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?
Monday, July 30, 2012
Monday, July 23, 2012
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
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
Thursday, July 19, 2012
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:
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.
- 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.
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