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Spillikins №141. Siri – If You Say So

This week will be so reach for events I think I should highlight some of them. Android 4.0 and Google/Samsung Nexus Prime are to be announced on October 19 in Hong Kong. Google had to remove some of the features from the original version of the OS to avoid legal claims from Apple. On Thursday October 20 Nokia will report quarterly results one week before the next Nokia World in London. This will be a very important piece of news as it will tell just how much Nokia has lost over the last quarter – several hundreds of millions or may be even over a billion euro. I don’t know and I don’t want to give any wild forecasts but the news will not be good anyway. The company’s CEO keeps twitting that everything is going to be fine and that he likes what they have prepared for Nokia World – just words that have no ground basis.

One of the most outstanding experiences for me was visiting Google’s office last week. I have been there a few times but this time I saw many employees using Apple MacBook Pros and Airs. Though their laptops don’t have Apple logos but you recognize the silver of Apple’s aluminum. Even my MacBook Air, the one on the picture below, is more Googlish – it has Android stickers on it. I personally find it wrong that Apple’s laptops have become a standard for Google’s employees. I might perceive the rivalry between Apple and Google too literally but I think it is not a sign of corporate loyalty to be using products of your biggest competitor. However, these two companies do also cooperate a lot am I am not sure what exactly about this MacBook thing I find wrong.

Blackberry is Out of Reach. Apple is Having Problems Too

Canadian RIM, the owner of Blackberry, seems to be going through a dark period. And the way the company handled the last week’s situation cannot add to the company’s credibility. So, on October 10 Blackberry users in Europe encountered the problem of not being able to receive mail – the service was down. This concerned a number of countries – about ten million users (the biggest Blackberry audience outside the US and Canada). We have already covered a part of this story here:

Blackberry Blackout

It wasn’t the failure of the Blackberry’s main service that got under my skin – all services fail at some point and Blackberry has not had such a massive service issue since 1999. I was a lot more concerned about how the company was going to communicate with the users – it turned out there was another communication breakdown. On the first day when the problem affected millions of users at once Blackberry did not comment on the situation at all. The company reps were responding to press by saying that the management was at the Blackberry Tag presentation of new technologies in the United Emirates and is not available for comments. It’s not very nice is it? I don’t believe that the company’s management did not know about the problem. The company kept silence on October 11 as well – only the company’s twitter was trying to reassure users and tell them the problem is not that big. But how many people actually follow Blackberry’s twitter? I personally follow it all the time but I missed these messages anyway. They did not even care to provide the carriers with any information on the problem. So, de facto Blackberry did not say a word about the company’s biggest system failure ever.

It was not until October 12 when Blackberry finally voiced the problem – only when it got to Canada and the US, the company’s biggest markets. At this point the amount of complaints they were receiving was inundating. The company’s CIO made a short comment on that day on the issues the company was having. One of the two company’s CEO posted a video only on October 13:

It seems to me like a very bad case of PR work and it only happened because of the massive public response to the problem. I talked to a few carriers’ reps and they say that Blackberry is not even considering any kind of compensation and that compensations for a service failure must be made by the carriers. Considering that every carrier pays Blackberry about $10 monthly for every Blackberry user I think the least RIM can do in this situation is give the carriers and users three days of free service to make up for the time the service was down. But the company is silent again – they probably want just to hush up the whole story. This is a really bad strategy for a company that is going through a lot right now.

Below is a link to all the official post of the company commenting on the situation in the chronological order.

RIM’s comments on Blackberry services

Another service issue you might have encountered last week concerns the iOS 5 update which became available for iPod, iPad and iPhone. A lot of people were waiting for this update and hurried to download it the moment it was released. This was a big strain on Apple’s servers and as a result many people became familiar with the 3200 error. The servers were unable to verify devices and the update could not be installed. In a day the problem was gone but once again the company preferred not to comment on the issue, although Apple users were not affected as badly as Blackberry users I find it terrible manners trying to hush up the problem as if it never existed.

On the first date I tried to update my unlocked iPhone 4 I bought in AT&T. after the phone updated to iOS5 (at this point I was happy as Larry) it demanded an AT&T SIM while ignoring any other carrier’s SIM cards. The AT&T support asked me to come over to their office to fix this issue but it’s kind of hard to do from Moscow so I will only be able to revive my iPhone by the end of the month when I’ll be back in the US.

My first generation iPad updated without any issues but I now have some performance issues on it (some apps now lag) and some stability problems (the standard Twitter client crashes at start). I found many comments in the web from people experiencing some issues with their devices – you have to reinstall the Twitter client to fix this problem. It worked for me but I still cannot work with my feed the apps crashes all the time. It is the first time I encounter app crashes on an iPad (I don’t count the rare browser shutdowns). My kids reported similar issues on their iPads 2.

I am disappointed with Apple for releasing iOS 5 unstable. And while system crashes are ok in betas it is simply unacceptable in the release version. I hope Apple fixes these issues soon – just look at the Twitter interface I get:

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Android In Numbers

The numbers in the Google’s quarterly report speak for themselves – no need for lengthy explanations. The total number of Android devices has gone over 190 million units. Just in the time interval from July 14 to October 14 the total number grew by 55 million devices i.e. 650 000 devices are activated every single day mainly smartphones. These kinds of sales are really impressive.

Right after the release of iPhone 4S and the successful launch of the Siri assistant Google added the conversation mode to the Google Translate service. It supports 14 languages – you can simply say something you want to be translated. Moreover it can work during phone calls so you can receive adequate translation on the go. The demo video is below:

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Siri by Apple – The First Impressions

In the previous issue of the Spillikins I expressed my doubts about Siri in iPhone 4S becoming something big and working properly:

iPhone 4s: First Orders and Siri Voice Controls

Since the release there have been many reviews of this service and as soon as I got my iPhone 4S I have been playing with it and I must say I have really underestimated this service. It is really entertaining, there is even a website that publishes funny Siri responses – some of them even show some sort of intelligence this service has.

Siri work examples

And here are some examples I found particularly funny:

In the first part of iPhone 4S review we have described the way Siri works and listed some of the commands you can use with it. The video below illustrates how it works:

The entertaining factor of Siri will surely make it very popular especially among the youth. Apple is pioneering this sort of entertainment and there are some problems they might encounter.

Siri needs Internet connection to search for answers in the Apple cloud. One of my readers sent me a link to an article that explains why Siri is important for the company and why it was officially launched only for iPhone 4S (unofficially it is available for iPhone 4 also).

Why is Siri important

This article covers the history of development of this service and the cost of a single request (yes it is not free for the company). That is why Apple needs to limit the number of requests or the richest company in the world will soon lose this title. This service became possible solely thanks to the profits the company is making now. On the US market Siri has become one of the factors that drive users to purchase. I have been playing with Siri for several days now and I am still not tired of it.

On the release day the number of preorders for iPhone 4S went over one million handsets – Apple even issued a press released boasting of this number which exceeded the previous record of 600 000 units for iPhone 4. As I expected iPhone 4 S is proving to be extremely popular and it is one of the best phones on the market today.

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Sony Ericsson Announces 3^rd Quarter results

In our previous issue we mentioned the possibility that Sony can buy all shares of SE and now we have the latest financial reporting data to analyze. The results are indeed staggering. Either they were processed by accounting wizards or the management suddenly learned how to earn. As far as the managerial team stayed the same and the press release contains a traditional mix of lies and silence we have to thank the financial department for their good job! At the start of 2012 this nice looking house will be shattered by real life events, which do not take into account internal SE issues.

Let's look at the table and discuss what is being hidden behind the figures.

	Q3 2010	Q2 2011	Q3 2011
Number of units shipped (million) / Average selling price (Euro)	10.4 / 154	7.6 / 156	9.5 / 166
Sales Euro m.)	1,603	1,193	1,586
Gross margin(%)	30%	31%	27%
Operating income (Euro m.)	63	-37	38
Operating margin(%)	4%	-3%	2%
Restructuring charges (Euro m.)	4	-	-
Operating income excl. restructuring charges (Euro m.)	67	-37	38
Operating margin excl. restructuring charges (%)	4%	-3%	2%
Income before taxes (IBT)(Euro m.)	62	-42	31
IBT excl. restructuring charges (Euro m.)	66	-42	31
Net income (Euro m.)	49	-50	0

In the 3^rd quarter sales went down by 9% in comparison with the same period last year. The press-release highlights that sales rose 33% from the 2nd quarter of 2011. You may mistakenly believe that things are looking up and the management can be proud of their job. Unfortunately, these fluctuations are explained by seasonal factors. 3^rd quarter figures usually surpass those of the previous one, though last year SE showed a 5% drop. It is the only positive trend. Many new models were announced in September, which boosted sales. In the final quarter demand will be lower, but what is more SE continues losing its market share. The question is when SE hits the bottom. It may be 1.5% of the market share or slightly lower.

Income before tax reached 31 million Euros. The company borrowed 51 million Euros and paid it back within this quarter. The accounts of Sony Ericsson contain 466 million Euros, while the debt stands at at 718 million Euros. If the company works the way it did in the 3^rd quarter of 2011 it will take 15 years to pay the debt back. The situation does not look too rosy, because the company borrows more than it can possible earn.

What confuses me is the inconsistency of CEO Bert Nordberg. In the 3^rd and 4th quarters of 2011 SE offered many ordinary phone models to boost sales. This trick was successful, but in 2012 SE plans to develop and sell exclusively smartphones. It increases the margin and boosts profits, while the market share will dwindle. It contradicts with the current strategy of SE. It looks as if they believe that other people will have to clean up after them. We shall see, but such a scenario looks quite probable at the moment. The company is planning to have another round of staff reductions due to the abandonment of several secondary markets. If you cannot earn it is vital to save.

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New Microsoft Record: Smartphone Market Share Reached 2%

In the second quarter of 2011 Microsoft broke the next anti-record as its market share in the smartphone market reached 1.3% (according to Asymco, 1.4 million items) or 1.6% if you trust Gartner more. It is clear now that the first version Windows Phone 7 is not popular. Microsoft does not know how to sell its products and suffers setback after setback.

Microsoft hopes that the situation will change when Nokia joins the frame. We may see some progress, because 1.4% is indeed the bottom (even Bada sells better). The main plan of the company is to splash cash on promoting new models with Mango on board. For example, in UK Nokia will receive 20 million pounds from Microsoft to promote its models, while Samsung will get only 8 million. It does not look just, but if you take into account the fact that Samsung is planning to offer Omnia W almost twice cheaper than Nokia 800 the difference is understandable. More expensive model with similar features will need more advertising, but Nokia can win only if it fixes prices very low. Rival companies have similar models, but their prices are much more attractive, which is quite important.

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Motorola Slashes the Price of XOOM

Motorola was to quick in launching its tablet XOOM, sales were low, but negative feedback was strong. Against the background of other companies, which conceded to Apple iPad, Motorola decided to be original. Instead of decreasing the price of the initial model the company introduced its simplified incarnation (8 GB of memory, WiFi only) with preinstalled apps for kids, which otherwise cost $80 долларов. Now XOOM is labelled Family Edition. It is an interesting step to add color to Android tablets, but the current price for a 10.1" model is too high nonetheless.

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Protected Gadgets: Tablets and Phones

Motorola was one of the first to offer a protected tablet. ET1 is not a copy of XOOM. There is Android 2.3 inside, which offers necessary software for business users (automation of stores and shops). The screen is 7" and we get an additional battery for 15 minutes (while you replace the main one). According to the manufacturer this protected device can be handy in many places and I agree with them. The model will appear at the end of the year and will cost around $1000. Watch the video to see how the company views its product. Bear in mind that this is not a mass market solution, but an industrial gadget for specific purposes.

The segment of protected phones is rapidly growing, but companies do not rush in, which results only in the handful of models on offer. One of the most popular solutions is Samsung Xcover to be upgraded later this year. С3350 will get an QVGA screen, 2 MP camera and IP67 protection level. It is an interesting phone. I hope that Chinese manufacturers will get involved and we will witness serious competition and enjoy many models on the market.

Extra reading:

An article on Scott Forstall responsible for iOS in Apple. Who is he and why many think he is a charismatic leader? What is his role in the post-Jobs era? It is a very useful article
How smartphone users deal with data (data gathered by Ericsson)

Do you want to talk about this? Please, go to our Forum and let your opinion be known to the author and everybody else.

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Spillikins №141. Siri – If You Say So

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