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January 25, 2014

Mobility Techzone Week in Review

As we look ahead to Apple's 2013 holiday buying season earnings report on Monday, it is worth noting that new reports coming from Asia strongly suggest that Apple is without a doubt looking to finally move towards delivery this year of larger screen iPhones. It's important for several reasons. First, there is no doubt pent up demand for larger display iPhones I the United States. But there is even more demand for them in Asia. Apple's new deal with China Mobile may be the final piece that had to fall in place before Apple took the larger screen plunge. And by the way, don't look for any of the new iPhones to sport polycarbonate cases.

On another Apple front, it seems that a number of iPhone 5s users running the latest version of the operating system are occasionally suffering through what can only be described as a "white screen" crash, where the iPhone becomes inoperative. We've never experienced any such thing nor do we know anyone who has, but apparently there is a real problem as Apple is expected to releases an iOS 7 update soon that will fix the white screen problem.

We are anticipating Apple having a record blowout quarter. But that Apple expectation did not translate well for Samsung, which for the first time in two years reported a drop in profits. We can't say we're surprised (and in fact it was already fairly widely anticipated based on earlier Samsung guidance that Samsung would do so). But it is worth reflecting on Apple always pointing out that while others may own the actual crown on total devices shipped Apple has a lock on most of the industry's mobile profits. It appears that will remain the case.

It has been a rather Apple and Samsung week - and the same can be said for most of 2013. Even on the semiconductor front these two dominate the airwaves. By a significant margin, Apple and Samsung continue to buy up more semiconductor ships on a full year basis than any other electronics-based competitors. In 2013 the two bought up $52.5 billion worth of them. That speaks volumes about how these two dominate both the mobile and electronics landscape.

The week also brought us news of a rather substantial acquisition, with VMWare - the cloud and virtualization company - performing some wheeling and dealing to acquire mobile device and mobile applications management vendor AirWatch in a deal valued up front and $1.18 billion but that is likely to have additional payouts bringing the total price up to about $1.52 billion. The deal will prove to be a nicely synergistic one, with AirWatch bringing significant mobile assets to VMWare at a time when VMWare is making a major push into the end user mobile computing market. It is certainly a great payout for AirWatch's founders.

At essentially the same time we were learning of the AirWatch acquisition, Gartner was launching a new research report that predicts that by 2017, the number of mobile app downloads will exceed 268 billion. In turn, this will generate more than $77 billion. In essence, it will only take a couple of years for mobile apps to become one of the most popular computing tools for users on a worldwide basis. In other words today's mobile apps sales are still just a tip of the iceberg. There is much more to the report however - it focuses on and defines what Gartner now calls "Cognizant Computing" - which will be central to the mobile app explosion. What is it? Read the article and find out.

An interesting question worth asking relative to a mobile app explosion is on what mobile operating system platforms these apps will manifest themselves on. Well, we are fairly sure that it won't be either Samsung's alternative operating system Tizen or Ubuntu Touch. Both platforms took significant hits recently, with hope fading that either of them will ever catch on. For Samsung it clearly means it will remain a huge user of Android. In fact it also means that both the Android and Windows Phone platforms are likely to become deeply entrenched on the low end.

South Korea, by the way, is preparing for the deployment of 300 Mbps mobile bandwidth - which will keep the country at the leading edge of wireless service capabilities. This certainly means that Samsung will have an entire country with which to deliver high end mobile devices to. All that bandwidth capability will need capable smartphones to effectively make use of all the data that becomes available.

We'll end the week's review with a couple of BlackBerry items. First, CEO John Chen has announced that BlackBerry will quickly be taking its QNX operating system up to the cloud. This makes a great deal of sense for many reasons, one of them being the Internet of Things and machine to machine possibilities that open up. Chen has been cleaning up BlackBerry's management ranks and bringing in a number of former Sybase colleagues he trusts, but for the new QNX group he has tapped Alec Saunders, who has been at and QNX and subsequently BlackBerry - dating back to when BlackBerry - then doing business as Research in Motion, acquired QNX.

Finally, aside from all of the management moves Chen is making, he has also fully focused the company on continuing to drive its powerful government and enterprise security capabilities - which is a foundational cornerstone of BlackBerry's history. All of these things have caused the stock to pop back up to $9+ per share, which is the number that BlackBerry was originally going to be acquired for. Now analysts are suggesting a possible minimum target price of $17 per share. Chen, who is already quite wealthy, no doubt sees an opportunity here for substantially new wealth - no wonder he's dropped the "interim" from his CEO title.

Have a great weekend!

Edited by Tony Rizzo

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