Mon 21 January 2011
Will Microsoft survive or reinvent itself through IPTV
www.bloomberg.com/news/2011-01-18/
Source Bloomberg Finance
"Tablet-computer sales will almost triple to 44.6 million units this year as
more technology companies try to capture some of the success of Apple Inc.'s
market-leading iPad, research firm IDC predicted.
Shipments will jump to 70.8 million units in 2012, compared with 17 million
last year,...."
"PC shipments however presents another story: Worldwide PC shipments are
projected to total 367.8 million units in 2010, a 19.2 percent increase from
308.3 million units shipped in 2009, according to the latest preliminary
forecast by Gartner, Inc." http://www.gartner.com/it/page.jsp?id=1429313
If you compare the above numbers of Tablet PC sales with PC sales, it is not
hard to imagine that Tablet PC will account for up to 20% of PC sales by
2012. This will present a big problem for Microsoft which dominates the PC
operating system with Windows but is not there yet with tablet PCs. Tablet
PC operating system is dominated by Apple with its iPad, followed by
Google's Android operating system, Rearch In Motion with its Blackberry
operating system and Samsung with its Galaxy OS. With Tablet PC sales
growing in triple digit and PC sales growing at double digit, Microsoft is
in grave danger of losing its main revenue base rapidly to Apple and Google.
What will Microsoft do to protect its revenue, no doubt it will launch its
version of Windows for Tablet PC but it is more likely Microsoft will
acquire someone in the Tablet PC space if only it could. Acquiring Apple
(market cap US$306 bil) and Google (Market cap US$200 bil) is out of the
question due to their massive size relative to Microsoft's own market cap of
US$242.5 bil. Even RIM is capitalised at US$32.6 bil and is too expensive to
buy for cash. Question remains what Microsoft will do with its US$40 bil
cash. When Microsoft makes its M&A move and deploys the cash horde, the US
market will catch fire. Buying yahoo is no longer in my opinion an urgent
task. Microsoft needs to reinvent itself or it may be killed by Apple or
Google. Survival is the key word.
Both Apple and Google are early in the IPTV space, funny about that. Apple
with Apple TV and Google with Google TV. But again, where is Microsoft in
IPTV? Nowhere. The big 4 TV manufacturers, Samsung, LG, Panasonic, and Sony
are all turning their TVs into Internet connectable TVs and come this March,
some of them will release TV models with browser and downloadable app
capability. The TV will become more like big screen PC. Adding to
Microsoft's woes in Table PC, Internet connectable TV will present yet
another major challenge to Microsoft and Windows Operating System. There is
a "window" for Microsoft to get into IPTV through its Xbox game console with
Internet connectivity, in the same manner as Sony getting into IPTV
initially through PS3 game console and then expanded its IPTV platform to
the BRAVIA TV. However, starting from scratch is difficult when Apple and
Google are at least a year ahead of Microsoft in IPTV. I believe a big
acquisition by Microsoft in IPTV is more likely and it had better be soon
for Microsoft's sake. Now THAT will set the IPTV sector on fire too.
Mon 17 January 2011
VIX index imminent breakdown to usher in major equities boom.
Click to view graph large
Image source Bloomberg Finance
The VIX index has just completed an extended head and shoulder pattern from July 2007 and is ready to fall well below 15.5 while it finished at 15.46 last Friday. Investors' appetite for risk will increase from here and accordingly, small/micro cap and technology/internet stocks will outperform any other sectors. This trend will coincide with historical pattern as well. "The S&P 500 averages a total return of 19 percent in the third year of a Presidential term, according to Strategas Research, with the market higher 12 months out from a mid-term election on every occasion since 1938."
http://www.cnbc.com/id/41002960.
So, buckle down and enjoy the ride up and up for the rest of 2011.