Subba’s Serendipitous moments

October 21, 2009

The Apple juggernaut rolls on

Filed under: Business,Competition,Leadership,Strategy — Subbaraman Iyer @ 1:23 pm
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Apple’s juggernaut continues unabated going by the latest results. Thanks to the iPhone’s game changing play that’s elaborated here. A blow out quarter.

Record shipments:Apple sold 7.4 million iPhones this quarter (ending Sept 2009)which is a 7% growth from last year. It sold 3.05 million Macs in this quarter up 17% a year ago. Both of these are milestones in Apple’s history. Sales of iPod touch were up 100% year over year. iTunes store is now in 23 countries and has become the world’s largest retailer.

Cash: Apple has $34 billion in cash this quarter compared to $31 billion last quarter. There’s a hint that there could be a share buyback soon. No debt. And to put this in context, this cash hoard is greater than that of Microsoft and more than the market cap of Dell.

Profit: A quarterly profit of $1.67 billion on revenues of $9.87 billion. It is the most profitable quarter ever in Apple’s history.

Future outlook: The future outlook seems still better with iPhone making an entry in on of the largest markets in the world — China, followed by Korea and a few other additional countries.

New accounting rules: Apple can recognize revenues from its subscription devices immediately rather than spreading it over a 2 year period.

Competition: Apple’s competition is actually languishing. Nokia the largest mobile device vendor reported a $834 million loss — the first in a decade due to falling mobile sales. Its smart phone sales saw a huge decline in market share as well. Sony Ericsson also suffered losses.

I am wondering whether Nokia or Sony Ericsson will make a bid to acquire Palm.

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October 16, 2009

Will India ever emulate Finland?

I moaned about the state of broadband in India here. Based on some more research I found that the performance of broadband even in metros are poor. Reliability is an issue, committed performance are not delivered, and getting premium performance to test high bandwidth applications is impossible.

Let’s see Finland which has a small population, but has always had a strong, liberal telecom sector.

Finland introduced laws which guarantee broadband to every resident living in the country. This is the first such guarantee anywhere in the world. Starting July 2010, every person in Finland will have the right to a one-megabit broadband connection as an intermediate step, says the Ministry of Transport and Communications. By the end of 2015, the legal right will be extended to an impressive 100 Mb broadband connection for everyone.

Will India ever introduce such a guarantee? It would be mind boggling to see what the innovative entrepreneurial Indians will do with powerful broadband access!

We could just catapult to world stage as Korea did in this decade and the way China is poised to do in the next decade. And honestly, I don’t understand what’s holding them back!

October 3, 2009

Salesforce.com into financial applications

Unit 4 Agresso has now teamed up Salesforce.com — the poster boy of SaaS to create FinancialForce.com that will produce SaaS based accounting, and financial management applications.

Well SaaS has been growing, but CFOs are mostly conservative and would not want to the data to be in the cloud. Hence the success of Financialforce.com will be keenly watched.

Now there are several interesting issues that come about with this joint venture.

For a start, it seems that Salesforce.com is a minority investor. Salesforce.com’s presence will undoubtedly create higher visibility for SaaS based financial applications. Hence other vendors will follow suit giving the SaaS proposition a greater momentum. Enterrpise software vendors who offer products in the mid market space like Oracle, Microsoft and SAP will have to respond quickly to this trend.

But with this association, Salesforce.com also seem to be sending mixed signals to its App Exchange partners who use the Salesforce.com’s Force.com platform to build new applications. Well, they could build an application only to realize that Salesforce.com might one day compete with them. Recent acquisitions by Salesforce.com in many of the App Exchange parnters’ businesses have not made Salesforce.com popular with many of the partners. Yet, there’s no compelling SaaS platform currently.

It looks like Salesforce.com needs to clearly clarify its positioning, strategic goals and its partnering model.

October 2, 2009

Cisco’s brilliant acquisition of Tandberg

Recent acquisitions by Dell and Xerox have something in common. Both acquired companies which are far away from their core competencies in an effort to find stable growth. They acquired predominantly U.S. centric IT services firms. I explained my disappointment with Dell’s acquisition of Perot Systems here. Xerox recent acquisition of ACS also evoked a similar thinking in me. It is very difficult for a pure play product / technology organization to blend well with a pure play services organization. The organizational DNA are too different, growth trajectories are quite different, organizational processes lend itself to little synergy. In short, I am not very high on such acquisition moves.

Cisco is different.

Cisco announced an all- cash offer to acquire Tandberg for $ 3 billion. Tandberg — a Norwegian company sells smaller and less priced video conferencing systems. This is a perfect fit for Cisco’s more expensive TelePresence systems which has been a great success. I think this is a brilliant acquisition since Tandberg’s gross margins is 66% and has clients in US and Europe. This acquisition would enable Cisco to sell the Tandberg products to companies which cannot afford the TelePresence. With this acquisition, Cisco would dominate the video conferencing systems for some time. More importantly the acquisition came in quite cheap since Cisco just paid 11% premium over Tandberg’s closing price.

Cisco has always acquired companies that in some way or the other generated more Internet traffic creating in turn demand for its core business — the networking hardware business. The way it is going to unleash its Unified Computing strategy will of course be interesting and one has to wait and see how it provides the synergy to the networking hardware business. Cisco’s ability to shake off entrenched players in fairly established market segments will also be evident in a couple of years.

Over the last 5 years Cisco has acquired 40 companies — both big and small and they have helped Cisco plug the gaps in the technology and product roadmaps admirably well. They also have had little problems integrating them into the Cisco model.

Cisco has $35 billion in cash which means further acquisitions are on the way. I only hope they don’t go with the flavor of the month and acquire another U.S. based IT services firms !

October 1, 2009

Swami Viekananada and John Rockefeller

Filed under: Business,Learning,Perspective,Stories — Subbaraman Iyer @ 2:07 pm
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When visiting Chicago, Swami Vivekananda stayed in the house of a businessman who was an associate of John D. Rockefeller. Many times had Mr. Rockefeller heard his friends talking about an extraordinary and wonderful Hindu monk, and many times he had been invited to meet Swamiji but always refused.

At that time Rockefeller was not yet at the peak of his fortune, but was already powerful and strong-willed, a hard man to advise. One day, on a whim, the millionaire briskly walked through the door and said he wanted to see the Hindu monk. Swami Vivekananda, who was behind his writing table, did not even lift his eyes when the magnate entered the study room. In their ensuing conversation, Swami told Rockefeller secrets about his past that Rockefeller alone knew. Then, Swami boldy explained that God had given him all his wealth in order that he might have an opportunity to help people and do good.

Annoyed that someone dared to tell him what to do, Rockefeller stormed out. Coming back a week later, he brought plans to donate an enormous sum of money to charity. This was Rockefeller’s first large donation to the public welfare. “Well, there you are,” he said to Vivekananda, “You can thank me for it.” Swamiji then said softly, “No sir, it is for you to thank me.”

source: The Complete Works of Swami Vivekananda, vol. 9