This daily post is a day late but as I wrote on Friday, I found the IDC data estimate putting Android market share at 75% as an alarming warning sign for Apple. The problem is that Apple is a premium priced producer which makes relatively high end technology products. This means high margins but also gives competitors an opportunity to undercut on price, as we are seeing in the tablet market where Amazon is selling at cost. Apple’s strategy has to address this reality to a degree by cutting price, which they have done, most emblematically with the iPad mini, a defensive product meant to stop the 7-inch tablet onslaught from Android manufacturers. The result is eroding margins.
The eroding margin problem need not slow growth at Apple if the market maintains robust growth due to high adoption rates and an intense upgrade cycle. But we have seen this before in the portable music player market, where iPod sales growth slowed. Now, sales are declining. Apple understood this natural cycle and addressed it by releasing product into related markets: the smartphone, tablet, etc.
But what’s next? My suggestion is that Apple should look at two potential markets – or better said, we should look to see whether Apple taps two potential markets if we are to believe they can maintain earnings momentum. First, Apple can hit the Apple TV segment that is in its infancy and does not have a dominant player with any significant barriers to entry. But another possibility I like is the corporate market. I recently published an article showing how Blackberry was being supplanted by Android and iOS at the US Department of Defense. And that tells me there is significant room for growth in the corporate market. I believe Apple should use the iPad as the entry vehicle for this market as I have already seen the iPad used in a variety of forms for that market: insurance claims adjustors, resort hotel billing and customer service, sales and marketing presentations, and retail checkout.
The number of places where a tablet could be used instead of a fixed computing terminal in the corporate environment are limitless. And since Apple is far and away the leader in this market, now is the perfect time for it to penetrate that market before the Android onslaught begins in earnest. That way, Apple iPads can become the next Blackberry-like must-have devices of the corporate market.
IDC: Android Market Share Reached 75% Worldwide In Q3 2012 | TechCrunch
“Of course, remember that we’re looking at shipped figures, not sold here. Still, it’s indicative of the traction Android is having in the worldwide market.”
First impressions of the Google Nexus 4 smartphone — Mobile Technology News
“Although Hurricane Sandy put the kibosh on Google’s Android event this week, the company still introduced the Nexus 4 smartphone. My first impressions show some nice evolution from last year’s Galaxy Nexus, including more memory and a slimmer form-factor at the same price or lower.”
Samsung Galaxy Note 2 Review – Droid Life
“The Galaxy Note 2 is an incredible smartphone, there is no denying that. What you will all have to decide is whether or not you can deal with the size on a daily basis. I personally, couldn’t wait to get back to my “smaller” Galaxy S3, but that doesn’t mean that the majority of you won’t love the 5.5″ display and large body of the Note 2. There really are few negatives to this phone. It’s powerful, polished, stable, and Samsung’s best work yet. It’s just one of those hybrid products that there is no way for me to say one way or the other if you are going to love it. You are the one buying your next smartphone, so if you think the Note 2 may be it, I suggest you go get your hands on one.”
Apple expected to ship 850K iPad minis in first week of sales
“As the first iPad mini preorders are being delivered and the tablet hits shelves at brick-and-mortar retailers, shipment forecasts are already being released, with one analyst estimating a total of 850,000 units will go out to consumers over the device’s first week of sales.”
Where The iPad Mini Fits On My Digital Tool Belt | TechCrunch
“I personally like the MacBook Pro/iPad mini combination in my bag right now. But you really can’t go wrong with any X/iPad mini combination. Pretty soon, I suspect the iPad mini to be my second most-used device behind only the iPhone.”
Yelp’s flaws become Apple Maps flaws in iOS 6 — Apple News, Tips and Reviews
“There’s been plenty of anecdotal evidence already offered that Maps needs work — at times location data is missing or directions were wrong. But on more than one occasion Maps have led users astray because of the user-sourced business information that Apple is using from Yelp.”
Google Nexus 10 hands-on (video) — Engadget
“The Samsung-made Nexus 10 just landed in our hands, and we had a little time to take it for a spin. It’s no secret that this particular tablet is ready for some serious hand-to-hand combat against the iPad, possessing a rather stunning set of components and solid build quality. First, let’s go over the laundry list of specs. The Nexus 10 has a 1.7GHz dual-core Exynos 5250 under the hood — these are Cortex-A15 processors — as well as a Mali T604 GPU and 2GB RAM. There’s little doubt in our minds that this is more than sufficient to please power users, especially now that we’ve had some time to see how incredibly speedy everything is. We were even more impressed than we had anticipated, as the tablet features some of the most detailed and smoothest graphics we’ve seen.”
Nexus 4 Review: Not Exactly Perfect, But Close Enough For Me | TechCrunch
“f you’re an Android enthusiast, a tinkerer, someone who hates signing multi-year contracts for high-end hardware, or just enjoy experiencing the bleeding edge, you really can’t buy this thing fast enough. That’s not to say that absolutely no one else will enjoy this thing — there’s a whole lot to like about the Nexus 4 — but those of you who don’t fall into one of those camps may be better served by a different device.”
“This tablet retails for $399, which is cheaper than the standard iPad. However, I’m not pitting one against the other. What I can say is this: If you are a Google account holder and Google product user, then you really should think about picking this device up. Sure, it’s not perfect, and I’m not thrilled that Samsung made the device.
I thought that Asus did a way better job with the look and feel of the Nexus 7 than Samsung did with this device. However, it’s not horrible; in fact it’s quite solid. The idea that Android’s OS might be better on a tablet than iOS might be jarring for you, and trust me, I surprised myself with this line of thinking. What I’m saying is that for my daily usage and lifestyle, this really is the case.”
Apple’s iPad Mini Launch Draws Smaller Crowds Than Previous Product Debuts | TechCrunch
“The iPad mini goes on sale in 34 markets today, and was available for pre-orders beginning Friday, October 26. Pre-orders sold out over the course of the first weekend, but it remains unclear how many were available in that initial crop. Analyst estimates for initial iPad mini sales vary, but Piper Jaffray’s Gene Munster says to expect around 1.5 million, compared to the iPad 3′s 3 million over the launch weekend. These lines suggest conservative estimates are likely on the right track, but it’s also worth noting that only the Wi-Fi version of the iPad mini goes on sale today, so customers could be waiting for its LTE-enabled sibling, which doesn’t ship until later in November.”
Apple rolls out iPad mini to shorter lines | Reuters
“The launch of Apple Inc’s iPad mini attracted smaller crowds from Sydney to New York on Friday than have been typical for previous Apple product debuts, events marked by people lining up for hours or even days.”
“The Android smartphone operating system was found on three out of every four smartphones shipped during the third quarter of 2012 (3Q12). According to the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker, total Android smartphone shipments worldwide reached 136.0 million units, accounting for 75.0% of the 181.1 million smartphones shipped in 3Q12. The 91.5% year-over-year growth was nearly double the overall market growth rate of 46.4%.”
Dear Apple, I’m leaving you « The Real Economy
Technology
FTC Staff Said to Formally Recommend Google Patent Suit – Bloomberg
“The U.S. Federal Trade Commission should sue Google Inc. (GOOG) for trying to block competitors’ access to key smartphone-technology patents in violation of antitrust law, the agency’s staff told commissioners in a formal recommendation, according to four people familiar with the matter.
A majority of the agency’s five commissioners are inclined to sue, according to the people, who declined to be identified because the matter isn’t public. A final decision on the staff recommendation, made last month, isn’t likely until after the Nov. 6 presidential election, they said.”
Sequoia-Backed Search And Social Marketing Company Kenshoo Raises Another $12M | TechCrunch
“The company has three main products — Kenshoo Enterprise (a tool for managing search advertising campaigns), Kenshoo Local (ditto), and Kenshoo Social. It says it’s managing more than $3 billion annually in search engine marketing, with more than 1.5 billion search marketing and 1 billion social marketing impressions delivered per day. Clients include Expedia, Facebook, Hitwise, Kayak, LendingTree, Omnicom Media Group, Sears, Starcom MediaVest Group, Tesco, Travelocity, Walgreens, and Zappos.”
Election
“Sometimes, by summing all that uncertainty up in a single number, it can feel as if you’ve made it go away. You haven’t.”
Europe
Dutch property lending volume plunges further in 2012 – PropertyEU
“The production of commercial real estate loans almost halved last year from EUR 12 bn to EUR 6.6 bn, according to research from PropertyNL, the Dutch sister publication of PropertyEU. Compared to 2008, this marks a decline of 70%. At the peak of the market in 2007, lending production reached EUR 27 bn.
Prospects for 2012 based on figures for the first half of the year point to a further downward trend, editor in chief Wabe van Enk said. In the first half, production was confined to less than EUR 2 bn. The survey is based on figures from all the leading commercial real estate lenders in the Netherlands. “
Dutch banks have not set aside enough against bad property loans | GulfNews.com
“Dutch lenders, with almost €80 billion ($103 billion) in commercial real estate loans on their books, haven’t set aside enough money to cover potential losses, according to the country’s central bank.
Banks have set aside less than 2 per cent of the total, an amount “insufficient to absorb large losses,” the Dutch central bank said in a report. In addition, valuations of the properties backing the loans are often outdated, according to the report.
The office vacancy rate in the Netherlands is 14 per cent, the central bank said, which is among the highest in Europe. Dutch commercial real estate prices have been falling for four years, dropping by about 12 per cent from a September 2008 peak, the bank said. Supply will probably continue to outweigh demand as online retailing rises, office space is used in a more flexible way and the workforce grows more slowly.”
Euro zone factory downturn deepens as core economies struggle – PMI | Reuters
“”The manufacturing sector opened the final quarter of 2012 on a disappointing footing, as the downturn in the sector gathered pace,” said Chris Williamson, chief economist at data collator Markit.
“The national data also paint a bleaker picture. The ongoing weakness of the periphery is being combined with hollowing out of the previously strong core of France and Germany.”
Markit’s Eurozone Manufacturing Purchasing Managers’ Index (PMI) fell to 45.4 in October from September’s 46.1. The October figure was just up from an earlier reported flash reading of 45.3. The index has been below the 50 mark that divides growth from contraction since August 2011.
The manufacturers’ output index sank to 45.0 from 45.9.”
This eurozone PMI record appears to be broken | FT Alphaville
“Another day, and another confirmation that the eurozone economy is struggling to gain traction. And it’s not just the small peripheral economies that are seeing factory activity slowing.”
Banks
Barclays case shocks the energy market – FT.com
“The Federal Energy Regulatory Commission is seeking a record penalty of $435m and trying to claw back $34.9m in profits from Barclays for allegedly manipulating the electricity market for 655 business days between November 2006 and December 2008. The regulator is also accusing four former traders at the bank of intent to manipulate the price of power.
The case – and the dozens of emails and instant messages released by the FERC – shines a light on the obscure US electricity market, a niche corner of the commodities industry in which banks, utilities, grid companies and hedge funds bet billions of dollars in physical and financial transactions.
It suggests US commodities regulators, including the FERC and the Commodity Futures Trading Commission, are paying extra attention to the link between the physical and derivatives commodities markets.”
Los tres grandes bancos españoles ganan un 61% menos | Economía | EL PAÍS
The biggest Spanish banks all show poor results on the earnings front in comparison to 2011. Santander, BBVA and CaizaBank all are down on the bottom line. Banco Popular and Bankia, two troubled institutions, are also having difficulties, with Bankia losing over 7 billion euros.
United States
“The October jobs figures released today by the BLS showed a stronger U.S. labor market. The unemployment rate edged up by 0.08 percentage points, just enough to raise the headline rate from 7.8 to 7.9 percent. However, a look at the underlying data showed that the uptick in the headline rate was a “good” increase of the kind that we often see as previously discouraged workers return to a strengthening labor market.”
TheMoneyIllusion » Bonfire of the verities
“Back in 2007 one could take some pride in being an economist. There were a set of truths that were pretty widely accepted, at least among the more elite macroeconomists. Now that entire edifice seems to have gone up in smoke, and I’m not entirely sure why. This will be a very long post, as I’ll try to document just a few of the truths we used to accept, which have been recently tossed aside.”
The Recovery Spreads – NYTimes.com
“A year ago, the jobs recovery outlook was gray. From October 2010 to October 2011, the economy added 1.2 million jobs, according to the non-seasonally adjusted figures from the household survey. All of the net gain, and a little more, was in the over-55 age category.
Over the last 12 months, the story has been different. First, the recovery has accelerated. There were 3.1 million more jobs shown in the household survey released Friday than in the October 2011 survey, and one million of them were in the prime-age category. Workers over the age of 60 still got one-third of them, but two-thirds went to younger workers.”