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!
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
Related BoomBustBlog Subscription-only Research:
Google still exhibits the likelihood that they will control mobile computing for the balance of the decade.
Google Q1-2012 Valuation Summmary 04/20/2012
Google Final Report 10/08/2010
A 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.