to provide pure mobile internet services it has to be in conjunction with regular pc internet services.
So big question is what will Nokia do in future, definitely Nokia don’t want to miss out next big mobile internet service opportunity but just partnering with existing xSP players .so option is either build its own services which is expensive and risky or just buy existing player though its expensive .So my bet is that it might take the acquisition route .so next question is which one, among the big players who have complete portfolio of services namely Google,MSN and Yahoo only Yahoo is potentially up for sale. And more importantly among the big three only Yahoo has community based services at core which fits quite well with mobile internet services where media and other content sharing is at heart and search is one service unlike PC internet services where search is heart and the key .