Tuesday, January 31, 2006

Google quarterly results disappoint

Google announced quartery results that were below what the market had hoped for. Their revenue growth was lower than the previous quarter, though still very impressive, and their earnings were considerably below expectations as they invested in new products and international expansion, while also experiencing a jump in their tax rate.

The market reacted badly, initially sending their shares down 19%, but since they have stabilised in after market trading to 15% below were they were at the close of the bell. So, Google's unbroken run of beating analysts expectations has come to a dramatic end. And some would argue that Google is growing up.

Google reported gross revenues of $1.919bn, an increase of 86% from the year before and a slowdown from the 96% of the previous three months. Net revenue, after deducting traffic acquisition costs paid to other websites that carry its search results, was $1.29bn, in line with estimates. In its previous five quarterly earnings reports as a public company, Google's revenues beat estimates by between 6-15%.

Google earned $372.2 million, or $1.22 per share, in the quarter. That represented an 82% increase from net income of $204.1 million, or 71 cents per share, in the previous year.

Earnings per share, on the pro-forma basis, were $1.54, below the $1.76 that the stock market expected. The company said its tax rate had jumped to 41.8% because the proportion of expenses allocated to its international operations was higher than it had expected.

The big question everyone will be left asking is whether and when these huge investments/bets in new products and international expansion are going to pay off.

Google challenged by newspaper publishers

The Paris-based World Association of Newspapers, whose members include dozens of national newspaper trade bodies, has announced that it is exploring ways to "challenge the exploitation of content by search engines without fair compensation to copyright owners."

It looks like they are aiming particularly at services such as Google News, which aggregates news content and pulls in headlines, photos and short excerpts of articles from thousands of news sources, linking back to the publishers' own site. But Google doesn't pay the content owners, does not carry advertising on the site and often doesn't ask permission of the sites owners (apparently).

Google is about to face a US court in a case which pits Agence France Presse against Google. AFP sued the company last year, alleging that Google News carries its photos, news headlines and stories without permission.

At the present the approach by the World Association of Newspapers is exploratory and constructive. Let's hope it stays that way, for news aggregation services are becoming increasingly valuable and popular.

Cingular launches Motorola's Slvr with iTunes inside

Cingular Wireless, the US' No 1 mobile provider, has started offering its customers the Slvr, an ultra-thin phone from Motorola loaded with the popular iTunes music-playing software from Apple.

This is the second device that Motorola has launched with iTunes inside. The first, the Rokr, was not a great success. This was apparently because the design was, well, a bit limp. It neither looked like the iPod or the Razr, two of the hottest consumer electronics devices of last year.

So, Motorola has dealt with the design issue (apparently) as the Slvr looks more like the Razr than the Rokr did (try saying that lot in a rush).

So that just leaves us begging one simple question. When will Apple deal with the other side of the design equation and launch the iPod mobile phone? Come on guys, you have all the evidence that you need.

Google to buy Napster?

Rumours are buzzing around the media that Google may be looking to buy or license Napster, the troubled music sharing site.

And only a few days ago we were talking about the likelihood of Google launching a digital music market. So, could Napster be the answer?

It makes sense to us. And there's nothing like a bit of intrigue right before Google announces their latest set of results.

Ericsson announces impressive results

Ericsson, the worlds No1 provider of telecomms networks annuonced record results.

Sales in the three months to the end of December rose 16% to around $6bn, against just over $5bn for the same period in 2004. A weak performance in western Europe, where sales fell 4% in the 4th quarter, were offset by strong performances in the rest of the world. Full year revenues rose 15% while net income jumped 39%.

Strong demand for second-generation GSM technology helped drive sales growth in Africa, the Middle East and Latin America, while delivery of 3G networks, including the first upgrades to speeds of around 1Mb, helped lift the performance in North America.

The million dollar question is can Ericsson continue their recent run of strong results. They probably can, albeit at a more measured pace, thanks to growing demand from the likes of India and China and their big bet on managed services, which has to be a winner going forwards.

Cable & Wireless in last ditched restructuring attempt

Cable & Wireless (C&W), the UK's long time number 2 provider of fixed line services has announced another restructuring and will part with it's latest CEO, Francesco Caio. C&W, which has spent the last couple of years reinventing itself now has to face up to the fact that their UK business is in deep trouble and their international business probably needs to be sold off (or is it the other way round).

C&W like so many encumbant fixed line players is paying a huge price for being too slow in switching to IP based telephony. Now they're losing customers and margins at a perilous rate. And they cannot fully implement their new IP based network until 2009. They could be dead by then.

3 years could see most of the UK market having already shifted to other IP networks. Just look at the French market for evidence. So, C&W is doing the only thing that they can do.

They're separating out their profitable and reasonably successful international franchise (mainly in the Carribean) and they have promoted the well known entrepreneur and head of Energis, John Pluthero, to run the UK business.

Maybe Pluthero will in turn engineer a management buy-out of C&W UK with some friendly private equity groups and C&W can sell the international business to any number of telco's in the US or Western Europe. Either way the group looks destined for a major change. Let's hope it's for the better this time round.
Toshiba today announced a 14-fold rise in quarterly profit, driven by strong sales of flash memory chips, while Fujitsu swung to a profit on robust demand for electronics components.

Japan's Toshiba, the world's fourth-largest chipmaker, raised its net profit forecast for the full year by less than expected. And chips-to-computers conglomerate Fujitsu stuck to its outlook.

Toshiba is the world's 2nd largest maker of NAND-type flash memory behind Samsung Electronics. Growing use of flash memory chips in portable electronic devices such as cell phones and digital music players has gaven the leading players a significant boost.

Both conglomerates are turning out to be winners in the Japanese electronics sectors on the back of international expansion and success in key tech niches.

Toshiba, currently the preferred bidder for Westinghouse, also stated that it is aiming to take about a 51% stake in the US power plant arm of British Nuclear Fuels. Are these Japanese conglomerates stretching themselves too thin?

Energy and consumer electronics - hey, I could think of worse sectors to be in right now. Just look at how ExxonMobil performed yesterday!

Monday, January 30, 2006

RIM losing out to rivals?

It looks like the bad press surrounding Blackberry maker RIM, thanks to their IP battle with NTP, is starting to sway the market.

For wireless email distributors and competitors to Blackberry are making noises that corporate customers may not be switching to other services yet, but they are starting to look around.

This should benefit most Nokia, Microsoft and Visteo. And it's a battle worth fighting over, for the 6 million users of wireless email today will become 125M in a few years. And rivals such as Nokia and Visteo are touting a future where wirless email will be ubiquitous across most mobile phones, not just specialist devices.

RIM may not lose the battle with NTO, but they may end up losing the war for leadership in the fast growing mobile email market. My bet's on Microsoft or Nokia being the number 1 in the next 5 years.

Icahn steps up battle with Time Warner and proposes new CEO

Carl Icahn has stepped up his battle for Time Warner and has now increased his team of change agants to include Frank Biondi, former CEO of Viacom.

So now Icahn, Wasserstein and Biondi will take the Time Warner management team on in May where at the AGM they will seek to have Parsons replaced by Biondi. They will also next week announce their restructuring plan for Time Warner.

The announcement saw the first uptick in Time Warner shares since last November. Parsons and his team had better move fast to get the business performing and the share price up, because Icahn means business and is closing in on them.

He may not succeed in May but he is unlikely to back off either.

IBM announces free version of DB2

IBM today introduced a free version of its DB2 database in a move designed to win software developers over to its products. It is called DB Express-C and is the same database as IBM's commercial offerings. The company places limits on what kind of hardware it can run on.

IBM is following similar moves from Oracle and Microsoft recently, as well as the increasing shift toward open source sfotware by the development community.

According to Evans Data over 70% of developers installed and used an open-source database last year. And of the open-source databases, MySQL was by far the most popular among respondents.

The free software movement continues unabated amongst developers, tech start-ups and soon into the corporate and government universe.

Skype signs ringtone music deal with Warner Music

Warner Music will deliver ring tones from its vast library to Skype customers, under a deal announced today.

US customers of VoIP (voice over Internet Protocol) provider Skype will be able to download ring tones culled from songs by Warner artists such as Madonna, Green Day, Mike Jones and D4L. The snippets will cost $1.50 each.

Skype already offers ringtones from the Ministry of Sound etc, but this marks the first deal with a major. And if ringtone sales to VOIP customers is anything like as polular as ringtone sales to mobile customers, this could be big for both Skype and Warner.

They'll be available at the Skype store in a couple of months - first out big promo on Madonna tones.

Vivendi Universal has weak quarter

Vivendi Universal ended a positive 2005 with a weak last quarter. And their achilles heal seems to be their music and games division. They were only saved by double digit growth from SFR, its French mobile telephone operator.

Full year revenues rose an impressive 9% to €19.5bn from €17.9bn a year earlier. All divisions grew overall. The 4th quarter slump in games probably demonstrates more than anything the volatility in consumer games revenues. Which proves how important it is to have a large stable of games, so that the portfolio effect can come into place.

The music divisions slump is perhaps more concerning, particularly as it was during the holiday (Xmas) season. I wonder whether the continuous drive to digital music sales is hurting Universal Music more than others.

But the loger term should look OK for Vivendi, as their combination of technology and media assets looks like the right mix for the converged media and telco world were moving towards. Their lack of international clout could restrict in the future. How about them merging with the perhpas soon to be public Berlesmann!

Kodak's digital restructuring turns corner

Eastman Kodak, which is halfway through a 4 year restructuring in a shift to digital, today reported a 12% rise in 4th quarter revenues led by a 45% jump in the sale of digital products and services.

For 2005 digital sales represented 54% of total sales. This was the first year that digital sales were bigger than traditional sales. And boy do they need them, for sales of traditional products and services slumped by 21% for the year.

No one better than Kodak can reveal the revolution going on in the shift from analogue to digital. And the world of photography has been decimated in the one off shift. Only a few weeks Konica Minolta announced that they had failed in trying to shift to digital and were exiting the camera and film business.

Kodak is more fortunate that their all-digital strategy is working and they have the money to finance it. Because the shift will cost them billions of dollars (and they're still only half way through it). But, by 2010 Kodak will have an all-digital business. Bye, bye the analogue world.

So, which other sectors will go the way of photography? Next up is the music industry, the broadcasting industry and the video industry. But that's just the tip of the iceberg.

Saturday, January 28, 2006

Carl Icahn to reveal plan for Time Warner

It looks like Time Warner's celebrity minority investor Carl Icahn is close to revealing his plan for Time Warner. And as he nears toward telling us all how he would like to see Time Warner get split up he's also ramping up the rhetoric on Time Warner management. Now he's challenging them over running too fat a head office and splurging too much on executive perks etc. You know the usual investor gripes.

And Dick Parsons will make sure to keep costs sensible, for there's always room to trim overheads in a company the size of Time Warner. And if the company were to break up anytime in the future then hammering away at unnercessary overhead is the thing to do.

But more interesting even than that is the likely plan that Icahn and Wasserstein are probably working on right now. For it looks as though they are planning to try and get Time Warners TV Networks, Movie Studio and AOL merged off as ONE package with one of the leading Internet portals.

Then they would spin off/sell off Time Warners cable business and publishing interests. Now this plan is not loony. And it's one we can probably buy into. But more importantly it may even be one that potential merger partners could buy into.

I could think of no greater transformational deal for Yahoo, MSN or Google than to buy Time Warners TV Networks, Movie Studio and AOL. And they have the valuations to pull it off. Icahn may well use Barry Diller as the sprat to catch the big portal mackerels.

Strategically it could make a lot of sense as media increasingly converges with technology and the Internet. Operationally it would be a great deal more challenging (as the original merger of Time Warner and AOL proved). The only leader of a portal who has any real media experience is Yahoo's Semel. Neither MSN or Google management really have the skills to manage a media empire. But in this bold new world of bullish M&A's and media convergence it may not matter as much.

And then there could even be one merger partner that all of us have overlooked. How about Time Warner TV/Movies/AOL merging with Apple. Now that would give Jobs a portal, loads of content for iTunes and the US' answer to Sony!! And Jobs has the media experience from owning/running Pixar (now part of Disney).

So selling Time Warner TV/Movies and AOL off to another company could be possible. That then just leaves spinning off/selling off Time Warners cable business and publishing, which shouldn't be hard at all.

Of course the million dollar question is will all these moves make more money for Time Warner shareholders than keeping the group as is. Well, unfortunately for Parsons nothing done to date seems to be doing anything for Time Warner shareholders. So time (pun intended) may be ticking away for him to keep to the current stratagy.

A break up of Time Warner could become increasingly likely. And it may even happen this year.

Friday, January 27, 2006

Blogsites tips - Google gets Music, Amazon sells video-on-demand & Yahoo buys Digg

Tech Blogsites are making some interesting predictions.

Battellemedia tells us that Google looks set to dive into music - and why in the world shouldn't they? What's taking them so long?

Then paidcontent tells us that Amazon is about to sell movie downloads. Hey, that makes sense too. And they look set to launch in April.

And finally Blogma tells us Yahoo's about to buy Digg. You know digg. We'll at least of your reading TechBoard you should know. Check it out.

Verizon to buy Vodafone out of Verizon Wireless

Verizon's CEO announced on a conference call that he would love to take full control of Verizon Wireless and buy Vodafone (their JV partner) out. It's not too surprising given Verizon's latest set of results.

Vodafone on the other hand has stated for a while that they would rather have full control of a US mobile carrier than continue the partnership with Verizon. The problem is that there aren't really any sizeable US operators for Vodafone to buy.

They could take a punt and buy the US' 5th largest operator Crown Castle, but they'd have to spend a huge amount of money to make them a leading US carrier with clout (and brand). So that leaves a major Mannesman style deal merging with SprintNextel and selling off their fixed line assets.

I'm just not sure that Arun Sarin has the stature to pull this off with Vodafone investors (even the lofty Gent might have struggled with this one). So that leaves Vodafone facing the depressing reality that they may have to take a Verizon offer and retreat from the US market. Ouch.

The current global leader of the mobile phone market would suddenly look a whole load less 'global'.

Lenovo stumbles - merger taking it's toll?

Lenovo today announced quarterly results that disappointed analysts. And as a result the world's number 3 PC maker announced a raft of cost cutting measures and a drive to focus on lower cost PC's for SME's and the education market.

Lenovo’s global PC shipments grew 12% year-on-year, lower than the industry’s average of 17.1%. In China, the company said PC shipments grew 39%, boosting its market share to 36.5%.

So the Chinese market looks solid for Lenovo. As far as the rest of the world goes they have a long way to go. And you can't help feeling that they're struggling a whole load more with the IBM PC business integration exercise than they would ever let on.

The challenge for their team is that they do not as yet have the experience managing a global business (as the results may just reveal) and they jettisoned one of the guys that did (the ex head of IBM's PC business who until recently was CEO of Lenovo).

You can't help feeling that Lenovo might want to take a piece out of Acer's srategy book for how to compete with Dell and HP. Going head to head with them could become a fools mission.

Silicon Valley to get blanket wireless hi-speed network

A group of Silicon Valley civic and business leaders are looking to build a regionwide wireless network. They want a wireless high-speed data canopy to cover the region. And they want either fee-based or advertising-supported plans that do not require local taxpayer funds.

The plan is to embrace various wireless technologies, from Wi-Fi short-range networks to wide-area WiMAX and other techniques under one umbrella that will give residents of the region wireless coverage from home to work and around town.

This is the future. By 2010 expect all major cities in the Western world, plus key industrial/educational/research zones such as Silicon Valley, to have adopted similar models and allow their inhabitants and visitors to roam seamlessly between various hi-speed wireless networks.

Berlesmann to be forced to go public?

Bertelsmann, Europe’s biggest media company, is being forced to prepare for a long-resisted IPO. The company is faced with the choice of paying about €5bn ($6.1bn) to buy out its only independent shareholder, or acceding to a market listing. And they only have until May to resolve the issue.

And Groupe Bruxelles Lambert, the financial holding company that owns 25% of Bertlesmann and has the right to force an IPO by May if their stake is not bought out, announced today that they want to pursue a listing of their stake in Bertelsmann. GBL acquired the stake in 2001 when Bertelsmann bought GBL’s 30% holding in RTL to take full control of Europe’s largest TV and radio broadcaster.

Ooh, this looks juicy. And Bertlesmann will have to borrow money or sell off assets if they decide to try and buy GBL out. This looks to be a major showdown and could lead to a fascinating development for the secretive and private Bertlesmann if they do end up as a public company. It may even be the best thing that ever happened to the company.

VNU buys Enquirer and becomes largest tech site in UK

VNU Business Publications Ltd, the London-based publishing arm of VNU Business Media Europe, has purchased The Inquirer, www.theinquirer.net, one of the leading technology news sites. The investment is part of VNU’s ongoing strategy to enhance its online portfolio and transform its business into a fully cross-media content publishing organisation.

In addition to BME’s leading cross-media brands, The VNU Network, www.vnunet.com, is one of the leading online technology communities and serves a wide spectrum of professional and home users. Following the acquisition of The Inquirer, the VNU Network will become the largest online technology network in the UK.

The march of content companies into the digital realm continues. And so it should.

Microsofts mixed bag of results

Microsoft has just announced their results for Q4 2005 and it was a mixed bag to say the least. And analysts were disappointed that their revenues came in below their expectations. The problems apparently lay with Xbox 360 delays and MSN stumbles.

On the Xbox 360 side Microsoft admitted that sales were lower than they hoped. They sold 1.5M by end 2005: 900,000 in US, 500,000 in Europe and 100,000 in Japan. So, if you want to buy an Xbox 360 go to Tokyo. But Microsoft promise they'll sell 4.5-5.5M by end June!

And that's really the problem, cos Microsoft just can't quite seem to get their production right. So even today if yo wanna buy an Xbox anywhere other than Tokyo in any normal shop - go blow! And they are blowing their opportunity, as even they were the first to point out that one of the best weapons they had against the Playstation 3 was the fact that they launched so much earlier.

Well, when it comes to it launching that's one thing, but there's no beating actually supplying your product early if you really want to steal a march on the next guy. Given that the Playstation 3 will now be out in a few months Microsoft may even have blown their advantage.

Then comes MSN. Microsoft have seen revenues dip 3% from a year ago as they struggle to migrate their revenues from dial-up to ad based portal. Add to that the fact that they have lost the ad based part in their shift from Yahoo ads on MSN to Microsofts new ad technology called Adsense and you have to giggle a little at the software giants fumbles. I mean, is this stuff really rocket science or is Microsoft fighting on too many fronts/having troubles scaling/just boobing around.

But on the flip side came the good news, which almost made up for the Xbox/MSN boobs. For thanks to the healtch of the PC market (which pleased analysts no end) Microsoft's consumer business saw double digit growth and so too the server and tools division thanks to a successful launch of the latest flavour of SQL Server.

And Microsoft were also quick to tell us that a couple of their newer divisions went into profit for the first time - the medium sized business division and the mobile and embedded systems division. That's nice for them cos these two divisions have plenty of growth left in them (sorry Nokia) and Microsoft should be well suited to this game (sorry Sage too - who?).

And lastly the Microsoft execs left analysts with a warmish feeling as they raised projections for 2006. Mind you, given the flood of new products from Microsoft this year, you'd hope *** well hope so. And given their extroardinarily unimpressive share price performance over the last 3 years (nearly every major indicese beat them) - they had better outperform. So roll on 2006 and good like Bill and Stevie (that's Balmer not Wonder silly).

Thursday, January 26, 2006

Nokia in a strong position

Nokia just announced their 4th quarter results for 2005. Revenues for the first time ever hit Euro10 billion for the quarter. But earnings were lower than expected due to weakness in their networks division and lower margins in mobile phone sales as they chased vloumes in lower margin, developing markets.

Nokia’s sales were €10.3bn during the quarter, an increase of 9% year-on-year and ahead of market expectations, while net profits were €1.07bn, a decline of 1%, contrasting analysts’ expectations of an increase of a similar proportion.

The sales for the whole year were €34.1bn, up 16% from 2004, while net profits were €3.6bn, up 13% from 2004. Nokia's share of the handet market held steady at 34%, exactly where they were at end 2004.

So, as Nokia's famous leader, Jorma Ollila, announces his last full year results before handing the reigns over in June and heading off to chair Shell, he has much to be proud of. He hands over a company making record sales and solid earnings. He has transitioned Nokia well in the new multimedia mobile universe and he has held onto their powerful 34% share of the market, even after stiffer than ever competition from Motorola, Samsung and Sony Ericsson in particular.

Now it will be up to Olli-Pekka Kallasvuo, Nokia's new CEO starting June, to continue Ollila's success record and take Nokia into the 21st Century. For there are many challenges to face, with new entrants in the handset market, slower global growth rates, stiffer competition and the convergence of devices. For tomorrow most mobile handsets will behave more like PC's than just phones.

AT&T posts strong quarterly numbers too

There seems to be a pattern emerging among the US' two largest telco's. TechBoard has just covered Verizon's record breaking results for their latest quarter, and now the US number two telco AT&T has come in with some great results too. The triple play is really paying off.

For AT&T has just posted a profit of $1.66 billion in its first quarterly report since it was formed by SBC Communications' purchase of AT&T Corp at the end of last year.

The results were boosted by an increase in customers for AT&T's broadband Internet service and strong customer growth at Cingular Wireless, the AT&T venture with BellSouth Corp. Cingular now has over 56M wireless customers.

2006 will be strong for both AT&T and Verizon.

Verizon announces strong quarterly results

Verizon Communications, the largest US telecommunications company, has posted record wireless subscriber and high speed Internet customer growth, boosting revenue by 5.8% in the 4th quarter.

Earnings fell from a year ago, when it posted a big gain on asset sales, but revenue jumped to $19.3 billion.

Verizon Wireless, added 2 million net new wireless subscribers in the quarter, which analysts said was a record breaking quarter for the wireless industry. It ended the year with 51.3 million wireless customers in the US. Wireless revenue rose 18.3% to $8.7 billion in the quarter.

Verizon also added 613,000 net new high speed Internet customers in the 4th quarter, setting a record in the telecommunications and cable industry, ending the year with 5.1M customers.

It looks like the huge investment that both Verizon and AT&T are making in next generation high speed networks may even pay off. And they will need it to boost their share prices. It also proves the potential growth engine of the triple play; digitial TV, Internet access and telephony (ideally fixed and wirless).

Interesting that Vodafone (Verizon's minority partner in Verizon Wireless) just reported more disapointing results. Maybe the strength of wirless only is weakening.

2006 could be a strong year for Verizon. And there are still many more wireless and fixed broadband Internet connections for them to go after.

Sony turning around?

Sony announced solid results for the last quarter of 2005. Sales were up 10% and they posted a reasonable profit versus a loss the year earlier. Howard Stringer must be sighing a sigh of relief. Or is he?

Sony’s ailing consumer electronics division recovered, with sales rising 4.7% and operating income jumping 56%. The business benefited from buoyant demand for its Bravia flat panel LCD TVs, which helped it to emerge as the global leader in LCD TV sales on a value basis.

Games were also a strong performing category, with sales of PlayStation 2 and PSP, its handheld console, doing particularly well. The games division enjoyed a 48% rise in sales in Sony's 3rd quarter and a 59% increase in operating profits.

So, that was the good news. The bad news was that their financial services division performed best of all of them. This is bad because it is no longer a strategic division at Sony. They have committed to spin it off soon.

The other bad news is that the Walkman division is still getting walked all over by Apple's iPod. Their sales were flat on the year earlier. And Sony's movie division had an awful year. Producing a run of flops.

So, the best Sony could do was to announce a cautious outlook for 2006 and so they should. They'll have to pray for some box office success in their movie division, try to take some market share back from the all-powerful iPod (yeah right!), try and get the Playstation 3 out early and pray like mad that flat panel TV prices don't tank.

So, Sony still has a long way to go before Stringer and his team can even think of celebrating any kind of turn around. 2006 will be critical for them.

Wednesday, January 25, 2006

Intel makes chip breakthrough

Intel has become the first manufacturer to produce a working chip for the next generation of miniaturisation, where transistors are reduced to 45 billionths of a metre in size.

The 45-nanometre breakthrough comes as Intel is ramping up production of the latest 65 nanometre chips, six to nine months ahead of its biggest rival in processors, AMD. And this is an important step in Intel's attempts to take back recent market share losses.

The move to smaller-scale 65 and then 45 nanometre chips means Intel can cut costs and undercut rival’s prices. The new scale allows more transistors on a chip, greater power efficiency and faster performance.

Intel has crammed more than 1bn transistors on its 45nm test chip and volume production is expected from summer 2007.

Intel seem to be hitting their stride again. And they need to to afford the huge new bets they are making in R&D and marketing (including new brands and straplines). Plus, they have to regain customer confidence after shortages last Xmas.

Google launches Chinese site and creates an uproar!

Google today launched a new Chinese search site at Google.cn. In doing so they have set up a censored Chinese version of its website which will block results in order to avoid angering the country’s Communist government. The site will not provide Gmail, Blogger or other services that will open up its use to unfettered expression.

And the announcement of this new, filtered and handcuffed Google site has led to uproar. For the media and the blogging community have stood up in arms and denounced Google for giving in to the Chinese authorities. It seems as though what is acceptable for Microsoft and Yahoo to do is not for Google.

But there are two major take-aways from todays unfortunate announcement from Google. One is that the company is growing up into a global corporate much faster than anyone anticipated (Google founders included) and the second is the extraordinary power that they (through Blogger) and others have unleashed via blogging technology.

Problem number (Google becoming a corporate) should perhaps not surprise us too much for at one point they had to. You can't be worth more than IBM and not behave a little like them. And the reality is that Google are now a public company and have to play by the rules of shareholder returns, however we may all dislike that at times. The Chinese market is just too big and any company ignores it at its peril. Playing by their rules is an unfortunate side to succeeding in the massive Asian market.

Perhaps the Google founders were a little naive when they announced their corporate values that they now seem to be eschewing in the name of profit. But, Google is no longer their company, it now belongs to countless demanding institutions and individuals, many of whom do not have the same values as either the Google founders (or at least the values they published as they went public) or the media/bloggers.

But perhaps the even more startling takeaway is the power of the blogging community, for the Financial Times piece announcing Google's new site refers more to the blogging communities response than to the actual announcement itself. And its all over the FT.com home page.

What the FT quoting bloggers more than their own writers or tech analysts or Google or other sources? If the venerable FT has so bowed to blogger opinion (as they should), then today's announcement about Google says more about the latest form of free speech (yep, blogging) than it does about Google's supposed malfaisance with the Chinese.

Maybe that should be the real take home here and possibly even a small line of defence for Google, who pioneered blogging technology with the acquisition of Blogger.com. So, shame for the Chinese and even shame for how Google have to play their game, but what a great day for free speech and for bloggers.

Microsoft opens up Windows source code!

Microsoft top lawyer just announced that the US software giant would offer licences for some of its source codes in a bid to comply with antitrust requirements set by the European Commission.

"We will also license the Windows source code itself," Microsoft General Counsel Brad Smith told a news conference. He added he did not know what percentage of the company's source codes would be licensed.

He also stated that this could lead to a new era of Microsoft complying even further in the future. I guess we'll all have to see this to believe it.

But, this is a major concession by Microsoft, and a change in tack. I guess they understood that the EU was serious and not likely to back off. Of course in the grand scheme of things it doesn't change that much.

Interesting to note that just as Google is starting to get into their own legal hot water with Governments, Microsoft is backing off. I'm sure the irony isn't lost on them.

Xerox perform well on back of digital copiers and document management strategy

Xerox announced quarterly profit rose 18% on strong demand for its high-margin digital color copier supplies and services, and stated that 2006 earnings should hit the high end of its previous forecast.

Xerox, which over the past two years has unveiled many new digital printers and office systems. The company, best known for its copiers even as it expands its offering of document management services, said net income rose to $267 million, after payment of preferred dividends, from $226 million a year earlier.

CEO, Anne Mulcahy has led Xerox through a painful and now successful transition to the new digital world. You only have to look at KonicaMinolta, who just pulled out of the camera and film market, to realise how different things could be for Xerox had she not succeeded.

The future may even look bright for Xerox, and pushing harder into document management systems while leading the drive to digital copiers is a sound strategy with legs to it.

SAP exudes confidence

SAP announced their latest quartery results and pronounced a positive outlook on 2006. Both revenues and earnings climbed nicely as SAP continued to take market share from Oracle.

SAP forecast full-year 2006 product revenues to increase in a range of 13% to 15% compared to 2005, based on its expectation for software revenue growth in a range of 15% to 17% compared to 2005.

And they're getting aggressive about new product launches and new directions as SAP goes after the small and medium sized business market. SME's are fast becoming key growth markets for major systems vendors including IBM and Microsoft.

But, perhaps most telling is the market share gains SAP made at the expense of Oracle. With software revenues rising across the globe, SAP extended its market share to 62% by the end of the fourth quarter, a gain of 7% on the same quarter in 2004.

In the US, Oracle’s home turf, SAP took advantage of disruption at its rival which is reorganising after snapping up most of its smaller opposition in a $19bn shopping spree. SAP increased US market share to 47%, 10% higher than a year ago.

Oracle had better move fast to launch Fusion, because SAP is not standing still. And SAP are to hire another 3,500 employees this year. They're a formidable leader in the enterprise apps space.

Tuesday, January 24, 2006

Sun Microsystems stumbles in its latest quarter too

Oops, there goes another disapointing set of numbers by a bellweather tech company. This time it's Sun that is biting investor dust as it announces lower than expected earnings in the last quarter of 2005.

Sun Microsystems has just posted results that missed analyst expectations on higher costs even as revenue rose, helped by the acquisition of Storage Technology Corp. Its shares are ticking lower in afterhours trade.

But, at least their revenues are finally heading north again and Scott McNeally has been quick to point out that their order backlog is large and their line-up of products has never looked better. He may even be right, but you just can't help feeling that Sun still need to make a transformational move to get a real future.

M&A or bold new product directions have to be the way to go for them. Maybe they could get more mileage out of their partnership with Google. How about an Internet appliance or taking their office suite onto Google servers and into Google Pack.

Disney acquires Pixar - the deal is finally done

The deal we have all been talking about is finally done. Both boards have now agreed a $7bn takeover of Pixar Animation by Disney, and it looks like Steve Jobs will join the board now that he owns 7% of Disney.

So, Disney gets to become the undisputed leader in animation again, both traditional animation and digital animation. And Disney trumpets the internet and digital era for media powerhouses.

This is a great deal, and if the Iger/Jobs double act can work, this could be the beginning of something really interesting at Disney and for Disney shareholders.

Looks like Disney set to buy Pixar

It seems as though the Disney board approved a deal for Disney to buy Pixar Animation in an all day meeting yesterday.

So, as Disney gets out of radio, they're about to jump into high tech animation. Mickey must be dazed! And it seems the board have also approved Jobs as their largest shareholder with around 7% of the equity, dependent on the final price of the deal, and becoming a board member.

So, it looks like the next generation of Disney will be marked by the Iger/Jobs double act. Expect Disney to fast become the leading technology driven media company and expect Apple to get into entertainment PC's.

And that's the least of it. But it's the beginning of yet another era in the 21st century's media revoltuion.

Vodafone struggles to keep growth up

Cracks seem to be emerging in the Vodafone story. The world's largest publically listed mobile operator.

They beat forecasts for customer and revenue growth helped by emerging markets and sales of new 3G phones, but disappointed some investors by saying they would keep their US business. And they have maintained their outlook for 2006. So far so good.

BUT, they added a net 7.1M customers in the 3rd quarter of fiscal 2005, spanning the key Christmas period, as growth in emerging markets, Spain and the United States offset stiff competition in the UK, Germany and Italy.

FOR, the core European business showed scars from the mauling caused by increased competition and falling prices, with blended annual average revenue per user (ARPU) falling 7.8% year-on-year in Germany, 8.3% in Italy and 4.3% in the UK.

So service revenues were flat in Germany and fell in Italy. These are two of Vodafone's largest and most strategic markets.

And this all means only one thing, that Vodafone is not being as successful at selling data services to their customer base as they should be and as some of their competition is. For O2 announced stellar results yesterday.

And until data services, including music, games, email, texting, internet surfing etc start taking off, ARPU's will keep falling, for the cost of making calls on mobile phones will keep dropping as they have in the fixed line world.

Vodafone needs to get a grip on Vodafone Live and get a grip on it fast. There are far too few free or low cost bundled services. If this does not change fast, data services will not take off. And broadcast TV to mobile phones will not come to their rescue. They need cheap bundles of texting, subscription based music services, lots of valuable internet content sites for free and better games devices. And they need them now!

Google founders sell more stock

Last month, the 32-year-old celebrity co-founders of Google each sold more than $160 million worth of their company's stock.

Interesting that they sold them at all time highs for the stock. Mind you, should the shares reach $600 as some analsyts predict, they could have sold them cheap.

And this takes share sales by both founders to over $1.5bn. They clearly didn't need the money for this latest sale, so people are bound to speculate over whether it bodes badly for Google stock.

We'll know a lot more when Google announces their next set of results. If there is any hint of a slow down in their business then expect a share price slide. And a fairly painful one. After all, Yahoo is down 17% since their recent performance worried investors last week.

Google may be down 7% since last weeks Nasdaq sell-off, but there's still room to fall a bunch more.

Texas Instruments chip performance strong - calculators weak!

Texas Instruments, the largest maker of chips for cell phones, announced higher than expected profits for its 4th quarter, but lower revenues.

It's a classic tale of traditional business versus new directions. For at TI, calculator sales were weak (do people still use calulators?) while chip sales were strong.

TI said semiconductor growth had accelerated over the past year and sales rose 3% in the third quarter to $3.23bn, representing 90% of total revenues. It said demand was focused on its digital signal processors (DSPs) and analogue chips used in mobile phones and consumer electronics.

And it looks like they hit they're golden objective of $1bn of chip sales for mobile phones in 2005. I guess TI should just keep focussing on chips. It seems to work for them.

Monday, January 23, 2006

IBM connects Lotus business chatters to Internet IM

IBM's Lotus Notes is hitting back at Microsoft Exchange by making it's Lotus chat offering to connect seamlessly with users of AOL IM, Yahoo chat and Google Talk. Of course there is no mention of connectivity to MSN.

IBM’s Lotus division will allow users of its Lotus Sametime messaging system to chat with more than 100m users of public chat networks. IBM claims about 15M instant messaging customers. IBM has faced fierce competition in the business collaboration market from Microsoft, whose Outlook/Exchange software package is a direct competitor with Lotus and now leading in market share.

And it looks like 2006 will finally be the year that IM users will (nearly) all be able to talk with eachother.

Google top brand for 2005

The annual survey compiled by online branding magazine brandchannel.com puts Goole back at the top slot globally.

But this year, the 2,528 branding professionals and students who voted came up with more conventional tech-heavy answers (after all it's an online poll) when asked "Which brand had the most impact on our lives in 2005?".

Looks like Google 1st, Apple 2nd, Skype (!!) 3rd, Starbucks 4th and Ikea 5th. It's the Starbucks 4th and Ikea 5th that worry me the most. These brands had the most impact on people's lives globally!! I never knew expensive coffee and cheap furniture was so important to people.

O2 announces stellar set of results - the last as an independent company

MMO2, known by it's catchy brand O2, has just announced it's last set of results before becoming a subsidiary of Telefonica. The UK's largest mobile phone operator and the fastest growing in Germany, impressed analysts today with sizeable market share gains in both the UK market and Germany.

And these results are all the more impressive given that both the UK and German markets are plenty saturated, so that means O2 is stealing large chunks of customers from their competitors. And they're doing it the consumer electronics way, a la Apple, they're wowing the market with great branding, powerful and simple marketing and great products.

And it's not surprising that O2 are being so successful, for they make all the other European operators look, well a tad boring (except perhaps for 3). And the common denominator for both O2 and 3 is that they are the small independents with whacky brands. They have had to succeed through marketing and innovation as they do not have the scale of the likes of Vodafone, T-Mobile or Orange.

And both operators have become the best value providers in their respective markets. Which proves that the volume end of the mobile phone market has a lot to do with simplicity and value.

The biq question is whether Telefonica can allow O2 to continue with it's magic formula or will they smother O2 much as France Telecom did with Orange. My money's unfortunately with Telefonica dulling O2. Which would ony be good for 3. But I'd love to be proved wrong. Come on Telefonica.

HP strategy getting clearer

HP's strategy under new CEO, Mark Hurd, is getting clearer. And it looks sensible and solid. Like their new operational, low key CEO, the post Fiorina HP looks likely to deliver rather than excite. That should be good enough for the share holders.

It looks like HP will focus on software acquisitions in the infrastructure arena a la IBM, driving the printer division to become the leader and innovator in commercial print systems ("the new Heidelberg"!!) and reducing the reliance on Intel chips (who isn't after Intell supply problems recently).

As far as 'HP considering making more acquisitions in the infrastructure software arena part' goes, these acquisitions could include security software companies, storage software makers and software companies that serve the blade server market. I.e. moving away from mainframes.

So the days of bold M&A moves may be behind them. And it looks like they're trying to compete more and more with IBM. HP as a strong 2nd to IBM makes solid sense. But they'll need to bulk up in the services arena to really pull it off. And there seems no mention of that.

And for HP to really compete with IBM they'll need to be great at both the operational excellence part as well as the visionery stuff. I wish I could see a little more of the latter.

Ex Peoplesoft founder to launch new software start-up

Dave Duffield, the well known and respected founder of Peoplesoft, is about to launch a new software start-up called Workday, which looks set to begin by building software tools for managing human resources.

Indeed the buzz is that Duffield and the 35 odd people working with (mainly ex-Peroplesoft folk that left Oracle) him will stick to what they know and launch an HR and financials back-office software outfit with a twist. Could that twist be on-demand software or Web2.0 business model?

I guess we're about to find out. And they'll need a clear USP to compete with the trend towards intergrated suites of business applications which led Oracle to snap up Peoplesoft in the first place.

Livedoor to become the next Enron

A Japanese Internet empire is on the verge of collapse after its founder and other top executives were arrested on charges of securities fraud.

Japanese prosecutors have arrested Takafumi Horie, the founder and CEO of the Internet portal Livedoor and other Net-related businesses, and three other top executives on charges of securities-law violations.

It looks like Livedoor could well become the next Enron. Expect the usual share price collapse, de-listing, fire-sales and executive court room jostles. There seem to have been so many high profile collapses and executive misdemeaners since Enron blew up. Is this because the regulators are getting better at spotting it? Probably.

You just have to feel for the next bunch of largely innocent shareholders getting ripped off. There's something wrong with the system...

Saturday, January 21, 2006

Icahn to push Time Warner to sell AOL

Rumours are circulating that Carl Icahn, the dissident shareholder battling with Time Warner management, will next week come up with a plan to merge AOL with another major portal player.

We'll find out next week if the rumours are founded. Certainly Icahn has made it pretty clear that he'd like to see AOL spun off. Strategically this would be a mistake for Time Warner and buck the trend toward convergence between media and technology (particularly the internet), but for a short term share boost it might succeed.

The question remains who would merge with them? Google and Yahoo would be foolish to do so (they don't really need AOL unless it comes with significant rights to Time Warner content on exclusive basis, which would be a mistake for Time Warner) and so that just leaves MSN.

Microsoft may even be tempted, particularly as it would upset the AOL/Google apple cart. The only other possible players are Diller or Murdoch who would be unlikely to pay up.

So, Icahn may throw up suggestions till he goes blue in the face, but the options won't look that appealing right now. Better to let AOL develop a little more first. They should revisit spinning off AOL in 18 months if it is still not performing under Time Warner.

Disney board to meet on Monday re buying Pixar

So, the Disney board will meet on Monday and most likely make a decision on whether to buy Pixar or not (see sister channel businessuncut on Disney/Pixar). Or maybe they'll be agreeing a new long term contract with Pixar.

So, will they or won't they buy Pixar? Our guess is that they will. And Jobs will join the Disney board. Let's see!

Friday, January 20, 2006

Where's the wirless market going in 2006?

Global growth of wireless subscriptions will slow to 20% in 2006 from 23% last year, with the biggest gains in emerging markets, especially some African countries, according to a report by Strategy Analytics.

By the end of 2006 there will be 2.5 billion mobile subscribers, up from 2.1 billion at the end of 2005, the report said. This includes about 400 million people with two phones or a separate subscription for laptop data services.

So it looks like the real growth in handset sales will come from developing markets such as Africa, Latin America, Indonesia, Russia, China and India.

For the developed markets mainly in the West, plus Japan, Australasia and S Korea the focus will be on growing users of high bandwith 3G services. By end 2005 there were 75M subscribers of advanced broadband 3G devices and that is expected to climb to 150M by end this year.

So there's lots of room left for the mobile market to grow. And 2006 will be the year of the mobile internet and picture, video, gaming and music services in particular. Don't expect mobile surfing and commerce to take off in earnest for another couple of years.

Motorola earnings and revenue up - but their stock collapses?!

Motorola, the world’s 2nd largest mobile phone maker, reported an 87% increase in 4th quarter profits boosted by record handset sales.

Net income rose to $1.2bn, from $647m, a year earlier on sales that gained 18% to $10.4bn. A $40bn revenue company grew 18%. Now that's not bad. And it looks like their new thin line of phones, led by the Razr, had a lot to do with it. And Motorola's share of the mobile handset market duly bounced up 3% to 19%.

But, Motorola's share price slumped 6% this morning. Go figure. We have been writing all week about how tech stocks are getting corrected downwards because the tech bull market has got ahead of itself. Not necessarily due to fundamentals at tech companies.

Motorola is in a strong position in handset sales. Their approach to fashionable, feauture driven internet capable phones is the way forwards and nice on margins. And the global handset market is due to grow 20% in 2006. This may be down on 2005 growth of 23% but is still strong. Motorola should do even better.

The issue seems to be their networking business, as it is for many (just look at Lucent and Nortel). This is the part of the Motorola business that provides wireless and broadband infrastructure to mobile phone operators worldwide. And it's revenues fell by 18% from the quarter a year before.

The big question for Motorola CEO Ed Zander is whether he should sell the networking division off and focus on the handset market exclusively. This focus seems to work well for Sony-Ericsson. And as mobile devices extend to become tablets and camera's and music players and more, the segment may just extend.

Google battles US government over web-search information

Google has refused to comply with a US government subpoena for information about how people use its search engine, opening one of the first legal battles over whether law enforcement agencies should have access to the increasingly far-reaching data held by search engine companies. The US government wants the information to help them defend a child pornorgraphy law that the supreme court has struck down.

Federal prosecutors have asked Google, Microsoft, Yahoo and AOL to turn over two types of data: logs showing search terms used by people, and a list of Web sites indexed by the companies' search engines.

And it seems as though Microsoft, Yahoo and AOL have complied. Even though Yahoo and AOL have been quick to comment that they have not provided information that could reveal any users identities.

Google is refusing to provide the data and as a result has thrown the issue open to public debate and the lawyers. For no doubt there will now be considerable wranglings over internet search privacy and internet privacy in general.

And this is a critical debate given the increasing trend toward internet services where users worldwide will see most of their private information stored in secure servers across the globe. And the likes of Google, Microsoft, Yahoo and AOL have the most to gain from us trusting them with more and more of our information.

Washington Post closes blog

The Washington Post shut one of its blogs yesterday, saying it had drawn too many personal attacks, profanity and hate mail directed at the paper's ombudsman.

The closing was the second by a major newspaper in recent months. An experiment in allowing the public to edit editorials in the Los Angeles Times lasted just two days in June, before it was shut because pornographic material was being posted on the site.

Every content site and most professional blog sites have to deal with comment spam/abuse, including all the sites in the businessuncut network, but to just close comments off seems a little far fetched.

The new era of the internet is all about interactivity and the larger sites and media outfits are going to have to figure out how to manage comments, they probably can't just allow them to be unfiltered.

This may seem to be a set back for internet free speech but may become a necessary step for leading sites. I'm sure technology will soon be developed to better manage/control comments and user generated content. Until then content owners will have to figure out how to do it manually and cost effectively.

Thursday, January 19, 2006

Apple and Ebay cautious in their outlooks

Apple and Ebay last night rang a note of caution with their 2006 forecasts. And given their recent stock price increases and heady valuation you can't really blame them. For they are now merely acting as the mature public companies that they are and being careful to manage the markets and manage their bubbling valuations.

So, while both of them announced stellar results for the last quarter of 2005, both of them also refused to be overly bullish about 2006. This disappointed investors and analysts who have been justifying their ever appreciating stock prices by pushing ever more bullish outlooks. And both their stock prices sank.

At one point the company's have to take charge and they have. By being more cautious about their outlloks for 2006 they have taken heat out of their heady valuations and set achievable and sensible objectives for this year. Objectives that only a few years ago would have looked highly ambitious. So neither of them deserve to get too punished for it. And 2006 will be a good year for both companies.

The market will correct and tech stocks across the board will get revalued downwards, then the tech bull market can resume in a somewhat more measured and realistic manner (see sister channels businessuncut daily for more on tech market directions).

Digital music sales pass $1bn in 2005

Sales of legally downloaded digital music passed the $1bn mark last year thanks to more legitimate online music stores and mobile phone ringtones, according to the music industry’s leading trade body.

And it looks like most of these sales came from new sunscribers, rather than people who used to use illegal file-sharing sites. At least useage of illegal sites remained static last year. In the UK and Germany legal sales overtook illegal sharing.

Now digital sales account for 6% of total music sales and continue to grow. Apple's iTunes of course has the largest slice of the cake with some people estimating that they control 75% of the market for digital music sales in the US.

But, mobile music sales continue to take a large slice of the pie. In Japan mobile accounts for 96% of digital music sales. And 2006 will see mobile phone operators and handset makers swamp the market with music enabled phones and new mobile services.

AMD announces strong results

AMD yesterday announced some powerful results, proving that Intel's misfortunes are not all their own doing. And it looks like AMD's sucesses will continue well into 2006.

Their 4th quarter sales were $1.84 billion, up 45% from the fourth quarter in 2004. AMD's strongest growth was in its server business, followed by its mobile and desktop offerings.

And AMD are expecting sales to be flat in the traditionally quieter 1st quarter, which would equate to a 70% increase on the same period last year. AMD are taking real market share gains from Intel. The challenge will be for them to keep growing after this summer when Intel launch their dual-core processors.

But, It's up to AMD, for everyone likes to have another meaningful choice. It feels like the days when Intel could monopolise it's market may have ended.

Google trying to make their IM and VOIP services ubiquitous

Google has opened it's IM and Internet telephony services to any company willing to support the XMPP protocol, a standard under the control of an open-source foundation.

XMPP, or extensible messaging and presence protocol, is an XML-based protocol for passing instant messaging and presence information among servers. The protocol is under the Jabber Software Foundation.

Google said on its Web site that it's committed to taking an "open federation" approach to instant messaging and Internet telephony, which means people on its networks can communicate with anyone on a system supporting XMPP.

This is a smart move. Unfortunately until Yahoo and MSN decide to play ball and support XMPP as well, the benefits to Google users will be small. At least they still have the deal with AOL users, so you can chat away to them all you like.

More importantly, this is a natural move for Google. They have as yet the smallest number of IM users amongst the big portal players, so they need to try and spread the net as widely as possible to link up with other already established networks.

For users it would clearly be great to have IM and VOIP interoperability, but I don't see Yahoo or MSN playing ball with Google quite yet. Shame.

Wednesday, January 18, 2006

Yahoo takes a tumble

Last night Yahoo announced that they had missed analyst forecasts in Q4 2005 and their shares immediately tanked. For it seems Yahoo's battle with Google is getting expensive.

Yahoo revealed that since last Autumn they have been spending more in an effort to meet revenue targets, eating into their profits in the latest quarter and their earnings forecasts for the rest of 2006.

Yahoo outlined higher spending plans in an attempt to keep up with Google and prepare for the next wave of growth outside the US. Building new data centres and other facilities to house the internet company's growing staff.

It also looks like they need to improve their search based and text advertising as Google ads apparently have double the click through rates of Yahoo's. And Yahoo can't rely on their banner ads too much, as Google etc will soon take them on here.

Interesting that Yahoo stumbles as MySpace, the hottest and latest portal keeps flying. And Yahoo have made social networking a key pillar of their strategy going forwards. Maybe they should have bought MySpace??

Investing to grow internationally makes a lot of sense. For their US user numbers are levelling off. Google will no doubt be firing on multiple cylinders abroad as well.

I guess the real challenge for Yahoo is deciding how much of a destination site they really want to be. And as they pile into TV and mobile phones, you have to wonder whether they should start generating more of their own content to differentiate further from Google and improve margins.

To be the internets portal of choice for third party and original content as well as user generated content, now that would be a powerful position to hold. But it would cost investors end Yahoo even more in the short term.

Disney launches pre-school broadband internet service

Disney has taken another step into the new media world by launching Playhouse Disney Preschool Time Online, a pre-schoolers online channel. It costs $49.95 per year and is apparently the most learning-oriented of Disney's Internet subscription services for kids.

Developed with the help of educational experts, Preschool Time focuses on pre-kindergarten skills, such as letter and number recognition, and features "fun learning" tools such as interactive story books.

The channel is another step in Disney's attempts to provide targeted online services to children at every age and then on through their life. This may not be such a bad idea.

For now Preschool Time Online can be purchased only through Disney, but the company has plans to integrate it into Disney Connection, a free kids "channel" offered to subscribers of high-speed Internet services provided by Comcast, Adelphia, MediaCom and Verizon.

Video-on-demand ads coming

We have for a while been saying that the next frontier for advertising technology and services to crack is on-demand advertising and advertising on mobile phones. For, after all, until this happens video-on-demand services and data services on mobile phones will see limited user take-up. The model won't scale as it could based on users always having to pay a fee for every single download.

Well, finally it looks like Comcast may be making some progress. For the US' largest cable operator, plans to introduce a video-on-demand channel today that will include advertising embedded in the programming.

It's called Exercise TV, and the ads will be integrated into the programs. Comcast has sold exclusive advertising rights to New Balance, the footwear maker, for several million dollars. This will allow the company to insert its products and logo in and around the programs, initially a selection of 90 fitness episodes.

And the epxectation is that this approach, tailored to video-on-demand viewing, will resonate better with viewers. For Comcast have found that just leaving ads that were originally in programs once they get offered on-demand gets users to fast forward past them.

So, could we soon see Google, Yahoo and even iTunes take similar approaches? Something similar they will have to figure out, for fee only on-demand services are too limiting.

Intel stumbles on supply issues

Intel took an unexpected and major stumble in Q4 2005, the world discovered last night. And it seems as though it's related to supply issues.

Intel blamed the miss on an ongoing shortage of chipsets, (the chips that sit between a computer's main microprocessor, its memory, and other parts of the computer) coupled with a weakness in PC sales, particularly in the US.

And boy have Intel been punished. Their stock price has tumbled over 10% and analysts are being unforgiving. And now Otellini is on the back foot trying to defend their forecasting and supply chain issues while accepting that they have problems.

And he has decided that Intel will no longer provide such regular updates. For they have been punished hard for getting their Dec update on Q4 wrong (they predicted revenues would come in at least $200M higher than they did).

It even looks like this lack of chipsets has hit PC makers sales in the critical end of year holiday season. This may lead to PC makers shifting more business toward AMD. Speculation is already rife that Dell may end their exclusive relationship with Intel by end 2006. And Gateway used AMD chips in more of their lines pre-Xmas.

So, poor old Intel and poor old Otellini who started the year with such a bang. At the beginning of January he and his new marketing head trumpeted Intel's brand new strategy and brand - it's all about consumer electronics. Then he made a bunch of bold announcements at CES and he even joined Steve Jobs (dressed as a bunny!) at Macworld to impress everyone with their early delivery of Intel Macs and Powerbooks.

So, his stumble makes Intel look a little silly. And proves to the world that the Intel change in strategy is perhaps a little overdue and bound to be frought with transitional challenges.

But, utlimately Intel will get over their supply issues and they will execute on their new strategy - they have to, it's bang on. But, the markets will have to be patient and we all know how good they are at that. If the tech bull market continues investors may even give Intel a break. If not...

Livedoor shares suspended

The shares of Livedoor, a leading Japanese internet services company, under investigation for alleged market manipulation, were temporarily suspended as a newspaper reported that the Japanese internet company had falsified its 2004 earnings.

Oops, and now the Japanese stock exchange has had to be closed and trading suspended as their systems ground to a halt under a wave of sell orders.

Tech and internet leaders in the US and Europe have also seen falls as earnings at Yahoo, Intel and IBM disappointed.

The tech bull market has now been raging for over a year and valuations are getting a little heady again. It's not surprising that inestors get jittery on any bad news of substance. Let's hope the Livedoor rumours don't reveal another Enron or MCI Worldcom.

SonyEricsson sees strong end 2005

SonyEricsson ended 2005 on a high. Earnings and revenues soared and they have recaptured the number 3 spot from LG Electronics.

SonyEricsson has stubbornly kept to a strategy of fighting for the high end of mobile phones. They pack their phones with features and they always have some of the best designs. And it looks like this strategy is paying off. As their margins are some of the best in the industry and they are now also seeing good volumes.

In fact, the trend toward well designed, high end consumer electronics devices seems to be paying off in key sectors. Just look at Motorola's Razr phone and Apple's iPod. Utlimately if you get it right the consumer will pay up.

The other interesting piece to note is that SonyEricsson have sold 3M of their Walkman music phones since they launched them last August. That's a blistering start and one that could pose a real threat to Apple's iPod, particularly in Europe and Japan. And SonyEricsson aren't standing still, they're launching a bunch of new Walkman phones this year.

Tuesday, January 17, 2006

Apple's iTunes gives NBC a ratings boost!!

Apple's iTunes has arrived for TV and video! For NBC have today announced that NBC's show "The Office" saw its highest ratings ever last Thursday in the crucial 18-to-49 demographic. And the network is attributing the bump to iTunes.

The broadcaster, owned by GE, signed a deal with Apple Computer last year to offer shows through the store. And now officials at NBC are saying that the program is the network's top-performing podcast available through the online store.

And iTunes is allowing NBC to reach new users as well as opening a new revenue stream. This is extraordinary news for Apple. And the kind of news that should get consumers to try downloading even more iTunes videos as well as persuading other TV networks to join iTunes.

And over time iTunes could become an increasinlgy vital (distribution) channel of it's own, perhaps even one to rival the Comcasts or BSkyB's of this world (see article on the future of TV in sister channel business-rant yesterday). And maybe the real gotcha is that internet TV and video will take off quicker than we all imagine!

Google buys leading radio advertising company - revealing a diversification strategy for AdWords

Google has just announced one of their larger acquisitions. And it's not a software company or internet site or even an ISP, it's a US west coast radio advertising company called dMarc Broadcasting. And Google are paying up for them which tells us that this is part of a larger strategy for the leading search company.

For Google will pay $102m in cash up front for dMarc, but additional cash payments contingent on integration, revenue and inventory targets could raise the total price to $1.14bn over three years.

Google is impressed by the fact that dMarc connects advertisers to radio stations through an automated advertising platform. This will allow them to integrate dMarc technology into the Google AdWords platform to create a new radio ad distribution channel for Google advertisers.

I guess ultimately Google would like to use their internet advertising technology platform as a hub to then deliver integrated, automated, measurable and real-time ad solutions across print, radio and ultimately even TV and mobile phones. Now that's a smart way to diversify and grow their AdWords franchise.

And all of this will presumably make speech recognition software even more important to them. And may even get more people to buy into their huge valuation. Who knows, but the Google picture gets a little clearer.

Microsoft Exchange going after IBM's Lotus Notes

Today the business and technology press is awash with an announcement, presumably from Microsoft, that they are going hard after IBM's Lotus Notes. And the interesting part is not the specifics on Microsofts Exchange versus IBM's Notes strategy, even though your average IT Manager may drool over details, but that Microsoft is increasingly targeting IBM as its leading competitor. Could it even be that Microsoft sees it's future more in supplying business solutions than consumer software?

For only ten days ago Bill Gates, while being interviewed at CES, announced that their number one competitor and his number one concern was IBM, not Google etc. While you have to take such posturing with a pinch of salt, it may even hint at a strategic shift for Microsoft going forwards.

Perhaps they have recognised that Google etc are changing the game when it comes to consumer software and that in the future more and more consumer apps will go for free. Look at Google's recently announced Google Pack. You get nearly a dozen valuable PC applications that Google downloads, manages and updates for you for free. Look at consumer email. Everyone uses free services from Yahoo, AOL, Google and even Microsoft. And thanks to the open source movement and developments such as Web2.0, the trend towards free consumer software seem well set in motion. It may even be irreversable.

So, on the consumer side it may be that Microsoft sees it's future joining the charge towards free internet services based software even more than we all imagine and quicker than we imagine. This is a risky change of strategy, so it may well be that to hedge it, Microsoft will accellerate it's growth strategy and investments toward the business market, both corporates and SME's.

And the corporate market is getting shaken up as well. Just look at what Salesforce.com is achieving and changing and you realise that the corporate market is going through a similarly large change, and Microsoft may even be able to benefit from it.

And they have a solid and growing franchise. Look at their Exchange franchise alone. For a July report by Radicati Group estimated that Microsoft Exchange, the server software behind Microsoft Outlook, was on track to have 126 million users in 2005 compared with IBM's Domino, the server software underlying Notes, which was expected to have 88 million customers.

In market share terms, Microsoft had 32% of the 389 million users of e-mail and collaboration software, while IBM had around 24%, Radicati estimated.

By 2009, Radicati estimates that the number of Microsoft Exchange users will rise to 200 million users, or 37% of the corporate market. And both Microsoft and IBM clearly feel that their corporate messaging solutions could prove to become important hubs of software and services to companies well into the future. As Exchange and Domino tie together a family of web services and communications tools that extend across the enterprise and into the wireless universe. And none of this software is free. Or looks like it's gonna be free for a long time.

And lets face it, if you own corporate communications and collaboration as well as office applications you have a strong and ubiquitous coporate franchise to build out from. That could get Microsoft more and more into enterprise infrastructure software with the likes of .net etc as well as enterprise applications. Imagine if Microsoft bought Salesforce.com (assuming the regulators ever allowed them).

So, you see the future could well be bright for Microsoft in the business space, perhaps much more rosy than the dramatically evolving future for consumer software. So, maybe IBM is Microsoft's number one competitor after all. That would presumably make Sun and Oracle and SAP etc their number 2,3,4... Mmmm, so where does that leave Google? Maybe with a larger opportunity than we all thought.

West coast start-ups look at linking DSL or cable networks

A couple of west coast start-ups are looking at allowing consumers to link up DSL or cable connections which would both speed up access and reduce the cost of surfing at home. This would be most relevant in urban areas.

Mushroom Networks, which was started at the University of California at San Diego, and WiBoost, based in Seattle, have built prototypes of simple wireless systems that make it possible for groups of neighbors to share their DSL or cable Internet connections.

Both companies said that sharing high-speed lines might enable users in small neighborhood clusters to download files and Web pages up to 10 times faster.

The two are taking different approaches, but getting at a similar opportunity which is allowing consumers to speed up DSL access in particular, while cost effectively using under-utilised network capacity. For the reality is that most hign speed dedicated connections lie idle for the vast majority of the day and night.

While these two start-ups solve an interesting dilemma their challenge will be persuading DSL and cable providers to adopt their technology. It may be better for the user, but sure is worse for the service provider who would see less connection fees.

Mind you, it may allow DSL providers to speed up their connections and better compete with cable companies. And if it's better for the user at some point one such start-up will find a route to market. And lets face it a clear benefit would purely be that your average user wouldn't have to install and manage their own wireless network. They would just access a neighbours.

Given that my wireless router still doesn't work properly, I sure can see the benefit of that!

Monday, January 16, 2006

Apple now more valuable than Dell!!

How the PC world is changing. First we hear that a Chinese upstart named Lenovo has taken over IBM's PC business to create the world's 3rd largest PC maker, then we hear that while Dell is struggling with performance, HP is turning their PC business around. Now we have Intel based Apple Mac's available for purchase and to cap it all, Apple is now worth more than Dell!

For a 12% surge in Apple's stock price last week pushed the company's market capitalization to $72.13 billion, passing Dell's value of $71.97 billion. Wow!

Now, Dell is probably a little undervalued at the moment, but the milestone has to beg a few questions. One is, can Apple become the next trend leader in consumer PC's, leaving Dell to focus back on the corporate market? Another question is whether the PC as a device is starting to morph into more of a consumer electronics offering and so the Apple's of this world are likely to be mid term winners.

And perhaps the short term reason for Apples success is that in every mature market, and the PC is now a mature product, value accures to the manufacturer with the largest margins and he who owns the top end of the market. Just look at Porsche in the car market. Apple certaily looks like they can be the quality leader and their proprietary solutions could just prove to be their key to longer term success.

Oh, and lastly, might Apple just surprise us all and take a larger slice of the PC market than anyone expects? Now that's the real million dollar question. We'll know more at the end 2006.

The UK to host online gaming summit

The UK is to host the first international summit on online gaming this year. The UK last year became the only industrialised nation to introduce a regulatory framework for the online gambling industry with passage of the Gambling Act.

The UK is keen to become a leader in regulated and legal gambling, allowing both online and physical gambling to proliferate. The UK now has a few leading online gambling sites listed on their stock exchanges.

The summit is a move to stake out thought leadership in the fast growing global gambling industry as well as necessary attempt to get other leading nations to adopt regulations and codes to try and stamp out illegal and under age gambling.

I'm not sure how much success the UK will have in getting other leading countries to play by similar rules, but trying to take leadership in this industry is wise, the economic benefits are obvious.

Mozilla to launch Firefox for Intel Mac's in March

The Mozilla Foundation has set a March launch date for a version of its Firefox Web browser that will run on Apple Computer's Intel version of the Mac OS X.

Firefox now has about 10% of the browser market, still a long long way behind Microsoft's Internet Explorer, but they have made some interesting moves recently.

For Firefox is now bundled in the Google Pack of free software that seems to be proving an early success with both analysts and users. Anyone who can jump on Google's coat tails at the moment is almost bound to do well. Then to follow this with a jump onto Apple's coat tails could make 2006 a good year for Firefox.

Their announcement stands out as they seem to be one of the earliest software companies to announce a concrete date for the Apple port to Intel chips. Can Firefox grab 20% of the browser market? It may well prove harder than winning the first 10%, but moves like this make it easier. How about Firefox for mobile or set top boxes?

Saturday, January 14, 2006

US building out new TV broadcasting networks for mobile devices

The US could see live TV broadcasted to mobile devices by the end of 2006. And Verizon Wirless looks set to become one fo the first US carriers to dive in.

Cell phone technology company Qualcomm, through its MediaFlo subsidiary, and wireless operator Crown Castle International, through its Modeo subsidiary, are both investing millions of dollars in new mobile networks that will broadcast live TV programming to cell phones across the country.

With the massively expensive roll-out of 3G broadband mobile technology around the world carriers have at least learnt that downloading TV is popular. The challenge is that their new networks are not really designed to deliver real live TV. At it's most basic this is beacuse 3G is based on "unicast," which means signals are transmitted between a single sender and a single receiver. If 500,000 people in a city decide to watch the same football game on their cell phones, the network has to transmit a copy of the video to each user.

Whereas MediaFlo and Modeo are attempting to build the heavy-duty network that can make mobile TV work. They're working on networks designed for "multicast" transmission, which means they transmit signals once to many devices. Which is how traditional broadcast television works.

So they argue that mobile phone operators need both 3G and MediaFlo/Modeo. And Verizon seems to agree, for they have signed up with MediaFlo. And it looks like running both networks will allow US carriers to charge different amounts for different kinds of content.

So does this all mean that the next generation of high speed mobile networks that carriers build out will incorporate broadcast TV? I guess we'll all have to wait and find out. Let's see how popular the MediaFlo and Modeo services prove to be.

Mixed results for video games market in 2005

2005 seemed to be the year when the video games market get hot. New online services, with the noted success of multi-player gaming got a lot of airtime and portable games devices from Sony's PSP to Nokia's Ngage opened up new categories. Even the good old cellphone seemed destined to become a hard core gaming device.

Now that 2005 has ended one can look back at the year and spot reality from hype as well as some clearly emerging trends going forwards. And it seems to have been a year of divergence, where portable devices did well, but consoles slumped.

For video games publishers enjoyed a record-breaking year in 2005 in the US in spite of a 12% fall in software sales for consoles, according to NPD, the leading provider of statistics for the industry.

The strong performance was credited to growth in the portable games market, said NPD, which offset the declines in the console market.

And numbers are also coming in for Microsoft's new Xbox 360 sales since it was launched in Nov. It seems as though Microsoft has only sold 600,000 devices so far. Given that they want to sell around 5M by June it looks to me like they could be a little behind. And they even have production problems meeting this level of supply, for finding an Xbox 360 in the US is still a challenge today.

So where's it all going? Well, portable video device and software sales should keep growing and more and more games will get bought and used by mobile phones. And this year console sales should nudge back up as people upgrade to the Xbox 360 (once Microsoft get over their supply challenges) and the Playstation 3 and new Nintendo consoles get released later this year.

Next year look for multi-player and online games to start taking hold, once players are armed and skilled with their new generation consoles.

Friday, January 13, 2006

Microsoft about to launch Office Live?

Rumours are circulating that Microsoft is about to launch Office Live - and itdesigned will deliver a suite of applications designed for small businesses. They'll be delivered over the internet and should be free! This follows Windows Live that was launched at the end of last year and is targeted primarily at consumers.

According to the company's Web site, Office Live is a set of online services to help small businesses establish "a professional presence online." That includes business applications, such as customer, project, and document management tools and a Microsoft-maintained Web site to share information with people inside and outside a company.

Keep your eyes out. This could be a sensible offering for SME's. Let's hope it's not as buggy as Windows Live!

Google hits mobile phones as the home page of choice!

Google has finally announced a major step in making their services potentially ubiquitous over mobile phones. And they're promoting it hard.

If you have a Google account and personalised page on your PC you can now access it over mobile phones and PDA's. This could potentially make them the mobile phone's home page instead of mobile operators front end. It's a key announcement for Google.

The Google Personalized Home, allows users to access Gmail, news, RSS feeds and other information from their personalized Google home page on mobile phones and PDAs. The service is free in the US and works with any phone that contains an XHTML-capable Web browser.

Go get that XHTML phone!

France Telecom stumbles - and points to the future of telephony

Yesterday France Telecom shares tanked nearly 10% on the back of their statement that earnings would fall below expectations in 2006. And today European telco stocks in general have fallen. Why? Well, of course it's all about the triple play silly. You see, if you are a fixed line telco today anywhere in the developed world and you don't have a triple play offering in the market right now - your in deep trouble. For those that do are gobbling your customers.

And France is a fascinating test bed for the future of fixed line telephony, beacuse it has one of the highest penetration of VOIP telephony in the world and has the highest in Europe.

Last year France Télécom predicted that the proportion of VoIP telephony would rise to about 15% of residential traffic by the end of 2005. But it said yesterday that take-up was accelerating and would reach 40% by the end of this year. Look out fixed line operators, what's happening in France will happen in the rest of the developing world at the latest by 2010.

French challengers, Iliad and Neuf Cegetel, have attracted many of the new VoIP users with attractively priced services. Free, Iliad’s consumer brand, has not changed its prices in more than three years. Subscribers continue to pay €29.99 a month, but where they once received only broadband internet access they now also receive television and VoIP, including free international calls to some destinations.

This is the way of the future. And incumbent fixed line telco's without triple plays should watch out. And soon you'll need a quadruple play: TV, VOIP telephony, internet access and mobile services. At least France Telecom has Orange!

US FCC moves towards internet access on planes

The US FCC yesterday announced that it plans to auction airwaves now used by phones embedded in airplane seats. Those phones, operated by a Verizon Communications unit, are not used regularly because of the high cost.

The financially strapped airline industry could generate a new stream of revenue by partnering with companies wanting to offer high-speed Internet, or cheaper on-board telephone services, or both.

The FCC is also considering allowing consumers to use their cellphones on planes.

It would take a year from now before any broadband services will appear on US planes, until then you'll have to fly on Germany's Lufthansa or Israel's El Al to get that internet experience at 30,000 feet!

Samsung profits rise 40%

Samsung Electronics, Asia's most valuable technology company and now worth over $100bn, has just 40% rise in net profits in the 4th quarter, as surging demand for flat screens and memory chips used in mobile phones and MP3 players spurred the first rise in profit for five quarters.

I guess they're worth their lofty valuation. And Apple had better watch out for this mighty technology company has them squarely in their sites and plans to assault them from all sides, with their own vast array of new digital music players, with music playing mobile phones and with intelligent TV's.

Expect Samsung to get more powerful over the coming years, not less. and they just keep ramping up R&D expenditure.

Thursday, January 12, 2006

The simultaneos release of "Bubble" in the cinema and DVD - is it the end of cinema?

The near-simultaneous release of the film "Bubble" in theaters and on DVD has prompted the media world and bloggers to announce the end of shared entertainment such as going to the cinema. One should perhaps not be too hasty.

For a starter cinema attendance has been declining for a while, so the simultaneous release of films such as "Bubble" will not alone be the demise of cinema's. Indeed, the only reason why simultaneous releases will occur is as an acceptancce that cinema attendance has already started declining.

And it certainly accepts the conventional wisdom that thanks to the high comparable cost of going to the cinema's and the broader proliferation of wide screen TV's and DVD players, home is as good a place as any to see great movies, and see them straight out of the gates. For DVD sales are huge, and in need of greater growth, so simultaneous releases may be a route.

The real issue for cinema's is that they're in dire need of some business model and technological developments. Going to the cinema needs to become a broader experience. Perhaps involving gaming and 3D, as well as more exciting social venues. They should become more integrated, dynamic and compulsive meeting places. Plus, the digital experience at the cinema needs to move on.

Then parhaps cinema sales may even stop falling. Until then, lets not be too quick to blame simulatanous releases.

Siebel announces sizzling results

Siebel has caught everyone by surprise by announcing off the chart results for their latest quarter, the last of 2005. They even beat their own expectations. Maybe Oracle and Ellison are one step ahead of all of us after all.

Preliminary revenues grew 20% to $469m compared with the 4th quarter of 2004, well ahead of Siebel’s own forecast of $340m to $360m.

Licence fees, Siebel’s largest revenue source, were almost double consensus estimates, reaching $214m, or 33% more than the same period a year ago.

Now it's over to Oracle to try and integrate and grow Siebel further and fight off SAP and Salesforce.com. That could be harder.

Google launches new corporate search solutions

We literally just penned a piece commenting on Henry Blodget, ex-Merrill Lynch internet analsyt, about Google's rick of becoming overly reliant on one source of revenues - online ad sales.

Well, they must have been reading our pieces, beacuse straight on the back of it they announce a couple of brand new corporate document search appliances. Which don't make money through ads - but through good old license fees!

They are now offering three Google "Mini" search appliances, used by small to mid-sized companies, including systems that can find up to 200,000 internal documents that sells for $5,995, and a 300,000 document search appliance selling for $8,995.

Search appliances are a combination of hardware and software that can cull through a wide variety of documents by office workers inside an organization, or used externally to allow customers to search through documents on a company's Web site.

And corporate search is becoming a growing trend. At the top end you only have to look at Autonomy to see how much money can be made. The question is can Google pump serious revenues out of their search appliances. It's too early to tell, but they do have a neat and cost effective solution for SME's and few others have do.

The question is is the demand there and do Google have the ability to market effectively and service this sector. Let's see.

Once leading internet analyst becomes Google bear

Henry Blodget, the once famous Wall Street internet analyst, has got the media and tech world all ruffled because he has dared make some bearish comments about Google - oooh!

He argues that Google at a valuation approaching $150bn is way too high and runs the serious danger of a share price meltdown. His arguments centre on the fact that Google is still just a one trick pony selling online ads and the online ad market may not have all the gowth legs in it everyone seems to be predicting. Wow, and Henry Blodget used to be such an internet bull!

He specifically argues that most of his concerns centre on a possible decline in advertising revenue due to click fraud, competition or just a general slowdown. Competition I buy into, but click fraud or a general slowdown I'm a little more challenged on without some real specific evidence.

But the real issue is at what point Google stock starts heading down. After all what goes up must go down and every single stock on the planet follows upward cycles and downward cycles. First we must ask ourselves whether Google at $450 odd is over valued today. And the answer is of course. Can it really justify a loftier valuation than IBM? I'm not sure.

But the real question is can Google grow into their current valuation quickly enough that their share price can postpone a fall for quite a while or even climb higher. Well, the real answer is no-one knows. Whatever any pundits say. But we will know a lot more by end 2006. We'll know more about the growth rate of online ads, we'll know a great deal more about Google competitor progress and we'll know more about whether Google can start to generate some real revenues from their numerous other initiatives.

And lets not forget that many of Google's other initiatives may monetize through ads, but this doesn't necessarily mean Google is dependent on AdWords alone. Not at all. So role on 2006. Time will decide a great, great deal.

Google on Blackberrys

BlackBerry mobile devices will be equipped for instant messaging, local search and maps from Google, Google and BlackBerry maker Research In Motion have just announced.

Immediately available is a software download of Google Local for mobile, which enables BlackBerry users to view maps and satellite imagery, find local businesses and get driving directions on their BlackBerry handsets. Google Talk, the messaging service will be available in the spring.

This, plus the AOL IM deal, could give a much needed boost to Google Talk. Of course the interesting part about Google Local will be when it gets hooked up with personalization and location based technology. Then maps will automatically drop down for where you are and so too relevant promotions and services related to your location and preferences.

But Google Local appearing in mobile devices is the start. For the clever stuff we'll still have to wait a little longer.

Wednesday, January 11, 2006

Microsoft strikes legal blow to open source movement

Microsoft's announced today that a federal ruling has deemed its Windows file-storage systems patents valid. The ruling will raise numerous concerns in the open source community.

The software giant's victory in the file allocation table (FAT) patents battle could demonstrate that global patents systems can be dangerous to the health of Linux and the open source community at large.

Microsoft could even force Linux users to pay them fees. Either way this ruling puts a bunch of power back in Microsofts hands versus open source. Let's hope they use this power wisely. My gut is that they'll do little about it. Open source is too popular and too large a movement. The backlash wouldn't be worth the hassle.

But this is one major political and PR coup for the software giant.

Google video store goes live

The Google Video Store has just gone live. A few films and TV programs and news clips are available. But as yet this looks like a true beta.

The design is perhaps a little too simplistic and the thumbnails need work. But the obvious challenge is a lack of content. But, like Google Base, the Google Video Store depends on the content creators entering their offerings and maintaining them well (including packaging and presentation).

It'll all depend on Google now and their users. If downloads start selling, more content companies will join and off will fly Google Video. But it looks like it's got a long way to go from here.

Apple's strategy for 2006

Ever since the beginning of the year the tech industry has been obsessed with Apple's strategy for 2006. The media and industry pundits have been speculating like mad. No company other than perhaps Google has come under such a spotlight. Steve Jobs must be having a ball.

So as the dust settles on Jobs announcements yesterday at Macworld we thought it was time to look at the reality of what Apple plans to do for 2006 now that most of their product cats are out of the bag.

Our view is that at Apple 2006 is a year of execution. I.e drive the products that they designed last year through the market as far and as hard as possible. The fact that Jobs started his keynote telling us about the impressive performance and financial metrics achieved at the end of 2005 tells us that he has enough evidence to believe that his startegy works.

And Apple's strategy at the high level is quite simple. Dominate the music player market through the iPod for as long as possible and keep his package (iPod + iTunes) proprietary for as long as possible. Then use the music player to become the default hi-fi sytem for the home and then get that to hook into some Mac device that acts as a media center. So, that's the first half of the strategy.

The second half is all about the Mac. The Mac business is the legacy business at Apple and for as long as Steve Jobs has returned to Apple as their leader he has been taking the Mac through a classic turnaround. Now that the turnaround is complete he is going after market share again. Apple only has a paltry 3% of the PC market. His Intel strategy is about growing that. And his iLife suite is about further differentiating his computers from Windows computers. The Apple computer for the multimedia broadband age and the Windows computer for utility and office computing.

And his end game may even be to offer the ultimate hybrid device that runs both the Windows O/S and the Mac O/S. So, for utility and office apps fire up Windows and for multimedia entertainment and apps switch over to the Mac O/S. With Intel chips in the Mac all Jobs has to do is license Windows from Microsoft and he's off. This one move could boost Apple's share of the PC market into the double digits.

And if Apple continues to lead the market for digital music players, which shouldn't be too hard at least for 2006 thanks to their cool factor and lack of real competition, and if Apple grows their PC market share by 1 percentage point per annum, they will have no problem driving sizeable top line growth. They don't need an Apple TV or an iPod mobile phone to help them get there. Though they may want them for future growth, but that's another story.