Business | Technology Bloggers

Could Samsung and Apple have another big competitor

28th August 2012 8 Replies Joe Pawlikowski

For the past month or so, Samsung and Apple have dominated headlines with their patent trial. Such a case was probably inevitable – how many ways can you design a smartphone? – but any such case would inevitably gather daily headlines. After all, it was Apple and its iconic iPhone vs. Samsung and its status as world’s largest smartphone manufacturer. They’re both kings of the industry in their own ways. Yet they could have a competitor breathing down their necks before they know it.

Lenovo has been around for a while, and in their time they’ve made some waves in the laptop sector. Remember the IBM Thinkpad? In the late 90s and early 00s it seemed as though everyone had one. When IBM exited the consumer electronics business, they sold the brand to Lenovo, who have continued to the line to this day. They’re not quite as ubiquitous these days – the MacBook has taken over the role of the Thinkpad – but it’s still a high-quality Windows offering. In fact, it’s one of the main ways in which Lenovo competes with Apple.

ThinkPads on the International Space Station

ThinkPads being used on the International Space Station.

The present: laptops

Let’s face it: laptops won’t be around forever. They’ve evolved to get smaller and smaller, but the latest round of laptops appears to be their evolutionary end. The only way to make them smaller is to remove the hinge, and when you remove the hinge from a laptop you don’t really have a laptop at all anymore. Still, the latest round of laptops, dubbed Ultrabooks, has made quite an impression on the market.

Apple started this trend years ago with the MacBook Air, but that model went through a few generations before it became a viable product. Once Apple got it down other companies followed. Lenovo got right on the trend, coming out with two lines: the ThinkPad, that business-class continuation of the IBM line, and the IdeaPad, a ligthweight, affordable Ultrabook meant for the consumer market. They are directly comparable to the MacBook Pro and the MacBook Air.

The difference, of course, comes in the price. The 13.3-inch IdeaPad runs more than $450 cheaper than the 13-inch MacBook Air, and more than $250 cheaper than the 11-inch MacBook Air. The ThinkPad compares even better to the MacBook Pro. The Apple faithful might not have much of a need for a different line of laptops, but the average consumer can benefit greatly here. Fact is, most people simply do not need a Mac. PCs can do pretty much the same, and oftentimes more. The saved dollars can go towards products of the future.

The future: tablets

To complete the thought above, when you remove the hinge from a laptop you don’t have a laptop. You have a tablet. While tablets aren’t quite to the level of replacing laptops, they’re certainly travelling that path. Just take a look at the super-thin keyboard cover for the Microsoft Surface. The writing is pretty much on the wall. Soon enough manufacturers will deliver laptops that make us look at laptops like clunky relics of the past.

In this territory, Apple is the undisputed king. People often ask me for advice on buying a tablet. They’ll ask, “is the new iPad worth it? Or should I get an Android tablet?” And I tell them that no, the new iPad isn’t really worth it; the iPad 2 is the second-best tablet on the market, and you can find it at a significant discount. Android tablets just aren’t there yet. But Lenovo has an idea.

First, they’ve put down the idea of competing with Apple on features. Samsung did this with the Galaxy Tab 10.1, pricing it at the same as the iPad. Seeing the two products next to each other, who was going to choose the Galaxy Tab? Lenovo has dipped below the iPad’s $500 base price. They’ve also differentiated, offering four different tablets: three Idea Tablets, ranging from 7 to 10.1 inches, and a ThinkPad tablet, designed for business.

Again, Android has a ways to go when it comes to tablets. But it appears that Lenovo has something going with its segmented offerings and skinned Android interfaces.

Smartphones in the offing?

It would be interesting to see if Lenovo decided to compete on all levels by offering a smartphone. It seems as though everyone’s doing it these days, and with AT&T and Verizon supposedly pushing customers away from the iPhone there might be an opening here. And again there’s a chance for Lenovo to segment its offerings, using Android for consumer and BlackBerry 10 for enterprise.

Yes, BlackBerry is something of an afterthought these days, but they do appear to have a strong offering with their BlackBerry 10 operating system. Problem is, they might need some licensing help to get it off the ground. Lenovo, which already has inroad to enterprise customers, could combine with RIM, which is – or at least was – the enterprise leader. On the other side, creating Android smartphones shouldn’t be such a big deal.

Yet the competition issue comes into play here, too. Apple dominates its own little space, which consumes quite a large portion of the overall market. Samsung seemingly dominates the Android space. No one really dominates the Android tablet space, though, because it hardly exists. But if carriers really are pushing Android smartphones, there could be opportunity there.

Age of the smart consumer

I’d like to believe that we’ll soon enter the era of the smart consumer: one not dominated by fads and iconic brands, but rather by utility. The average consumer does not need a Mac, yet might feel as though they need one because everyone else has one. In truth, many other companies can fit the bill. Lenovo fits right in there.

And if you don’t need a product and can save money buying a comparable one, doesn’t that make the most sense? Wouldn’t it be more sensible to buy a $700 laptop and a $400 tablet for less than you’d spend on just a MacBook Air comparable to the other laptop? It makes sense to me.

The story of the online auction monopolist eBay

17th August 2012 12 Replies Christopher Roberts

eBay. A firm which in 2011 had a net income of more than 3.2 billion. A website which almost everyone has heard of.

In an article I recently posted which explored whether there is really that much diversity online, I noted how eBay owned four websites in Alexa’s top 100 ranking – eBay.com, eBay.de, eBay.co.uk and PayPal.com.

There is no doubt that eBay holds a monopoly on the online auction market. But how did it get there? On September the 2nd 1995, eBay didn’t exist. One day later on September the 3rd it did, and after just over 3 years and 6 months, the site made its first major acquisition, the auction house Butterfield & Butterfield which it purchased for the price of $260,000,000 USD. A spend of 260 million after less than four years trading? eBay’s rapid early growth set it up to become a global internet phenomenon.

eBay kept buying up smaller firms, but not spending nearly as much as it had on its first purchase until mid-2000 when it forked out 318 million (USD) to buy Half.com. This was an amazing investment at the time, as even today it stands as eBay’s 6th largest ever investment, and it has made hundreds.

That said, the purchase of Half.com was to prove small fry to PayPal, which the now giant auctioneer purchased 2 years later in July 2002 for an astounding $1.5 billion. PayPal integration with eBay is (in my opinion) one of its greatest ever business moves. eBay is now able to seamlessly integrate processing credit card payments without having to pay millions every year to third parties. Fees eBay would have lost to PayPal are now extra revenues.

eBay wasn’t done though, going on to make the biggest purchase in its history, by buying Skype Limited for more than $2.5 billion. The auction site purchased the Luxembourg based company in 2005, only to sell 70% of its shares in 2009 for $2 billion – a healthy profit. Later, in May 2011, Microsoft bought Skype in its entirety for $8.5 billion, an investment which I am not sure it will see great returns on in the near future at least.

eBay started to turn into a Microsoft and a Google. It was fast becoming an internet giant which bought up pretty much anything it could see turning it a bigger profit, or anything which posed a threat – in terms of competition. Just some of its purchases include StumbleUpon, Bill Me Later and Magento, the ecommerce web application.

Many say that eBay is one of the most notable successes the dot-com bubble, and I have to agree. Without the internet, eBay would be nowhere. It got in early and grew from the start, giving its competition very little chance.

Like it or hate it, eBay is an internet phenomenon, and also an internet giant. In my opinion it is successful down to luck: a good idea at the right time. Had it been thought of a year later, eBay might not be what it is today, had the internet not really taken off as it has and still is doing, eBay would again might not be where it is today.

What are your views on eBay? Were you aware of how much it owns and how rich it is? Is its monopoly unfair, or don’t you mind?

Is the demise of big banks on the horizon?

20th July 2012 6 Replies Christopher Roberts

There are many ways you can grow your money.

You could invest in a project, such as installing solar panels, this can be really beneficial and can pay you back many times over the life of the panels, it is also green. Solar is a long-term investment though, so if you want quick returns, it might not be your thing.

You could buy property, become a landlord and earn income via letting it out to tenants.

You could gamble with it, which can have really high returns, however this is rare, whereas big losses arn’t.

You could invest your money in stocks and shares, and hope that the stockmarket value of them increases. This is a risky but potentially very lucrative way to earn money.

Alternatively you could put your money in a bank – or a building society or cooperative. This is probably the safest option.

Big Banks

In the UK, during the 1980’s many building societies changed into banks meaning they were allowed to float on the stockmarket, due to a change in British banking laws.

During this time, many of the banks we know today either turned from building societies into banks or took over smaller building societies. This created the ‘big banks‘ that we know today.

Bank on Dave

A recent television show I watched (called Bank of Dave) made me think about banking a lot more. In 2008 bankers were put in front of a committee of MPs and grilled, as a result of the global banking crisis.

Despite the massive losses many banks have encored, most have still awarded tens of thousand, hundreds of thousand and even million pound bonuses to their top employees.

In Bank of Dave, millionaire David Fishwick, used tens of thousands of pounds of his own money to set up a small cooperative cross building society, which he liked to call a ‘tiny bank’. The reason he did this is because he was sick of banks not lending, acting improperly/indecently/immorally and treating savers badly.

Dave owns a business dealing in minibuses, minicoaches and vans, and noticed that in 2008 when the banking crisis hit, many of his customers could no longer get loans to buy his products. This angered him and was another reason why he started his bank.

David Fishwick – the Yorkshireman who was fed up of the big banks, so set up his own.

In just six months Dave made almost £95,011 profit by simply taking peoples (and before he got all the necessary licences his own) savings (he couldn’t legally say ‘deposits’) and lending them out to local businesses and individuals who were unable to get loans from the banks. The profits (after paying the two employees and presumably himself) went to local charities.

Due to its low overheads and risk, the bank could offer savers an amazing 5% interest rate.

Dave persuaded his local MP to lobby for him and his venture in parliament. Dave also managed to get the Business Secretary Vince Cable and politician Alastair Campbell to appear on the show, both of whom agreed that it was the sort of business/banking that the country needed, opposed to the monopolistic big banks that we have today. Vince Cable told Dave that he would speak to the FSA to try to make it easier for Dave to operate, and more people to start up similar ventures in future.

Most of the businesses the Bank of Dave (officially Burnley Savings and Loans Ltd. for legal reasons) helped, were legitimate and honest local ventures, which grew and thrived when they received the cash they vitally needed either to stay afloat or expand. An amazing 98% of the businesses Bank of Dave lent to were paying back their loans on time at the end of the programme!

The show was a real eye opener to me, as to the way things are currently run and how they could potentially be run.

In the global economic downturn, the UK lenders that have weather the storm well are Nationwide Building Society and the Co-operative. These are not your typical big bank, they are more community focused, ‘friendly’ institutions. Why? Because they don’t pay crazy bonuses, don’t engage in unethical business and are more careful with what they do with savers money – i.e. don’t take high risk gambles.

The show Bank of Dave ended with the commentator saying:

“Could this be the start of a banking revolution?”

I think it could be.

Just yesterday, the ‘safer’ more responsible Co-operative bank made a deal to take a form of ownership of the not so stable Lloyds Banking Group. A big bank that has been cut down to size?

Bye Bye Big Banks?

Considerable awareness has now been raised about the way our banks operate, and whether there is a viable, better alternative.

My thoughts are that if institutions like the Co-operative, Nationwide Building Society and Burnley Savings and Loans Ltd. are doing so well, then they could well be the future. They seem to have greater public support, lend to more people, offer better interest rates, and are less risky.

I think a banking revolution is on the horizon – you heard it here first!

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