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Part II: Why Smartphone Hardware Manufacturers Are Doomed!
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Last week I told the world that hardware vendors are DEAD! At least the fat margin business model hardware vendors (like those whose name rhymes with Snapple). The post Smartphone Hardware Manufacturers Are Dead, Long Live The Google-like Solution Providers, pretty much says it all – or does it. You see, this is about mobile computing, not smartphones (reference The mobile computing wars from 3 yrs ago). Google has just launched a major salvo into the bastion of those companies who dare apsire to sell notebook computer/software bundles for over 22% margin!
Google offering $99 Samsung Series 5 Chromebooks to public shool teachers and students
If you reference the Google press release, you’ll see that this offer includes a special, discounted price of $99 including hardware, management and support! Now that’s CHEAP! An equivalent Macbook Air with the same package would run more than 10x the prices, that’s right, well over $!,000! Margin compression here we come!
Google ascendance, here we come! For those who don’t know how the Google biz model works and why they actually want the cost of hardware to go down to zero, watch this piece that I did on the Max Keiser show…
- Right On Time, My Prediction Of Apple Margin Compression 8 Quarters From My CNBC Warning Landed Right On The Money!
- Which Is The More Sustainable Business Model – Selling The World’s Information or Selling Shiny New Things???
- Now You Will See Margin Compression In iPhones As Well As iPads
- Many Don’t Understand The Google/Apple/Microsoft Business Model Dynamic Nor How Dangerous This Apple Legal Win Can Be For Consumers
- Reggie Middleton currently leading the CNBC Stock Draft Pick contest, see his opinion on air here
Google’s “less than free” business model has successfully put it on track to becoming the next Microsoft. Once it has 90+% market share in mobile OSs (it’s currently knocking on 89%’s door), it will have the door opened to lead as the de facto provider of cloud services, basically acting as the Windows operating system (remember the importance of this OS in the 1990s) of the Web. We’re not even broaching the topic of Google being the shepherd of global data and information throughout the web and the Internet connected world!Related BoomBustBlog Subscription-only Research:
Apple 4Q2012 update professional & institutional
All paying subscribers should download the Google Q1-2012 Valuation Summary, wherein we have updated the valuation numbers for Google using a variety of metrics. Click here to subscribe or upgrade.
Google still exhibits the likelihood that they will control mobile computing for the balance of the decade.
Google Q1-2012 Valuation Summmary 04/20/2012Google Q1 2011 results 04/18/2011Google Q3 2010 reveiw 11/08/2010Google Final Report 10/08/2010
Google Valuation Model 09/21/2010Google’s VOIP and Telephony Services 09/16/2010A couple of bits from our archives…
The table of contents outlines how we have broken Google down into distinct businesses and identified both the individual business models and the potential revenue streams, as well as valuation for each business line.
Page 57 of the analysis shows a sensitivity table which outlines the various scenarios that can come into play and how it will change our outlook and valuation opinion.
Professional/institutional subscribers can actually access a subset of the model that we used to create the sensitivity analysis above to plug in their own assumptions in case they somehow disagree with our assumptions or view points. Click here for the model: Google Valuation Model (pro and institutional). Click here to subscribe or upgrade.
Images: Flickr (licence/attribution)
About The Author
Reggie Middleton is an entrepreneurial investor who guides a small team of independent analysts to uncover truths, seldom if, ever published in the mainstream media or Wall Street analysts reports. Since the inception of his BoomBustBlog, he has established an outstanding track record
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