Weekly Digest
Weekly Digest Issue No. 527
05-08-2010
by Deirdre McArdle
Mobile market enjoys resurgence | Motorola eyes tablet market
Irish tech sector gets busy
This week offered up some good news for the Irish tech sector. On Tuesday, Service Source, a firm that delivers cloud computing solutions to the technology, healthcare and life sciences sectors, announced that it was to create 70 jobs as it expands its operations in Dublin. Sandyford plays host to Service Source's EMEA headquarters, where the firm already employs 380 people. Recruitment for the new positions has started, and the firm is looking for HR, training, information technology, and operations staff. Minister for Enterprise, Trade and Innovation Batt O'Keeffe described the jobs announcement as "a strong signal that confidence is returning to the economy and major investors are now planning for the recovery".
Also this week, Newry-based provider of software and consulting services First Derivatives acquired Canadian data management firm LakeFront Data Ventures. LakeFront's clients include investment banks, pension funds, rating agencies and hedge funds. First Derivatives said the deal will extend its data management capabilities in the enterprise and reference areas. Financial details of the acquisition were not revealed. First Derivatives employs around 450 people. This is not the firm's first acquisition this year; in February it bought Dublin software firm Cognotec out of receivership for EUR3.4 million.
Meanwhile, Cork firm GPS Ireland this week launched an all-Ireland digital address coding system with the backing of satnav maker Garmin. The firm's Loc8 codes uniquely identify addresses and could be used as a navigational tool on satnav devices, smartphones or online. GPS Ireland expects to earn revenue through licensing the technology to satnav manufacturers, app developers or online retailers that use courier services to deliver goods.
Innovative start-ups like GPS Ireland received a boost this week with the Government announcing that it would set aside an extra EUR55 million to invest in high potential start-ups over the next six years. Minister O'Keeffe said it is hoped that the money will boost the number of HPSUs -- from 70 this year to 85 next year and to 100 by 2016. Finally, a new organisation was formed this week that aims to increase the number of spin-outs created in Irish higher education institutions (HEIs). The Irish Technology Transfer and Innovation Group (ITTIG) will be made up of the seven national universities along with DIT, WIT and RCSI.
Mobile market enjoys resurgence
The global mobile phone market is on track to recapture some of its previous form. During the second quarter of the year 308 million units were shipped worldwide, 13 percent higher than the year-ago tally, according to figures from Strategy Analytics. The main drivers for that growth continue to be high-end smartphones, as well as lower-end 2G devices in emerging markets. Strategy Analytics expects 325 million handsets will be shipped in the third quarter, a potential increase of 12 percent year-on-year.
Of the top five vendors, Research in Motion (RIM) had the most noteworthy quarter. The BlackBerry maker shipped 11.2 million handsets during the second quarter, up 40 percent from 8 million units a year earlier. The Canadian firm held a 3.6 percent market share at the end of the second quarter, up from 2.9 percent a year ago. And with a new smartphone operating system, BlackBerry OS6, on the way, and a touchscreen handset about to launch, RIM could well start improving on that market share.
Samsung also had an above-average quarter, shipping 63.8 million handsets, 22 percent more than last year. It now holds 21 percent of the market, more than double its 10 percent share of last year, and well ahead of third-placed LG, which holds 10 percent. Also this week, Samsung reported its financial results, which reflected its solid mobile performance. Net profit jumped 83 percent year-on-year to KRW4.8 trillion, with revenue jumping 17 percent to KRW37.89 trillion.
Market leader Nokia recorded an uninspiring quarter. The Finnish firm shipped 111 million units, up just 8 percent on last year. Nokia's market share dipped slightly over the past year to 36 percent from 38 percent. Meanwhile, LG also had an undistinguished quarter, growing shipments by a mere 3 percent to 30.6 million units. However, it was last-placed Sony Ericsson that put in the worst performance of the top five. It shipped 11 million handsets in the quarter, down 20 percent over the year. Like RIM, it holds 3.6 percent of the market.
Just outside of the top five is Apple, which is nearing both Sony Ericsson and RIM with a 3 percent market share. During the quarter Apple shipped 8.4 million iPhones, up 61 percent on the 5.2 million it sold in the year-ago period.
Motorola eyes tablet market
Staying with the mobile phone market, Motorola this week had somewhat of a resurgence, prompted by the popularity of its Android-powered Droid X smartphone. In all, the US firm's second quarter profit soared 84 percent to USD162 million from USD26 million a year ago. While overall sales slipped 2 percent to USD5.4 billion, the firm's mobile device unit swung to an USD87 million operating profit.
Motorola's focus on smartphones has undoubtedly lifted the firm. During the second quarter it shipped 8.3 million mobile devices, 2.7 million of which were smartphones. With this increased focus on high-end devices like the Droid X, Motorola has been able to offset, to a certain extent, its falling shipment volumes as its average selling price (ASP) increases; during the second quarter its ASP broke the USD200 barrier for the first time since 2000.
Motorola's recovery could also be aided by the news that it is rumoured to be developing an Android-based tablet device in conjunction with Verizon in the US. Speculation is rife that the mobile maker is working on a tablet that will allow users to watch TV on it. The device is said to have a 10-inch screen and could launch as early as this autumn in the US. It is expected to tie in closely with Verizon's FiOS digital pay-television service, according to sources quoted by the Financial Times. Motorola manufactures the TV set-top boxes for the FiOS television service.
While it's clear that Apple has first-mover advantage in the tablet market, the rumoured Motorola device could well challenge its dominance. Apple tried and failed to secure any deal with TV programmers to support TV-watching capabilities on the iPad prior to launch. Motorola's route of linking up with Verizon, which itself holds a 25 percent share of the TV market in the areas in which it operates, seems at first glance to be a clever option. In addition, reports suggest that Motorola's tablet will also support Flash. Apple, on the contrary, decided to back the HTML 5 standard for web video for the iPad. This is a key criticism of Apple's device. By attacking two of these weaknesses in the iPad, Motorola could well make an impact on the tablet market and continue turning its fortunes around.
E-book sector heats up
Evidence, if any was needed, that the e-book market is thriving was highlighted this week when the Association of American Publishers said that e-book sales in May at 13 of its member companies grew 163 percent from a year earlier, to USD29.3 million. The category accounted for 8.5 percent of the total trade books market through the end of May, compared to 2.9 percent for the same period in 2009.
There's no doubt the e-book market is a potentially lucrative one. With so much at stake, the nascent market has attracted some anti-trust scrutiny. This week, the US attorney-general's office in Connecticut launched a probe into the pricing of digital books by Amazon and Apple. Richard Blumenthal, the state's most senior legal official, has written to both Apple and Amazon expressing concern that their pricing agreements with publishers "threaten to encourage co-ordinated pricing and discourage discounting". Both Amazon and Apple have agreements with publishers that give the publisher of an e-book the right to set its list price, in exchange for granting the seller a 30 percent share of the revenues (agency pricing model). The inquiry will focus on unconfirmed reports that Amazon and Apple have secured guarantees they will receive the same pricing terms from the publishers of an e-book as any rival, which would allow them to match the lowest price in the market. Neither Apple nor Amazon have responded to the investigation.
Meanwhile, Amazon has gotten on with things, releasing its next-generation Kindle e-reader. Smaller, lighter and faster than its predecessor, the 3G version of the device will sell for USD180 in the US, while the Wi-Fi only model will cost USD139. In an informative interview with CNet, Ian Freed, an Amazon vice president in charge of the Kindle, said Amazon holds between 70-80 percent of the e-book market.
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