Products That Get You Thinking

We can become so completely engrossed in what our business is doing today that we fail to know much about the rest of our industry, much less adjacent or completely unrelated fields. However, I enjoy scouting for new products and services as a means of inspiration. Innovative new products, and those about to come to market, help me stay current and stimulate ideas that might help the businesses in which I am involved. They often get me thinking about how to apply technology or solutions differently, or help me personally in some way. The following are several that have got me thinking recently. Hopefully they will do the same for you.

After being blown away by “The Boy Who Harnessed the Wind” (a must read) some time ago, I’ve been fascinated by technologies that many of us take for granted. Electricity and lighting are things we rarely give pause to, but the absence of these technologies in many countries effects well over a billion people. Twenty-one percent of the world’s population does not have access to reliable electricity. Many still use kerosene for light. That is why I was amazed at the simplicity and execution of the GravityLight. The product is now in production.

Pong Case – A new phone case, so what’s the big deal? This one definitely makes you wonder if they can back up their claims – increased outbound signal by 44%, increased range by 20%, reduced SAR exposure by 82%, built-in antenna that instantly pairs with iPhone 5s when snapped on, and can take six-foot drop. All this with a 60-day, money-back guarantee. Does this product live up to even half its claims? I intend to find out when mine is delivered later this week.

A cardboard bicycle made for only $9? I had been following this story for some time and was amazed at the possibility of a functional cardboard bicycle which could be made for $9-12 and sold for around $60-90. With bicycles providing a major form of green, economical and practical transportation for people worldwide, I was interested to see what would come of this. Check out one of the stories from earlier this year on the cardboard bike. Unfortunately after gaining some early momentum this crowd-funded project hit some potholes especially in light of the much higher than expected price. Regardless of what comes of this, and if or when we ever see a cardboard bike come to market, it’s an amazing demonstration of how powerful crowdsourcing can be from a variety of perspectives.

Another concept that fascinates me are wearables—computer-powered devices that can be worn—as we’re only just beginning to scratch the surface of this space. While many of these technologies need time to be refined, it’s interesting to see how vertical a device might be, such as a watch made for the hard of hearing or deaf. On the other hand, some of these applications have endless uses such as Bluetooth Tracking Stickers. These have mixed reviews but I am definitely intrigued by the idea.

Did any of these products resonate with you? What gets you thinking about new ideas? Where do you look for inspiration? I would love to hear from you if you come across an interesting solution or product that is still out of the mainstream.

2013 Tech Themes and Forecast

Here is a look at this years Themes and Forecast. To see how last year turned out you can read the 2012 Themes and Forecast or check the results.

  1. M&A for 2013 – I expect quite a few mergers of necessity. This doesn’t mean they will take place at the most advantageous price for purchasers or shareholders.
    1. FTNT – Let’s start with a former pick, Fortinet. This stock has gone nowhere in a couple of years and needs a partner. If the stock trends lower there could be takers.
    2. DLB – Dolby Labs has some investors concerned due to patents expiring and Disney’s ownership of THX. That said, Dolby has a wildcard that isn’t talked about much—the patents to NFC. If you believe NFC is finally going to gear up in 2013 or 2014, then Dolby could be a great buy for any number of companies. With the stock nearing its five-year low, it is definitely one to keep your eye on.
    3. RIMM – I know there is hype on the new operating system, but the odds of this truly being a game changer are extremely slim. The RIM faithful, hoping this might finally be the device that saves the company, will be out in force so look for the stock to bounce. That said, I still believe the company will be taken out later this year when the hype dies down.
    4. PANW – Palo Alto Networks is a leader in the security space having pioneered Next Generation Firewalls. Though the business is growing quickly, it has seen its results lag behind expectations, putting the stock under pressure. The valuation is still on the high side. For someone like Cisco that needs to do deals in 2013, a better deal may be had in the near future than before the company went public.
    5. GRPN – We know about the problems, but they still have a large active user base. I liked it better before the run-up, but I think someone will take them out (though it may need to go lower first).
    6. TZOO – With all of the consolidation in the travel space and the stock under pressure, Travel Zoo could find itself taken by a larger player in the industry.
    7. YHOO – Marissa Mayer has gotten the attitude turned around and brought some swagger back. Can you sense it? Perhaps they don’t need to be acquired at this point, but wouldn’t it be funny to see Microsoft come back now that the company is turning. Don’t forget they still own a good-sized stake in Alibaba.
    8. Other possible companies that could be acquired in 2013 include Brocade, Adtran and NetApp.
  2. Apple Has to Do Something New, Right? – While I could talk about why an iTV type of product still seems likely, I am going to switch my focus to personal M2M. Just walk into an Apple store and what do you see? All sorts of devices that communicate with your PC/Smartphone/Tablet via Bluetooth or the Internet. What do these devices do? Some of the early models analyze how well you sleep, give you a high level display of alerts on your wrist, track how many steps you take, how much exercise you are getting, etc. Even Nike has gotten into the fray. In December, the FDA approved a heart rate monitor for the iPhone. In 2013, Apple will jump into this space with a wrist based device to gather and share data. The new Apple Nano should have been this product but we will have to wait until 2013.
  3. Facebook Comeback – Facebook has their hooks into everything and in 2013 their monetization of those inroads will become more evident as the stock works back to the IPO price with a few detours along the way.
  4. Smartphone Cameras – Smartphone cameras are now a given but the quality is still lacking. Sure, it is acceptable for posting to Instagram but in most cases just not quite good enough to replace dedicated portable cameras. This year we see a number of major improvements that will widen the usefulness.
  5. Cloud War – There are just far too many services in the cloud so expect mergers, failures and new product launches. Apple, Google, Amazon and Microsoft all have strengths and weaknesses in the cloud today. Look for this war to heat up in 2013 as we haven’t seen anything yet. There are a number of platforms and products ripe for the picking. Pinterest or Yelp anyone?
  6. Crowdsourcing Goes Mainstream – This trend was identified in 2011 http://liquidnetworx-com.liquidnetworx.com/2011/01/ and has grown greatly. With the public and mainstream media finally getting wise, we will see it everywhere in 2013.
  7. Microsoft – The company finally makes some headway with their Windows Phone 8 and launches a new Xbox. By the way, the prediction that Lync would be a huge success two years ago has continued to hold true. UC strategists are stating that Cisco now views Lync as their top threat even above Avaya. Lync will make even further inroads in 2013, hurting Cisco and Avaya in the process.
  8. Laws Slow Cloud Adoption for Large Companies – There are still many questions. How would an internet kill switch possibly affect enterprise customers? Even outside of a black swan event such as this, there are still too many gray areas that risk-averse companies just can’t get around. For big companies, there is still little case law and precedents to reference. Look for consumers and small businesses to continue marching into the cloud eyes wide shut.
  9. Platform as a Service (PaaS) to Explode – These offerings have been limited but as businesses get more involved this segment should start getting more action. Note: Oracle recently took a stake in Engine Yard to get a foot in this space.
  10. Flexible Displays – New materials will allow new form factors for a variety of displays. Samsung is already rumored to be preparing a smartphone that will use this technology.

What do you see happening in 2013?

Disclosure – I am currently long Facebook.

Why Apple and Microsoft Need Each other – at Least for Now

Most of us witnessed Apple’s invasion of corporate America. A wide range of executives, power users and recent graduates have hit the work scene with their own iPhone, iPad and Macbooks or required that their companies purchase some of these items. Several well-known companies have rolled out thousands of iPads to entire divisions within their companies. Liquid Networx has observed this first hand, prompting us to reevaluate our policies and support procedures.

Let me share my own personal experience. An early adopter of the iPad and iPhone, I decided to experiment with a Mac Air last year—the hardware was just too tempting to pass up. A number of colleagues. and occasionally even customers, were asking if you could really run off a Mac for business without using a Windows Virtual Machine on the device. Excellent question. After living off of the Mac Air for about 18 months while using a range of other devices and platforms, I have advice for both Microsoft which is facing the brunt of my frustration and for Apple which is close behind.

The Now

I’ll start with the good, the bad and the ugly with Microsoft. On the pro side, from my Mac Air I’ve had zero problems sharing files with PC users utilizing recent versions of MS Office. Microsoft has made great strides in ensuring the file formats normally work without a hitch. Linking into SharePoint also works with relative ease. The only major “gotcha” (which isn’t Microsoft’s fault) is that many of the add-ons such as document management products and file comparison utilities still do not run natively on the Mac.

Now for the bad. The Mac Air menus inside Office are inconvenient and clumsy as they are non-standard with the Windows counterpart. The controls don’t match what users are accustomed to on Windows, nor do they emulate most other Mac software. Therefore you waste too much time searching for features with which you’re typically familiar. In some cases, they’re simply missing altogether.

That bring us to the ugly. The Outlook module inside Office 2011 shouldn’t be called Outlook, though it is an improvement over Entourage. When purchasing a product called Office 2011, you might imagine that the software bundled inside would be an improvement over Office 2010, regardless of the platform designation. Unfortunately, I can assure you this is not the case. Outlook 2011 looks okay at first glance, but there are a number of areas Microsoft must to address. Where to begin? For starters, the “offline” mode requires some attention as the software behaves sluggishly in this mode. Also, I’m a bit nauseated by the spinning rainbow pinwheel each time I open up contacts. When switching to this view, there is invariably a 20-30 second delay when you can do absolutely nothing but wait until the pinwheel stops its rotations and finally returns control to the user.

Cloud to the Rescue? Not quite yet

Cloud services represent another area where some of the ugliness assimilating Apple and Microsoft can be abridged. Both companies have made integration with outside cloud services far more difficult than they should be. For instance, Windows users can sync Google contacts and calendars with Outlook, but Mac users cannot. Apple is also guilty of delaying availability of iCloud to PC users. Assuming you have an Apple device, iCloud is great. But as far as I can tell, it’s worthless with any other OS or hardware. I think Apple is really missing the mark here as they made huge inroads into Windows Land when they made iTunes available for the platform. Now Apple is at a critical juncture again. I’m ready to see the company make iCloud fully available for Windows and other platforms, and perhaps have the rest of their cloud strategy become as pervasive as iTunes. Forget the enterprise the current cloud offering doesn’t even work well for consumers or the SMB.

Impact not just to Apple

With the Windows 8 launch being tepid at best (both across the desktop OS and mobile platforms), now is the time that Microsoft needs to solidify the Office franchise as the platform of choice for Enterprise class customers and the SMB. To begin with Microsoft should make Office available for the iPad. Unfortunately nobody knows if or when this might happen. Forbes recently ran the following article on why this isn’t likely to happen anytime soon. http://www.forbes.com/sites/ericsavitz/2012/02/17/microsoft-office-on-the-ipad-dont-hold-your-breath/ Which brings to mind why hasn’t Microsoft clarified its position on the iPad especially since so many of their customers now own one. While Microsoft would love everyone to buy a Windows 8 tablet the adoption rate even under the rosiest scenarios being offered is just not going to make a significant dent in the total market for tablets – at least not yet. Besides making me happy why should Microsoft do this? Microsoft’s failure to make Office work seamlessly across Apple products could open the door for even more defections to Google Apps to occur. Ensuring that the Office franchise works seamlessly with Mac and IOS is not only good for users, but to protect the franchise.

More Questions than Answers

If you were Microsoft what would you do? Will Office 2013 for the Mac will finally rival the Windows version? Who shares more of the blame for lack of compatibility and functionality? Where are both companies going over the next few years? What, if anything, will make them play nicer together? Would universal Office apps across the Apple universe and Android platforms slow the adoption of Google Apps? No matter which way you look the stakes are high and the risks are many for everyone involved. This is for sure – Microsoft/Apple dysfunction only benefits Google and could hurt both of them in the long run.

 

Mushrooms, Apples and Beatle’s: What Apple Should do with All that Cash

Much has been discussed about Apple’s cash hoard and how it can best be used. This discussion often ends with the opinion that Apple should at least initiate a dividend or some other unexciting scenario. Of course I’m not Tim Cook, but that won’t prevent me from suggesting what he should do with all that mounting cash.

I actually first thought of the scenario described below some years ago and shared it with some friends. The thought was that if anyone could pull this off and realize the full value from the acquisition, it would be Steve Jobs. The problem with this idea at the time was the company I believed they should acquire was riding a very hot product cycle and had seen their shares rise dramatically. There was also the issue of whether or not Apple was really committed to their TV strategy. As with every good deal, it’s always about timing. And I believe the timing is finally right.

So what do mushrooms have to do with apples? If you haven’t guessed already, I’m talking about Nintendo. And in the event you haven’t checked in on Nintendo in awhile, here’s a quick rundown. It’s currently in a product transition period. After scoring a runaway hit with the DS and Wii, the company is currently searching for and working to develop its “next big thing”. I believe this has positioned the company in a timeframe where a deal could be done. Nintendo’s market cap is currently around $17 billion and shrinking by the day. In a couple more trading sessions, the stock could be trading at book, which isn’t too far away. But the story gets better. The company is sitting on over $11.5B in cash and no debt to speak of.

The first part of this acquisition is easy to understand—Apple would pick up some great intellectual property and potential protection around the world. There is also the potential benefit of having access to new technology that Nintendo is currently developing in their R&D facilities that could be integrated into future versions of the Apple TV. Based on this piece alone I don’t know that the stock is cheap enough to do the deal, but there’s still more to factor.

Now here’s where I thought Steve Job’s connections, experience with Pixar, Disney and licensing would have culminated perfectly. Just think about the game libraries, characters and licensing that Apple would acquire. Apple could do one of two things with this: 1) They could swallow it whole and have a real game development arm or, 2) these characters could be easily licensed to any number of media studios creating an endless supply of royalties and a kick to Apple earnings for years to come. Who wouldn’t want to license this library? Do you think Disney, Dreamworks, Marvel, EA and others would be interested? Kids are already fascinated with Apple and this would only give them further reach and branding opportunities.

I am reminded of what Paul McCartney once told Michael Jackson. Michael asked Paul what was the best thing he could do with his money? Paul told him he had regretted not owning 100% of the Beatle’s catalog and that he wanted to acquire the 50% of it, held in ATV at the time. Paul said that owning the rights to great music was a good investment. Did Michael heed Paul’s advice? You bet he did. He went on to outbid Paul and others by buying the ATV library which brought with it a 50% interest in the vast majority of the Beatle’s library! I’m uncertain how this affected their friendship, but given Michael’s spending habits this was probably one of his best purchases ever.

While the Nintendo library doesn’t get you John, Paul, George or Ringo, it could net you Donkey Kong, Yoshi, Link, Mario, Luigi, Peach and much more. If you like this strategy (though the chart is ugly), you should keep an eye on Nintendo. This stock could still go quite a bit lower but there is major support around $10 per share. And I think anywhere around book is a good place to begin building a position regardless of whether a buyout ever occurs.

So Tim, if you are reading this, give me a ring and we can plot the takeover of Nintendo together.

* I currently do not own any shares of Nintendo at this time but may purchase some in the future.

2012 Themes and Forecast

The past few years I have stuck my neck out on the line and come up with Themes and Predictions for the upcoming year. 2011 was no different as I not only hit on different technology trends I also tried to predict which companies would and would not be taken over this past year. I had a lot of fun doing this and it is almost scary how well things worked out for these selections. You can go back and read my 2011 Themes and Forecast if you like but for now take a look at the stocks I removed from the M&A possibilities list and notice that every single stock not only was not acquired but all of them except Fortinet was down on the year with the average loss being much worse than the market at -17.3%. This was a really good basket of stocks to have avoided, they were overpriced and this prediction was on the money.

Closing Price Closing Price Percentage of
Company Symbol 1/4/2011 12/31/2011 Changes
Adtran ADTN 36.28 25 -31.09%
Fortinent FTNT 17.49 22 25.79%
Extreme EXTR 3.21 2.8 -12.77%
Juniper JNPR 37.16 22 -40.80%
F5 FFIV 132.07 98 -25.80%
Riverbed RVBD 37.28 22 -40.99%
-20.94%

Of the 8 companies I mentioned that were likely to be acquired 5 had either been acquired, merged or signed agreements to be acquired before the end of 2011. One company split itself in to two pieces and I believe the other two are still in play to be acquired. If you would have purchased this basket of stocks you would have scored a 21.3% gain easily beating the market in general by a wide margin. If you could have somehow purchased shares of Skype or MySpace on the secondary market or simply avoided Sprint which was the real stinker of the group you could have done much better. Take a look at how the M&A list performed below:

Closing Price Last Trade or Price Percentage of
Acquired 1/4/2011 12/31/2011 Change
XO XO Yes 0.69 1.4 102.90%
Global Crossing GLBC Yes 13.01 22.38 72.02%
Sprint S no 4.45 2.25 -49.44%
Blue Coat Systems BCSI Yes 30.24 26 -14.02%
Tekelec TKLC no 11.8 11 -6.78%
NTELOS * Company Split in to two pieces for modest gain
Skype Yes Privately Held – Investors made large gain
My Space Yes Company after floudering moved into passionate hands
20.94%

So to recap the highlights of last year’s forecasts M&A was definitely hot in 2011, the economy muddled along with uncertainty being a dominant theme, Apple did obtain the largest cap in the world shortly before the passing of Steve Jobs, smart phones and tablets continued to invade corporations at a rapid pace and Microsoft got it right with Lync being a breakout product for them.

So what about 2012? Here we go beginning with M&A.

1) M&A – I think M&A will cool down some after the blistering pace of 2011. Most likely we will see smaller deals done as tuck-ins to round out the portfolios of larger entities. The market is definitely ripe for IT service provider consolidation, security related entities, wireless players and for some more strategic cloud acquisitions where I expect the carriers to be active.

  • IDCC – If you haven’t heard of InterDigital before don’t feel bad as they are not a household name, however, many of the brands you know and love have to utilize their patents. With so many companies being taken off the board in 2011 including the acquisition of Motorola by Google the InterDigital wireless portfolio looks might impressive and the stock is trading just a little above its lows for the year.
  • NOK – See a pattern beginning to emerge here? Here is another undervalued wireless play. This is also a major partner of Microsoft trying to compete with the market leaders Apple and Google. This stock is trading close to or slightly below book value. I think this stock could head lower first since Lumia has not done well but keep an eye on them.
  • RIMM – I will not stoop to insulting die hard Blackberry users as I still have one or two friends that love them. The problem for RIM is that one or two die hard customers here or there is not going to help them recover quickly enough. But there is some good news. Even though Apple and Google have been declared winners of the smartphone wars this will not stop Microsoft and others from continuing to try. The market is just too big for them to walk away from. Just look at HP’s ill-advised purchase of Palm not so long ago. Sooner or later Microsoft, HP, Oracle, IBM, Amazon, Dell or someone else will decide that the market is just too big not to have a player in the game and with the market cap getting smaller by the day and no debt there is a good possibility that someone finally makes a play for the company this year.
  • Here are a few more names that have good potential to be taken over in 2012: InterNAP, Netflix, Sprint, Riverbed, Zix and Tekelec.

2) Dot Com Implosion 2.0? – Though having real products, many of the Web 2.0 companies we know, love and hate have seen stratospheric growth and valuations. While these are real companies unlike what we saw 10 years ago we now have some very big expectations to fill. There are a number of high profile companies readying to come public and one has to wonder if the valuations that are being thrown around are realistic. Just looking at the performance of recent IPOs in this space has to make one cautious at this point. Perhaps the Facebook IPO will tell the story.

3) Voice Recognition goes Mainstream – I know you have already heard more than enough about Siri but the bottom line is that everyone has been playing with this technology for years. Microsoft has made huge investment along with a number of other companies and yet none of them has had the success that Apple has in such a short time. This consumer driven technology will now find its way through every business.

4) Windows 8 – Given that enterprises are still upgrading to Windows 7 the biggest impact of Windows 8 may be on either side of the desktop.

  • Since it will enable PCs and Tablets to turn on instantly and potentially run all day, finally the Mac Air will have some legitimate competition. I have also heard developer chatter about a number of Windows 8 powered tablets that have the power of a PC inside enabling a much wider range of applications than current tablets. Look for Windows 8 to drive Ultrabook and sophisticated tablet sales.
  • The Server side of the house will also benefit as Microsoft is boasting a greatly upgraded hypervisor. While Hyper V3 will probably not match everything vmWare can do it should pressure pricing and provide end-users with more options.

5) iTV – When was the last time you were really excited about a television? I think there are legs to the iTV story in 2012. Just look at Jobs own words on this the television experience as penned by Walter Isaacson in his biography of Steve Jobs. Here’s what Jobs said: “I’d like to create an integrated television set that is completely easy to use. It would be seamlessly synched with all of your devices and with iCloud. It will have the simplest user interface you could imagine. I finally cracked it.” I am willing to believe he cracked it and that the first product ships before year-end.

6) M2M – While Machine 2 Machine (M2M) potential has been discussed for some time we are finally seeing a number of products begin to enter the market and fill a niche. Even more interesting is that these offerings are beginning to be integrated with other multi-function devices meaning that this technology is about ready to go mainstream. Look for a wide variety of products to deliver additional value to businesses across the marketplace but beginning with verticals.

7) Smart Wallet – Mobile enabled payment solutions definitely have interest. With both Android and iOS devices expected to come with Near Field Communications (NFC) chips built-in we could this technology gain momentum in the US very shortly.

8) HTML 5 – With Flash biting the dust there will be a mad rush to HTML 5. This will make many websites much more friendly to end-users. The prediction is that the HTML 5 will cut down on the need to design customer downloadable apps. This could make it easier for enterprises to deploy solutions but I don’t see the app store going away anytime soon. There is too much profit motive and the benefit of control for it to disappear.

9) Education – Will be greatly impacted by the tablet explosion – look no further than our local librarians giving lessons on how to utilize your tablet with the public library system. Even more amazing than the technology itself is the incredible amount of talent that can be pooled and captured on a single platform to make learning easier. If you haven’t watched a Khan Academy lesson with your children or for your own benefit you just don’t know what you are missing. http://www.khanacademy.org/ – They have topics on anything you could imagine including math, science, history and art with more lessons being added all of the time.

10) Security – 2011 got us talking about custom malware attacks that seemed almost like something out of a spy thriller. Expect even more custom attempts in 2012. PII also will gain increased visibility as states, companies and consumers all become more concerned.

What do you see happening in 2012?