A Software Giant's Decline

The software industry’s key player Nintendo has been showing signs of struggle in the past few weeks. Nintendo as of recent, is at a net loss of 925 million dollars (70.3 billion yen). The two main factors in this fall are the newfound strength in the yen, and weak software sales. The two have really put Nintendo in a hole, and they have had to cut millions in their forecast for next year. The decline in Nintendo software sales can be traced partially to the app craze with the iPhone. Nintendo, which has always marketed toward a casual gamer, now faces over 25,000 games in the Mac App Store. Nintendo’s 3DS which was released in March has also brought bad results, as its 3D technology fell below most expectations. Now Nintendo must brace itself as Sony plans to release a new console to rival the 3DS.

I found this article to be important simply because it deals with the one of the biggest software companies out there. Nintendo also hits home with me as I grew up with many Nintendo products. It is interesting to see how the software giant is starting to finally decline, and it will be interesting to see what Nintendo does to try and bounce back.

http://www.washingtonpost.com/business/technology/nintendo-reports-first-half-net-loss-on-weak-titles-and-strong-yen-slashes-full-year-forecast/2011/10/27/gIQADORVLM_story.html

http://www.tuaw.com/2010/03/09/ebooks-outnumber-games-in-the-app-store/

HP Strengthens Brand

xHP continues to strengthens it's brand name as it receives another accolade from industry evaluators. The computer producing company has been named a leader in the most recent 'Gartner Multifunction Printers report'. According to the report, HP products have become stronger and more reliable then previously. Hewlett Packard has also surpassed other printer specific companies in consumer ratings on products. HP has recently refocused their strategy on printer production. A newly created strategy has a concentration on security, cloud printing and stronger diagnostics.

HP hopes that new ideas will allow their consumers to update and expand on the capabilities of their printers. HP's Senior Vice President of their Printing solutions division remarked "that our strategy (is to ensure) that customers gain a real competitive advantage with these devices". HP intend to continue strong sales within it's printer division and believes that their strategy will advance the technology of multifunction printers.

HP has broadened it's printing products beyond everyday consumers. New products are now focused on specific industries. The HP ePrint & Share(2) allows designers, architects, and engineers to access 'large-format plans' through cloud software. Architecture companies love the new idea. "Using the HP ePrint & Share mobile application while we are on the go is a very powerful tool for us to communicate with all parties involved in a project, ensuring that the plans we are working from are the most current and keeping the design process flowing smoothly and efficiently" says Matias del Campo of SPAN architecture and design. If HP continues to hear responses like that from companies in specific industries they may have tapped into a niche market.

http://www.marketwatch.com/story/hp-achieves-position-as-a-leader-in-annual-magic-quadrant-report-for-mfps-and-printers-2011-10-26

http://www.marketwatch.com/story/hp-brings-large-format-printing-to-design-professionals-on-the-go-with-new-mobile-application-2011-10-20

Netflix Plan to Spend Billions More Than It Has

Just three months ago Netflix was flourishing. Its profits were high, its investors and customers were happy and the only question of its future was how big it might become. However, over the summer the company made the possibly fatal mistake of raising its prices well over an amount its customers were willing to pay. As over 800,000 customers abandoned the company, as did a substantial amount of investors. Now instead of gaining a predicted earnings growth of 38% between 2011 and 2012, the company has in fact lost 37% of its worth in just the last few months. On Monday the company released a statement saying it expects to lose money "for a few quarters" starting next year. But just how much do they plan on loosing?

Netflix has already committed to spending $3.5 billion on marketing and content over the next several years. The goal of this massive investment is to "bring domestic subscriber growth back to life and get it started in new overseas markets". While at face value the plan seems logically sound, many critics have raised the question: Can Netflix really afford to spend $3.5 billion? Since 2007, the company has spent more than $1 billion on share purchases, leaving its cash flow at just $366 million. After factoring in roughly $200 million worth of debt, the amount has reduced down to just $13.8 million. As contracted content payments continue to rise and customer return seems slow at best, it is likely the company's recent announcement will hold true.

If the company continues on its current path, experts say competitors such as Amazon, may soon begin to take interests in takeover. Personally, I couldn't agree more. I have a tremendous doubt that Netflix will be able to regain all that it has lost. I feel that competitors will take advantage if the situation and offer the board of Netflix a chance to save their investments and leave with a sizable profit.

http://online.wsj.com/article/SB10001424052970204777904576653022926782608.html?mod=WSJ_business_whatsNews

Possible acquisition of Yahoo by Microsoft

In early September the Wall Street Journal reported on the difficulties that the Internet business Yahoo has currently been facing. One of the sources of income for a mainly Internet based company are the sales of advertisements on their website. Yahoo, as well as others such as AOL, were late to realize the impact and popularity of social networking sites and as a result the popularity of Facebook, as well as competition with Google, has caused them to struggle with advertisements. Yahoo’s percentage of the overall shares of U.S. online advertising market dropped from 16.1% in 2009 to 11% in 2011. Also, Yahoo’s total revenue fell 23% in one year’s time and now Yahoo is in danger of a takeover.

Both Microsoft and Google are the two companies in competition for the acquisition of the company. Both Companies have a lot of cash and would be able to afford to takeover Yahoo, where most private- equity firms are having difficulty borrowing enough money to make billion dollar deals, Google and Microsoft have liquid assets already available. In the case of Microsoft, one possible reason for their desire to acquire Yahoo is their current advertising deal with them. Microsoft’s Bing search engine provides search results and yahoo provides the advertisements and any change in ownership of Yahoo could be unfavorable for Microsoft. The competition with Google comes in with Google possibly wanting to get an advertisement deal with Yahoo, although the government antitrust regulations most likely discourage such a deal. Also, Google probably doesn’t want Microsoft to own Yahoo for competitive reasons making the battle for Yahoo strategically competitive.

http://blogs.wsj.com/deals/2011/10/24/who-needs-banks-in-yahoo-takeover-google-and-microsoft-play-banker/

http://online.wsj.com/article/SB10001424053111903285704576556973446155098.html?mod=WSJ_article_onespot

Oracle in $1.43 Billion Deal for RightNow

Oracle (Software and Programming Corporation) has taken a bold step forward by striking a $1.43 billion deal to acquire RightNow Technologies, a provider of Web-based customer service solutions, as they wish to build their portfolio on cloud-based offerings.  The enterprise software giant is going to pay RightNow’s shareholders $43 a share, under the terms of its deal.

This deal is the product of Oracle’s attempt to boost its cloud-based software systems that are available via web and focus on aiding online retailers improve customer service. Last week, Oracle also purchased Endeca Technologies for an unannounced amount. Oracle’s acquisition, the largest since it purchased Sun Microsystems for $7.4 billion in April 2009, also indicates that Oracle’s appetite for acquisitions is strengthening once again.

Earlier this year, Oracle’s chief, Larry Ellison, said he was restraining his check book and focusing on organic growth because assets were “wildly overpriced.” While the company has made several acquisitions this year, it has largely focused on smaller, privately held companies.

I think that by this growth and organic growth, Oracle will be able to pool their resources and strengthen their market position, as well as their financial stance with their specialised and knowledgeable workforce and have access to a greater customer base in order to succeed. As Oracle is interested mainly in small acquisitions, it means that there is a low level of risk in acquisitions; however, this may limit their scope for growth and high profit, as high risk results in higher profits and benefits. As shown in Figure 1.1, the combined assets of the recent acquisition will give a figure of $74.27 billion, which will make them the biggest company in the Software industry. On the other hand, the combined liabilities would equal to a heavy figure of $33.27 Billion, which means that the company would be in debt to other and will have to insure that the debt is payed off from their retained earnings or by liquidising their assets and perhaps, calculating their Leverage Ratios to measure the degree to which they rely on borrowed money, in order to respond to cash flow issues.

Figure 1.1

http://dealbook.nytimes.com/2011/10/24/oracle-to-buy-rightnow-for-1-5-billion/?ref=technology

International Computer Firms Hit the US Market

The Computer Software and Hardware industry has had great international influence for a very long time. Many Asian technology brands, from Korea, China and Japan, have challenged US companies for market share since the dawn of this industry. Brands such as Sony and Toshiba have released powerful, consumer favorites that have competed with similar US manufactured products on the market. Sony, a Japanese headquartered brand, has ownership over the VAIO product line.

The VAIO brand has released over twenty different types of computers that are popular from Japan to the United States. Sony has brought in an annual 18.5 billion dollars worth of sales per year. The brand is extremely popular among television and video game sales as well.

Acer is another large brand in terms of internationally based firms. The Taiwan based firm had a net income of over 500 million dollars in 2010. The firm also employs over 7500 employees world wide. Acer acquired Gateway in 2007 and soon became the parent company for the California based firm. According to Gartner's Preliminary U.S. PC Vendor Unit Shipment Estimates for 3Q11, Toshiba and Acer, two foreign firms, will be responsible for 18.5 percent of the US PC Market share. While not the leading brands in the market, both firms hold their own against large American based computer companies.

http://www.macrumors.com/2011/10/12/apples-share-of-u-s-pc-market-leaps-to-12-9-in-3q-2011/

http://us.acer.com/ac/en/US/content/company

The Big Picture of Computer Hardware

Taking a look into the Computer Hardware and Software Industry, one is thrown into a sea of many successful international companies. Most look to the United States, with Apple and Hewlett-Packard commanding a huge share of the industry, but some key players fall over seas. Some huge companies include Samsung, Toshiba, Sony, and Panasonic. The companies listed have produced products not only within the computer software/ hardware industry, but also many other fields ranging from kitchen appliances to television monitors.

These companies can be considered key players in the software/hardware industry mainly because they can be classified as computer system manufacturers. The topic of computer hardware opens the industry up as many other devices run off of computers. For example: Samsung’s phones use computer based processors, LG’s appliances use computer systems to monitor how food is stored or prepared, and Sony, Toshiba, and Panasonic’s TVs use basic computer chips to stream the television that everyone enjoys.

Personally I think that this proves the value of the Computer Hardware industry, as it allows more companies to make a name for themselves. It opens the world to a common industry that can be analyzed on so many levels.

Computer Industry Outsourcing

Manufacturing is a major part of the computer hardware industry and keeping costs low and profit high is always a factor. Many companies such as HP, IBM and Dell outsource production of their products. Because so many parts go into making computers and other electronic devices outsourcing makes sense. In December of 2009, HP set up a $ 1 billion investment plan involving setting up outsourcing centers in India to compete with IBM and Dell because both of those companies were increasing outsourcing in low cost areas such as India. More than 90% of technology productions in low cost areas are located in India because of a growing population of English-speaking computer engineers and India’s desire to gain more outsourcing vendors to join the global market. India has not only a large amount of English speaking engineers but also an abundance of English speaking technical support which is why when someone in the United States needs assistance with their computer, they call the company and get linked with a the support employee in India.

This September, Apple came under scrutiny by environmental activists in China because of some of their supposed supplier plants there. An activist group claims they found polluted canals leading from what the group believes in an Apple plant. Apple does not identify all of their suppliers, which is why they were under questioning. Apple never claimed that specific factory as being associated with them but they did issue an annual report that, this year, reported that Apple identified and corrected 80 facilities that were not storing or handling hazardous waste properly and 41 that were not recycling or disposing of hazardous wastes properly.Outsourcing is a good idea for computer hardware companies to utilize but there are issues that can arise and things that companies should be sure to watch out for.

sources: 1.http://online.wsj.com/article/SB10001424053111903895904576542273644200108.html?KEYWORDS=apple+outsourcing

2.http://online.wsj.com/article/SB10001424052748703296604576005151105178710.html

3. http://www.businessweek.com/technology/content/jan2009/tc20090115_770577.htm

Bright Future for Acer?

Amongst the many global companies in the Computer Hardware and Software Industry, one that truly draws my attention, is Acer. The homepage kindly informs that Acer Group is a family of four brands: Acer, Gateway, Packard Bell and eMachines. This multi-brand strategy allows each brand to pool their resources and benefit from synergy. Thus, they can target different market segments and assure that all customer needs are fulfilled in the global PC market.  Acer ranks No.2 for total PC and notebook shipments with a global workforce of 8000 employees. Merging with Gateway Inc (Oct 2007) and Packard Bell (March 2008), Acer managed to strengthen its presence in the US and Europe. Acer has been able to achieve its sustainable growth worldwide by means of adapting to the trends and collaborating itself with the industry’s top partners.

Acer's PC-centric product offering includes notebook and desktop PCs, servers and storage, LCD monitors, projectors, and smartphones and tablets. Sub-brands include the consumer-focused Aspire series, and commercial sector TravelMate and Veriton series. This product line and overseas alliances has allowed Acer to progress further and excel in the fast-paced IT industry.

Recently, Acer has been focusing on expanding further, thus, the organisation has decided to market in the Chinese market and also taken a more ethical stance by ‘going green’. I believe that in an environmentally conscious society now, investors are looking forward to take the risk of investing in firms that are socially responsible and willing to enter new markets with enhanced products. Acer is managed to be ‘global’ by targeting the middle-class consumers and manufacturing in bulk for businesses.

http://www.acer-group.com/public/The_Group/milestones.htm

Apple, IBM, Fujitsu

To many the very mention of the computer hardware and software industry brings thought to US based companies such as Apple, IBM and Microsoft. However, across the globe non-US based companies are quickly growing, expanding and becoming a more dominate force within the industry. One such company is the Japanese based Fujitsu Group. While Fujitsu has been in operation since 1935, it holds relatively low brand awareness to consumers in countries such as the US. Although its brand recognition may not be as high as companies such as Apple or IBM, Fujitsu has rapidly become a key player within the industry. As of 2008, Fujitsu was the third largest IT services provider in the world and the largest in Japan. The companies 172,000 employees brought in a profit of 55 billion dollars at the end of the 2011 fiscal year, from sales and serves provided to over 70 countries. Additionally, Fujitsu has become involved in joint ventures with companies based in prominent countries such as the UK and Germany. The company's latest strategic alliance with Microsoft has increased its influence within the US; which may pose difficult challenges to Fujitsu's top global competitor, IBM.

Personally, I feel that Fujitsu will continue to become a more and more powerful force within the industry. Throughout its history the company has made tremendous strides with technology innovation that have dominated the market in both Japan and around the globe. These strides will only continue to occur as Fujitsu tapes into lucrative foreign markets through joint ventures and strategic alliances. The companies current strategic alliance with Microsoft caught my attention and leads me to believe that Fujitsu will become larger player in both the US and the world

http://www.fujitsu.com/global/about/profile/info/

The Race to the Top

Corporate competition is a driving factor of all major industries. Competition allows companies to create superior products, offer better services and innovate all merchandise lines continuously. The Computer Software and Hardware industry is a prime example of a line of trade that experiences cut throat competition and extremely high demand. While all companies offer new and advanced technology, each respective brand works constantly to differentiate themselves. Specifically, focusing on offering cutting edge technology that’s high in demand by a consumer base with even higher expectations for the products they purchase.

Apple has created a brand that is synonymous with creativity and simplicity. Apple’s product lines, that have revolutionized a plethora of industries. have a focus on the ‘little things’. Apple computers offer applications such as Launch Pad and Mission Control that provide an easy, graphically pleasing approach to help organize an individual’s use of the personal computer. In the 1990’s, Apple changed the industry forever by launching the first clickable computing system. Since then, they have found ways to make technology more functional. In the present day, products such as the iPad and iPhone allow for portable computing and the ability to carry technology, with the ability of a personal computer, in ones own pocket. Apple’s branding has successfully distinguished the company as a leader in Computer Software industry.

PC brands have worked hard to focus the branding of their products towards a business based consumer. Computer firms such as Dell and HP strive to offer software that allows for quick and efficient data entry and fantastic word processing. PC owners also enjoy great gaming abilities which many computer based game users cannot find with Macintosh computers. The distinction between Mac and PC products has single handedly divided an industry and sent firms striving to find a unique identity for their line of products. Brands that do not keep updated on the advancements of technology often find themselves left behind by the consumer market. Dell is such a firm that has experience this reality of the industry. In 2006 Dell controlled over 15% of the market share for PC members. As of 2010 that amount has decreased to about 12% and many believe it is due to lack of advancement in their technology.

http://www.gartner.com/it/page.jsp?id=1519417

http://www.switched.com/2008/08/06/mac-vs-pc-6/

Is Apple Falling?

Many thought that with all of the rumors, that Apple was producing an iPhone 5, which opened up endless discussion about new features. When the iPhone 4S was announced many were disappointed. The release of the iPhone 4S has put Apple in a new predicament. Now many are looking to other companies as an alternative in the smart phone field. Samsung’s new model the “Nexus Prime” has jumped in as a possible alternate. The new model has a curved screen to prevent others from seeing from a side angle. It will also feature the 1 GB of RAM (adding to the 32 GB of built in storage), a dual core processor for easy use, and the new Android 4.0 mobile OS. These impressive features have proven to be a huge selling point to enraged Apple customers. Many thought that with all of the rumors, that Apple was producing an iPhone 5, which opened up endless discussion about new features. When the iPhone 4S was announced many were disappointed. Samsung has postponed their release in respect to the passing of Steve Jobs, but the product is projected to do very well.

This pertains to the field of hardware and software, as it simply opens up the competition within the Smartphone sector of the industry. Many are now starting to look into whether the iPhone 4S and the passing of Steve Jobs will affect the computer giant.

http://sanfrancisco.ibtimes.com/articles/227722/20111009/samsung-nexus-prime-can-it-deliver-what-iphone-4s-couldnt.htm

Recent Consumer Behavior Trends Influencing the Industry

IFA- Berlin is the world’s largest trade show focused on consumer electronics. This year’s show was held from September 2-7 in Germany and Euromonitor International, a market research company, identified four of the main trends in global consumer electronics in 2011. The first is the growing middle class, which has become a focus for companies to advertise to because of more single and/or working parents and a willingness of the middle class to reward themselves for hard work. The second trend in companies catering to consumers is a global increase in woman in the workforce in need of electronics. In the past companies would appeal to the female demographic by making their product available in colors such as pink or red but companies are now catering to more than just a more feminine color scheme. One tablet by Samsung makes their product more user friendly for woman with long fingernails by including a stylus for text applications. the third trend is that companies are ignoring the elderly as a demographic to focus on because even in the most developed sections of the world the elderly take up at most 18% of sales. The trend of ignoring the elderly demographic could end up hurting some companies because in places like India and China the elderly take up a large chunk of the population that companies could be alienating. The fourth trend that could help companies is the increasing amount of the global population that views mobile devices as a necessity and companies are focusing on the connected population and developing markets.

source:http://www.portal.euromonitor.com/Portal/Pages/Search/SearchResultsList.aspx

The Digital Divide

Smartphones are ceating a buzz all over America and ensuring that more people have access to an Internet experience, allowing them to cross over the so called Digital Divide. Being on the other side of this Digital Divide has become a concern for high quality of life, which shows that there is a change in the culture, consumer preferences and responses. However, being technologically involved is determined by two key elements: income level and job security. At present, the lack of reliable, easy access to the internet hinders our ability to connect to jobs, education, services, public safety resources and support networks.

‘’Increasingly this means having good Internet access on the go, because in just a few years most U.S. Internet access will be mobile. Recently International Data Corp. predicted that by 2015, "more U.S. Internet users will access the Internet through mobile devices than through PCs or other wireline devices."

Telecommunication companies tend to concentrate and provide coverage in densely populated areas, thus people living in remote areas so not benefit from these broadband and wireless connections. It has been predicted that within the next year, handsets in use in the US will be smartphones of some kind.

What are some of the consequences of having the nation run on smart-phones? Firstly, smart-phones are costly for most; especially for low income earners and committing to long term contracts can often prove to be a financial risk for low income levels. Thus, no contract phones have become a little more popular over the past few months.

In order to encourage and overcome this problem, services like T-Mobile and Sprint have been applying consumer-friendly strategies and using competitive pricing to attract more customers. Thus of course, has increased the level of competition in the industry, but it also assures that the majority benefit from smart-phones and mobile internet services. Competitive pricing is used intensely in this industry by organizations, and what determines their sales is then based on the effectiveness of the marketing and promotional tactics.

http://www.cnn.com/2011/10/07/tech/mobile/amy-gahran-cell-phone-bridge/index.html

Steve Jobs: Rockstar of the Technology World

Pick up any newspaper around the world and you are guaranteed to find an article about the late Steve Jobs and his revolutionary contributions to Apple and the computer hardware and software industry. As co-founder of Apple, one of the largest and most influential companies within the industry, Jobs was able to create and release some of the most profitable and technologically advanced products into the world. However, more notably than the ground breaking products themselves, was the man who promoted and sold them. At the forefront of every major Apple release was Steve Jobs. His presentations to the public and press were the "rock concerts of the technology world". Thousands of technology critics, experts and press representatives would listen intently to his presentations; hanging on his every word and recording his legendary speeches with IPhones in the air. Through his incomparable, onstage charisma, Jobs was able to get people excited and believe in his products that he preached as "magical and revolutionary". "To technology freaks and geeks, he is a 'demigod', whose product launches are adulatory affairs regularly likened to religious revivalist meetings," the the British Newspaper the Guardian wrote in 2006.

With the recent death of Steve Jobs many are questioning if Apple will be able to hold its place at the top of the industry; as the legend behind its previous success is no longer at the reins. With his passing Apple's stock took a significant hit, implying that many had invested in the man, rather than the company. From its beginning Jobs served as the face and voice of Apple, inspiring excitement in his products and concurring skepticism among the critics. "The world has lost a visionary." President Barack Obama said in a statement posted on Wednesday night on White House blog.

http://www.cnn.com/2011/10/06/tech/innovation/steve-jobs-cult-figure/index.html