Android comes to Play: GooMo and the Future

Ahhh the future.  Three weeks ago we knew there would always be investment banks....

The first "GPhone" is being released today and so is born the first credible competition for the iPhone.  Do not misunderstand, the phone released today could be terrible.  

It is the first credible competition for the iPhone.  Google does not care about the device, they continue to look for ways to expand and protect their search and advertising franchise.

Great Article by Greg Sterling outlines the market and how the iPhone has been really a "proof of concept"  device that will lead to other, more and better devices.  Regardless of what WinMo and Blackberry had done up until the iPhone was introduced, they did not actually get used in a way that makes the internet the internet.

There are a lot of WinMo and Blackberry devices sold and in use, its just that they are not used for anything but texting and email.  (as measured by hits )  [if WinMo is WinMo, should Android be GooMo?]

To Google the internet is advertising and the "Mobile internet" is the future.  Andy Rubin points out in the Google Blog There are more mobile phones in use today by people that have NEVER had a PC (of any kind) than there are currently PC's.  To grow Google must be as ubiquitous in Mobile as they are on our desktops.  It is not important to Google that Android be anything but a minor success, they just need it to be enough of a threat to insure that Google will continue to serve mobile advertising on many devices.

So later today when people are talking about how Great or terrible the actual device is remember that this is the first of what will be MANY from many competitors.  WinMo will eventually be trashed by Microsoft and they will start from scratch and there may be even more players that we have never heard of that will innovate their way into the space.  The point is that in a couple of years there will be better internet enabled phones than we have now available from a number of sources.  

Today is the day that Apple begins to give up some of its 100% market-share in the next generation of mobile platforms. (of which the iPhone is the only current offering).  

We know that there will be insane growth in this market for the next couple of years and that we all will get to benefit from innovations in the devices /methods / cost.  We do not know what those devices would be.   For the Near term iPhone will play "PC" to Googles "Mac"/Android.  It will be fun to watch.

Apple Everywhere… Margins, Growth and Pervasive Appleness

In the 4th quarter last year Apple earned 904 million dollars on 6.2 billion in income with a Gross Margin of 33.6%. They are predicting 905 million in income on 7.8 billion in income with Gross Margins of less than 32%.  (and 30% for 2009)  Apples Margins may be coming in but they are going to earn more than a 1.00 per share in the 4th quarter this year ( July-Sept 2008 )

Apple has freaked out all the analysts by changing the “Code” they use for what their earnings predictions mean.  Apple is a large multinational company with a large range of products and  sales in 100 countries (yea I made that up) predicting how many for how much and at what cost is a crap shoot at best.  So the “Code” becomes a way for the analysts to come up with a nice safe prediction (safe because it will be close to all of the other predictions.  It is hard to get fired/sued if you have the same prediction as everyone else) that will also be safely leapfrogged by actual results.  

That said Apple has made it clear that they are changing the game in the coming quarters and Gross Margin is expected to suffer as a result.  I have written before Hereand Here about some of the forces at work narrowing margins for Apple.  Apple is not introducing A (meaning one) product that is going to narrow margins.  They have a long range plan to take over the world Grow their business. 

Apple everywhere is a strategic, systematic broadening of Apples scope while simultaneously increasing the barriers to entry for their competitors.

More and lower priced computers, more and higher priced computers more and lower priced phones, mobile computing devices …. Apple is going to meet the market where they are and spend a little less time enticing the market over to them.  How long until the retail price of an iPhone hits $50 bucks? (subsidy still FAT)

RBC today predicted sales of 3 million Macintosh computers in the quarter.  Why not.  The back to school market has shown huge growth (50% Plus over the last couple years) and Apple increased their annual back to school iPod offer to include not a $150 nano but a $300 iPod Touch.  Narrower margins…

Hard to say what comes in the short term but I suspect more computing options for less than $1,000.  Some very competitively priced portables, and more iPhone and iPod options.  The name of the game is Network externalities and Apple knows if you have any one of their products the chances of your taking a chance on another one go up exponentially (yea I made that up too but it goes up a lot)