Showing posts with label Microsoft. Show all posts
Showing posts with label Microsoft. Show all posts

Friday, August 3, 2012

Nokia in Q2 2012: A lighter balance sheet, and a free OS


I’m not doing a full analysis of Nokia Q2 2012 results here. Very briefly, Nokia group revenues were 7.5 billion EUR with a loss of 1.53 billion EUR. A billion plus euro loss cannot be very rosy, of course, but maybe investors expected worse, as the stock price spiked up briefly after the announcements of the results on Thursday, 19 July.






Revenue & Profitability has taken a hit for the last one year, when the strategy of shifting from Symbian & Meego OS’es to Windows Phone has gone disastrously wrong for the company. A very detailed analysis of this strategy gone wrong can be found on Tomi Ahonen’s communities-dominate blog. As for this current post, the chart below tracking Nokia revenues is enough to describe the problem.


Nokia revenues - falling since 2011.


But in this post I try to delve into some of the revelations in the Q2 earnings release.

4 Billion EUR Lighter Balance Sheet

If we take a look at the balance sheet on Nokia's Q2 earnings release, there is a reduction of assets of about 4 billion EUR between Q2 2011 and 2012. About 1.4 billion EUR of this comes from impairment of Goodwill & amortization of intangible assets. This is also explained in a discussion on the operating results in the Q2 2012 interim report.

"During the second quarter 2012, based on a combination of factors, including the decline in our market capitalization, credit rating downgrades as well as our operating results, we concluded that there were sufficient indicators to require Nokia Group to perform an interim goodwill impairment analysis as of June 30, 2012. "


This explains the 1.4 billion reduction in goodwill and intangible assets. But what else did to reach this 4 billion EUR figure? 

"In the second quarter 2012, Nokia recognized EUR 800 million in valuation allowances related to its Finnish deferred tax assets in accordance with accounting standards "

Deferred tax assets is when a loss making company expects to make profits in the future, and sets aside a portion of their losses as tax credits to take advantage of, when they return to profitability. But this is allowed, in Finnish and International accounting laws, only if there is sufficient indication of the company returning to profitability. Deferred tax assets sits on the balance sheet as a current asset, and this accounts for another 800 million of the total 4 billion reduction in assets. 

The rest of the 4 billion is made of lower accounts receivable (amounts due to the company), and prepaid expenses. 

Now, I may be reading a bit too much into this, but cleaning up the balance sheet of intangibles, and deferred tax assets may be to make it more palatable to a buyer. Even though Nokia is currently valued low (it's currently valued lower than what Motorola was picked up for), most buyers would not be convinced by intangibles & goodwill on the balance sheet. Goodwill comes up when a company acquires another company, and pays more than the net asset valuation of the acquired company. The excess amount paid is not treated as a loss, but projected as an asset, which is the intangible valuation of expected synergies from the acquisition. Goodwill appears on the Nokia balance sheet because of the past acquisitions of Navteq, and others. 

Thursday, May 24, 2012

Open Source Licenses - Part 1

Having worked with open source software for quite some time, I thought it would be nice to jot down a few of my thoughts on open source, in general, and the common licenses, in particular. Open source is quite common in technology, and especially the smartphone industry today. As I have noted in one of my previous posts, open source is used in four of the popular smartphone OS’es today (iOS, Android, Symbian and Bada/Tizen). While I started, I thought this would be one post, but as I rambled on, I thought it would be better readability to divide this across two posts. So here is the is the first part in a 2 part series on open source.


What Is Open Source?

Before getting into the details of licensing, it maybe good to define the concept of open source. In very simple terms, "open source" means software that is available in source code form, and which allows users to debug, modify, enhance, and re-distribute it. However, there is a belief or philosophy behind open source, which is deeper than just having source code available. The philosophy is that users of software should have freedom to run the software, customize it according to their needs, improve the software, and also make it available for others to use, thereby propagating "good" software. Due to the fact that the open source concept revolves around the freedom of software users, it is also sometimes called "Free Software". Richard Stallman founded an organization called the "Free Software Foundation", and he stresses that the "Free" does not refer to price, but to freedom. A famous and funny quote from Mr. Stallman is "To understand the concept, you should think of ‘free’ as in ‘free speech’, not as in ‘free beer’". Open source resolves around this fundamental philosophy of freedom, and most of the licenses reflect this in their terms & conditions.
Another non-profit organization - Open Source Initiative(OSI) - goes a step further and actually defines the criteria that a software should have before it can be considered to be open source. The criterion are (in summary, full list at http://www.opensource.org/docs/osd)

  • Freedom to redistribute the code.
  • Freedom to access source code.
  • Freedom to make modifications.
  • Integrity of the original author’s source code.
  • No discrimination against persons, group, or fields of use, or specific technology.


Why Open Source?

Having defined what it is, the question arises why it is so popular. Here are a few reasons why I think open source is popular.
  • High quality, and/or feature rich software: This is a general statement, and of course, there may be many exceptions. However, most open source projects have contributions from highly dedicated software engineers/programmers from around the world. Development is not budgeted by a single organization, but spread across many individuals, and the time and effort invested in the software is high. The result is either high quality code, or a plethora of features, or both. Note also that the source code access means that each programmer’s work is being scrutinized by an open peer review, which is one of the reasons for high quality code.
  • Significant savings in R&D cost: More and more organizations are using open source rather than develop their own proprietary versions of the same software. One of the reasons has to be the large savings in R&D effort (which translates into R&D expenses, that reduces the bottom line).
  • Faster time to market: As well as saving R&D costs, using open source means that time is not wasted in designing, implementing and testing the software which is already available. It involves significantly lesser effort in modifying existing software to meet a specific need, than to develop something from scratch. Again, this is a very generic statement, and exceptions will be there.
  • Supplier Lock-In is prevented: During my tenure as a multimedia integration engineer in a mobile handset manufacturer, I had encountered a case where a chipset supplier had used closed, proprietary API’s to implement some media accelerators. This meant that for every small minor API change, every little enhancement or bug fix, we had to raise a request to this chipset supplier. This would take time, and of course, money as well. Had this handset manufacturer mandated that the supplier use open source API’s to implement their components, the situation would have been much easier. Anyone could have made the minor tweaks that are always needed when integrating complex software components. Moreover, the company could also choose to switch suppliers without risking costly changes in their own code (as the open API’s would ensure a new supplier’s implementations worked).

Wednesday, February 1, 2012

Apple's Q4 2011 results makes it the largest PC maker

Last week Apple released their calender Q4 2011 results (Q1 2012 for Apple fiscal year). The 37,044,000 iPhones sold makes them the largest smartphone maker for Q4 2011. They also sold 15,434,000 iPads, 1,479,000 Mac desktops, and 3,719,000 Mac laptops. This adds upto 20.6 million personal computing devices sold in the quarter. This, according to research firm Canalys, makes Apple the largest personal computing device maker. The analysis obviously considers a tablet like the iPad as a personal computer (PC), which I think is about right. 
"Hi, we're both PC's now!"

I'm not sure how Canalys predicted that Apple has sold more PC than HP, as HP's 4Q 2011 (calender) results are still not public, but maybe they have estimated the numbers. But if these numbers are correct, then we are seeing an interesting change. The "WinTel" (Windows OS running on Intel processors) duopoly is seriously challenged. The rise of the iPad, and it's challenge to the WinTel PC is very well documented by Horace Dediu in his blog.

It would be interesting to see what happens to Microsoft once they lose the dominance of the personal computing market. It may be a step back in time... back to the eighties, when Microsoft was writing applications for Macintosh! This was, of course, before Windows and Office took off. Maybe Microsoft will get back to writing applications for iOS and OSX devices. That would be interesting indeed!

Wednesday, January 11, 2012

Five Reasons Why Forbes May Be Wrong on Microsoft's Windows Phone



My LinkedIn homepage directed me to this article today on Forbes, titled “Five reasons why Microsoft Windows Phone will make a big splash”.
Interesting read, but sadly, not many of these 5 reasons cited by the author make much sense to me. Of course, they all make sense, in general, but I don’t see any of these 5 reasons strong enough to make a “big splash”!

Reason #1: Windows Phone Has A Totally Unique UI
Yes it does. So did RIM playbook, but that did not help RIM much, did it? Having a unique UI may or may not help make the product a success. Having a UI that makes something simpler, easier or faster to do may help, but still cannot guarantee success. 

Reason #2: Originality Means Fewer Forays Into The Patent Wars
Come on now! When you have a minefield of patents for everyday activities like clicking a button on a touch-screen, or uploading a photograph, no smartphone OS maker can be safe from patent wars. The only way to prevent patent wars is to build a big & mean portfolio of patents as a deterrent to any infringement claims. I believe Microsoft already has this, and so the point of fewer patent wars is valid, but the reason is not "originality".

Reason #3: Uniformity Across All Devices & Carriers
iOS already has this. So what's new? And who says that tight control and uniformity is the key to success in smartphones? We're talking about the world here, not USA. Android's "clopen" system is successful, Apple's closed iOS is also successful. Microsoft has just chosen to go the Apple way instead of the Google way.



Saturday, December 17, 2011

Goodbye Symbian, Hello iOS

I finally joined the iOS bandwagon by purchasing a iPhone 3GS from Aritel yesterday. It was available at a discount, because of the launch of 4S (I guess Airtel needs to clear it’s inventory). 

iPhone 3GS in the box.
2011-12-17-236
Contents of the box (everything but the swiss knife on the right).
2011-12-17-237

Why iPhone/iOS?
This is my first non-Nokia phone in the last 11 years. This is my second non-Symbian phone (I breifly used a S40 phone) in the same time. To be frank, I never thought I would buy an iPhone. A Nokia Symbian phone has always offered the best value-for-money while still satisfying the techno-geek in me. But as Nokia CEO decided to kill Symbian, I thought it’s about time I looked at some other smartphone OS. I had to choose between Android or iOS, because the other OS’s out there are not for me! Windows Phone is something that I personally will never buy, the reason for which I have ranted on in an older post. Blackberry is in more trouble than Symbian, and I strongly believe it will not last. The smartphone market is what economist call a "networked market" where it’s either a virtuous cycle or a vicious cycle.
My first choice was, of course, Android. However, after researching a bit, and asking a few questions to Android owners I realized that Android is just the new Symbian. Android’s evolution is quite similar to that of Symbian... a large technology firm is backing it and driving the roadmaps, many handset manufacturers have adopted it, ported it on a wide variety of hardware, ranging from ARM9 to ARM-Cortex-A9, and customized the UI. Android users also give a pretty underwhelming response when asked for feedback. The most general response from Android users is "It’s a pretty attractive phone, but it has a few nagging problems". I think Android will soon face all the problems that Symbian did, and within the next 5 years will start declining. But that’s all my prediction, which is based on no data to speak of, except an uncanny resemblance to the Symbian story. My logic, whether flawed or otherwise, convinced me to not buy an Android phone.
So I was left with iOS, and seeing the prices of iPhone 4, and 4S in India, I kind of gave up on the idea of buying a new phone. The iPhone 4 costs Rs. 38,000, while 4S is Rs. 44,500. For that much I could buy a nice laptop, thank you very much! However, while searching the airtel website for iPhones, I noticed that they are still selling the 3S, for a much more affordable price. At Rs. 20,900, it is cheaper than my existing N8. I guess this was the best way to jump on the iOS bandwagon. I researched the technical specs a bit, and found that although it runs at the same clock speed as the N8, it’s based on Cortex A8, which is faster than the ARM11 on my existing Nokia N8.

Tuesday, November 15, 2011

2011 Smartphone Market Share


What would be the 2011 market share for smartphones by OS platform? If predictions by Gartner & IDC are anything to go by, Android is clearly the winner & Windows Phone at the bottom. Both Gartner and IDC have released their forecast for 2011 market shares. Both have similar figures, as expected, but Gartner is slightly more optimistic iOS and Windows share. But overall, their figures differ by 1 to 1.5% only.


The chart above is a average of the two analytic firm's predictions. 


Looking at this, I could draw the following conclusions...
  • Android is the new Symbian
  • iOS is the new Blackberry
  • RIM itself is down but not out
  • Windows - Long way to go to become anywhere close to the "3rd ecosystem".

Friday, November 4, 2011

Why I will not buy a Nokia Windows Phone


Last week, Nokia announced the launch of it’s Windows Phones, the Lumia 800 & 710. Normally, a new cutting-edge smartphone from Nokia would interest me, as I have been a loyal Nokia customer for all of 11 years, and a Nokia employee for quite near to 5 years. But there is one reason why I will not buy these phones, even though they seem to be reasonably priced.
Every morning, as I settle down in my cubilce for another days’ work, I open my laptop, and stare unproductively at the screen as I wait for it to wake up. Once awake, I open Outlook, and again stare at the splash screen while it says “Processing...” endlessly. I cannot help but think that there’s got to be a better alternative. But there isn’t. Microsoft has made sure that it’s “Wintel” monopoly (Windows OS, Intel Processors) is so near complete, that there are no practical alternatives. Yes, we have Macs, and we have Linux, but neither are very practical. Mac, is still very expensive for what you get, and Linux, though free, has still some issues.
I have tried Ubuntu Linux on my home laptop. I loved it. It booted up in a jiffy, woke up from sleep in an instant. Ubuntu installed much faster, and with less hassles, than any Windows XP install that I have done (I have not installed Windows 7 myself, so cannot comment). Wireless LAN/WiFi setup was done in seconds, printer & scanner took a bit longer, but still was quite straightforward. But my love affair with Ubuntu did not last long. I soon ran into major issues syncing my iPod and my Nokia (Symbian) Phones. There seemed to be no easy way, and this was so important to me that I reverted back to the hated Windows XP.
But XP was fast when I installed it. I thought maybe I was biased. Maybe in my home laptop... where Outlook, Powerpoint, Word & Norton would not be needed... would not start slowing down. I was wrong. A few months of use, and it’s slow. Boot up has started taking significantly more time. Where previously I could press the power button and wait just about 45 seconds to start working, now I have to go and get coffee and come back to see the curser is still hour-glassing.
Microsoft software IMHO are not the best. Microsoft business practices of encouraging a monopolistic environment are even worse. It would not be good for the smartphone customers if a WinComm (Windows OS with Qualcomm processors) mimics the PC Wintel monopoly. Which is why, when it’s time to upgrade from my Nokia N8, I will be most likely looking at a Samsung Galaxy SII.

Thursday, September 8, 2011

Android strikes back!

Aha! This will be interesting now. HTC is sue-ing Apple using patents it bought from Google, which Google got from Motorola.




Everyone in the industry knew that Google is stocking up patent ammunition to lead it's counter-attack against Apple & Microsoft. This move also redeems Google's lost credibility among Android licensees (handset manufacturers like HTC and Samsung) when it acquired Motorola. I would expect very soon to hear news of Samsung fighting back the injunctions against Galaxy tabs with similar Google-supplied patents. A proxy patent war has started. Clash of the titans, indeed!

Tuesday, September 6, 2011

All About "bogus & dubious patents"

It's pretty well known that Google does not like what is calls "dubious patents". This recent post by David Drummond, Google Cheif Legal Officer, blames Microsoft, among other companies for attacking the Android licensees with infringement cases wrt bogus patents. So what really are "dubious" or "bogus" patents?


A "good" patent is one which conforms to the N.U.N. test, where

N = Novelty, i.e. it's a new idea or invention.
U = Utility, i.e. it has commercial use.
N = Non-obvious, i.e. it involves innovation and not something quite obvious to the industry.


"Bogus" patents are those that fail in one or more of the above areas. In his paper on "Injunctions, Hold Up & Patent Royalties", Carl Shapiro uses the term "questionable patents" to describe this. He further states 
[These questionable patents were] likely to be invalid or contain overly broad claims. The National Academies of Science (2004) expressed concern that many patents are issued for inventions that should in fact be considered “obvious”...