Reggie Middleton

Reggie Middleton

Resident Contrarian Badass at BoomBustBlog (you can call me Editor-in-Chief)...

Disruptor-in-Chief at Veritaseum.com, where we're ushering the P2P Economy.

 

Yahoo borrows a page from Google's book and gets disruptive for 2014. I like!!! 

The old media is ripe to be shaken up even further, and why should everyone let Google's Youtube have all of the fun. Lauren Lyster, a personality who used to interview me often on RT joined Yahoo last year as well. She's good and Yahoo is aggressively recruiting talent and investing in this space. 
Now, the old guard media, if they had any sense, would retaliate by pushing harder into the new media space. Don't hold your breath for that one to happen any time soon, though.

krugman-picsay

Paul Krugman wrote an anti-cryptocurrency Op-Ed piece in the NY Times titled the "Anti-social Network". Now, I know the Times needs to sell ad space and subscriptions, hence technical accuracy may not be exactly what they are going for, but Mr. Krugman (the classical Keynesian economist type - I don't particularly subscribe to such schools of thought, I guess I'm not educated enough) has spewed so many inaccurate statements, false facts and just plain old indications of his total misunderstanding of the subject matter one would think it would behoove the Times to either have him issue corrections (or, since it is Op-Ed after all) have someone such as my self (you know, maybe a little less academically involved) come after him and clean up a little. 

Now, where shall I start? To quote Mr. Krugman:

So how is bitcoin different? Unlike credit card transactions, which leave a digital trail, bitcoin transactions are designed to be anonymous and untraceable. When you transfer bitcoins to someone else, it’s as if you handed over a paper bag filled with $100 bills in a dark alley.

I don't think that's true Mr.Krugman. Let's refer to Wikipedia's write-up on the Cryptocurrency...

 Once validated, every individual transaction is permanently recorded in a public ledger known as the blockchain.[8] 

I believe Mr. Krugman made this error due to the accuracy of a statement made earlier in the Wikipedia description of Bitcoin, to wit:

Bitcoin (signBitcoinSign.svg; code: BTC or XBT[7]) is a peer-to-peer digital currency that functions without the intermediation of a central authority.[8] 

You see, the old school way of applied economics may very well have a big problem wrapping their collective heads around the concept of the absence of a "central authority" (read central bank) to act as the Grand Pubah, or ultimate financial intermediary. I'm just saying..

And to go on with the oh so witty comments from Mr. Krugman...

And sure enough, as best as anyone can tell the main use of bitcoin so far, other than as a target for speculation, has been for online versions of those dark-alley exchanges, with bitcoins traded for narcotics and other illegal items.

Bitcoin is a currency that's no older than 4 or 5 years. Has any other currency experienced a genesis any different than Bitcoin? The US dollar, when freshly minted was used for the spurious trade of human lives, the lives of my very own relatives several generations back, actually. It was the tool for rampant speculation as well, prone to extreme volatility and purposeful devaluations. Was it really so different from Bitcoin before it went mainstream (that is except for the purposeful devaluations part since there is no Grand Pubah to unilaterally call the market shots)? Methinks this economist may be picking and choosing his facts. For instance, look at how he started the Op-Ed missive in the first place...

Bitcoin’s wild ride may not have been the biggest business story of the past few weeks, but it was surely the most entertaining. Over the course of less than two weeks the price of the “digital currency” more than tripled. Then it fell more than 50 percent in a few hours. Suddenly, it felt as if we were back in the dot-com era.

The economic significance of this roller coaster was basically nil. But the furor over bitcoin was a useful lesson in the ways people misunderstand money — and in particular how they are misled by the desire to divorce the value of money from the society it serves.

Volatility is the name of the game with new currencies that have limited penetration and distribution, no? Why pick on bitcoin? Let's recall how the US dollar got started via the continental note, as per Wikipedia:

By the end of 1778, Continental Currency retained between only 1/5 to 1/7 of their original face value. By 1780, Continental bills - or Continentals - were worth just 1/40th of their face value. Despite efforts by Congress to reform the currency by removing the old bills from circulation and issuing new ones, the attempt met with little or no success. By May 1781, Continentals had become so worthless they ceased to circulate as money. Benjamin Franklin noted that the depreciation of the currency had, in effect, acted as a tax to pay for the war.[1] In the 1790s, after the ratification of the United States Constitution, Continentals could be exchanged for treasury bonds at 1% of face value.[2]..

Hey, it doesn't end there...

 On August 8, 1785, the Continental Congress of the United States authorized the issuance of a new currency the US dollar.

However runaway inflation and the collapse of the Continental currency prompted delegates at theConstitutional Convention in Philadelphia in 1787 to include the gold and silver clause into the United States Constitution preventing individual States from issuing their own bills of credit. Article One states they were prohibited to "make any Thing but gold and silver Coin a Tender in Payment of Debts."[4] 

 Paul then goes on to compare Bitcoin enthusiasts to Goldbugs - which was inevitable. I'm far from a Goldbug, and those that follow me can attest. Apparently Mr. Krugman isn't either, but he appears to make a specious argument, to wit:

The similarity to goldbug rhetoric isn’t a coincidence, since goldbugs and bitcoin enthusiasts — bitbugs? — tend to share both libertarian politics and the belief that governments are vastly abusing their power to print money. At the same time, it’s very peculiar, since bitcoins are in a sense the ultimate fiat currency, with a value conjured out of thin air. Gold’s value comes in part because it has nonmonetary uses, such as filling teeth and making jewelry; paper currencies have value because they’re backed by the power of the state, which defines them as legal tender and accepts them as payment for taxes. Bitcoins, however, derive their value, if any, purely from self-fulfilling prophecy, the belief that other people will accept them as payment.

I really need somebody from the academic ivory towers to explain to me the difference between paper currencies being backed by the power of the state and Bitcoins alleged self fulfilling fulfilling prophecy of the belief that other people will accept them as payment. Both of these concepts share one common theme that seems to have escaped Mr. Krugman - Belief!!! Being backed by the full faith and power of the government means nothing unless you believe that government backing has a real value. That real value, if you do believe in it, is solely a function of your level of belief in the government and the governments willingness to back the currency  and to what extent. After all, Greek bonds written under Greek law are backed by their government as well, as are Somalian bonds. So, pray tell, what's the difference between the value of those bonds and US treasuries? Belief, that's the difference! Again, a refresher from Wikipedia:  

Today, like the currency of most nations, the dollar is fiat money, unbacked by any physical asset. A holder of a federal reserve note has no right to demand an asset such as gold or silver from the government in exchange for a note.[28] Consequently, some proponents of theintrinsic theory of value believe that the near-zero marginal cost of production of the current fiat dollar detracts from its attractiveness as a medium of exchange and store of value because a fiat currency without a marginal cost of production is easier to debase via overproduction and the subsequent inflation of the money supply.

Below are additional observations regarding Apple's most recent earnings announcement. Please pay particular attention to the new video content.

Quick chain of events:

  • I explained the business strategy behind the iPad designed to allow Apple to enter the netbook fray without Margin compression it worked!

  • The iPad, a raging success, still had lower margins than the cash cow iPhone franchise but still served its purpose in allowing Apple to diversify its revenue streams for over 60 percent of its profits came from a single product - and that's dangerous!
  • I warned that Google's Android will quickly start eating Apple's lunch, which was high in margin fat. I was proven correct as Apple's tablet market share (a market that Apple ingeniously reinvented) fell from 92% to 32% in just 3 short years.

Reference: 

Sliced Apple Margins For Dinner?

Steve Jobs Calls End Of the PC, We Call The End Of The Fat Margin Tablet – Including The Pretty iPad, With Proof! 

Then go on to BGR.com: History repeats itself: Android tablet shipments blow past iPad

Whether or not people are really using Android tablets, it has become clear thatAndroid tablet shipments are absolutely exploding as Apple’s overall iPad shipments decline

iPad Shipments Decline As BoomBustBlog Time Machine Disrupts ...Jul 31, 2013

Apple's iPad Is Losing Market Share And Profit Margin As Apple Hits ...Mar 16, 2012 

  • Samsung emerged as the top Android vendor (again as forecast at BoomBustBlog, reference Deconstructing The Most Accurate Apple Analysis Ever) by offering a wide array of products, many of which offered superior performance to Apple's, due in large part to Android performance enhancements and capabilities. 


  • Samsung released 7 and 8 inch tablets which sold well. I forecast that tablet sales will continue to dwindle due to the increasing capabilities and screen sizes of cell phones. The performance and comfort of use delta is shrinking quickly.
  • Samsung released the Galaxy Note, though panned by tech critics and pundits, was a success in the market.
  • Samsung released the Galaxy Note 2 which further defined the segment and was a raging success.
  • Google launch its own branded tablet, the Nexus 7, at a cut rate price with leading performance and it was an immediate hit- confirming my thesis on the converging form factor - reference Steve Jobs Calls End Of the PC, We Call The End Of The Fat Margin Tablet – Including The Pretty iPad, With Proof! 

Apple US sales have completely stalled and growth is coming only from international sales. Those sales will be stymied in part by devices such as the Moto G on the low end and the Oppo Find 5 and N1on the high end - both with a price/performance ratio that can't be touched by a fat margin vendor - Apple or otherwise.

Subscribers, download the Q3 2013 valuation reports (click here to subscribe).

File Icon Apple 4Q2013 preliminary update

The update from two months ago is also of value for those who haven't read it. It turns out that it was quite prescient!

  1. File Icon Apple 1Q2013 update - Pro & Institutional (Technology)
  2. File Icon Apple 1Q2013 update - Retail (Technology)

Two months ago I answered the query, Is There A Bubble In The Canadian Condo Market? for my subscribers. The missive started off like this: 

The Canadian condo market is running into a precarious over-supply situation with large inventories slated to be entering the market in 2014 and 2015. Major centers such as Vancouver, Montreal and Toronto are witnessing a rapid pace of condo construction, despite falling sales. The demand for housing overall is slowing down, with sales in the last few months of 2013 falling on y-on-y basis. In most major Canadian markets there is an increase in listings and decrease in sales (even though prices are still somehow rising, which should in and of itself be indicative of a problem). 

Well, the Financial Times is now weighing in on the issue... Canada’s housing market teeters precariously

Robert MacFarlane, a long-time crane operator, surveys his empire from the top of one of Toronto’s flashy new apartment buildings. “I can see more than 50 tower cranes,” said Mr MacFarlane, whose bird's-eye photography from the country’s tallest crane has gained him online notoriety as interest in Toronto’s property sector escalates.

These cranes – which can offer clues to bubble-like conditions – emerged in response to lofty demand for condominiums from investors and homebuyers taking advantage of Canada’s ultra-low interest rates.

This is a fact. I've observed this in the bubble markets that I've personally experienced: Miama, NYC, DC - cranes and construction galore. In retrospect it appears virtually impossible for anyone NOT to realize we were in a bubble.

But as home prices rally and construction projects proliferate – particularly in Toronto, Montreal and Vancouver – industry analysts say the country’s property sector is perched precariously at its peak.

David Madani, economist at Capital Economics, believes the nation is on the verge “of what will prove to be a prolonged correction”.

“Canada’s housing market exhibits many of the symptoms that preceded disruptive housing downturns in other developed economies, namely overbuilding, overvaluation and excessive household debt,” he adds.

Mr Madani’s comments chime with a chorus of policy makers, rating agencies and hedge fund managers who have warned of the risks posed by Canada’s overheated housing market.

Alongside Norway and New Zealand, Canada’s overvalued property sector is most vulnerable to a price correction, according to a recent OECD report. It is especially at risk if borrowing costs rise or income growth slows.

And why in the world would borrowing costs rise with all of the world's most powerful central banks pushing #ZIRP4EVA???

In its latest monetary policy report, the Bank of Canada, the nation’s central bank, noted: “The elevated level of household debt and stretched valuations in some segments of the housing market remain an important downside risk to the Canadian economy.”

The riskiest mortgages are guaranteed by taxpayers through the Canada Mortgage and Housing Corporation, somewhat insulating the financial sector from the sort of meltdown endured by Wall Street in 2007 and 2008. But a collapse in home sales and prices would be a serious blow to consumer spending and the construction industry that employs 7 per cent of Canada’s workforce.

But isn't that a circular argument???

...the flipside of a low interest rate policy designed to buttress the economy has meant that household debt levels have hit record highs as homebuyers stretched themselves to jump into the housing market. That in turn propelled demand and prices.

... Household debt has risen to 163 per cent of disposable income, according to Statistics Canada, while separate data show a quarter of Canadian households spend at least 30 per cent of their income on housing. This is close to the 1996 record when mortgage rates were substantially higher.

On a price-to-rent basis, which measures the profitability of owning a house, Canada’s house prices are more than 60 per cent higher than their long-term average, the OECD says.

... Year-to-date new home sales in the Greater Toronto Area – an area accounting for a fifth of Canada’s home building activity – are down by half from two years ago, according to the Building Industry and Land Development Association.

... Mr Madani forecasts a market correction in home prices over the next few years, predicting a 25 per cent drop.

But those that are bullish on the market point to resilient regional data. October sales of existing homes rose 38 per cent in Vancouver and 19 per cent in Toronto.

“It’s a mistake to think that what happened in the US will happen in Canada,” said Gregory Klump, CREA’s chief economist said.

Yes, because this time it's different!!!

... Mr MacFarlane too has yet to be convinced of an imminent slowdown. “In the past when things have slowed down, there has been a distinct ‘feeling’ from the boots on the ground perspective. I don’t really sense that right now.”

Nothing like that good 'ole empirical forensic analysis to make an investor feel all warm and cozy, right?!

All paying subscribers, feel free to download.

File Icon Is There A Canadian Condo Bubble? (Residential Real Estate)

Non-subscribers can purchase this report through a day pass subscription via PayPal orCredit Card 

More on this topic...

    1. The Canadian Real Estate Bubble? Featured -Jul 25, 2012 - Below is an email that I recieved from a reader: RIO Canada is one of the biggest reit's in Canada I know some of there management and from 

...

 moto G

Google has fired a shot across the bow of the smartphone market, and it quivers in response

Yesterday, Google's Motorola division released the Moto G, a $179 full featured smartphone with a screen resolution and size superior to the $650 iPhone 5S, and an all day battery that bests the iPhone and Samsung Galaxy S series as well. This is a fully functional smartphone that is priced below the cost (as in the cost to build!!!) iPhone 5S and Samsung Galaxies (as in all of them!). Needless to say, this threatens to give Google significant market share in the low and mid-tiers, not to mention full vertical integration (the hardware, software, app ecosystem, cloud and services will belong to Google - leaving only the wireless pipes for it to contend with, and I would not sleep there either [Google Fiber in your diet}).

Google's cost shifting business model allows them to sell this phone below the actual cost of manufacturing and development of many if not all of its competitors. For those not familiar with the concept of cost shifting...

This is how Google did it...

For those who do not remember the importance of market share on margins, let's reminisce on post past...

Looking Through Windows To See The Big Data On Fruit - Or Android Gets 'em Again

In early 2010 I warned on Blackberry (then RIMM), with market share loss to Android being the prime determinant... . I put significant data out in the public domain to illustrate my point and put explicit price points out for subscribers, ie. RIM Smart Phone Market Share, RIP? Was I right?

Blackberry market share vs margin correlation analysisBlackberry market share vs margin correlation analysisBlack

I explained this in detail in the post "Cost Shifting Your Way To Prominence Using The Network Effect, Or Google Wins - Apple, RIM & Microsoft Have ALREADY LOST!". Failure to achieve the network effect effective is tantamount to a failure to be able to control you margins, long term. Of all people to of know this, who do you think preached it most convincingly? 

Margin compression was sure to kill Blackberry, even if they did hit their sales numbers, which they didn't and couldn't!!!

 

Related reading...

The Smallest & Liveliest Of The DeadBeat Carriers Successfully Launched Wireless WMDs

Again, The Sell Side Analysts (Even The Rock Star Analysts) Don't Seem To Understand The Mobile Computing Wars

Reggie Middleton's Apple Q4 2013 Analysis: RDF In Full Effect As Analysts & Press Go GaGa Over Garbage!

Within two years of getting the mobile computing crown (toppling Apple and insuring that Nokia and Blackberry didn’t stand a chance), Samsung is already prepping to relinquish it. I know, the hoi polloi screams from the common street analyst’s rooftop, incessantly chanting “… but Samsung is dominating handset sales, creating and literally owning categories, and essentially out Appling Apple!”

Well, the reason why I apparently out-maneuver the Street in this space (as in others) is not vastly superior intellect nor a LiPoSilica Oxide powered crystal ball borne from some extraterrestrial technology. It’s actually so much simpler than all of that.

See also...

Thumbnail 5:31 Reggie Middleton Wins The CNBC Stock Draft 21 Stocks, 7 Traders, One Winner

Buy Apple till $1000! Hurry & get this Facebook IPO while its hot! Short Google to go long Apple! Reggie Middleton shorts Wall ...
Reggie Middleton goes for his 2nd consecutive win on the CNBC Stock Draftinvestment challenge. Look at the amount of ...

Subscribers, see also... 

Subscribers, download the Q3 2013 valuation reports (click here to subscribe).

The update from two months ago is also of value for those who haven't read it. It turns out that it was quite prescient!

  1. File Icon Apple 1Q2013 update - Pro & Institutional (Technology)
  2. File Icon Apple 1Q2013 update - Retail (Technology)

 

In foillowing up on the photographic capabilities of the flagship device from Oppo, I want to make my followers aware of the following updates. I have taken a few more pictures around town and I'd like to share what I've discovered from this capable device from the Chinese Margin Compressor known as Oppo.

After takng a trip to a local AT&T store...

20131110 150752

Now, as you may recall from my post yesterday (A Thorough Look At The Oppo N1's Photographic Capabilities: Low Margin, High OEMs That Can Threaten Apple & Samsungregarding the N1's dissappointing camera performance I believe this hardware can do better. As you can see above, if the subject is saturated with light the N1 outperforms in terms of realism if not resolution. I mailed the company yesterday (Sunday) early evening and they replied early this morning (remember, the company is based in China, I'm in NYC). This is the reply: 

We'll be sending out a firmware update on Nov. 14th (subject to change) and you should see improvements with both the camera and the battery life. Will confirm that date when I can. Thanks for sending in that post!

Maybe I'm a little cynical, but I doubt very seriously I can get a turnaround that fast from Samsung, LG, Apple, Nokia/Microsoft or Apple. I have a problem getting samples of the product sent over. Let this be and example of how hungry and responsice this little manufacturer of high end equipment is. When you raise the bar on performance and drop prices, what does it mean????

image078

On the topic of battery life, the N1 has the biggest battery that I'm aware of in a cell phone. Here's the results of my first day of usage. For those who don't speak Android, I used this phone for 22 and half hours taking photos and videos, VOIP phone calls, surfing the web, etc. and still had 19% battery left. Oppo says there's an update coming out in 3 days that will further extend battery life. How do they achieve such a long lasting battery? A 3,600mAH battery (the largest in the industry) coupled with a CPU chip that is frugal, no LTE (but it does have penta-band HSPA+) and optimized and above all, light, customization to the Android OS.

Regarding the picture below, the phone was plugged into a car charger between 10 to 20 minutes in the middle of the day, and although the cellular radio was on, no SIM chip was installed. Instead I used VOIP while tethered to my other phone throughout the day. Most other sensors and radios were on and I took extensive full resolution pictures with and without the flash.

thumb CAM00105 copyo

Why am I focusing on the camera so much?

When the  first camera appeared on cell phones in Japan in 2000 and shortly thereafter in the states, photography from the phone was a novelty. The pictures were grainy, blurry and very low resolution. It was at this time that the camera manufacturers should have caught on. Alas, like practically any other successful industry, they rested on thier laurels as cell phone and then smart phone manufacturers steadily increased the performance of their devices. Fastforward ten years and these cell phones have all but decimated the once powerhouses in point and shoot photography. Ask KodakOlympus, Polariod and Minolta if you doubt me, or reference Put your point-and-shoot in a museum, next-gen phones have finally...

Now, we have the heavy weights of the photography industry - who have all gove digital - and they are exhibiting the same hubris as the smaller point and shoot guys - you know, the guys who are all but out of business. Reference To Save Itself, The DSLR Market Should Look To Smartphones And Revalue Each Press Of The Shutter or reference the WSJ report claiming DSLR camera shipments could fall 9.1 percent by the end of 2013, versus 2012, according to research firm IDC. As you might imagine, DSLR diehards poo poo this notion, but then again so did the executives of the point and shoot industry 5 years ago. Don't worry fellas, I know - "But... But... But... It's different this time!"

From the N1 without the software patch... 20131110 155251 9411IMG20131110151456 1IMG20131110152940IMG20131111015705IMG20131111024856

{youtube}MgiituhsRsg{/youutube}

Subscribers, download the Q3 2013 valuation reports (click here to subscribe).

The update from two months ago is also of value for those who haven't read it. It turns out that it was quite prescienct!

See also:

What Sell Side Wall Street Doesn't Understand About Apple - It's Not The Leader Of The Post PC World!!!

 The short call - October 2012, the month of Apple's all-time high and my call to subscribers to short the stock:  Deconstructing The Most Accurate Apple Analysis Ever Made - Share Price, Market Share, Strategy and All

In continuing with the "Hardware is Dead" mantra, I bring you a company that I introduced last year as the maker of some of the most beautiful, durable and innovative handsets available. Below is an introductory overview of their latest flagship handset, the N1 from Oppo - a Chinese company that I featured on my blog about a year and a half ago with thier then flagship - the Finder 5. It was the first five inch full HD phone that I was aware of. It was the first phone sporting a 13 MP camera that I knew of. It was sexy, a sandwich of metal and hardened glass. It was also the thinnest smartphone that I knew of at the time. Although a year old, it is still competitive in terms of performance and specs. Unlike the iPhone, it was durable as well. How durable? Check out this demo...

So, if you're a true nerd such as I, you must wonder what the follow-up flagship from this little known company that makes reference quality high end Blu-Ray players is like. Well, rotating 13 MP camera, 3600 mAH  battery, BLE remote control, rear mounted touch pad - it's different and an obvious attempt at innovation beyond the simple rectangular slabs that we've grown used to. Of course, not everthing is herbs and roses here, but one thing is for sure - priced below $600 US, it can easily put margin pressure on the big boys if it catches on. I should know, because I pioneered the hypothesis of Southeast Asian companies armed with Android ripping through profit margins of the big boys three years ago when the mere thought of such was blasphemous and I was thought to be inept. Now, if you Google "Apple Samsung margin compression" you get...

  1. Samsung Follows Footsteps Of Apple, HTC, Nokia - Wasn't That ... Sep 6, 2013 - I've written several articles on this topic, with Samsung, Apple, RIMM, NOK and ...  Apple Gears Up To Combat The Margin Compression That...

  1. Samsung Will Be Ready To Do That Fruit Thing, Just Like Blackberry ...Mar 7, 2013 - Two and a half years ago I declared in my mobile computing wars series that Google would commoditize the mobi...

Here's a quick video of the unboxing and a comparison to the market leader as well as my personal favorite. There are two technical errors in the video, One, the camera does NOT have OIS (optical image stabilization) which is apparent in low light situations, and two the camera assembly has a 6 element lens array, not 7. This may be minor to most, but the technical geeks among you will notice the snafu.

About the camera...

There's a lot to write about the camera on this phone. Let's start with... 

The Good

Let's face it, the iPhone is still probably the most popular phone among the cosmopolitan, metropolitan cutie crowd. They buy it because it's cute, and these girls use the cute iPhone to make a lot of cute "selfies". From grade school, to high school, to undergrad, to college and grad school, to the young adult dating scene, to married with kids, to taking self portrait flics with the grand kids - the front camera on smartphones get worn out by the female cosmo crowd. This is where the N1 stands out.  It uses one very high quality camera on a swivel instead of a big/little combination back and front. The results, combined with innovative software, are quite impressive.

The self photography (or selfie) market is bigger than even I thought. I took the N1 to various spots around NYC city and let cute girls esconced in make-up try it out. They loved it. Check this out...

You swivel the camera a full 270 degrees to the from to take a hi-res selfie...

CAM00303

You then invoke the "Make-up" app and choose the desired effect (sexy, elegant, sping freshness, blah, blah, blahhh...). The phone then applies its processing wizardy around your face, eyes, head and mouth. If you click the "fine tuning" option, you can drill down to specific facial parts to custom sculpt your face...

CAM00304

CAM00305

 CAM00300

 CAM00308

You custom sculpt your facial parts by grabbing and dragging the dots to where you'd like to expand or contract your eyes, mouth and lips...

 CAM00309

This is the finished product...

CAM00312 

For those non-make up type guys (I profess that I may be one of them) who may not be able to see the difference, this is a split screen comparison...

picsay-1384027953

I believe Oppo may be on to something here... 

Then there's the Bad...

I consider the N1 to be a photography-centric phone, and as such I must admit that I was rather dissappointed with the performance of the camera in low light settings and even in broad daylight, particularly when compared to competing high performing shooters such as the LG G2 and the new Nokia phablet (I believe it's the 1520) & the 1020. There was a material amount of noise, graininess and trouble locking on focus. From a company that has put out such high quality product in the recent past, I was really taken aback. So much so that I decided to look into the problem further. In defense of the company, I believe I got one of the very first  - if not the first - production models and it may have shipped a tad bit incomplete. 

The camera on the Oppo N1 is a 13 Megapixel Sony EXMOR RS Stacked CMOS Sensor unit. This is the exact same sensor found on the Find 5 (above), the Lenovo K900, the Samsung Galaxy S4 and the Galaxy Note 3. It is a 1/3.06″ sensor. Oppo attempts to set it apart from the competition by complementing it with a six element f2.0 aperture lens. According to the marketing material the lens is coated with IR and Blue filters for reduced chromatic aberrations and purple fringing. The innovative part is that whole unit sits on a swivel-type arrangement that can rotate 206 degrees for using the same camera for front-facing as well as rear-facing shots.

Remember investors, it is the higher end cameras on phones that have all but destroyed the point and shoot industry (ie. Minolta>Sony, Samsung, Nikon, Canon, etc.) and is clearly threatening to move up the food chain to higher end prosumer and mirrorless devices. Many may poo - poo this statement and sentiment, but then again so did those consumer point and shoot manufactuers from a few years ago - you know those very same guys whose market is just about subsumed, and it is clear that the smart money will look for photographic innovation from companies who are trying to outrun margin compression. The problem is you will probably not be able to do so unless you have low labor cost structure - as in SE Asia, and even then, the laws of economics will catch up to you - right Samsung? From the Oppo web site...

 
 

Cutting Edge Optics

N1 is the first Android smartphone to use six physical lenses, giving you a clearer image while eliminating any distortion. The latest generation stacked CMOS sensor, upgraded type 1/3.06 imaging module and f/2.0 wide aperture lets more light in, so you can take great photos even in dark environments.

Not satisfied with what was available, we partnered with the leading optics companies to tailor make our own image-processing solution for improved white balance, exposure and focus. No matter the lighting condition, the N1 camera captures astonishing clarity and detail.

Reinvented Flash Technology

Like any camera, the N1 is equipped with a flash to light up dark environments. The dual flash design consists of a normal flash for back facing shots and a diffused softer light for when you flip the camera forward. With its brightness tunable via the OPPO N1 camera software, the front facing flash will provide perfect lighting conditions for any front facing shots.
 
 

Capture the Essence of Time

With unprecedented hardware support, the N1 supports long exposure photography of up to 8 seconds. Capture more than pictures; capture the pulse of the moment.

Camera Design

Designing a rotating camera was a challenging engineering problem. More than a year of work and over 20 different camera designs ultimately led to the simple brilliance of the OPPO N1. The small camera housing includes more than 10 modules, 50 cables, and 67 components. Every part is structurally reinforced and undergoes anti-static treatment.

 

So, you must be asking the same question that I asked myself. With all of this fancy schmancy camera tech, how is it that the N1 produced pictures that I wasn't happy with? For one, I believe it's a low level firmware and/or driver issue. That means that the N1 could still quite possible be the best thing since sliced bread, but was shipped (to me, at least) with half-baked software that crippled what looks like excellent hardware. This is a guess, mind you. This is the evidence.

This is the LG G2 pic taken at full resolution with all automatic settings on, the picture has been cropped to fit comfortably on this page.

G2 sample cropped 

This is the Oppo N1 pic taken under the same conditions and settings...

N1 sample cropped

There is much more noise in the N1s version, and the more you zoom in and the closer you look the more apparent it is. The N1 underperformed the Note 3's camera and LG G2 (although most cameras do, even the Note 3). The N1 was litereally blown out of the water by the Nokia phablet. I presumed such poor performance from such apparently premium hardware stemmed from over compression and misprocessing of raw data from the sensor. To remedy such I downloaded Camere FV5, an app that allows DSLR level flexibility in configuring your Android smartphone's camera. It allows you to adjust the compression of the JPG file upon saving and to save in a near lossless PNG format. To all of the non-geeks who actually have a life and have no idea of what I'm talking about, this app allows you to take pictures without being tampered with by the OEM enginneers forethoughts on how the picture should be processed once taken. The logis is, if the pics were being overprocessed or compressed too much, this would solve the problem. Alas, even with the lack of compression, subpar results ensued. 

I'm going to give Oppo the benefit of the doubt on this one and request they clarify the issue with the camera. If I'm right and the drivers need to be tweaked and/or rewritten, the N1 may very well still be one of the best photographic phones on the market. 

 My next post on this topic will cover the N1s other features in comparison to its competition, how it pans out in day to day use (there's plenty of other sites who do benchmarks and other tech stuff) and most importantly whether this device or a device like this can make a dent in the US markets and consequently in Apple and Samung's profit margins.

Who Is Reggie Middleton?

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 analyst reports.

Reggie Middleton Wins CNBC's First Ever Stock Draft Investment Contest, and Does So By A Wide Margin!

Reggie Middleton's The Only Investor/Analyst To Publicly & Timely Call To Short Apple At It's All Time High and Go Long Google On CNBC!

The Financial Nostradamus!

Who Is Reggie Middleton & What Is BoomBustBlog?

Since the inception of his BoomBustBlog, he has established an outstanding track record, including but not limited to, the call of....

  1. The housing market crash in the spring of 2006 and publicly in September of 2007: Correction, and further thoughts on the topic and How Far Will US Home Prices Drop?
  2. Home builders falling and their grossly misleading use of off balance sheet structures to conceal excessive debt in November of 2007 (not a single sell side analyst that we know of made mention of this very material point in the industry): Lennar, Voodoo Accounting & Other Things of Mystery and Myth!
  3. The collapse of Bear Stearns in January 2008 (2 months before Bear Stearns fell, while trading in the $100s and still had buy ratings and investment grade AA or better from the ratings agencies): Is this the Breaking of the Bear? | After the collapse, a prudent bullish call as well... Joe Lewis on the Bear Stearns buyout Monday, March 17th, 2008: "The problem with the deal is that it is too low, and too favorable for Morgan. It is literally guaranteed to drive angst from the other side. Whenever you do a deal, you always make sure the other side gets to walk away with something.  If you don’t you always risk the deal falling though unnecessarily. $2 is a slap in the face to employees who have lost a life savings and have the power to block the deal. At the very least, by the building at market price and get the company for free!" | BSC calls are almost free and the JP Morgan Deal is not signed in stone Monday, March 17th, 2008 | This is going to be an exciting, and scary morning Monday, March 17th, 2008 | As I anticipated, Bear Stearns is not a done deal Tuesday, March 18th, 2008 [Bear Stearns stock goes from $1 and change to $10, front month calls literally explode from pennies to several dollars]

  4. The warning of Lehman Brothers before anyone had a clue!!! (February through May 2008): Is Lehman really a lemming in disguise? Thursday, February 21st, 2008 | Web chatter on Lehman Brothers Sunday, March 16th, 2008 (It would appear that Lehman’s hedges are paying off for them. The have the most CMBS and RMBS as a percent of tangible equity on the street following BSC. The question is, “Can they monetize those hedges?”. I’m curious to see how the options on Lehman will be priced tomorrow. I really don’t have enough. Goes to show you how stingy I am. I bought them before Lehman was on anybody’s radar and I was still to cheap to gorge. Now, all of the alarms have sounded and I’ll have to pay up to participate or go in short. There is too much attention focused on Lehman right now. ) | I just got this email on Lehman from my clearing desk Monday, March 17th, 2008 by Reggie Middleton | Lehman stock, rumors and anti-rumors that support the rumors Friday, March 28th, 2008 |  May 2008
  5. The fall of commercial real estate in general (September of 2007) and the collapse of General Growth Properties [nation's 2nd largest mall owner] in particular (November 2007): 
    1. Will the commercial real estate market fall? Of course it will.
    2. Do you remember when I said Commercial Real Estate was sure to fall?
    3. The Commercial Real Estate Crash Cometh, and I know who is leading the way!
    4. Generally Negative Growth in General Growth Properties - GGP Part II
    5. General Growth Properties & the Commercial Real Estate Crash, pt III - The Story Gets Worse
    6. BoomBustBlog.com’s answer to GGP’s latest press release and Another GGP update coming… (among over 700 pages of analysis, review the January 2008 archives or search for “GGP” for more research).
  6. The collapse of state and municipal finances, with California in particular (May 2008): Municipal bond market and the securitization crisis – part 2
  7. The collapse of the regional banks (32 of them, actually) in May 2008: As I see it, these 32 banks and thrifts are in deep doo-doo! as well as the fall of Countrywide and Washington Mutual
  8. The collapse of the monoline insurers, Ambac and MBIA in late 2007 & 2008: A Super Scary Halloween Tale of 104 Basis Points Pt I & II, by Reggie Middleton, Welcome to the World of Dr. FrankenFinance! and Ambac is Effectively Insolvent & Will See More than $8 Billion of Losses with Just a $2.26 Billion
  9. The overvaluation of Goldman Sachs from June 2008 to present): “Can You Believe There Are Still Analysts Arguing How Undervalued Goldman Sachs Is? Those July 150 Puts Say Otherwise, Let’s Take a Look”, “When the Patina Fades… The Rise and Fall of Goldman Sachs???“andReggie Middleton vs Goldman Sachs, Round 2)
  10. The ENTIRE Pan-European Sovereign Debt Crisis (potentially soon to be the Global Sovereign Debt Crisis) starting in January of 2009 and explicit detail as of January 2010: The Pan-European Sovereign Debt Crisis
  11. Ireland austerity and the disguised sink hole of debt and non-performing assets that is the Irish banking system: I Suggest Those That Dislike Hearing “I Told You So” Divest from Western and Southern European Debt, It’ll Get Worse Before It Get’s Better!
  12. The mobile computing paradigm shift, May 2010:  »

Reggie Middleton Singularly Moves The Irish Banking System, Apparently Motivates Top Banking Regulator To Resign

We believe Reggie Middleton and his team at the BoomBust bests ALL of Wall Street's sell side research: Did Reggie Middleton, a Blogger at BoomBustBlog, Best Wall Streets Best of the Best?

Latest Subscription Content


smartphones-picsay

Last week I aggressively chided rock star sells side analysts for daring to say that Apple's reported slide in gross margins weren't real reduced margins. Those who know the industry well know that Apple is being sucked into matching the efforts of the market king Microsft and the uber aggressive challenger Google in the offering of free office productivity software. Of course, this brings about #MarginCompression for all but Google since the other two companies actually sell this software while Google always gave it away for free.

Well, last week we say Apple write down nearly a billion dollars on this event, and today we can expect the same from Microsoft, again potentially couched in the effect of its weakening but still apparent reality distortion field. To wit, ZDnet publishes: Microsoft improves its free online Office

Where's Office for the iPad? Maybe you're looking in the wrong place. Today, Microsoft released its latest batch of Office Web App updates, pushing its free offering well past the feature set offered by its rivals.

Office is Microsoft's fattest cash cow. It's even more profitable than the ubiquitous Windows franchise. Pray tell, what happens when you materially increase functionality while simultaneously drop and/or maintain pricing at ZERO?

Once again, why is this happening?

For paying subscribers:

Inflation vs deflation vs stagflation

The primary business of banks is lending.

  1. In a recession, not many people and businesses borrow, hence lending tends to be a poor business.
  2. In order to make money off of lending assets you need a reasonable return.
  3. When ZIRP (Zero Interest Rate Policy) is applied, said reasonable return does not exist unless banks dramatically mark up the cost of the loan which brings up back to point one.

In the states I made this point when most analysts insisted that ZIRP was good for the banks, to wit...

Now remember, I've been very bearish on the EU and thier banks and sovereign debt in particular, since Q! 2010 - way before most - reference Pan-European sovereign debt crisis. Yesterday morning if you were to Google the term EU recovery, you would see something like this in return... 

Well, somebody better tell Draghi, as per Bloomberg: ECB Cuts Key Rate to Record Low to Fight Deflation Threat

The European Central Bank cut its benchmark interest rate to a record low after a drop in inflation to the slowest pace in four years threatened its mission to keep prices stable.

Policy makers meeting in Frankfurt today reduced the main refinancing rate by a quarter point to 0.25 percent. The decision was predicted by three of 70 economists in a Bloomberg News survey. The ECB kept its deposit rate at zero and trimmed the marginal lending rate to 0.75 percent. ECB President Mario Draghi will hold a press conference at 2:30 p.m.

The ECB now has just one more quarter-point cut left before reaching zero, increasing the likelihood of unconventional tools such as quantitative easing or a negative deposit rate if prices slow further or the economic recovery stalls. Euro-area inflation is less than half the ECB’s target and unemployment is at the highest level since the currency bloc was formed in 1999.

“There comes a point where inflation is so weak, and coming in weaker than anticipated, that the case for loosening policy becomes too hard to resist,” said Richard Barwell, senior European economist at Royal Bank of Scotland Group Plc in London, who predicted the cut. “Bad unemployment numbers only make the case stronger.”

Does it seem like I've predicted the future hear once again as that Financial Nostradamus Dude???

Quantitative Easing

A Fed-style quantitative easing program has repeatedly been ruled out by ECB policy makers. The central bank is barred by European Union treaties from financing state debt, making large-scale purchases of government bonds open to a legal challenge.

While Draghi has floated the prospect of a negative deposit rate, the rate for commercial lenders who park excess cash at the central bank, policy makers have said that its effects can’t be adequately predicted. A negative deposit rate could hurt banks’ profitability by lowering money-market rates, potentially hampering credit supply to companies and households and reducing banks’ incentive to lend to other financial institutions.

“If inflation stays low, as seems likely, and the threat of inflation expectations becoming unanchored to the downside increases significantly, then all the tools in the box can come into play,” said Ken Wattret, chief euro-area economist at BNP Paribas SA in London. “But knowing the way the ECB operates and how long it has taken to try and get support for a refi rate cut, doing the big stuff could take some time.”

Well, I believe QE has already been implemented by the ECB accepting trash sovereign debt as marketable collateral, but that's a discussion for another day. Just listen to the Financial Nostradamus dude when he warns what happens when a larger, admitted QE program is instituted. For one, you'd probably eliminate that inflation problem... replacing it with...

deadbeat2 

Bloomberg reports: T-Mobile Sales Beat Analysts’ Estimates as Subscribers Surge. So, how did BoomBustBloggers know this would occur? Well, It started last year with the article "Deadbeat Carrier Creative Destruction In The Ongoing Mobile Computing Wars". You see, US wireless carriers are running one of the biggest Ponzi schemes around. The buy overpriced hardware from manufacturers on contract (see Have We Reached "Peak Premium Smartphone"?) mark up said hardware and then offer it at heavily and usurious financing rate otherwise called a subsidy. The US consumer buys these overpriced devices for a relatively small downpayment and then proceeds to pay through the nose to the carrier a very, very margin rich wireless fee for what amounts to a commodity service of dumb virtual pipes through the airwaves.  Not only does the carrier recoup its outlay for the device purchased en masse from the OEM, the carrier also tacks on and collects a very large premium for its post paid wireless services as well.

There are 4 major national carriers in the US, basically two big ones two smaller ones. The smallest of the 4, T-Mobile, consistently go beat up - losing out on the right to subsidize the iPhone at a loss (like AT&T used to and Sprint still does) and basically losing subscribers. Then they decided to do something about it. They said, "Hey, let's stop being deadbeats!". By changing their pricing plans and eliminating subsidies and instead selling pure access to their virtual pipes (like a carrier is supposed to) combined with actual "real" financing of the hardware (at competitive rates, nonetheless) they essentially committed DeadBeat Carrier Blashphemy. The only issue was, it worked, to the chagrin of the competition - reference:

 Reggie Middleotns Carrier Cost ComparisonReggie Middleotns Carrier Subsidy Cost Comparison

Now, back to the Bloomberg article whose substance we predicted this time last year: T-Mobile Sales Beat Analysts’ Estimates as Subscribers Surge

T-Mobile US Inc. (TMUS), the fourth-largest U.S. wireless carrier, reported third-quarter sales that exceeded analysts’ estimates as its cheaper service plans and phone-upgrade strategy attracted customers.

Sales rose to $6.69 billion, an increase of 8.7 percent when adjusted to account for T-Mobile’s merger with MetroPCS Communications Inc., according to a statement today from the Bellevue, Washington-based company. Analysts projected $6.58 billion, the average of estimates compiled by Bloomberg.

T-Mobile, which combined with MetroPCS in May, added 648,000 new monthly subscribers, topping the 401,000 average estimate and gaining for a second straight quarter. 

T-Mobile, which merged with MetroPCS six months ago, added 648,000 new monthly subscribers, topping the 401,000 average estimate and gaining for a second straight quarter. T-Mobile has benefited from offers such as zero-down financing on phones and a $10-a-month service that lets customers upgrade their devices more often -- a program that rivals such as Verizon Wireless, AT&T Inc. (T)and Sprint Corp. (S) have now adopted. 

Umm... Margin Compression!!!??? Remember we called this in the telecomm space a few months ago... Deadbeat Carriers Compete, aka #MarginCompression!!!

The net loss was $36 million, following a second-quarter net loss of $16 million. The average phone bill for monthly subscribers shrank about 3 percent to $52.20 from the second quarter as more customers opted for cheaper plans. Analysts had projected $52.86, according to a survey of seven estimates by Bloomberg.

... T-Mobile rose 1.7 percent to $28.83 at 9:42 a.m. in New York. As of yesterday, the shares had climbed 72 percent since May 1, following the MetroPCS merger. Deutsche Telekom rose 0.6 percent to 11.82 euros in Frankfurt.

Who in the hell is behind this rampany wave of #MarginCompression? Oh yeah! Google Has Officially Gone On Record To Confirm Reggie Middleton's "Negative Margin Business Model" Tactics. Google has created an atmosphere and environment that is primed to drive down the cost of computing and Internet access even further. I will discuss that in detail in my next article on this topic. In the meantime and in between time, read: 

Subscribers, this is directly relevant to both the Apple and the Google valuations. 

Recent Apple Valuation Reports

Subscribers, download the Q3 and Q4 2013 valuation reports (click here to subscribe).

The update from two months ago is also of value for those who haven't read it. It turns out that it was quite prescienct!

Recent Google Valuation Reports