#Xbox and #PS4 dogfight will exhaust each other. Situation ripe for a massive disruption. $SNE, $MFST, $AAPL, $GOOG,

Sony and Microsoft have launched their gladiator proxies in the forms of Xbox and PS4. Sales since launch seem to be even on a global basis. Brand loyalty is strong. No signs of any major defections. The product narratives are holding.

Consider this. Race fans will recognize the set up. Two strong horses running neck and neck fighting for every inch. The adrenaline surges, surges and then surges some more. One cannot let the other get ahead or its all over.

Usually the two horses cannot pace themselves and a third stalking horse comes out of nowhere, sweeps around in the last turn and makes a mad dash for the finish line leaving the two favourites eating dust.

The two are playing the same game. Corporate thinking is so us vs. them who really understand the landscape.

Possible disruptors could be Apple. The iPhone and iPad were pretty good. The app store has wide distribution. Google is just desperate the make Android work. The Chinese would love to take a run at this as well.

So sit back and watch the race. The harder the more likely they will fail.

George Gutowski writes from a caveat emptor perspective.

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Apple Schizophrenia Distorts Long Term Value $AAPL

Apple (Nasdaq:AAPL) is expected to show some short-term weakness. You know this because all of a sudden the PR machine is talking about new and exciting future product launches.

Stock prices are the present value of future earnings.

Everything cannot come out good every quarter. Business is too complicated. If a company can manufacture good every quarter something smells bad.

The market discussion on Apple is very schizophrenic. Investor behavioural behaviour case study at its best.

Buy on rumor sell on news is have a train wreck. News will be out shortly and rumour is out like right now.

Do not trade on todays rumour or todays news. Buy Apple if you believe in the story which has made billions despite the latest suggestions from Carl what’s his name.

George Gutowski writes from a caveat emptor perspective

Five Reasons to Hate Apple $AAPL #iPhone #iPad $GOOG

Apple (Nasdaq:AAPL) continues to generate controversy with declining margins and lower than expected unit sales of iPads. So here are a few reasons to really hate the stock.

  1. Despite competitions best efforts no one has delivered a knock out punch.
  2. $18.8 Billion returned to shareholders through dividends and stock repurchases.
  3. Enormous cash positions
  4. Enormous cash flow
  5. History of innovative product offerings

I’ll stop it after five points. There are no examples of investments who can make these claims and be considered losers.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter @financialskepti. Follow his evil twin who writes Wall Street Murder Thrillers on twitter @georgegutowski

Microsoft Challenges Apple in Tablets. Is This Real? Grand Strategy vs Product Tactics $AAPL $MSFT $YHOO $GOOG

Image representing iPad as depicted in CrunchBase

Image via CrunchBase

Microsoft (Nasdaq:MSFT) seems to be challenging Apple (Nasdaq:AAPL) in the Tablet market space. Apple with its uber cool iPad and seemingly unassailable market dominance does not look like the weak sissy in the school yard that everyone can punch out whenever they want.

So what does Microsoft see that they can take down and create some shareholder wealth. The contrast is more about the strategic battle than any specific shoot out on product features. Apple has its fabled eco-system of developers who feed into the iPad value proposition. Much momentum comes from this without any overt moves from Apple. Others just feed into it. Apple can be expected to constantly release new and improved offerings and thereby maximize revenue over and over and over.

Microsoft on the other hand is supposedly moving closer to Yahoo (Nasdaq: YHOO) and reportedly will take over their search engine and create a mash-up with Bing. (BTW you have to love the pictures on Bing). So with the obvious exception of Google (Nasdaq:GOOG) they will become very strong in search. Apple as cool as the iPad is, does not rely on Safari to the same extent. Search revenues for Apple are low to the point of being strategically non-existent. As we all know it’s all about search revenues. Investors do not really care how slick the iPad is. What we do care about is how many search dollars are generated.

As best can be determined from the rumours about Apple nothing major is coming from Safari. Despite the huge cash position of Apple not much R&D dollar has been allocated to turning Safari into something stronger.

We all glibly talk about the post PC environment where it’s all hand-held and mobile. Microsoft needs to get a large piece of that to maintain a strong hold on devices to make sure they are well entrenched after Google. Microsoft thrived because everyone put their browser in. Now with iPad and Apple in a near monopoly position they need to be throwing some competitive punches.

Will they blow away Apple in the next year or two. No. Can they make Apple change its offering and maybe pull a punch or two, certainly. The strategic battle is about tipping points and leverage. So when you look at the Microsoft product it will not be primarily about customer experience. It will be about what can Microsoft do to make Apple changed.

The battle is in the back room strategy sessions. The noise will be in the consumer market place as we all slavishly expect new offerings.

One day Apples trajectory will bend. Nothing goes in a straight line forever. This could be the beginnings of change.

George Gutowski writes from a caveat emptor perspective.

Apple Cash becomes a political target or corpgov issue? iCash solution soon or it’s dead money. $AAPL

English: The logo for Apple Computer, now Appl...

Image via Wikipedia

Apple (Nasdaq:AAPL) has an $81 Billion cash hoard. This amounts to 25% of its market cap. The stock does not pay a dividend. Everyone clearly agrees that they have enough for a robust R&D effort. This ensures that they can beat up any direct competitor and/or buy up smart ideas while they are still small.

The cash issue becomes a governance question. This is shareholder money with no clear purpose. Shareholders to date have been delighted with iPhones and iPads. But lets face it, the market is not going to let this dead money stick around on the balance sheet forever.

Apple executives have a big problem. They are good at technology but are they good at investing? Apple does not have a track record investing money. They have bought a few things here and there to augment their technology. But it stops there.

The question also becomes political. Apple is global. The cash most likely is spread out in bank accounts around the world. Uncle Sam has a perverse habit of taxing cash as it comes into the United States. So you will understand the reticence of some executives to repatriate profits. Democrats want and need to tax. Will politicians help hurt Apple.

Investors will be clamouring. IRS will be salivating. Politicians will be hiding. Apple executives will be confused. The public will read about the problem on their iPads thereby creating more profit.

Apple needs to pick a direction with the cash and develop a strategic plan. The problem is much more complex than just a little bit of dividend yield. So far they have no game.

George Gutowski writes from a caveat emptor perspective.

Kindle Fire vs iPad – vacuum cleaner wars $AAPL $AMZN #kindlefire #ipad

A Dyson DC07 upright cyclonic vacuum cleaner u...

Image via Wikipedia

OK it’s game on between Apple and Amazon. Between iPad and Kindle Fire. Everyone is focused on what they can and cannot do. We are blinded by the user experience paradigms. What you are really seeing is an old fashion war between two vacuum cleaners. The two vacuum cleaners are designed to suck cash out of a consumer’s pocket as quickly as possible. Books, music, video whatever can make a buck is what we are talking about. The cost of the devices may come down to near zero. What shopping center charges parking. They want you in with your wallets open. Be quick about it.

Eventually you will see many with both tablets. Huh. Think about it! Have you ever shopped at two different malls? Sometimes in the same day. Have you ever sent your partner to one mall and you are at another for some heavy-duty comparison shopping?

Kindle Fire and iPad will eventually need to differentiate themselves in offerings and pricing strategy. We may even view Amazon and Apple as two competing department stores just like Sears and Macy’s. 

So much for thin, light weight, compact, gorilla glass, touch screen and all the other features. No one has a long-term competitive advantage. At the end of the day will the consumer click and salivate at iPad or Kindle Fire. I can’t wait for the cyclonic features which must be coming soon. Capitalism you gotta love it.

Disclosure: George Gutowski writes from a caveat emptor perspective. I click and salivate at many on-line stores. I have no positions in any stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.

Apple pride drives poor iPad pricing. Kindle Fire changes tipping point $AAPL $AMZN #kindlefire #ipad

Image representing Jeff Bezos as depicted in C...

Image via CrunchBase

Kindle Fire finally dove into the shark tank. Just remember technology eats its own babies. Amazon (Nasdaq:AMZN) and Jeff Bezos have launched the smartest device to drive sales and revenues directly into Amazon. The Kindle price points have delighted the market. Compared to iPad a lot of new users will naturally gravitate to Kindle Fire. Jeff Bezos is very smart in not getting into a PR word battle about Apple (Nasdaq:AAPL) losing its dominance. Just make the customer happy and laugh to the bank which is hopefully still solvent.

Apple is not stupid. They will monitor their sales carefully. They already have cut back the manufacturing orders. The moment iPad pricing is dropped to create more value you know the tipping point has been reached. Currently the apple game plan is to be cool with the most app’s thereby driving demand but at a high price. The price is not sustainable. If Apple tries to chase the price down it will alienate customers and signal to the world that it has it wrong.

You can imagine what the stock price will do as the energy changes from hyper-positive to hyper-negative. Market behaviours are manic-depressive and you know it’s coming.

Notice I’ve said nothing about the other tablets.

Disclosure: George Gutowski writes from a caveat emptor perspective. I own both iPhone and Kindle e-reader. I do not hold positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.