Lună: septembrie 2013

Obsoletive: Revolutionary Products in Tech Don’t Disrupt-They Obsolete

Disruption is low-end; a disruptive product is worse than the incumbent technology on the vectors that the incumbent’s customers care about. But, it’s cheaper, and better on other vectors that different customers care about. And, eventually, as the new technology improves, it takes the incumbent’s market.

This is not what happened in cell phones.

In 2006, the Nokia 1600 was the top-selling phone in the world, and the BlackBerry Pearl the best-selling smartphone. Both were only a year away from their doom, but that doom was not a cheaper, less-capable product, but in fact the exact opposite: a far more powerful, and fantastically more expensive product called the iPhone.

The jobs done by Nokia and BlackBerry were reduced to apps on the iPhone

The problem for Nokia and BlackBerry was that their specialties – calling, messaging, and email – were simply apps: one function on a general-purpose computer. A dedicated device that only did calls, or messages, or email, was simply obsolete.

An even cursory examination of tech history makes it clear that “obsoletion” – where a cheaper, single-purpose product is replaced by a more expensive, general purpose product – is just as common as “disruption” – even more so, in fact. Just a few examples (think about it – you’ll come up with a bunch more):

  • The typewriter and word processor were obsoleted by the PC
  • Typesetting was obsoleted by the Mac and desktop publishing
  • The newspaper was obsoleted by the Internet
  • The CD player was obsoleted by the iPod
  • The iPod was obsoleted by the iPhone

Smartphones and app stores have only accelerated this process, obsoleting the point-and-shoot, handheld video games, watches, calculators, maps, and many, many more.

It’s rather striking how often Apple’s products appear on that list. The Mac (and PC), iPod, and iPhone weren’t so much disruptive as they were obsoletive. They absorbed a wide range of specialized tools for a price far greater than any one of those tools cost on their own. It’s reasonable to assume that whatever Apple comes out with next will absolutely be in the same vein.

via Obsoletive: Revolutionary Products in Tech Don’t Disrupt-They Obsolete.

Epoca Ballmer se incheie

Nu mi-a placut niciodata maimutoiul asta, developers developers developers. Sunt curios ce va urma pentru Microsoft. Dar orice ar urma nu cred ca vor mai putea stopa caderea.

PUT-urile mele luate vineri sunt acum la +37%, dar au fost si +57% mai devreme, pe fondul emotiilor legate de foarte probabilul government shutdown de maine. Nu ma grabesc sa le dau, mai au mult potential. Si cred ca o sa mai adaug niste call-uri de VIX.

How BlackBerry blew it: The inside story

Mike Lazaridis was at home on his treadmill and watching television when he first saw the Apple iPhone in early 2007. There were a few things he didn’t understand about the product. So, that summer, he pried one open to look inside and was shocked. It was like Apple had stuffed a Mac computer into a cellphone, he thought.

To Mr. Lazaridis, a life-long tinkerer who had built an oscilloscope and computer while in high school, the iPhone was a device that broke all the rules. The operating system alone took up 700 megabytes of memory, and the device used two processors. The entire BlackBerry ran on one processor and used 32 MB. Unlike the BlackBerry, the iPhone had a fully Internet-capable browser. That meant it would strain the networks of wireless companies like AT&T Inc., something those carriers hadn’t previously allowed. RIM by contrast used a rudimentary browser that limited data usage.

“I said, ‘How did they get AT&T to allow [that]?’ Mr. Lazaridis recalled in the interview at his Waterloo office. “ ‘It’s going to collapse the network.’ And in fact, some time later it did.”

Publicly, Mr. Lazaridis and Mr. Balsillie belittled the iPhone and its shortcomings, including its short battery life, weaker security and initial lack of e-mail. That earned them a reputation for being cocky and, eventually, out of touch. “That’s marketing,” Mr. Lazaridis explained. “You position your strengths against their weaknesses.”

Internally, he had a very different message. “If that thing catches on, we’re competing with a Mac, not a Nokia,” he recalled telling his staff.

How BlackBerry blew it: The inside story – The Globe and Mail.


Shorting MSFT. Episodul 3

Ieri am intrat din nou short pe MSFT, cu o mica pozitie speculativa, astfel:

Buy to open MSFT PUT 32 Nov. 2013 @ $0.51

Ideea mea este ca demiterea lui Ballmer, dupa 13 ani in care a gresit strategic de multe ori dar a adus consistent tot mai mari profituri in contul companiei, este un semn clar ca profiturile au inceput sa cada. Vreau sa speculez rezultatele din octombrie, care cred ca vor fi sub asteptari, si/sau un eventual anunt premergator/oferit o data cu rezultatele privind declinul EPS si/sau costuri de reorganizare.

Primele doua short-uri MSFT mi-au adus +62% si +27%, folosind bear call spreads. De data asta, am optat pentru un naked put out of the money, mult mai riscant si potential mai profitabil, care deja intra-day imi ofera +24%. Dar trebuie sa am grija cand ies din el, fiindca pretul lui e numai si numai time value care se erodeaza in fiecare zi.

In perioada urmatoare imi propun sa caut sa intru pe o pozitie mai semnificativa si pe termen mai lung de shortare a MSFT, pentru a prinde lungul declin al companiei dat de disruptia PC-ului. Cred cu tarie ca strategia actuala de „devices and services”, cumpararea telefoanelor Nokia si continuarea flop-ului Surface, cu toate ca sunt miscarile potrivite pentru a lupta cu disruptia, vin prea tarziu si din partea unei organizatii prea „batrane” pentru a avea vreo sansa de succes. Cu toate ca nu cred ca MSFT va urma imediat soarta Nokia sau BlackBerry, dau pronostic MSFT sub $20 in 2-3 ani. Si vreau sa profit serios din acest trend.

The figurative sales of iPhones and BlackBerries | asymco

The reporting of sales after a launch weekend has been a staple of Apple’s communications about product for a long time. Therefore the evaluation of this performance should be made in comparison with previous launches.

But it’s not necessarily a statement of end user purchases. Nor is it a statement purely of shipments. The term “sold” as used in a press release is not an accounting term and it is not something which is meant to be audited.

However, none of that matters. The signal is what should be observed. By deliberately and repeatedly using the word “sold” Apple is expressing confidence that demand for its products is strong. Sure, there is channel inventory in that 9 million unit number but there are also ordered devices which have not been shipped and thus are not counted as sales. There are also depleted store shelves and people angry about not getting their desired phone model. Apple knows this, Tim Cook is making it clear they know this. They have excellent visibility into the distribution of their products. They have excellent inventory management. They are typically conservative in their financial reporting.

So why would anyone interpret Apple’s release as a negative signal? If you want an example of a negative signal, look at how BlackBerry reported its launch performance.

When interpretation of a signal is very different from the literal statement, it says more about the interpreter than about the company.


The figurative sales of iPhones and BlackBerries | asymco.


An Interview With Ben Thompson On Apple, Microsoft And Stratechery

Q: Where is Apple at right now as a company in this post-Steve Jobs period?

A: I think, were Steve Jobs still here, Apple would be in the exact same position: wildly successful financially, with justifiable skepticism about their future growth prospects, and unjustifiable skepticism about their short-term opportunities.

The iPhone was in many ways a once-in-a-generation business opportunity: carriers are paying Apple handsomely to disrupt the personal computer business, just because Apple’s product happens to have an app that makes phone calls. Oh, and that product is one that is a necessity for almost every person on earth. It’s difficult to imagine a more lucrative opportunity, and fair to question how Apple can grow from such a large profit baseline (then again, it was hard to imagine a better business opportunity than levying a massive tax on every single computer just as computers became a necessity for every business and home, i.e. the Microsoft model, yet it turned out even better opportunities existed).

What’s not justified is the assumption that iPhone sales are going to suddenly collapse in the face of lower-cost, “good-enough” Android-based phones. This sort of thinking is primarily the provence of analysts with their roots in PCs who witnessed the race to the bottom among Windows OEM’s, and it ignores that the PC market was primarily driven by businesses, where the buyers were not the users, and thus highly focused on price. The iPhone, on the other hand, along with all of Apple’s products, competes for consumers, and every other consumer sector offers evidence that there is a sizable portion of consumers who make purchase decisions for more reasons than just price. Apple, with their focus on the user experience, has always been a consumer company, and in a lot of ways their success over the past decade is a result of consumers embracing technology just like businesses did in the 80s and 90s. The right company, in the right place, at the right time with the right product.

Steve Jobs certainly played a major role in that, and his most underrated quality in my opinion was his patience (on the flip side, one of Microsoft’s biggest failings is their timing). However, the values Jobs insisted Apple embody – quality, simplicity, the “feel” of something – are actually not that difficult to understand. There is no magic formula, just the incredibly difficult work of making choices and executing in a way that ensures those values come through in the products.

The problem, though, is that those qualities aren’t easily measured or put on a spreadsheet. A lot of analysts handled that uncertainty by simply ignoring them, and then, when Apple continued to surprise, Steve Jobs became the scapegoat for success. And, now that he’s gone, these analysts can’t imagine how Apple can be successful even though the reasons remain just as clear as ever. Apple even made a commercial about it (the Designed in California spot)!

In other words, I think Apple is fine. My long-term worry is about what happens when all of the old guard leave, and those in charge have only ever known success. But that’s still a ways off.

An Interview With Ben Thompson On Apple, Microsoft And Stratechery – Forbes.

Spot on!