The labor efficiencies gained through the S.E.A. labor force combined with the margin efficiencies and dearth of development effort needed to produce a competant product (due to Android's open source, "less than free" model) combine to make a very, very potent and formidable brew in the portable computing space. Asus, the company that totally disrupted and up-ended the computing world with the introduction of the razor-thin margin netbook computer form factor is back again to do the same things to the tablet and smartphone market. Samsung, LG and HTC will will not take this lying down, for they all have similar capabilities in terms of margin management, with Samsung possessing significant manufacturing capabilities. Oh yeah, even little Asus has managed to jump on the Apple marketing bandwagon. You see, no lead lasts forever. Asus is not there yet in terms of marketing, but their products are bustin' ass and they just launched their first Honeycomb tablet (the Transformer, above) last month. Check out what's on tap for next quarter, then come back and talk to me about innovation and disruption...
Here goes 3D screens, the thinnest capacitive stylus tech in the industry (that innovation thing) and full telephony, both through the tablet itself or through the telephony-only handset accessory (there goes that innovation thing again).
I have used Asus products for about 6 years or so now. They make good, solid products and you can buy them for a few hundred dollars (as in under $400). There is no compromise at those price points and even price points up to twice as much. The partnership with Google's Android is a killer combination as it allows each company to focus on its core comepetencies. A good example is the Transformer, which by itself is a much better performing and practical product than the iPad 2 see:
Despite the fact his launched last month, Asus is already launching two other tablets and a smartphone before the 4th quarter end, in time for the holidays. In addition, Android is slated for two major software upgrades in this same time period (HC 3.1 and IceCream Sandwich, which melds tablet and smartphone OS UIs). This is a ridiculously rapid pace and is impossible for Apple to keep up with as it struggles to launch the iPhone 4G (3 months late) and prep the iPad 3. In addition, Samsung, whose Tab 10.1 tablet is the thinnest and lightest in the industry (as well as their smartphone boasting nearly the same claim), has already announced updates to both the tablet and the phone for the 2nd quarter of 2012 that will more than double performance, most likely due to their proprietary Exygins? chip which is less power hungry yet faster than anything currently on the market. No, they will not be selling this to Apple (they make the chips for Apple's iPad and iPhones).
Glasses free, HD 3D phones are now everywhere HT, LG and even Sony who happens to have a dual 8MP 3D camera mechanism:
Kyocera Echo morphing screen form factor
Then there is Google's first mover advantage in mobile payment systems using the Android OS. This is a very, very big milestone and is something that will be very hard for competitors to match or even mitigate - particularly the pricing structure and platform infrastructure, both of which Google is uniquely well suited to capitalize on.
The possibilities here should not even need to be mentioned. It is rumored that the Yankees tickets may be available at 50% off if purchased through your phone's wallet. Promotions, geo-location sales, social media to the extreme, Groupon to the nth degree. Thus far, no other competing service is even off the ground. Innovation is coming in booms.
Professional and institutional subscribers should upgrade the kick-off stage of the Google Valuation Model to factor in these launches (63 pg Google Forensic Valuation, to plug in your own assumptions see Google Valuation Model (pro and institutional)) as mobile ad, cloud and subscription revenues look as if they may actually approach the "kick off" stage - not there yet but it does look promising...
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