An often irreverent look at this week's other news ...
Microsoft Paid Nokia $250 Million in Q4 2011. So?
When Microsoft and Nokia announced their historic partnership in early 2011, one of the key items of that relationship was that Microsoft would be paying Nokia at least $1 billion over several years. And now we can see that the first of these payments has been made: In Nokia's most recent quarterly report—which I wrote about separately in Nokia Sold "Well Over" 1 Million Windows Phones in 2 Months—Nokia notes that it has received a payment of $250 million from Microsoft. These payments are aimed at helping Nokia shoulder the burden of migrating from its previous mobile platforms to Windows Phone, and while many less sophisticated bloggers will try to turn this into some "Microsoft has to pay partners to adopt Windows Phone"-type story, the reality is that we knew about this up front, and Microsoft's payments to Nokia are both understandable and logical. And Nokia addressed the payments in a statement, noting that its "broad strategic agreement with Microsoft includes platform-support payments from Microsoft as well as software-royalty payments from [Nokia] to Microsoft." Nokia says the two firms "have a competitive software royalty structure, which includes minimum software royalty commitments." So the money's going both ways, as planned, and Nokia says that the amounts traveling in both directions will be in "the billions of US dollars."
Is Xbox LIVE Coming to iOS and Android?
One of the big recent rumors is that Microsoft is planning to port its Xbox LIVE service to both iOS (iPhone, iPad, and iPod touch) and Android (smartphones and tablets), increasing the reach of the service, which now serves users on the Xbox 360, Windows-based PCs, and Windows Phone. Can we now confirm this rumor? Let's see. "While the Xbox LIVE experiences and games always work best on the Windows platform, we understand that some Xbox fans may be using other types of devices," a Microsoft spokesperson said this week. "To satisfy that need, we are working to extend a few of our Xbox experiences and titles to other platforms." Hmmm, that doesn't explicitly say that the Xbox LIVE service is coming to iOS and Android. But perhaps an oft-cited Microsoft job listing will prove otherwise. "As a software development engineer on the team," the listing reads, "you will have the opportunity to help define and design the experiences for the project, you will get to work with a team of energetic and talented developers, and you will have the luxury to work with all sorts of mobile devices to create the official Xbox LIVE mobile experiences." A bit closer, but no confirmation. Here's how I read this: More Xbox LIVE "experiences" are coming to other mobile platforms, and we've already seen that happen with the Xbox LIVE app for iOS and the Xbox Companion app for Windows Phone. But that doesn't mean that Microsoft is porting the entire Xbox LIVE service to these alternative mobile platforms. Doesn't mean it's not, either. We just haven't seen any real proof yet. So let's stop speculating and move on, huh?
Apple Responds to the Human Rights Abuses at the Factories that Make Its Products
A recent New York Times story proves what we've all known for some time: Apple knows about and does very little about the rampant human rights abuses that occur in the China-based factories that produce all of the firm's electronics products and computers. I've been amused by the reaction to this story from Apple's fans—which boils down to "every company does it," as if that somehow excuses Apple, which is the worst offender thanks to the rampant sales of its products and its heady ~45 percent margins—but then that's expected. These guys aren't used to reality anyway. I'm more interested in Apple's reaction. And as you might expect, the company isn't amused that anyone has cast a harsh light on its dirty little secret. "Some people are questioning Apple's values today," Apple CEO Tim Cook wrote in a letter to the New York Times that simply states the obvious. "We care about every worker in our worldwide supply chain. Any accident is deeply troubling, and any issue with working conditions is cause for concern. Any suggestion that we don't care is patently false and offensive to us. As you know better than anyone, accusations like these are contrary to our values. It's not who we are." So. Apple cares. But they apparently care more about profits and unit sales, because these human rights abuses are real, and ongoing, and Apple has known about them for quite some time. So that's what "care" means. That said, Cook says Apple is addressing the problem, if perhaps belatedly and with as little enthusiasm as ever. "We will continue to dig deeper, and we will undoubtedly find more issues. What we will not do—and never have done—is stand still or turn a blind eye to problems in our supply chain. On this you have my word." There you go. Let's see what happens.
Samsung Was the Number-One Smartphone Maker of 2011
Apple might have experienced a nice little bump in Q4 2011 thanks to pent-up demand for its iPhone 4S—which shipped four months later than anticipated—and an interesting low-ball strategy for other iPhones like the free 3GS and cheap iPhone 4, but it wasn't enough to put the company over the top for the year. Instead, Samsung was the world's biggest maker of smartphones in 2011, and that trend will likely continue now that Apple's quarterly bump is over. Samsung sold 95 million smartphones in 2011, compared with 93 million for number-two Apple. But Samsung's biggest achievement, perhaps, was that sales of its smartphones rocketed 278 percent in the year—it sold just 25 million smartphones in 2010—blowing the doors off Apple's growth (Apple had sold 47 million iPhones in 2010). Samsung sold 20 percent of all smartphones in 2011. Number-three Nokia controlled 16 percent of the market, but of course that company is struggling and in the midst of a platform do-over.
HP Announces Plans for webOS
HP this week announced its plans for the Palm webOS platform, which it previously revealed would be made available for free to the open-source community. HP will deliver webOS 2.0 to the community by September of this year, along with its Enyo software development tool, using the Apache 2.0 license. "HP is bringing the innovation of the webOS platform to the open-source community," HP Executive VP Bill Veghte said in a prepared statement. "This is a decisive step toward meeting our goal of accelerating the platform's development and ensuring that its benefits will be delivered to the entire ecosystem of web applications." In many ways, then, the opening up of webOS will somewhat mirror that of Google's hugely successful Android system, and of course webOS will benefit from its free availability to licensees. I'm curious to see whether this plan gains any traction, and frankly I wouldn't be surprised to discover that webOS is in many ways technically superior to Android. I'll be watching this, skeptically but hopeful.
Netflix Soars on Better-than-Expected Results
It looks like subscriber outrage over Netflix's bungled transition from a DVD rental service to a streaming video powerhouse was a one-quarter bump. After an embarrassing 2011 in which Netflix CEO Reed Hastings and his company became the butt of jokes, Netflix rebounded quite nicely in Q4 2011, silencing critics and gaining a sweet 22 percent stock hike. Netflix posted a profit of $41 million on revenues of $875.6 million in the fourth quarter, and that latter number didn't just blow past expectations, it was 47 percent higher than the revenues in the same quarter a year earlier. But the bigger news was that Netflix's streaming video subscriber base jumped by 610,000 new subscribers to 24.2 million. (It had lost 800,000 subscribers in the third quarter after announcing a price hike and, temporarily, a plan to rename its DVD service.) In the United States, Netflix has 21.7 million streaming subscribers and 11.2 million DVD subscribers (there is overlap).
AT&T Sells Significantly More iPhones than Verizon in Q4 ... But Which iPhones?
AT&T Wireless sold more iPhones and more smartphones overall in Q4 2011 than did Verizon Wireless, based on numbers provided by both companies, narrowing the gap between their subscriber bases. AT&T recorded 7.6 million iPhone activations in the quarter, compared with 5.2 million for Verizon. (And AT&T lost a ton of money in the quarter—a $6.7 billion loss—which it attributed to its failed bid to merge with T-Mobile.) But there are two issues here. First, AT&T sells three iPhone models—the 4S, 4, and 3GS—while Verizon only gets the newest model. And I'm curious about the mix of iPhone 4S devices on AT&T, which were new to the quarter, compared with the older, less expensive iPhones like the iPhone 4 and iPhone 3GS (the latter of which is free). AT&T doesn't appear able to discuss the exact mix of Apple devices sold—no doubt a requirement from Apple, which could be embarrassed by the sheer number of out-of-date iPhones that make up its overall sales. According to outside analysts at TBR, however, a good deal of AT&T's success at selling iPhones this past quarter can be attributed to demand from the late-to-market iPhone 4S, yes, but also "the availability of a low-priced $99 iPhone 4 and free iPhone 3GS and the holiday shopping season, which typically boosts device activations." And while I'm sure the 4S outsold the others ... I bet it was pretty damned close. This is absolutely OK, of course, given the variety of Android devices that Apple competes against. But people look at Apple's sales figures and assume it's all one iPhone model there. It's not: There are three, and one of them is free. And I bet that free one is selling at an artificially healthy clip right now. What this all ties into is a very simple fact: Apple experienced a wonderful iPhone sales bump in Q4 2011. But it was temporary, and the company still didn't outsell Android.
Motorola Mobility Swings for a Loss
Meanwhile, the Android partner Google decided to buy isn't doing so well: Motorola Mobility reported an $80 million loss on revenues of $3.44 billion in the fourth quarter of 2011, and a loss of $250 million on revenues of $13 billion for the full year. The firm sold 10.5 million smartphones and tablets in the quarter and 42 million devices in the year. Of those, 5.3 million smartphones were sold in the quarter and 18.7 million smartphones were sold in the year. I'm not saying Motorola is a dog, per se, but it's certainly just one of several Android partners and not a particularly compelling one from a device perspective. But this just lends further credence to the notion that Google is really after Motorola for its mobile industry patents. That deal is currently being reviewed by regulators in the United States and elsewhere.
Listen to Paul. No, Really Listen. Or Watch. Or Both!
This week, Andrew Zarian and I recorded the latest episode of the What The Tech podcast on Tuesday, and Mary Jo Foley, Iyaz Akhtar, and I recorded the latest episode of the Windows Weekly podcast on Thursday. As always, these episodes should be available now or soon, generally in both audio in video formats, on the web, and via iTunes, the Zune Marketplace, and wherever else quality podcasts are found. You can also find all of my podcast activities on the SuperSite for Windows.
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