Really?

I am just wondering....

The state of Indiana's launch of a version of a Clinton area pice if legislation have the press and everyone else throwing fits with no regards to the fact this is aprox state #30 to do it -  while:

1. our State Department team is sitting in front of Iranian negotiators.....
2. Iran is everywhere in the Middle-east, seemingly playing the role of US as the real power broker
3. ISIS is cutting people's heads off on TV
4. Yemen is turning into the wild west (except it is t the east of us)
5. Russia is gearing up the aggression deploying  WWII area tactics
6. North and South Korea pointing artillery at each other
7. Several parts of Africa getting ready to erupt in war .... 
8. Our upcoming Presidential election having candidates clearly lying to the people and all needing a thorough journalistic vetting
9. and, and, and

What is really urgent and what is really important right now?????

“Shit - I shouldn't have done this”

may be what the Korean leadership team of Samsung may be thinking. My take would be, they are more likely thinking: “I shouldn't have done it this way......”

This week has been full of news  from the battle in the US between Apple and Samsung. Lot’s of well meaning Users, Industry Analyst and Commentators have been out there with thoughts and analysis, all striking me to be very immature and ill founded in facts. I don’t claim to know how this will end, but want to make sure we all consider, what is likely to happen next.

This whole debacle reminds me of several events in World history worth taking lessons from. Like when Japan in the late 1930’s early 1940’s realized they would have to deal with US eventually, as they were expanding the Empire across the Pacific. The Japanese Military managed to convince the senior leadership that the best way forward, would be a surprise attack on Pearl Harbor, to take out the whole Pacific Fleet. The logic was primitive and proved wrong for many different reasons, and they eventually lost everything!

The strategy simply was wrong - it never could work.

In the meantime: Samsung - though obviously confused by the US legal system,  and in a courtroom next door to Apple’s Headquarters in Silicon Valley - clearly have not found their form. But history have taught us, the South Korean company is not likely to give up, and some of the things they may do in short order are:

• Appeal the verdict in US: while showing a weak defence in first round in US - they will return with better lawyers and a better defense, and likely win an appeal or force Apple to settle the case
• Shift of short term Geographical focus: The bulk of the market for Smart Phones is outside US (almost 80%) and Samsung may focus outside US for a while as Smartphone sales go - and take advantage of great designs and good prices and continue to gain global share
• Focus on Windows Phone market: Samsung will launch their Windows 8 phone next week, before most players and definitely a week before Nokia. I looked at the Phones and they look very similar to all the Android based models they are making a killing with in the Global markets right now. They will likely be very successful in this market as well, and ride the wave of the Windows phone opportunity.....
• Concentrate on the Tablet opportunity. They won this part of the lawsuit from Apple and will likely pull all stops here. Their 10” tablet as well as 7” already hold strong positions in various markets around the world. They now have a courts approval to go ahead and push for volumes in the US marketplace, competing with the iPad, the new Google Nexus 7 and this week’s launch of new tablets from Amazon - as well as hundreds others, already selling Android based tablets around the world

In the meantime - The “Big Guy” will get into the game. Through the acquisition of Motorola, Google now posses 70 years of wireless patents, and own the Android operating system used by everyone... Interesting law suits ahead of us!!

And thousands of users are getting into the discussion in US, saying something along these lines: “If apple is so darn good why not compete instead of acting like a petulant child” or  “they are too expensive for what they deliver”

And every other country that Apple has sued in, they've lost (Germany, UK, Australia, Japan, Korea etc)

And Samsung and others are working on all the other devices in the Consumer Stack - like Cloud connected TVs and Blu-Ray Players as well as hybrids of telephones, tablets, laptops etc all of which are way outside the scope of current legal battle. Samsung and likes, will out-innovate, out-manufacture and out-distribute everyone on electronic devices because they are competing with someone who is dependant on, and insisting on, getting extremely high margins from the market.

Apple will soon feel like the Japanese emperor:

Shit - I shouldn't have done this......

Things are not getting better, Folks.....

Recently the Congressional Budget Office released an analysis showing the so called “fiscal cliff”, we as a country is scheduled to jump off by end of this year, will likely spark a new recession in 2013. A recession would obviously mean even less people having jobs, more companies closing down, new catastrophe in the housing market etc, etc. As a reminder: “this fiscal cliff” is there because our politicians decided last year it was too hard to agree, so they postponed the issue till this year (I know - OMG)

And this week the Commerce Department released the latest report on “Durable goods Orders” - a way of evaluating how the manufacturing sector is doing, and how they will be in the near future. Bad news again. “Core Capital Goods” fell 3.4% - the biggest drop since November last year, and the fourth decline in five month. Lot’s of other news in the report - none of them good!

Now, none of this would be a catastrophic issue if we all had confidence that our elected politicians had a plan, and were working on a solution to the problem.... But alas, we all know they are not. In fact, they do not even seem concerned about solving this. They seem to think, this is somebody else’s problem and we can always fix things downstream. Maybe in the “lame duck period” after the election? Or, if everything else fails, surely a new administration with a new mandate will take care of things!

We should all know better. The last few years should have taught us it is highly unlikely.

Which brings me to the real problem: Sentiment!

The Economy moves on sentiment. In other words - on the expectation on what is going to happen in the future, as opposed to what has happened so far. So if “consumers” do not believe in their near term prosperity, they will hold back on spending. And when “business” - large and small - see no demand, they will not invest. Simple and proven facts - you do not need a MBA to figure this out.

So how do you change “Sentiment” you might ask?

Good question! Usually you work on everyone's perception of what will happen in the future. In other words, you promise them things will change! Unfortunately people are getting cynical. They do not believe in the speeches any more. The last few years have taught them not to. And businesses have head no good speeches from the Government for a few years, so they are not likely to invest.....

Since we can’t change the “consumers” or “the businesses” I guess there is only one way to fix things:

A new Government!!!!

Apple CEO: Frothing fanboi iPhone 5 hype screwed our sales!

Apple CEO Tim Cook was quoted this way from an investor meeting following the disappointing results for the latest quarter. Seems Apple is learning an important lesson which most high tech companies have had to learn over time: Loyal and enthusiastic users, channels and analyst hyping your products, including guessing about the content of  the next product announcements, is a blessing in disguise. It may seem to help your demand generation here and now, but definitely makes product transitions very difficult.

When you are a small player trying to break into a market it is very tempting to encourage this since it is “low cost demand generation” and seems not to hurt your financials significantly  since the impact on your brand building and product awareness is mostly positive…..

But when you are a category leader and holding large share positions of important high volume product categories it is a very different matter. Which may be why most large companies with multiple global distribution channels, are very careful how they handle this.

And the messy launch of the iPad in China cannot have helped Apple's quarter either - as well as the fact that tablets increasingly are displacing Laptops in purchase decisions - even for Apple who now have a big dependency on Macbook revenues and profits.

So in summary: iPhone weak due to transition issues, iPad hit by China launch and Laptops hit by friendly fire!

Maybe we are simply watching Apple growing up?

Best thing to ever happen for Microsoft

Last week Microsoft posted its first loss ever for the latest quarter - and it may be the best thing ever to happen to the company!

Microsoft had to post a loss from a charge taken in connection with its internet business. This business includes the acquisition of the online advertising service aQuantive in 2007 and the relaunch of the Bing search engine and other initiatives to bring the company into the high growth part of the internet, and begin to compete with Google.

At the same time the core Microsoft businesses seems to be doing fairly well. The total revenue rose 4% and the Enterprise SW group was up nearly 13% with a big bump in operating income. And there is a new Office suite out, including a subscription based Cloud version as well as a new version of Windows on its way which will undoubtedly drive numerous Smartphone and Tablet products from vendors across the world, as well as an upgrade cycle on PCs.

But the stock price is not really taking off - why not? What is the problem?

Simply put: If the company do not succeed in breaking out of the sideway track it has been on for a number of years now, it will become the largest “cash cow business” ever seen, and the reservoir of “milk” may potentially be disappearing very  quickly.

If on the other hand they were able to leverage their enormous base of technology, talented people, customers and millions of users, they could be the growth story to dwarf even Apple!

So how hard can it be? Surely, it is just a matter of asking the engineers to build some better products? Well guess what, that’s what they have been doing. However - “good products” don’t cut it. It has to be mind blowingly great products which the world will instantly recognize they cannot live without.... And that is something quite different, as many great technology companies have realized before them.

The lackluster performance recently is not about lack of talent and vision with the Microsoft  team - it is about lack of hunger! Complacency is the number 1 enemy of technology companies and it seems like the people at Microsoft have a lot of this.

And this is where the first quarterly loss in 26 years come in. If the Microsoft management team cannot use this to explain the urgency of change and execution to the people there and  create real hunger again, Microsoft needs a new management team!

If however they can do this - all the elements are there for a fantastic success for Microsoft.....

How? you may ask.  I’ll tell you: Apple, Google and Amazon are all busy integrating Smartphones, Tablets and Cloud solutions into compelling solutions for the consumers trying to capture and lock them in for the future. Why the consumer market? Simple - because that’s the marketplace they mostly are in. Undoubtedly the strategy is to push towards to Business marketplace when dominance has been achieved and people are demanding their “personal solution” at their jobs.

However, Microsoft could be the company to integrate Smartphones, Tablets and Cloud solutions and PCs, into an uniquely and very compelling offering for the Business community and later move towards the Consumer markets. This is a true differentiation, only Microsoft have. If they use this advantage intelligently - they will win a large chunk of the market!!

To put it differently: It is theirs to lose

Why do we have to wait?

The Federal Reserve Chairman came out again a couple of days ago with a very dim view of the economic of the Country. He was clearly stating that the economy needs help now!  And as the economy of our Country is in dire straits, a lot of people are suffering and seeing their life being ripped apart around them. So you have to wonder why there is no action by the President and the Congress.It should not be hard for our them to spot the issues they need to work on:

• The job situation around the country is not improving in a meaningful way, no matter how you count it. In fact, the share of population employed - around 58% - is the lowest since the early 80’s and long-term unemployment is the highest since the 30’s
• The Consumer spending has been slowing down again for the last 3 month and our retail sector small and large are really hurting.
• The Factory’s have slowed down again across the country according to recent data - and the Euro exchange rate Vs USD is not helping our export businesses at all.
• The Fed recently downgraded the outlook for GDP growth for the year to 1.9 - 2.4% and a great deal of economists  are now saying this may be optimistic. This level of growth does not even account for the population growth and the inflation -  which means we are in recession territory.
• The National Debt is on its way to $16 Trillion by end of year, having grown from $9 Trillion over the last 4 years - and is now at the highest level vs GDP since just after World War II
• Federal Spending is now at 25% of GDP - the highest level since World War II and the Federal Budget deficit at 10% of GDP - also the highest level since World War II
• The next “Debt limit increase” is right around the corner promising one more standoff in Congress
• And we are all looking at “the financial cliff” where Federal taxes go up for everyone on top of all the increases included in “Obamacare” and across the board cuts as agreed last year. Republicans and Democrats in the Congress don't agree on much, but they do agree on this: the combination of increased taxes and spending cuts will likely cripple the economy further.  

And the businesses in this country see all these signs as well. Facing the uncertainty of the immediate future as well as the longer term,  the businesses - like most consumers - have decided, now is not the time to invest.

I am no economics genius but I do not really think it takes one to figure out that something has to be done!!! And it really isn’t much of a ideological debate - some of the needed actions are very basic and should be easy to agree on. As a matter of fact maybe we need an “ideological armesti” for a couple of years and get the base fixed.

I know, won’t happen. The debate about the ideology is much too important to put aside, even for a little while. So, no matter what happens, we are all heading into a couple of years of really rough waters and the people of this country are not going to see things getting much better for a while.

But - do we really have to wait 110+ days before our President and the Congressional leadership drop the “elect me” retorick and start working on the issues? And maybe prove they deserve to be our leadership??????

I don’t think so.