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Technology Stock Roundup: MSFT Plunges Again - Analyst Blog
9/9/2013 11:57:00 AM
Is Microsoft Throwing Good Money After Bad?
It's hard to put Microsoft's several billion dollar acquisition of Nokia's handset business in a nutshell, but I'll give it a try.
First let's see what Microsoft gets out of the deal. The positive is that the acquisition not only includes Nokia's WP8-based phones, but also the increasingly popular Asha phones that are basically high-class feature phones aspiring to be smart. Microsoft also gets non-exclusive licensing rights to 8,500 design patents and 30,000 utility patents for up to 10 years.
What's more, the Nokia brand name can't be used by Nokia on any new phones that it might want to make until after Dec 31, 2015. Microsoft, on the other hand, can use the name on any hardware products for the next three years and on existing hardware products for 10 years.
And that's not all. Microsoft has also licensed Nokia's mapping technology called Here for four years, which can be used to challenge Google ( GOOG ) Maps. Microsoft can do all this with roughly a tenth of its off-shore cash, so it's one of the few companies that can afford to take a gamble like this.
Microsoft's decision obviously hinges on its intention to go after the devices market. The decision met with bad press, but is not necessarily a bad move. Microsoft's PC business is melting away, and if it can't find a viable mobile platform, it will be Goodbye Windows - well almost. The consumer and enterprise demarcation is fading with BYOD, and Microsoft needs leverage here.
Microsoft has acquired 36,000 Nokia employees who can be used to further this objective. Its business solutions remain popular at this point and this may be the last chance it has to use them to garner support for its OS. Of course, there remains a significant amount of work to be done, not the least of which is app development.
In the near to medium term, Nokia can only be a drag on Microsoft's results. And the longer term will be determined by Ballmer's successor and his ability to deliver on the "devices and services" strategy.
Intel Plugging Entry Points to the Data Center
Intel's ( INTC ) Atom chips have a new portfolio. So far they have been known for spearheading Intel's efforts in the mobile segment. But with the latest Silvermont architecture and 22nm manufacturing, they now have the power and efficiency to handle the lightweight workloads of microservers, cold storage platforms (Intel's Avoton SoC) and entry level networking platforms (Intel's Rangeley SoC).
This is a relatively small segment of the market, but of strategic importance, since success here could encourage mobile chip rival ARM Holdings ( ARMH ) to get deeper into the server market which has been Intel's stronghold. The segment can function on low computing power but requires high energy efficiency, which makes it ideal for ARM architecture. This is probably the reason that Advanced Micro Devices ( AMD ), which has for long relied on x-86 architecture has expressed a desire to use ARM technology to target this segment.
Therefore, Intel is going all-out to protect its territory. The company announced 13 models of its Atom SoC, custom-designed for specific entry-level workloads such as dedicated hosting, distributed memory caching, static web serving and content delivery. The products are targeted at OEMs, telecom equipment makers and cloud service providers.
Intel is also launching the Ethernet Switch FM5224 silicon, which in combination with its WindRiver Open Network Software suite increases the density and reduces the power consumption in servers (basically SDN).
Currently, there are more than 50 designs based on the Atom C2000 SoC product family for microservers, cold storage and networking products and Intel says they will soon be available at leading players like Ericsson ( ERIC ) Advantech, Dell ( DELL ), Hewlett Packard Company ( HPQ ) and NEC.
Mayer Says It with a Logo
Yahoo ( YHOO ) finally launched its new logo last week after putting several trials on display for the last month or so. Without going into the technicalities involved in the logo-making as Mayer did on her post , the effect is plain to see.
The new logo is cleaner, sleeker, smoother, more sophisticated and more Marissa Mayer. And possibly, it's also what the new Yahoo seeks to be -- more "cool" than "fun," with an element of seriousness (until you look real close and see the concaves at the end of the straight lines).
Mayer has shown good thinking on various counts. She retained the purple color and the exclamation mark, as well as the unevenness in letter size, which meant that the logo remained recognizable and not shocking to users. She also ensured a month of free marketing, drawing more eyes to the Yahoo name every day. And finally, she started communicating at large through Tumblr, which remains a highly-used and poorly-monetized asset that Yahoo picked up recently for a little over a billion dollars.
Apple ( AAPL ) will be announcing 2 new iPhones this week and will almost simultaneously announce the products at a Beijing event. This is the first time in a while that Apple will be launching its products in both markets at approximately the same time. Apple's market share in China has slipped recently, as companies like Samsung and Lenovo gained ground.
This week, the U.S. Court of Appeals for the Federal Circuit, which specializes in patent law, will hear arguments on whether there should be different rules for standard essential patents and will also determine the circumstances in which companies can obtain court orders to block the use of patented technology.
Recently, Google's Motorola lost both patent infringement cases against Microsoft, claiming that Microsoft decided to go straight to court instead of negotiating in accordance with normal procedure, and Microsoft claiming that Motorola was discriminating against it with respect to its standard-essential patents. Motorola intends to appeal.
Intel will host its Annual Developer Conference this week where it intends to discuss the future of computing and the role that wearable devices are likely to play.
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