Charlie Wolf with Needham & Company issued a note to investors Friday in which he declared the "successful launch" of Windows Phone 7, the new mobile operating system from Microsoft.
I approve of quote marks around that phrase. I understand that there wasn't any pent up demand unleashed that day. It's clear that Microsoft is going to pour their attention into this segment and any success is going to be measured in the long run.
Definitely agreed about commoditization as well. It was clear with the old WinMo phones. Either price phones cheaply to increase sales volume, use cheaper materials to maintain margins, or both.
Android phones don't seem to be suffering from "race to the bottom" pricing yet but it's not hard to envision. There will always be many carriers and manufacturers using pricing aggressively to win share. That's not as apparent yet though IMO. Microsoft is putting their partners in the same scenario, too. Manufacturers will have to use prices (in addition to features) to draw buyers.
Having no competition for selling an iOS phone puts Apple in a great, great position. Others are rightfully green with envy.
This guy is dumb. Even though Microsoft has a giant marketing budget in place, that doesn't mean consumers are going to buy. ....
Actually, people generally buy what they are told to buy. History shows quite clearly that advertising sells product irrespective of the quality or the utility of said product.
The intelligence and "free will" of the consumer is vastly over-rated and every ad exec knows that people will buy anything if it's presented to them in the right way.
"We suspect the company will devote a material portion of it to buy the support of the leading smartphone manufacturers," Wolf wrote. "Indeed, if Windows Phone 7 is successful, it's difficult not to conclude that the Android platform will be impacted more than any other operating system because of the similarity of the two licensing models."
It's about time an "analyst" pointed this obvious point out. Most seem to miss it.
RIM might yet hold on to its profitable enterprise niche and stay out of the "race to the bottom" (in price and profits, if that wasn't clear to some commenters here). HP/Palm - we don't know what market segment they are targeting yet (do they?), so can't say.
and Nokia - look for MS to make a deal with Elop early next year for a new Nokia line running WP7.
I have no doubt whatsoever that Windows will see a lot of success in the corporate market. I work in a large corporation, and our computer department vehemently fights any leakage out of the Microsoft universe.
Given Microsoft's corporate history I expect that many companies will gravitate to Windows for their phones.
This guy is dumb. Even though Microsoft has a giant marketing budget in place, that doesn't mean consumers are going to buy. People want quality. The iPhone provides that.
I have no doubt whatsoever that Windows will see a lot of success in the corporate market. I work in a large corporation, and our computer department vehemently fights any leakage out of the Microsoft universe.
Given Microsoft's corporate history I expect that many companies will gravitate to Windows for their phones.
The days of a blanket corporate Microsoft universe look less likely. IT are seeing their workplace bringing in more external devices, fixes and ideas that haven't come from MS than ever before. The computer department can fight it but they rescinded some of that right when they failed to lead. A few years back they could fold their arms and say it's not allowed and there's no support. Now the response is deal with it.
I prefer the much more indicative word that really describes what the term MARKETING really means:
PROGRAMMING
oh yes TV does the same thing!~
Most of these ad agencies , the workers sit in their New York conference rooms having meetings every morning then afterwards go back to their cubes trying to figure out how to put lipstick on a pig. They don't even know it. But they have to believe their own hyperbole.
Almost every ad on TV - I imagine some poor slave who came up with the idea and the rest of the ants turning it into programming that you and I watch or read or hear.
There's a reason why the industry calls TV/Rado "programming" because it's purpose is.....to fill our heads with what the sellers want us to think . In reality - We don't have an independent thought in our heads at all, And the irony is either do they. And so it continues day after day ....
and that my dear friends is our world, don't you just love it?
That means Apple would have to take a loss enough to make it unprofitable for Android devices to compete.
Nah, it is more likely that Apple would maintain their high margins and let their competitors fight tooth and claw for the low-end of the smartphone market. Apple would eat up most of the industry's profits.
That's the way they've handled the PC market. Go for profits, not market share.
Apple's profit margin is over 21% while HP has 7%. Dell is running thin at 3.36%. Don't know about the Asian manufacturers, however I expect them to be in the range around HP and Dell.
... "Android effectively moved into a vacuum created by the implosion of Windows Mobile." ...
A competitor's implosion is also a factor in iPhone's success. Palm had a huge lead in the smartphone market, then did almost everything possible to blow it. They spun off the Palm OS group into PalmSource, hedged their bets with WinMob models, PalmSource sold themselves to ACCESS, Palm changed their name to palmOne, bought the rights to PalmOS back from ACCESS, changed their name back to Palm, ad nauseam. The only thing they didn't do was burn down their own headquarters building.
Easy to look back and find fault now, but the damage has been done. Who knows how much development time, money, and mindshare all those shenanigans cost Palm? If they hadn't blown it, they could have released the Pre and webOS years ago. Didn't happen, they blew the trust of consumers and enterprise.
So who benefited the most from Palm's implosion? Apple and iPhone. If the Pre and webOS had been released before iPhone, the smartphone world would be very different now. We'll never know how different.
... "Ultimately, however, commoditization, accompanied by deteriorating prices and gross margins, appears inevitable for licensees of the Android and Windows Phone 7 operating systems."...
And it's not just competition between Android manufacturers on one side and WPee 7 manufacturers on the other. All the running dog Android manufacturers are competing against each other, tweaking the OS and loading it up with craplets and trying to offer software and hardware value-add while cutting corners and trying to reduce their costs.
Same with the Wpee 7 manufacturers. By pitting HTC, Dell, Samsung, and LG against each other, Ballmer has triggered another race to the bottom just among competing Wpee 7 phone builders. They will cut corners with the best of them, lowering the quality of their handsets, and Microsoft won't be able to do anything about it. Exactly the same as happened in the Windows pee cee industry.
Android and Wpee 7 makers will all be trying to push each other off the low-price cliff. But what about Nokia? Well, they need to build an Android or Wpee 7 phone. Or both. Either way, they'll be standing on the edge of the same low-price cliff as all the others. By using a commodity OS, Nokia loses their software differentiation.
Yes, Nokia's strength has always been their hardware. But no, great hardware alone isn't enough to sell smartphones. To continue in the smartphone market, Nokia will need to get used to razor thin margins just like HTC, LG, and all the others. They'll become just another running dog too.
A competitor's implosion is also a factor in iPhone's success. Palm had a huge lead in the smartphone market, then did almost everything possible to blow it. They spun off the Palm OS group into PalmSource, hedged their bets with WinMob models, PalmSource sold themselves to ACCESS, Palm changed their name to palmOne, bought the rights to PalmOS back from ACCESS, changed their name back to Palm, ad nauseam. The only thing they didn't do was burn down their own headquarters building.
Easy to look back and find fault now, but the damage has been done. Who knows how much development time, money, and mindshare all those shenanigans cost Palm? If they hadn't blown it, they could have released the Pre and webOS years ago. Didn't happen, they blew the trust of consumers and enterprise.
Palm never had smartphone sales anywhere near the magnitude of iPhone sales. The iPhone didn't fill a void in the market, it expanded it dramatically. Palm failing is not why the iPhone succeeded. If that was the reason, the market wouldn't have grown, and Apple would have just taken over Palms sales. Thanks to the iPhone (and Android) the smartphone market is still expanding today.
The void Android filled was not one in the consumer market, it was a void in manufacturers needs. The likes of HTC, Motorola, LG, Samsung, etc don't have their own smartphone OS. Before Android, their best option was Windows Mobile which couldn't stack up against iOS and was not designed with touch screens in mind. Manufacturers needed a better OS and Google provided one. Now Microsoft is back with WP7 and wants to win that manufacturer support back.
Quote:
So who benefited the most from Palm's implosion? Apple and iPhone. If the Pre and webOS had been released before iPhone, the smartphone world would be very different now. We'll never know how different.
I doubt the Pre and WebOS would have ever existed without the iPhone. It's best to not get into what if scenarios. Palm had been doing smartphones and PDA's for years, yet WebOS came well after the iPhone. I think they needed a little inspiration.
Apple ... will accept a minority share of the market and Android will rule the majority.
As in PCs, Apple will have the minority share in terms of units... but as the "last man standing" profit-wise, they will rake in the majority of the revenues.
Android phones are the "commodity PCs" of the market place. Carriers will give them away, and manufacturers will fight over who gets the most nickels and dimes.
innovation is apple's strong suit. and the rest are basically trolls.
last week apple patented what i consider a spectacular game changer. watching 3d movies and television without wearing special glasses. just imagine the impact as the others strain to try and circumvent the patents.
3d television is just starting. watching it without special glasses will usher in a new paradigm.
Palm had a huge lead in the smartphone market, then did almost everything possible to blow it.
If by "blow it" you mean "failed to innovate", you're correct. Palm enjoyed basking in past glories, and believed more in doing one thing and one thing only.
Again, and again, and again, Palm has trailed behind the technology curve. Look how long it took them in the PDA market just to add a color screen to the silly thing. Their reason? People will prefer battery life over fancy graphics. Guess what? They didn't.
And finally, you're wrong about Palm and Apple.
Why? Because Palm lost the market to RIM and the Blackberry LONG before the iPhone ever hit the market.
Actually, people generally buy what they are told to buy. History shows quite clearly that advertising sells product irrespective of the quality or the utility of said product.
The intelligence and "free will" of the consumer is vastly over-rated and every ad exec knows that people will buy anything if it's presented to them in the right way.
Professor, you have nailed it! Agreed 100%. [Hint: look no further than how the GOP manages to convince people that cutting Social Security benefits and giving tax cuts to the super-rich will reduce the deficit. /off my soap box ]
Comments
Charlie Wolf with Needham & Company issued a note to investors Friday in which he declared the "successful launch" of Windows Phone 7, the new mobile operating system from Microsoft.
I approve of quote marks around that phrase. I understand that there wasn't any pent up demand unleashed that day. It's clear that Microsoft is going to pour their attention into this segment and any success is going to be measured in the long run.
Definitely agreed about commoditization as well. It was clear with the old WinMo phones. Either price phones cheaply to increase sales volume, use cheaper materials to maintain margins, or both.
Android phones don't seem to be suffering from "race to the bottom" pricing yet but it's not hard to envision. There will always be many carriers and manufacturers using pricing aggressively to win share. That's not as apparent yet though IMO. Microsoft is putting their partners in the same scenario, too. Manufacturers will have to use prices (in addition to features) to draw buyers.
Having no competition for selling an iOS phone puts Apple in a great, great position. Others are rightfully green with envy.
This guy is dumb. Even though Microsoft has a giant marketing budget in place, that doesn't mean consumers are going to buy. ....
Actually, people generally buy what they are told to buy. History shows quite clearly that advertising sells product irrespective of the quality or the utility of said product.
The intelligence and "free will" of the consumer is vastly over-rated and every ad exec knows that people will buy anything if it's presented to them in the right way.
"We suspect the company will devote a material portion of it to buy the support of the leading smartphone manufacturers," Wolf wrote. "Indeed, if Windows Phone 7 is successful, it's difficult not to conclude that the Android platform will be impacted more than any other operating system because of the similarity of the two licensing models."
It's about time an "analyst" pointed this obvious point out. Most seem to miss it.
No mention of RIM? Nokia? Palm?
RIM might yet hold on to its profitable enterprise niche and stay out of the "race to the bottom" (in price and profits, if that wasn't clear to some commenters here). HP/Palm - we don't know what market segment they are targeting yet (do they?), so can't say.
and Nokia - look for MS to make a deal with Elop early next year for a new Nokia line running WP7.
Given Microsoft's corporate history I expect that many companies will gravitate to Windows for their phones.
This guy is dumb. Even though Microsoft has a giant marketing budget in place, that doesn't mean consumers are going to buy. People want quality. The iPhone provides that.
Marketing works.
I have no doubt whatsoever that Windows will see a lot of success in the corporate market. I work in a large corporation, and our computer department vehemently fights any leakage out of the Microsoft universe.
Given Microsoft's corporate history I expect that many companies will gravitate to Windows for their phones.
The days of a blanket corporate Microsoft universe look less likely. IT are seeing their workplace bringing in more external devices, fixes and ideas that haven't come from MS than ever before. The computer department can fight it but they rescinded some of that right when they failed to lead. A few years back they could fold their arms and say it's not allowed and there's no support. Now the response is deal with it.
Marketing works.
I prefer the much more indicative word that really describes what the term MARKETING really means:
PROGRAMMING
oh yes TV does the same thing!~
Most of these ad agencies , the workers sit in their New York conference rooms having meetings every morning then afterwards go back to their cubes trying to figure out how to put lipstick on a pig. They don't even know it. But they have to believe their own hyperbole.
Almost every ad on TV - I imagine some poor slave who came up with the idea and the rest of the ants turning it into programming that you and I watch or read or hear.
There's a reason why the industry calls TV/Rado "programming" because it's purpose is.....to fill our heads with what the sellers want us to think . In reality - We don't have an independent thought in our heads at all, And the irony is either do they. And so it continues day after day ....
and that my dear friends is our world, don't you just love it?
That means Apple would have to take a loss enough to make it unprofitable for Android devices to compete.
Nah, it is more likely that Apple would maintain their high margins and let their competitors fight tooth and claw for the low-end of the smartphone market. Apple would eat up most of the industry's profits.
That's the way they've handled the PC market. Go for profits, not market share.
Apple's profit margin is over 21% while HP has 7%. Dell is running thin at 3.36%. Don't know about the Asian manufacturers, however I expect them to be in the range around HP and Dell.
... "Android effectively moved into a vacuum created by the implosion of Windows Mobile." ...
A competitor's implosion is also a factor in iPhone's success. Palm had a huge lead in the smartphone market, then did almost everything possible to blow it. They spun off the Palm OS group into PalmSource, hedged their bets with WinMob models, PalmSource sold themselves to ACCESS, Palm changed their name to palmOne, bought the rights to PalmOS back from ACCESS, changed their name back to Palm, ad nauseam. The only thing they didn't do was burn down their own headquarters building.
Easy to look back and find fault now, but the damage has been done. Who knows how much development time, money, and mindshare all those shenanigans cost Palm? If they hadn't blown it, they could have released the Pre and webOS years ago. Didn't happen, they blew the trust of consumers and enterprise.
So who benefited the most from Palm's implosion? Apple and iPhone. If the Pre and webOS had been released before iPhone, the smartphone world would be very different now. We'll never know how different.
... "Ultimately, however, commoditization, accompanied by deteriorating prices and gross margins, appears inevitable for licensees of the Android and Windows Phone 7 operating systems."...
And it's not just competition between Android manufacturers on one side and WPee 7 manufacturers on the other. All the running dog Android manufacturers are competing against each other, tweaking the OS and loading it up with craplets and trying to offer software and hardware value-add while cutting corners and trying to reduce their costs.
Same with the Wpee 7 manufacturers. By pitting HTC, Dell, Samsung, and LG against each other, Ballmer has triggered another race to the bottom just among competing Wpee 7 phone builders. They will cut corners with the best of them, lowering the quality of their handsets, and Microsoft won't be able to do anything about it. Exactly the same as happened in the Windows pee cee industry.
Android and Wpee 7 makers will all be trying to push each other off the low-price cliff. But what about Nokia? Well, they need to build an Android or Wpee 7 phone. Or both. Either way, they'll be standing on the edge of the same low-price cliff as all the others. By using a commodity OS, Nokia loses their software differentiation.
Yes, Nokia's strength has always been their hardware. But no, great hardware alone isn't enough to sell smartphones. To continue in the smartphone market, Nokia will need to get used to razor thin margins just like HTC, LG, and all the others. They'll become just another running dog too.
A competitor's implosion is also a factor in iPhone's success. Palm had a huge lead in the smartphone market, then did almost everything possible to blow it. They spun off the Palm OS group into PalmSource, hedged their bets with WinMob models, PalmSource sold themselves to ACCESS, Palm changed their name to palmOne, bought the rights to PalmOS back from ACCESS, changed their name back to Palm, ad nauseam. The only thing they didn't do was burn down their own headquarters building.
Easy to look back and find fault now, but the damage has been done. Who knows how much development time, money, and mindshare all those shenanigans cost Palm? If they hadn't blown it, they could have released the Pre and webOS years ago. Didn't happen, they blew the trust of consumers and enterprise.
Palm never had smartphone sales anywhere near the magnitude of iPhone sales. The iPhone didn't fill a void in the market, it expanded it dramatically. Palm failing is not why the iPhone succeeded. If that was the reason, the market wouldn't have grown, and Apple would have just taken over Palms sales. Thanks to the iPhone (and Android) the smartphone market is still expanding today.
The void Android filled was not one in the consumer market, it was a void in manufacturers needs. The likes of HTC, Motorola, LG, Samsung, etc don't have their own smartphone OS. Before Android, their best option was Windows Mobile which couldn't stack up against iOS and was not designed with touch screens in mind. Manufacturers needed a better OS and Google provided one. Now Microsoft is back with WP7 and wants to win that manufacturer support back.
So who benefited the most from Palm's implosion? Apple and iPhone. If the Pre and webOS had been released before iPhone, the smartphone world would be very different now. We'll never know how different.
I doubt the Pre and WebOS would have ever existed without the iPhone. It's best to not get into what if scenarios. Palm had been doing smartphones and PDA's for years, yet WebOS came well after the iPhone. I think they needed a little inspiration.
Apple ... will accept a minority share of the market and Android will rule the majority.
As in PCs, Apple will have the minority share in terms of units... but as the "last man standing" profit-wise, they will rake in the majority of the revenues.
Android phones are the "commodity PCs" of the market place. Carriers will give them away, and manufacturers will fight over who gets the most nickels and dimes.
innovation is apple's strong suit. and the rest are basically trolls.
last week apple patented what i consider a spectacular game changer. watching 3d movies and television without wearing special glasses. just imagine the impact as the others strain to try and circumvent the patents.
3d television is just starting. watching it without special glasses will usher in a new paradigm.
Amazing game changer by the innovators at apple.
http://news.cnet.com/8301-13506_3-20018421-17.html
http://news.cnet.com/8301-13506_3-20...17.html/QUOTE]
Sounds like Apple just got the patent, so I'd say innovators indeed.
Palm had a huge lead in the smartphone market, then did almost everything possible to blow it.
If by "blow it" you mean "failed to innovate", you're correct. Palm enjoyed basking in past glories, and believed more in doing one thing and one thing only.
Again, and again, and again, Palm has trailed behind the technology curve. Look how long it took them in the PDA market just to add a color screen to the silly thing. Their reason? People will prefer battery life over fancy graphics. Guess what? They didn't.
And finally, you're wrong about Palm and Apple.
Why? Because Palm lost the market to RIM and the Blackberry LONG before the iPhone ever hit the market.
Actually, people generally buy what they are told to buy. History shows quite clearly that advertising sells product irrespective of the quality or the utility of said product.
The intelligence and "free will" of the consumer is vastly over-rated and every ad exec knows that people will buy anything if it's presented to them in the right way.
Professor, you have nailed it! Agreed 100%. [Hint: look no further than how the GOP manages to convince people that cutting Social Security benefits and giving tax cuts to the super-rich will reduce the deficit. /off my soap box ]