FT : Android Overtakes iPhone

Thursday, August 19, 2010

Global sales of Apple’s iPhone have been overtaken by the multitude of phones using Google’s Android system, which has quickly become the US smartphone market leader.  The latest evidence of Google’s rapid success in mobile comes from Gartner, the research group, which said Android’s global share of the smartphone market had leapt from 1.8% a year ago to 17.2% in the second quarter of 2010.  That growth came largely at the expense of Nokia and Research in Motion, which produces the BlackBerry.  Android handsets now outsell Nokia smartphones and the BlackBerry in the US.

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Google’s success has provided a boost to struggling handset makers adopting Android such as Motorola and Sony Ericsson.   “We thought [Android] would be the second-largest global smartphone operating system by 2012, but we are now seeing it could be as soon as the end of this year,” said Carolina Milanesi, research vice-president at Gartner.  “For a lot of companies, Android has been a godsend.”  Although the iPhone continues to gain on its rivals, the fact that it is available only from Apple and a limited number of mobile operators has constrained its growth rate compared with Android, which is free for anyone to adopt.  “Apple have gone from being the underdog and people rooting for them to seeing an increase in the level of scrutiny and criticism,” Ms Milanesi said.  “Now they are seen as arrogant.”  Through their touch screens, application stores and easy web browsing, Google and Apple have reinvented the smartphone market.  Nokia remained the largest mobile manufacturer in the second quarter, according to Gartner, selling 111.5m devices.  But its share has fallen from 36.8% to 34.2%.  RIM, which is entangled in arguments over security and privacy with governments around the world, is also losing market share.  But Android’s success is a mixed blessing for the mobile industry.  By making its highly advanced features available to any manufacturer for no fee, Google has made it harder for device makers and operators to differentiate.  For marketers and developers, the Android app store also remains less appealing than Apple’s because of its weaker payment system and wide variety of software versions, screen sizes and devices.

Reference : http://www.ft.com/cms/s/2/77ed3ddc-a63f-11df-8767-00144feabdc0.html

The Economist : Wintel Crumbling

Monday, August 2, 2010

THEY were the Macbeths of information technology (IT): a wicked couple who seized power and abused it in bloody and avaricious ways. Or so critics of Microsoft and Intel used to say, citing the two firms’ supposed love of monopoly profits and dead rivals. But in recent years, the story has changed. Bill Gates, Microsoft’s founder, has retired to give away his billions. The “Wintel” couple (short for “Windows”, Microsoft’s flagship operating system, and “Intel”) are increasingly seen as yesterday’s tyrants. Rumours persist that a coup is brewing to oust Steve Ballmer, Microsoft’s current boss. Yet there is life in the old technopolists. They still control the two most important standards in computing: Windows, the operating system for most personal computers, and “Intel Architecture”, the set of rules governing how software interacts with the processor it runs on. More than 80% of PCs still run on the “Wintel” standard. Demand for Windows and PC chips, which flagged during the global recession, has recovered. So have both firms’ results: to many people’s surprise, Microsoft announced a thumping quarterly profit of $4.5 billion in July; Intel earned an impressive $2.9 billion. So now is a good time to take stock of IT’s most hated power couple. As The Economist went to press, Intel was on track to reach a settlement with America’s Federal Trade Commission (FTC), which would in effect end the antitrust woes that have plagued both firms. And Microsoft has recently strengthened its ties with ARM, Intel’s new archrival. This suggests that the Wintel marriage is crumbling.  Critics have often questioned both firms’ technological prowess. Yet Windows 7, the latest version of Microsoft’s operating system, is excellent, and customers have snapped it up. As for Intel, its manufacturing machine is peerless. Some of its transistors are so tiny that 2m would fit on the “.” at the end of this sentence. Both firms have often co-operated, despite occasional crockery-throwing. Microsoft has been pushier: in the mid-1990s, for instance, Mr Gates leaned heavily on Andy Grove, Intel’s boss, to stop the development of software that trod on Windows’ turf. Intel backed down. The Wintel marriage is now threatened, oddly enough, by technological progress. Processors grow ever smaller and more powerful; internet and wireless connections keep speeding up. This has created both centripetal and centrifugal forces, which are pushing computing into data centres (huge warehouses full of servers) and onto mobile devices—businesses that Microsoft and Intel do not dominate.  Other firms have leapt into the gap. Apple is now worth more than Microsoft, thanks to its hugely successful mobile devices, such as the iPod and the iPhone. Google may be best known for its search service, but the firm can also be seen as a global network of data centres—dozens of them—which allow it to offer free web-based services that compete with many of Microsoft’s pricey programmes.

The shift to mobile computing and data centres (also known as “cloud computing”) has speeded up the “verticalisation” of the IT industry. Imagine that the industry is a stack of pancakes, each representing a “layer” of technology: chips, hardware, operating systems, applications. Microsoft, Intel and other IT giants have long focused on one or two layers of the stack. But now firms are becoming more vertically integrated. For these new forms of computing to work well, the different layers must be closely intertwined.  Apple, whose products have always been more integrated, is building a huge data centre and also offering web-based services. Google has developed Android, an operating system for smart-phones. The heavyweights in corporate IT are invading each other’s territory, too. That is the only way to grow, they believe. Also, clients love a one-stop-shop. Cisco, the world’s largest maker of data-networking gear, has started to sell servers. That spurred HP, a vendor of these machines, to push into the networking business. Oracle, which sells business software, bought Sun Microsystems, a computer-maker, last year. Intel also has to deal with new competitors. For most of its 42-year history its main rival was Advanced Micro Devices (AMD), which makes processors based on a Windows-compatible architecture. Now Intel has to slug it out with ARM, a British firm. ARM does not make its own chips, but its designs are the basis for most of those that go into most mobile handsets.

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Trustbusters have made life for the Wintel couple more difficult, mostly by curbing the ways they can defend and expand their near-monopolies. Having lost its battle with the European Commission, for instance, Microsoft must now give Windows users in the European Union a choice of which web browser to install. The commission also went after Intel, fining it €1.06 billion in May 2009 ($1.44 billion at the time) for giving rebates to computer makers if they used fewer AMD chips. The rules governing how Intel can price its chips will finally be settled soon, when negotiations with the FTC conclude.  In response to these threats, Microsoft has made big bets on cloud computing. It has already built a global network of data centres and developed an operating system in the cloud called Azure. The firm has put many of its own applications online, even Office, albeit with few features. What is more, Microsoft has made peace with the antitrust authorities and even largely embraced open standards. In other areas, however, the firm is floundering. It is still losing money on its web services, despite having invested billions. And apart from Xbox Live, the online offering for its game console, its new web services attract few eyeballs. Bing, Microsoft’s search service, still answers only 13% of online queries in America. Worse, Microsoft’s mobile business is in disarray. It recently killed two new smart-phones after just 48 days on the market. A new operating system for smart-phones will only come later this year. And in tablet computers, Microsoft is behind, too. Should the firm fail to catch up fast, Mr Ballmer will surely be tossed through a window.

Paul Otellini, Intel’s boss, is more secure. When Intel started losing its edge against AMD, he quickly cut costs and revised the firm’s goals. (If regulators are right, however, Intel resorted to all kinds of unfair practices to buy time.) Mr Otellini predicts that Intel’s chips will eventually be in every intelligent device with an internet link—which could one day mean just about everything.  He is pinning his hopes on a new family of processors called Atom. Rather than making these chips ever more powerful, Intel is making them ever cheaper and less power-hungry. That way, manufacturers will find it economical to put chips not only in phones but also in television sets, sewing machines, robots and so on. Since such devices tend to need special programmes, Intel has also moved further into the software market. In June 2009 it bought Wind River, which sells operating systems for embedded processors. Still, Intel faces some high hurdles. Although Atom now powers most netbooks (cheap laptops), its success is hardly guaranteed. ARM’s chips guzzle little power and cost much less than Intel’s, because its licensing fees are low and most customers use foundries (contract chipmakers) to make them. Intel may not be able to sell future generations of Atom at a competitive price without hurting its fat margins. Intel executives are optimistic, however. Atom will be more attractive for device makers, the firm’s executives argue, because developers can rely on the Intel Architecture and will not have to learn new tricks. More importantly, Intel believes that it can keep making smaller transistors than anyone else and that Atom chips will continue to be as profitable as its other chips. Yet this suggests a long-term problem. Intel’s position seems safe as long as Moore’s Law holds (ie, as long as it can keep cramming twice as many transistors on a chip every 18 months or so). But some people think that will become physically difficult sooner rather than later. Regardless of whether Microsoft and Intel prosper individually, they will drift apart as a couple. Since Microsoft has yet to deliver a competitive version of Windows for smart-phones and tablets, for instance, Intel has teamed up with Nokia, the world’s largest maker of handsets, to develop Meego, an open-source operating system for mobile devices. Microsoft, by cuddling up to ARM, will be able to build chips of its own.  As the Wintel pair splits, computing will start to look different. Instead of being dominated by two monopolists, the market will be fought over by eight or nine more or less vertically integrated giants. Oracle, Cisco and IBM will vie for corporate customers; Apple and Google will scramble for individuals (see table). IT, like the world, is becoming multipolar.

Reference : http://www.economist.com/node/16693547/

Interesting graphic –


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A firee does not care if it was a machine or a foreigner that took his job.  Hewlett-Packard, however, thinks the days of geographical wage arbitrage are numbered.  Announcing a minor restructuring yesterday, the company identified automation of IT services as the area of growth for the next five to 10 years.  The reorganisation required should be straightforward for the world’s largest technology employer – cutting a net 3,000 jobs shortly after adding 100,000 of them via the 2008 acquisition of Electronic Data Systems.  Cost-cutting has already moved operating margins at EDS, since rechristened Enterprise Services, from below 12% to almost 16%.  Spending $1bn to save $500m to $700m annually by 2013 should push that margin onward into the high teens.

The challenge, however, will be holding on to such profitability in the face of competition.  HP is not alone in noticing that the future of business technology is likely to involve a combination of three things: secure data managed onsite, outsourced data warehousing and so-called cloud-based online services.  Buying service companies to stake out a piece of this market is now fashionable for hardware makers facing commoditisation of component assembly lines.  The largest consultant by revenues, IBM, already drives the automisation bandwagon and plans to spend $20bn on acquisitions over the next five years.  Also HP, as the world’s largest PC manufacturer, seems unlikely to follow IBM’s lead in getting rid of legacy hardware businesses.  So the group’s fortunes will continue to be dictated by demand for goods such as printers, laptops and servers, which contribute two-thirds of sales.  A valuation of 10 times prospective earnings is arguably too cheap for such a group facing recovering demand, but the rise of the machines does not extend to enthusiasm for making them.

Reference : http://www.ft.com/cms/s/3/03f213bc-6d87-11df-bde2-00144feabdc0.html

The International Telecommunication Union (ITU), an industry group, reckons that at the end of 2009 the world had two mobile-phone subscriptions for every three people.  That does not mean that two-thirds of the world’s population has a mobile phone: some people have more than one; in developing countries many people share; and unused SIM cards sometimes remain active.  The rapid spread of mobile phones contrasts sharply with the decline of fixed-line phones.  The number of landlines per 100 people peaked at 19.5 in 2006, and had fallen to 17.8 by the end of last year.  As recently as 2002, less than a tenth of the world’s population used the internet.  According to the ITU, more than a quarter now do.

Reference : http://www.economist.com/markets/indicators/displaystory.cfm?story_id=16222732

Worldwide Broadband

Wednesday, May 26, 2010

NetIndex by the Speedtest.net guys is very cool.

Adobe Systems is hitting back at Apple in the technology companies’ war over web video formats, with an advertising campaign and a letter from its founders.  Steve Jobs, Apple’s chief executive, has criticised Adobe’s Flash technology – a crucial tool for displaying video and interactive content – following the launch of his iPad tablet computer this year.  Flash has not been included on the iPad nor on Apple’s iPhone and iPod mobile devices.  A new run of print and online ads from Adobe seeks to emphasise its “openness” and explain the “truth about Flash”.  It cites figures that suggest three-quarters of web video is viewed using Flash.  While making Apple’s point loud and clear, the company’s stance has left much web video and interactive content on the web inaccessible to iPhone and iPad users.


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In an open letter published on Apple’s website last month, Mr Jobs damned Flash as a “closed and proprietary” system, controlled solely by Adobe, adding that “the mobile era is about low power devices, touch interfaces and open web standards – all areas where Flash falls short”.  Adobe says that contrary to Mr Jobs’s claims, the software was originally developed for touch-screen tablets.  Its banner ads on websites such as Tech-crunch and Wired say it does not love any company that is “taking away your freedom”.  They link to an online letter from Adobe’s co-founders and chairmen, Chuck Geschke and John War-nock.  “As the founders of Adobe, we believe open markets are in the best interest of developers, content owners and consumers,” the letter says.  “We believe that Apple, by taking the opposite approach, has taken a step that could undermine this next chapter of the web – the chapter in which mobile devices outnumber computers, any individual can be a publisher, and content is accessed anywhere and at any time.”  After emphasising Adobe’s commitment to publishing the specifications behind its technologies, the letter concludes:  “In the end, we believe the question is really this: Who controls the World Wide Web? And we believe the answer is: nobody and everybody, but certainly not a single company.”  The public spat has become one of the most closely watched dramas in Silicon Valley as two iconic companies argue over their visions of the future of the internet.  Apple is encouraging developers to use HTML5, a new computer language, instead of Adobe software, to develop applications for the fast-growing mobile web.  Last month, Apple said it would stop letting developers writing programmes for its devices use Adobe software.  This attracted the attention of US antitrust regulators, who are considering investigating whether Apple’s refusal to allow Flash on its iPhone platform is anti-competitive.

Reference : The Financial Times, Fri May 14th 2010