Spillikins #181. What memory does your phone use?

Those who read our Spillikins on a regular basis can be divided into two camps: some of them are asking for more information about Nokia and about how the company is dying, while others say it's all clear and the death agony is of no interest. As for me, my interest in the Nokia story is quite practical, for it presents a lot of scenarios of what and how a company should never do. And this is crucial for companies that wish to be successful. This week, Stephen Elop's lie about the good sales in the USA and about Lumia 900 market acceptance got disclosed – the time puts everything into place. We are about to see Nokia's quarterly report, which will send the company's shares to another flight. Waiting for those figures, some research companies are publishing their own estimations of Nokia's sales. For example, Nielsen believes that AT&T has sold not more than 300,000 Lumias 900 in Q2. No one speaks of millions, as the global sales will hardly exceed 2.5 million. Anyway, you will be able to read the details in the next Spillikins and in our news next week. Nokia is going to have very bad Q2 results. And when I say 'bad', it's even underestimated. Another word could be more appropriate here, but it would be beyond the normal vocabulary. For a starter, look at the diagram presented by Asymco: it shows the number of smartphones used in the USA. The picture is quite nice and it speaks for itself.

And here are some more data by Nielsen about Nokia's share of the US market for smartphones.

However, Nokia has some secret weapons, for instance, the Instagram client coming to the market in 2013.

But that's enough about the dying ones. Let's switch over to our standard topics. I would like to thank everyone who has given a vote to my book as I asked you to in the previous Spillikins. Thanks again! I'm going to spend the entire next week in Vladivostok, so if there is anyone who would like to meet me there, you can write on my Twitter, and we'll select the time and place together.

Contents:

1. Samsung Semiconductor advertising campaign: what memory do you use?
2. Apple getting down and dirty trying to manipulate retailer networks
3. Ecology in electronics: Apple's demarche
4. Developers' world: the OS's they are ready to work for
5. Infographics: what Americans are ready to leave home without

Samsung Semiconductor advertising campaign: what memory do you use?

Samsung is starting to make use of their logical advantages that the company possesses as a manufacturer of hardware components for various kinds of electronic devices, being the leader in the memory chip production in particular. I guess every company, when it manages to occupy the lion's share of the market, will sooner or later start looking for ways to tell the customers about the advantages of its products. It appears much more difficult for hardware manufacturers, as the customers select and buy devices according to their features and prices, but no one chooses anything just because it has memory chips by Samsung, a CPU by NVIDIA, or a screen by Sharp. If such people still exist somewhere in the world, I might feel sympathy for them, as choosing every single product turns out to be an agonizing compromise. Besides, this kind of choice is defective from the start, as the best components never mean the ideal product in the end. Those components have to be properly harmonized with each other, which is actually a separate skill that we don't find too often in this world.

Every hardware component manufacturer always tries to grab the biggest piece of the pie. For example, Qualcomm is trying to convince the customers that it is very important what kind of CPU is installed in a smartphone or a tablet. NVIDIA is doing absolutely the same when giving detailed descriptions of the advantages provided by their solutions. Of course, the CPU produces great influence on the general performance of the system. But still, we make our choices basing on a lot of criteria, with the CPU being only one of the variables. Every manufacturer, when starting an advertising campaign, wants to make its brand more recognizable, but the point is to increase the importance of the variable (e. g. the CPU) when the customers make their final choice. But this game is played not only for the customers, as it also produces pressure on the device manufacturers. If the customers get interested in what CPU, what memory or what screen is inside their devices, the manufacturers will have to pay attention to this factor when selecting their suppliers. The situation is unique due to the fact that 99 per cent of the customers do not think too much about the hardware specifications, e. g. the CPU frequency, its chip structure or its peculiar features if compared to the competitors. They just do not! The majority only keeps some kind of binary logic in their minds: Manufacturer A is good and Manufacturer B is not. Hence, every company bends its efforts to strengthening its own name, while the specifications remain important to the partners that produce their devices basing on those specs.

Back in April I told you that Qualcomm was starting to actively position their CPU's for ordinary customers. The curious fact is that today Qualcomm is experiencing deficit for the Snapdragon S4 processors, so the company has even signed a contract for production of these chips using the Samsung capacities, with the 28-nm technology. And the most curious thing about it is that Samsung's own CPU's are made with the 32-nm technology, while the next leap they are planning to make should be switching to the 22-nm technological norm. Thus, we can conclude that in 2012 Samsung will produce CPU's based on a more advanced technology for its own partner and competitor. The world of electronics represents extremely curious cobwebs, and, on the one hand, the major part of the big companies are in a permanent life-and-death struggle with each other (Apple and Samsung with their smartphones and tablets), but on the other hand, they cooperate with each other quite successfully (almost half of the Apple iPad hardware is manufactured by Samsung). In such conditions, any advertising and promotion of components turns into a minefield. Making your brand more recognizable, you add points to your competitors at the same time. And you should think twice every time which side is going to win more: your own production or some other strong company.

In the context of promotion of the Snapdragon trademark, Qualcomm has launched a commercial video. It is pretty long, not too clear, but it is made in quite an American style: "Shoulda got a Snapdragon!"

What reminded me of it is the absolutely amazing Samsung Semiconductor advertising campaign dedicated to memory chips. There are three videos featuring three different characters: Loading Ball Larry, Fiona Freeze, and Battery Brutus. The first one is the loading ball that we see in various OS's when waiting for an application to start. The girl is responsible for the system freezing. And the third guy is the one who sucks the energy out of the batteries.

It's been a while I last saw such a brilliant advertising dealing with electronics problems in a humorous way. As you understand, the suggested way out is banal: use devices featuring memory by Samsung. But the videos themselves are made with a good share of humor and are really funny. Watch them – I'm sure you'll like them. This campaign reminded me of the one used when Nokia N95 was launched in 2007: Nokia invented jeans with huge pockets that could accommodate a bug number of various electronic gadgets. Our website is the only place where you can find those videos; the original website has been closed long ago, and there are only fragments of the campaign description.

So let's finally watch those videos by Samsung:

Apple getting down and dirty trying to manipulate retailer networks

Apple is fighting for the US market, trying to increase iPhone and iPad sales. The company selected the products by Samsung, HTC, and some other manufacturers as the targets in this fight. Lawsuits are falling thick and fast like from a cornucopia. And, as a rule, the patents that, according to Apple, are being infringed deal with the Android OS by Google rather than with a specific implementation of any particular feature by the device manufacturers.

Last week we found a very apt description of this situation: it's an allegory. I'll allow myself a quotation from another author:

"The argument could (and will) be made, by the way, that if it's trivially easy to avoid infringing a patent, why didn't Google just do this in the first place? It's simple: because making mobile devices requires, necessarily, hundreds of thousands of little features that may or may not infringe on someone's patents somewhere. Whether it be standards-related like Nokia's recent claims, or just a clever idea that someone had and didn't realize someone else's product already does. This further raises the questions of whether such patents should even be legal, but that's beside the point. The point is that what these companies are arguing over is less like intellectual property theft and more like arguing over which one of them exceeded the speed limit by a single mile per hour. It is virtually impossible to drive a vehicle at exactly the speed limit 100% of the time. Leeway is granted to drivers who can't maintain a perfectly OCD adherence to the law. This same sort of leeway is not being granted to the players in the mobile industry. Instead, the law is being used in the way closest to the letter and furthest from the spirit, in a chess game that is more about market share dominance than it is fair competition."

The original text can be found here.

The article found a broad response and the arguments didn't take long to appear. The key idea is that Apple is going too far in their attempts to ban the sales of specific devices, for instance, Galaxy Nexus, due to some formal reasons. I'd like to remind you that the court imposed a temporary ban on the sales of this smartphone in the USA, but Google changed one of its features and it returned to the shelves. Hence, this kind of court struggle is not so efficient. It produces some PR effect (look: they all try to copy what we do – but actually, it's not quite true or even too far from being true), but it also takes effect in the real life where development of the technologies is restrained by a single company, with these restrictions being very strong.

The multitouch technology is a good example of such a restriction. In 2007, when Apple released iPhone, the company was emphasizing its advantage in this realm. Moreover, they feigned that the technology was their own invention, so no one could even pretend to it. What happened later? Later, this technology appeared in Android smartphones in all the markets except the USA, as the manufacturers got to know that Apple had no patents for multitouch in Europe or Asia. The US market had been holding out, while the lawyers involved in inspection of Apple's patents got very rich, indeed. When it was found out that there were no patents or those patents described the technology implemented in one particular device, the iPhone, everybody started to add the multitouch support to their devices. Apple's monopoly got destroyed, but lots of customers still believe that it was Apple that invented the technology and made it popular. In fact, Apple was trying to secure the advantage that it had no rights for, and the company really made serious efforts for that. It was a game where Apple was actually playing against the progress and technological development, trying to secure its own position in the market. Once again, they had been doing this without possessing any rights for the technology or its implementation in other devices. I would certainly support Apple if the company had really spent time, money and other resources to create the technology and tried to protect its own investments. But the company is only protecting its own interests – it's pure business and there's nothing personal about it. Of course, we shouldn't idealize any other manufacturer: for example, Google is doing practically the same things, but not so skillfully. Or not so cynically – it may depend on your own point of view and your personal likes and dislikes for specific companies.

Apple decided to play it rough, so right after the temporary ban was imposed on the sales of the Galaxy Tab 10.1, Apple sent a letter to retailer networks saying that the retailers and Samsung were to remove the mentioned device from the shelves. But the court decision didn't provide for that. Moreover, according to the American laws, the retailing companies that are not Samsung's subsidiaries have their full right to keep on selling the devices they had purchased before. Apple tried to lead the management of the retailer network astray on purpose, in order to strike another blow to Samsung. And this is quite Apple's style: nothing personal, pure business again. You can find the full text of that letter and a brief description of the situation here.

I find Apple's tactics efficient, and it certainly works: to produce pressure on the device manufacturer and to try to ban the sales through court decisions and to intimidate the retailing partners. Apple is not expecting any immediate results, as the game is played for some long-term prospects. In the future, the retailers will have to estimate and consider their risks when purchasing Samsung products or to wring some extra conditions from the manufacturer. Both activities will result in the growth of the costs for the sales operations for Samsung. And considering the steps Apple has been making during the past year, we may conclude that the main goal is not to ban the sales themselves, but to decrease Samsung's revenues and impair the company's efficiency.

This story has one more dimension, too. At the times when the World Wide Web was not so well developed, this kind of litigations and letters demanding the retailers to remove the products from the shelves could remain beyond the attention of the public. Moreover, Apple most likely would have achieved what they wanted, one way or another. But keeping in mind how fast any information can spread today and what people may think of it, it turns out impossible. It's strange that Apple, so skillful in the PR field, doesn't realize that this story may also produce a strong impact on the company itself and that the consequences are quite unpredictable. Apple's infallibility in the PR sphere is just a myth. Moreover, Steve Jobs had been actively supporting this myth, but lots of things have changed since he was gone. And that's what the next story is about.

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Ecology in electronics: Apple's demarche

In 2006, the American independent ecological organizations, in cooperation with the government and electronics manufacturers, including Apple, established the EPEAT program. This is a register of electronic devices (desktops and laptops, but smartphones and tablets are not included so far) that comply with specific requirements for recycling and disposal. Until recently, all computers manufactured by Apple were in the list, but at the beginning of July the company decided to stop its participation in this project (such participation is voluntary for any company). Apple didn't present any official declarations about it, so the company keeps traditionally silent. But the situation became a scandal right away, as the municipal authorities of San Francisco, known for their craze for ecology and safety for the residents of the city, claimed they would refuse to purchase Apple computers. Moreover, not a single Apple computer will be bought for the funds of the city. It caused a whole wave of arguments about why Apple had decided not to participate in the program anymore and what effect it would have on the company's sales.

Let's leave aside the number of computers purchased by the municipal authorities of San Francisco. The US federal government demands that 95% of purchased computers should be EPEAT certified. Even if we think that all governmental bodies in the USA may support this decision and refuse to buy Apple computers, it won't cause any big damage to the company. The damage will certainly be quite considerable, but it won't be a catastrophe. On the other hand, if American universities and schools lose their Apple computers, it may impact on the US educational system. Thus, it cuts both ways.

One of the possible explanations that I've managed to find is that the new MacBook Pro with Retina can't pass the EPEAT certification, because the battery is built-in into the laptop body, and it's much more difficult to remove it, if compared to previous models. Probably, Apple decided to avoid any impact from the greens and the bad PR, so they just removed their products from the register in a quiet way. But it turned out right the opposite. What's curious is that later many of the company's laptops will use the same battery fastener as in the new MacBook Pro. Hence, the question of how "green" this product is, as well as the company's future models, will keep on arising more than once. They didn't manage to nip the story in the bud, which means Apple will have to invent something else. From the PR point of view, the situation has got out of control, and Apple undid its moves quite promptly.

The scandal got to its peak on July 10, and three days later Bob Mansfield, Senior Vice President of Hardware Engineering, said openly that decision had been a mistake and, following the requests coming from the loyal customers of the company, Apple would get its products certified for the EPEAT register. I believe this is not the end of the story, and we are still going to see lots of accusations stating that Apple products are environmentally friendly. Anyway, Apple itself has given this cause to the competitors.

And in the end, I'd like to know whether you consider it important that a product meets some ecological norms and is "green". How much does it matter? If there were two products at the same price, which one would you choose? Are you ready to overpay for a "green" smartphone or tablet? How much?

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Developers' world: the OS's they are ready to work for

In the world of those zillions of ecosystems that we live in, it's a usual thing to boast of the number of applications available for your platform. Every owner of a platform or operating system publishes reports on reaching another milestone: 10, 50, 100 thousand applications… No one speaks of the quality of those applications, as this is quite a subjective thing. However, some companies perform interesting researches among developers, trying to find out what they think about the future of various platforms and what OS they are going to create their masterpieces like Hello World or something else for. For example, the Baird Equity Research Company studies the developers' preferences on a quarterly basis, and the data they collect are very interesting.

It's easy to see that the ten-point scale shows what developers think about different platforms. As a rule, their opinions are reflected in the number of masterpieces they produce for these platforms. It's no secret that developers mainly consider iOS and Android. The third best in the rating is Windows 8. What's curious is that the interest in Windows Phone 7 has gone down drastically since Microsoft announced that WP8 and WP7 would be incompatible at the hardware level. But the OS represented by RIM is what looks really bad; it seems developers have already buried this company and its platform. By the way, RIM is the only company that produced some reaction to the results of this research. But they talked their way out with some general statements about how well developers should feel and how they are waiting for BB10. Nevertheless, the facts themselves speak against RIM, and the facts are what we can hardly argue with.

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Infographics: what Americans are ready to leave home without

T-Mobile has made some infographics about what Americans would prefer to forget to take with them when leaving home: some would prefer to leave home without their pants rather than without their smartphones. There are not too much numbers, and I guess all of them are pretty clear. And what would you be ready to leave behind at home but have your smartphone with you instead?

Home reading:

• Samsung's first branded store in North America is considered a copy of the Apple Store
• Analysis of the passwords leaked from Yahoo. A very instructive article from the security point of view
• Interview with Jolla Mobile's CEO

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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Related links

	Spillikins №177. ARM Processors in 2014
	Spillikins №178. Galaxy Madness
	Spillikins №179. RIM to Embrace Microsoft

Eldar Murtazin ([email protected])
Twitter
Translated by Serge Gomelsky ([email protected])

Published — 18 July 2012

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