It's official. The floppy disk is flipped.
PC World is going to run is stocks down, and then that's it. No more floppies.
The death knell wasn't provided by CDs and DVDs. Yes, they took over the data storage job. But for quickly transferring a spreadsheet or a text document from one PC to another, the floppy still had a useful job to do. It was so much quicker than cutting a CD. And it was reusable. And cheap.
But now we've got memory sticks. USB memory. External HDDs. And we've got the internet and PTP and local networks, and home networking has become so easy a kid could do it (though just for the record, I still occasionally have problems with mine).
Flash memory is probably what really killed the floppy.
That, and size. Size really *is* important you know. Imagine trying to stick a floppy disk in your mp3 player or compact camera!
In the other dimension, floppies are just too small. At 1.44mb they won't even take a single decent resolution photo file. And there's been no development of this product for what, ten years? Time to go gentle into that good night.
Tuesday 30 January 2007
Vista - I'm underwhelmed.... and then again...
When the new version of Internet Explorer (7, for those of you who're counting) came out I was a little underwhelmed. I'd been using Firefox for a while, and all the improvements IE7 boasted were things that Firefox had already got - like tabbed browsing and a phish detector.
But IE7 did at least deliver a better browsing experience for IE6 users.
Now Windows Vista has been launched. A whole new operating system.
According to Microsoft it has 'hundreds of new features'. To be honest I'm not sure if 'a new GUI' really counts. I know about ninety percent of us keep the GUI in default mode, but changing the style of the windows and the colour of the menu bars doesn't count for me as a hardcore new feature.
Security has been enhanced, apparently. But that's something Windows has needed to address for a good long time.
It does sound as if the new shell is an improvement. I think many of us have got sick of our computers telling us to file a picture into 'My Pictures' even though we'd rather save it in the same directory as the Powerpoint presentation for which it's intended. Microsoft has taken this on the chin. Vista will give new ways of organising files in 'stacks', better searching capabilities,
'shadow folders' which can be returned to any past point (similar to the multiple levels of undo in Photoshop, which are one of its best features).
And it also allows the user to add metadata. That's really important. You'll be able to tag your files as if they're blog entries. Within an enterprise, or a collaboration, that will make the job of running taxonomies much more critical - but also opens up the potential for much more efficient knowledge sharing.
Now I don't have enough knowledge on other OSs to say for sure whether that's a differentiator for Windows, or just Microsoft playing catch-up. But it's the file system that seems to me to be the real selling point for the new version.
But IE7 did at least deliver a better browsing experience for IE6 users.
Now Windows Vista has been launched. A whole new operating system.
According to Microsoft it has 'hundreds of new features'. To be honest I'm not sure if 'a new GUI' really counts. I know about ninety percent of us keep the GUI in default mode, but changing the style of the windows and the colour of the menu bars doesn't count for me as a hardcore new feature.
Security has been enhanced, apparently. But that's something Windows has needed to address for a good long time.
It does sound as if the new shell is an improvement. I think many of us have got sick of our computers telling us to file a picture into 'My Pictures' even though we'd rather save it in the same directory as the Powerpoint presentation for which it's intended. Microsoft has taken this on the chin. Vista will give new ways of organising files in 'stacks', better searching capabilities,
'shadow folders' which can be returned to any past point (similar to the multiple levels of undo in Photoshop, which are one of its best features).
And it also allows the user to add metadata. That's really important. You'll be able to tag your files as if they're blog entries. Within an enterprise, or a collaboration, that will make the job of running taxonomies much more critical - but also opens up the potential for much more efficient knowledge sharing.
Now I don't have enough knowledge on other OSs to say for sure whether that's a differentiator for Windows, or just Microsoft playing catch-up. But it's the file system that seems to me to be the real selling point for the new version.
Mobile starts to motor
I spent quite a lot of the summer of 2006 trying hard to convince a number of people that 5x was not an appropriate PER for a mobile content company, even if the market had fallen on hard times.
Regulation and consumer cynicism after the Crazy Frog episode (customers finding out that they had an expensive subscription they couldn't stop, when they thought they'd just bought a single ringtone) had hit the market. And ringtones were beginning to slow down anyway.
I feel quite smug this morning.
Bango has come out with a positive trading statement. WIN and 2ergo have already announced positive updates. So it looks as if the slowdown is over.
Some of the share prices have done rather well. But WIN, for instance, despite a real spike in late December (120p to 180p in a few days) is still trading 30% below its year high. Sitting on 15x earnings for the financial year just past, and 12x for next year, it's not outrageously cheap - but that does represent quite reasonable value for a company expected to grow earnings at 30%. (If it succeeds, of course.)
Is there more mileage? Well I suspect there might be. Ringtones may be old hat, but mobile operators now need software for handling many more types of content. Besides, there's one big change in the market since the beginning of 2006; there's a much bigger population of phones out there with multimedia capabilities.
It's been a long and bumpy ride.... but I'm going to hang on for the moment.
Regulation and consumer cynicism after the Crazy Frog episode (customers finding out that they had an expensive subscription they couldn't stop, when they thought they'd just bought a single ringtone) had hit the market. And ringtones were beginning to slow down anyway.
I feel quite smug this morning.
Bango has come out with a positive trading statement. WIN and 2ergo have already announced positive updates. So it looks as if the slowdown is over.
Some of the share prices have done rather well. But WIN, for instance, despite a real spike in late December (120p to 180p in a few days) is still trading 30% below its year high. Sitting on 15x earnings for the financial year just past, and 12x for next year, it's not outrageously cheap - but that does represent quite reasonable value for a company expected to grow earnings at 30%. (If it succeeds, of course.)
Is there more mileage? Well I suspect there might be. Ringtones may be old hat, but mobile operators now need software for handling many more types of content. Besides, there's one big change in the market since the beginning of 2006; there's a much bigger population of phones out there with multimedia capabilities.
It's been a long and bumpy ride.... but I'm going to hang on for the moment.
Friday 26 January 2007
Portfolio management issues with overseas property
I'm a hard line economist with regard to portfolios. There is a single commandment: diversification.
That's why I worry when I see 'investors' whose total wealth is in residential property. They seem to think they are not running a risk.
With all their assets in a single asset class, they have in fact taken on a massive risk!
Now I'm not advocating that we all have model portfolios. My own portfolio, for instance, has a much higher skew to emerging markets and new technologies than most, including a big chunk in alternative energy stocks. But then I also have quite a bit of cash. And residential property. (I probably should have some commercial property - but not at today's yields.) And a boat.
(Does anybody want the boat by the way? She's a lovely 28' Broads cruising yacht*, all mahogany and gleaming brass, and she's for sale.)
But for all except the very wealthy, or those specialising in cheap-as-chips markets (which in itself implies a lack of diversification, committing too heavy a percentage to high risk areas), diversification in overseas property is unachievable. Simply, each property costs too much. And there is a big overhead in terms of management time and cost.
So I was impressed when I saw what 4:Property Projects has been doing in Eastern Europe - setting up projects with a minimum £10k entry level. Think about it; for a £30k in-cost, you can participate in three different markets - spreading your assets between property types, countries, and locations.
Because 4:Property joint ventures with developers, and is selling a share in the project, it's a hands-off transaction. And investors should get better returns than buying their own property because they'll get a share of the development margin. Even better, there should be a decent exit as the project will last from one to three years, creating a natural exit point.
I haven't seen the prospectuses yet and this *is* defined as a product for sophisticated investors only. But it's a very interesting way forward. I wonder if they might list on the stock market eventually? Then you wouldn't even need £10k to invest - you could just buy shares through your online broker. I wonder if you could put them in your SIPP?
That's why I worry when I see 'investors' whose total wealth is in residential property. They seem to think they are not running a risk.
With all their assets in a single asset class, they have in fact taken on a massive risk!
Now I'm not advocating that we all have model portfolios. My own portfolio, for instance, has a much higher skew to emerging markets and new technologies than most, including a big chunk in alternative energy stocks. But then I also have quite a bit of cash. And residential property. (I probably should have some commercial property - but not at today's yields.) And a boat.
(Does anybody want the boat by the way? She's a lovely 28' Broads cruising yacht*, all mahogany and gleaming brass, and she's for sale.)
But for all except the very wealthy, or those specialising in cheap-as-chips markets (which in itself implies a lack of diversification, committing too heavy a percentage to high risk areas), diversification in overseas property is unachievable. Simply, each property costs too much. And there is a big overhead in terms of management time and cost.
So I was impressed when I saw what 4:Property Projects has been doing in Eastern Europe - setting up projects with a minimum £10k entry level. Think about it; for a £30k in-cost, you can participate in three different markets - spreading your assets between property types, countries, and locations.
Because 4:Property joint ventures with developers, and is selling a share in the project, it's a hands-off transaction. And investors should get better returns than buying their own property because they'll get a share of the development margin. Even better, there should be a decent exit as the project will last from one to three years, creating a natural exit point.
I haven't seen the prospectuses yet and this *is* defined as a product for sophisticated investors only. But it's a very interesting way forward. I wonder if they might list on the stock market eventually? Then you wouldn't even need £10k to invest - you could just buy shares through your online broker. I wonder if you could put them in your SIPP?
Imate profit warning
Imate's profit warning seems very familiar. It's blaming supply problems. The market is there - but it can't supply it, as a key component is not coming through.
The shares are down 40 percent. And no relief is in sight; the problems are likely to continue in the first half of next year.
Supply problems always seem to wrong-foot the analyst community. For some reason, the City doesn't seem interested in supply chains - just in sales.
Now for retailers, let's say, supply chain usually isn't a huge issue. If you can source knickers from China, you can just as easily get them from Tunisia or Poland. As long as the elastic works you should be OK.
With technology the issues are very different. The quality bar is much higher - and a shortfall in quality can be just as damaging as complete interruption of supply. Where unique components are being manufactured to a specific requirement, and particularly in fast moving areas such as wireless and IPTV, switching source isn't easy.
I started this blog entry by saying the problem seems familiar. Anybody remember Trafficmaster's issues with sourcing of components for is Smartnav system back in 2004? or Jessops blaming difficulty getting hold of DSLRs for its subdued Christmas sales figures this year?
Perhaps we should be asking management how they manage their supply chains. But we're not. Companies are required to disclose their hedging of foreign currencies but they're not required to put any mention of their sourcing policies in the annual report. Which is really more important for a tech company - a 5% variance in this year's profits, or the entire business strategy belown to bits?
The shares are down 40 percent. And no relief is in sight; the problems are likely to continue in the first half of next year.
Supply problems always seem to wrong-foot the analyst community. For some reason, the City doesn't seem interested in supply chains - just in sales.
Now for retailers, let's say, supply chain usually isn't a huge issue. If you can source knickers from China, you can just as easily get them from Tunisia or Poland. As long as the elastic works you should be OK.
With technology the issues are very different. The quality bar is much higher - and a shortfall in quality can be just as damaging as complete interruption of supply. Where unique components are being manufactured to a specific requirement, and particularly in fast moving areas such as wireless and IPTV, switching source isn't easy.
I started this blog entry by saying the problem seems familiar. Anybody remember Trafficmaster's issues with sourcing of components for is Smartnav system back in 2004? or Jessops blaming difficulty getting hold of DSLRs for its subdued Christmas sales figures this year?
Perhaps we should be asking management how they manage their supply chains. But we're not. Companies are required to disclose their hedging of foreign currencies but they're not required to put any mention of their sourcing policies in the annual report. Which is really more important for a tech company - a 5% variance in this year's profits, or the entire business strategy belown to bits?
Friday 19 January 2007
More etail
More evidence that etail's taking over from retail in a suggestion that Curry's will eventually move off the High Street.
The interesting thing here is that if the specialist retailers all move this way, what's going to happen to the High Street? Will our town centres once again be full of little local stores and boutiques? Will we have French-style streets with boulangers and decent butchers?
I rather doubt it. It's the supermarkets, not just high rents, that have killed the local food shop; and that's not a trend likely to be stopped.
I suspect instead we'll have high streets that look like down-at-heel shopping centres do now - loads and loads of charity shops, a forsaken Iceland, and a couple of discount furniture stores. Which of course has implications for commercial property.
The difficulty of course is that lots of people use Curry's and similar shops to browse the stock, find out what they need - and then order over the internet. (Of course, they may order from a website that has keener prices.) So actually, although the accounting figures appear to show that you can close the shops, you're potentially losing a competitive advantage for your own web sites if you do so.
Jessops seems to have got one thing right. It's negotiated a number of exclusive deals. You cannot get them anywhere else. So if people pop into Jessops to look at a particular camera, they can order it on or offline, but they still have to buy it from Jessops. That's smart. Perhaps Curry's real problem is that it's for the most part just selling commodities. And that means people do shop on price; and they can go elsewhere.
The interesting thing here is that if the specialist retailers all move this way, what's going to happen to the High Street? Will our town centres once again be full of little local stores and boutiques? Will we have French-style streets with boulangers and decent butchers?
I rather doubt it. It's the supermarkets, not just high rents, that have killed the local food shop; and that's not a trend likely to be stopped.
I suspect instead we'll have high streets that look like down-at-heel shopping centres do now - loads and loads of charity shops, a forsaken Iceland, and a couple of discount furniture stores. Which of course has implications for commercial property.
The difficulty of course is that lots of people use Curry's and similar shops to browse the stock, find out what they need - and then order over the internet. (Of course, they may order from a website that has keener prices.) So actually, although the accounting figures appear to show that you can close the shops, you're potentially losing a competitive advantage for your own web sites if you do so.
Jessops seems to have got one thing right. It's negotiated a number of exclusive deals. You cannot get them anywhere else. So if people pop into Jessops to look at a particular camera, they can order it on or offline, but they still have to buy it from Jessops. That's smart. Perhaps Curry's real problem is that it's for the most part just selling commodities. And that means people do shop on price; and they can go elsewhere.
Wednesday 17 January 2007
Online vs offline
The Tesco results yesterday were very interesting for followers of online business strategies.
UK like-for-like sales were up 5.9%. However, Tesco's online sales were up more than 30% to £150m in the six weeks to January 6th. That's a drop in the ocean compared to Tesco's other business (£2bn a year profit!) but it's pretty sizable for online retail.
A report in the Telegraph suggested Ocado, Waitrose's online retailer, saw sales up 55% in the runup to Christmas. Waitrose is doing pretty well, with like-for-like sales up 6.2% - but again it's the online business that's making all the running.
I've never thought food retail was the most likely candidate for online sales. Unlike travel tickets, hotel bookings, or books and CDs, you've got a bulky product and you need to have your own distribution network - so the investment is massive. But it does seem to be getting more popular and as these figures prove, even in the 'bricks' world, it's the 'clicks' that are winning.
UK like-for-like sales were up 5.9%. However, Tesco's online sales were up more than 30% to £150m in the six weeks to January 6th. That's a drop in the ocean compared to Tesco's other business (£2bn a year profit!) but it's pretty sizable for online retail.
A report in the Telegraph suggested Ocado, Waitrose's online retailer, saw sales up 55% in the runup to Christmas. Waitrose is doing pretty well, with like-for-like sales up 6.2% - but again it's the online business that's making all the running.
I've never thought food retail was the most likely candidate for online sales. Unlike travel tickets, hotel bookings, or books and CDs, you've got a bulky product and you need to have your own distribution network - so the investment is massive. But it does seem to be getting more popular and as these figures prove, even in the 'bricks' world, it's the 'clicks' that are winning.
Wednesday 10 January 2007
iPhone
Well, the iPhone is out, bringing to an end a year of feverish speculation.
It looks good. It has wifi, it has the web, it has a 2 megapixel camera, it has iTunes, and it's a mobile phone.
But is it revolutionary? No, I don't think so. Plenty of other phones have similar functionalities.
What I do like is the small features that make the difference. For instance, everything works on a touchscreen. No moving bits on the front. That's elegant.
And the sensors built into the iPhone are very clever. Turn it sideways, and it works out that it's sideways - displaying photos and text the right way up. Slap it next to your ear, and it works out that you're using the phone - and switches off the display, saving power. That is genuinely smart and a real Apple touch.
I suspect though that the big question won't be answered for a while. Will it be more durable than the iPod? There have been just too many iPods falling to pieces in eleven months - the brand has a name for good design, but equally for poor maintainability. If Apple has got this right too, then the iPhone might well take off.
It looks good. It has wifi, it has the web, it has a 2 megapixel camera, it has iTunes, and it's a mobile phone.
But is it revolutionary? No, I don't think so. Plenty of other phones have similar functionalities.
What I do like is the small features that make the difference. For instance, everything works on a touchscreen. No moving bits on the front. That's elegant.
And the sensors built into the iPhone are very clever. Turn it sideways, and it works out that it's sideways - displaying photos and text the right way up. Slap it next to your ear, and it works out that you're using the phone - and switches off the display, saving power. That is genuinely smart and a real Apple touch.
I suspect though that the big question won't be answered for a while. Will it be more durable than the iPod? There have been just too many iPods falling to pieces in eleven months - the brand has a name for good design, but equally for poor maintainability. If Apple has got this right too, then the iPhone might well take off.
Bulletin Board Brouhaha
There's an interesting little story hidden deep in the Guardian's media news. Conrad Black now faces allegations of ramping his shares on a Yahoo! Finance bulletin board.
Anyone involved in investor relations, financial PR or corporate broking will recognise the situation - the investor relations guy pointing out that he can't disclose price sensitive information, and put under pressure to get the share price up any way he can.
What makes this story that much more interesting is that Black allegedly then went ahead and wrote his own contribution to the bulletin board under an alias.
I know some small company CEOs and IROs contribute to bulletin boards - under their own names, with careful attention to disclosure standards. I wonder how many others, though, think they can get away with manipulating the share price through an occasional BBS comment? Those days may be numbered. On the internet, now, *everybody* knows if you're a dog.
Anyone involved in investor relations, financial PR or corporate broking will recognise the situation - the investor relations guy pointing out that he can't disclose price sensitive information, and put under pressure to get the share price up any way he can.
What makes this story that much more interesting is that Black allegedly then went ahead and wrote his own contribution to the bulletin board under an alias.
I know some small company CEOs and IROs contribute to bulletin boards - under their own names, with careful attention to disclosure standards. I wonder how many others, though, think they can get away with manipulating the share price through an occasional BBS comment? Those days may be numbered. On the internet, now, *everybody* knows if you're a dog.
Tuesday 9 January 2007
The digital photography opportunity
Forget digicam manufacturers and retailers. The real opportunity lies elsewhere.
Have you noticed how as soon as you free consumers from having to pay for film, they start taking more pictures? And sooner or later they need somewhere to put them.
Flickr of course has already made its money in this area. But now there are a number of other businesses all looking to leverage this trend, in printing and storage.
I particularly like some of the Flickr symbiotes. Moo is particularly nice - it prints mini business cards using your Flickr photos on the back.
The one area that's really been saturated, I suspect, is snapshot printing. There's a plethora of services including one provided by Asda. Look for larger sizes, though, or for T-shirt or mug printing, and the number of options slims down. Perhaps those are areas a moo-style Flickr symbiote should get into?
Have you noticed how as soon as you free consumers from having to pay for film, they start taking more pictures? And sooner or later they need somewhere to put them.
Flickr of course has already made its money in this area. But now there are a number of other businesses all looking to leverage this trend, in printing and storage.
I particularly like some of the Flickr symbiotes. Moo is particularly nice - it prints mini business cards using your Flickr photos on the back.
The one area that's really been saturated, I suspect, is snapshot printing. There's a plethora of services including one provided by Asda. Look for larger sizes, though, or for T-shirt or mug printing, and the number of options slims down. Perhaps those are areas a moo-style Flickr symbiote should get into?
Digicams go soft
The trading statement from Jessops shows what I had been fearing for some time - the digital camera market has gone flat.
Like for like sales were actually down nearly 7% for the six weeks to 5th January. That's quite a fall - particularly given that digicams were according to many commentators the bright spot in a saturated consumer electronics market.
I suspect there are a number of factors at play. One was certainly general consumer malaise. And another, which has been widely picked up by the press, was the increasing availability of cameraphones. If you have a basic camera on your mobile, why buy a separate digicam?
However, that of course only affects the bottom end of the market. Nerds like me (still the proud owner of two Pentax K1000s) go for SLRs. Digital SLRs have now fallen out of the £5k a pop bracket and you can get the new Pentax DSLRs for under £400. (A definite plus, all K-mount lenses are compatible with the new range - Microsoft, read this and weep!)
But the big problem, I think, is that it's only the nerds who are buying the DSLRs. So the volume end of the market is getting savaged, while I suspect Jessops is having a very hard time shifting consumers up the range from compact 'point and shoot' to SLRs.
What's in the future? Well, it's intriguing that while DSLR prices for new models have come down, old models never seem to be discounted. I think we might well see a change in that pattern. And speaking personally, I rather hope so ... if I could get the Pentax *ist for £300 I'd be sorely tempted!
Like for like sales were actually down nearly 7% for the six weeks to 5th January. That's quite a fall - particularly given that digicams were according to many commentators the bright spot in a saturated consumer electronics market.
I suspect there are a number of factors at play. One was certainly general consumer malaise. And another, which has been widely picked up by the press, was the increasing availability of cameraphones. If you have a basic camera on your mobile, why buy a separate digicam?
However, that of course only affects the bottom end of the market. Nerds like me (still the proud owner of two Pentax K1000s) go for SLRs. Digital SLRs have now fallen out of the £5k a pop bracket and you can get the new Pentax DSLRs for under £400. (A definite plus, all K-mount lenses are compatible with the new range - Microsoft, read this and weep!)
But the big problem, I think, is that it's only the nerds who are buying the DSLRs. So the volume end of the market is getting savaged, while I suspect Jessops is having a very hard time shifting consumers up the range from compact 'point and shoot' to SLRs.
What's in the future? Well, it's intriguing that while DSLR prices for new models have come down, old models never seem to be discounted. I think we might well see a change in that pattern. And speaking personally, I rather hope so ... if I could get the Pentax *ist for £300 I'd be sorely tempted!
Datacentre strength
A good trading update from IX Europe this morning shows strong demand for datacentre space - particularly from the financial services sector, at its new London 4 datacentre. Over 15% of capacity is already committed andthe company is accelerating its fitout programme.
There are fewer opportunities for portfolio investors in the hosting and datacentre sector than there used to be, with Telecity taken out by 3i and Redbus by Telecity. But IX Europe looks interesting. The share price has risen from 30p to 50p plus over the past few months and it does seem that the company is seeing its potential recognised.
I've always liked recurring revenue plays and I've always liked hosting and datacentre business. The economics now look good; the savage price erosion we saw over the fallout from the dotcom boom has slackened, we're on to a tech refresh cycle that means capacity laid on during the boom is now no longer competitive with new facilities, and demand is increasing. I think I might be tucking some of the shares away, and I will definitely be looking for more like this one.
There are fewer opportunities for portfolio investors in the hosting and datacentre sector than there used to be, with Telecity taken out by 3i and Redbus by Telecity. But IX Europe looks interesting. The share price has risen from 30p to 50p plus over the past few months and it does seem that the company is seeing its potential recognised.
I've always liked recurring revenue plays and I've always liked hosting and datacentre business. The economics now look good; the savage price erosion we saw over the fallout from the dotcom boom has slackened, we're on to a tech refresh cycle that means capacity laid on during the boom is now no longer competitive with new facilities, and demand is increasing. I think I might be tucking some of the shares away, and I will definitely be looking for more like this one.
Monday 8 January 2007
Retail Weak
Ebay has just come in with Q4 listings 10 percent below analyst expectations, according to Piper Jaffray. Together with price increases for its listings - which major ebay sellers will probably pass on to their customers in terms of higher transaction fees, thus depressing sales further - that does not bode well for future sales.
Retailers are currently blaming increased online sales for their woes. But online sales too appear weaker than expectations. Consumer business is beginning to taper off as higher interest rates and lower disposable income set up a double whammy on the credit-card dependent shopper.
It's possible other etailers will do better. But I suspect etail will not be flavour of 2007.
Retailers are currently blaming increased online sales for their woes. But online sales too appear weaker than expectations. Consumer business is beginning to taper off as higher interest rates and lower disposable income set up a double whammy on the credit-card dependent shopper.
It's possible other etailers will do better. But I suspect etail will not be flavour of 2007.
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