Thursday, January 11, 2007


As most of you know that Apple Computers inc oh Sorry Apple inc has launched its own phone .There has been lot of hype and rumors from last 1 year about this product and finally when it was announced on 10th of jan, it got great review from both press and financial communities especially in later by taking apple stock up 9% and pulling RIM, Palm stocks by nearly 6 % and even Nokia and Motorola stocks by 2 %.My personal opinion on iPhone is mixed I think it’s a cool looking device from design point of view but would it reshape industry and shakeup already existing players as claimed by Apple and majority of press I strongly doubt so .

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)

No data


2.6" 16M color TFT, 240x320 resolution

3.5” 320 x480

Data access technologies

HSDPA (1.8 Mbps)






Input Method

Keyboard with joy stick


SW platform

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

Why Nokia should buy Yahoo ?

This is a speculative posting but with some logical reasoning behind it. Today beginning of new year I was going through my last years postings and the posting about Microsoft buying a stake in Yahoo started as a trigger point for this posting .Before I go further 2 important facts
  • Nokia announced recently in its investors meet in Amsterdam that Mobile devices 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 .