Erik Linask : Convergence Corner
Erik Linask

January 2009

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CNBC Ignores Google Earnings Drop, Yahoo! and Microsoft in Trouble?

January 22, 2009

It provides no guidance as to earnings, so Google's reported $5.10 non-GAAP earnings per share for Q4 2008 was welcome news today -- or was it?  While the figure highlighted by CNBC immediately following today's closing bell on Wall Street certainly bears noting, it is in sharp contrast to the $1.21 GAAP earnings per share the search and advertising giant reported.  That's a 70 percent dip from Q3 2008.   Regardless of which EPS figure you look at, the increased revenue is a positive, as is the uptick in stock prices following the close of the market today.  But what sticks out is that CNBC completely overlooked the sharp drop in earnings over a quarter ago in its initial reporting. I understand the need to accentuate the positive, but a 70 percent hit is tough to hide, and at the end, Google did beat expectations, and is well positioned moving forward.   Porter Bibb of Mediatech Capital Partners, speaking on CNBC following Google's announcement, declared Google undervalued.  "Although the bigger you get, it's hard to get even bigger, they own advertising," he said.  Even if Microsoft and Yahoo! Come together, they won't be able to touch Google."   Of course, it doesn't help that Yahoo! is somewhat in shambles right now, not sure whether it is a content aggregator or an advertising firm.  Google knows what it is and where it is going.  For Yahoo!, MS, and any other would-be competitors, Google has its sights set on at least two markets where it could become a disrupting force, as it has in the search space.   Everyone is talking about the iPhone and the BlackBerry Storm, but few are talking about the Google Phone, T-Mobile's G1.  Rich Tehrani recently wrote about predictions that open source communications solutions will dominate the market by 2010.  The market is focused heavily on mobility already, and with an increased tendency towards open source, Google will again have the advantage.  "It will be the next home run for Google," said Bibb.   And, if you ask anyone following the communications space, cloud computing is on the rise as one of the hottest topics today.  Well, Google Docs is nothing more -- while at the same time being much more -- than a set of cloud-based applications that offer the effectively MS Office functionality.  Again, the company already has its foothold in a space the rest of the market is only beginning to discover -- and why not? Why pay for an application you can get for Google for free, and not have to use hard drive resources. Windows 7 is likely to take a hit in uptake as a result.   So yes, Google's earnings are up, and despite its GAAP EPS being 70 percent below last quarters, its results are slightly above expectations.  And it's shares are up in after hours trading.  More importantly, it holds a dominant position in its primary business, and has a solid reach into two areas expected to be the future of the communications by many. Whatever MS and Yahoo! have in mind, they may already have played themselves out of the game.


Opera Hits a Wrong Note

January 21, 2009

I recently read a report suggesting that European officials are considering requiring Microsoft to strip its popular Web browser, Internet Explorer, from some versions of Windows. Naturally, the debate originated from a competitive browser provider -- in this case, a complaint brought by Opera.   In a nutshell, Opera claims that MS is abusing its position as the dominant OS provider by bundling IE with Windows. This practice, according to Opera, limits user choice.   If a ruling against MS is upheld, it wouldn't be the first time. In 2004, the European Commission made a similar ruling, requiring Microsoft to offer a version of Windows without its Windows Media Player. That version, called Windows N, failed miserably. The consumer voice was heard clearly -- they wanted an built-in media application with their operating systems.    The first question that comes to mind, should such a preposterous ruling be passed, is, how can users access the Internet to download alternative browsers if no means of access is provided? Sure, OEMs or retail vendors could install browsers upon purchase, but that is hardly a viable solution, given the frequency with which operating systems must be reinstalled or upgraded. It just doesn't seem reasonable.   In addition to that practical matter, the simple fact is there are several browsers that have gained popularity despite the inclusion of IE with Windows. Firefox, perhaps the most popular third-party browser, has made significant gains in market share over the past four years, jumping from less than 4 percent to more than 20 percent today, according to the report from the Competitive Enterprise Institute. During the same period, IE has reportedly seen a dip to below 70 percent from what was nearly a monopoly at 91 percent. Despite the lack of popularity of the Vista operating system, the ascent of Firefox is a testament to user choice in browsers, not operating systems.   Just as most users choose their favorite media player, they also are happy to install their browser of choice, regardless of what is preinstalled. Most Windows systems also come preinstalled with various ISP access software. I don't have the figures on that, but I suspect that may offer convenience to subscribers to those providers, but today, I doubt they drive provider decisions. To blame Microsoft for Opera's inability to gain market share is shortsighted. In fact, it's not over the top to place equal blame on Firefox for the stunted growth of Opera.   Then there's the question of Apple. We're aware of the success it has seen, particularly in the laptop space, and its Mac OS X comes with Apple's own proprietary Safari browser. I guess Apple just isn't a big enough name to go after?   Whether this is a real attempt to go after Microsoft's bundling practice, or just a shot at exploiting the media to gain attention, I'm not impressed by Opera's tactics.   Given the growth of the mobile market, including devices that offer a real mobile browsing experience (i.e., iPhone, Storm, G1, etc) on 3G networks, Opera might be better served by looking to draw attention to the fact that its Opera Mini offers a significantly faster browsing experience to IE on these devices.  In fact, I was quite surprised at the speed with which paged loaded compared to other mobile browsers. There are still some features that need work, but my initial reaction is to use Opera Mini on my Storm, even though there isn't a version optimized for the device yet.   Most software vendors begin in the desktop space and adapt their solutions to mobile platforms. There is no reason Opera can't employ the opposite strategy. We know consumers are creatures of habit, and once they become hooked on Opera Mini, the company can use that as its hook into the home and office environment, instead of creating ill will by attacking a market giant. And if nothing else, isn't there a lesson to be learned from what happened in 2004? For obvious reasons, most consumers want a complete package when they turn on their PCs for the first time.  

Interactive Intelligence Integrates with IBM for Enterprise-wide Unified Communications

January 19, 2009

With all the attention on integrating communications applications and solutions with Microsoft Outlook, to drive unified communications capabilities for the business market, many might forget that IBM still holds a significant share of the market -- depending on whose data you read, IBM's Lotus owns as much as 40 percent of the market.

Much of IBM's customer base is founded in tradition, with many large enterprises reluctant to replace a communications platform that has provided an effective solution for years -- not to mention the costs involved with making the switch to an alternative solution.

The point, though, is that many of the key players that have recently announced compatibility with MS Outlook and Exchange, are also now doing the same with IBM's Lotus Sametime solution. It is not only a testament to the market share still owned by IBM, but also to the continued growth of Unified Communications, which seeks to integrate all enterprise communications applications to enhance access and improve productivity.

Lenovo's VoIP Remote

January 5, 2009

It took me two years since it was first launched in North America to get one, but I finally got a Nintendo Wii. Now I know what all the hype has been about -- and why retail every retail outlet was sold out yet again this holiday season. That said, anyone wanting one would likely have easily found one on Craig's List (I did).

What is amazing -- and I'm certainly well behind the curve in getting to know it -- is the Wiimote. The motion sensitive remote controllers bring a new level of excitement and reality to its games.