The UpStream (Page 192)

Sony's Turnaround Not as Bright as Thought

posted Saturday Nov 2, 2013 by Scott Ertz

Sony's Turnaround Not as Bright as Thought

While Kaz Hirai might be certain of his revival plan, the numbers are not looking to be in his favor. After a rebound last quarter, Sony is back in its comfort zone, having lost nearly $200 million this quarter.

Sony has attributed much of this loss to the abysmal failure that was White House Down. Compare this quarter with its equivalent from last year, which included The Amazing Spider-Man and you can understand, and should expect, a poor quarter this year. One exceptional performance followed by one exceptionally dismal performance can be the difference between a stock rise or fall.

Clearly, this quarter's results will re-open discussions within the corporation about the possibility of spinning off the media division. Recently, Sony publicly stated that they had no interest in the proposal, yet still blamed the division for the poor quarter.

Shortly before rejecting the proposal, Hirai said that he believed the consumer electronics division was the biggest problem, not the media division. It is an interesting thing to say in public before blaming the media division for a bad quarter and knowing the PlayStation division has been a financial black hole for them.

So, will Sony be able to pull off their turnaround plan, or are they so disconnected from the reality of the situation that they will chase profits in divisions that don't matter? Let us know your thoughts in the comments below.

Rockstar Consortium Uses Patents for Lawsuits

posted Saturday Nov 2, 2013 by Scott Ertz

Rockstar Consortium Uses Patents for Lawsuits

In 2011, a group of companies came together to purchase the patent portfolio of the failed Nortel. The group, called Rockstar Consortium, was formed by some major players, including Apple, BlackBerry, Microsoft and Sony. Despite being asked, Google declined the offer, instead deciding to bid solo, losing to Rockstar.

It was only a matter of time before those patents were used to generate revenue for the group, and that time is now. The first target is Google, who would have obviously been better served to not turn down the offer to join the group. The seven patents in question, "Associative Search Engine," describe the process of associating advertising with search terms for a search engine. For those keeping track, that is Google's entire business model.

The fact that Google was obviously aware of the patents, seeing as they were bidding on them, will not work in Google's favor. In the complaint, the company said,

Despite losing in its attempt to acquire the patents-in-suit at auction, Google has infringed and continues to infringe the patents-in-suit.

Google isn't the only one in the cross-hairs. Samsung and HTC are also under suit from Rockstar for a collection of seven different patents that describe an operating system designed "to support Gallery, Email, Maps and Browser functionality." While this system described covers all modern mobile operating systems, most of the designers of said systems are owners in the patent, making it a non-issue. In addition to the seven, Samsung is also being sued for an eighth, entitled "Internet Protocol Filter." This covers Samsung's Hotspot feature, which is also present on most modern devices.

While many of these patents will probably not stand up to the law, it is about to be an interesting case against Google. While the other companies being sued can claim ignorance of the patents and possibly even have them canceled, Google knew about and understood the value of said patents, evidenced by their bids. Their battle against Rockstar will be more involved, and could even result in massive royalty payments to continue their only real business model.

Nintendo Neuters Sharing Features on 3DS

posted Saturday Nov 2, 2013 by Scott Ertz

Nintendo Neuters Sharing Features on 3DS

Mama Nintendo has announced this week that her children have disappointed her and shall be punished. In this instance, she has discovered that some of her children, particularly the minors, have been using their devices for naughty purposes, so she has taken away that capability.

Nintendo has learned that some consumers, including minors, have been exchanging their friend codes on Internet bulletin boards and then using Swapnote (known as Nintendo Letter Box in other regions) to exchange offensive material. Nintendo has been investigating ways of preventing this and determined it is best to stop the SpotPass feature of Swapnote because it allows direct exchange of photos and was actively misused.

The feature at hand is Swapnote's capability to share photos between friends over the Internet. As anyone who has ever worked in the technology world will tell you, the first thing that happens when you give people a camera and direct connection is pornography. You can make it request only, as Nintendo has, but people will find a way around that as well.

In my exploration of the Windows Phone Store, I discovered a promoted application called Kik, which is a messaging service, seemingly for people who don't pay their cell phone bills. The service, however, has been coopted by children trying to talk dirty. You can prove this theory by reading the reviews of the app, which are all kids sharing their usernames and posting whether or not they will talk dirty.

Obviously, the company tried to keep it secluded to only people you know, but there is always a way around that; in this case sharing in reviews. For Nintendo, the process was slightly different, via forums, but with the same result. The difference here is, Kik doesn't particularly care what people use the service for, as they are protected from litigation based on what their users do with the service.

Nintendo, on the other hand, is known for their maternal instinct. Features that have been commonplace for Microsoft and Sony were delayed with Nintendo as they tried to figure out how to implement them without safely. For instance, online play came to the Nintendo world several generations later than it should have, all because of Nintendo's parental decision-making process.

Overall, this is not really a loss for the handset - it's not like the ability to share photos was the reason people owned a 3DS; that's what they have a phone for. It does, however, emphasize the odd difference between Nintendo and the other rest of the industry. For better or worse, it is who they are and they are proud of it.

Qualcomm Considering Entering BlackBerry Bid

posted Saturday Nov 2, 2013 by Scott Ertz

Qualcomm Considering Entering BlackBerry Bid

Six weeks ago rumors began to circulate about another bidder for BlackBerry, led by founder Mike Lazaridis. Since then, the plans seem to have gotten more detailed. The addition of co-founder Doug Fregin brings the current holdings of the equity group to 8%, making a buyout a little easier. Adding Cerberus Capital Management, a private equity firm, into the mix brings guaranteed money to the table.

At this point, the only thing missing from the group is a company already in the wireless space with enough money to prop up BlackBerry until it can get a new direction firmed up and an ability to execute. That is where Qualcomm comes into the picture. In Qualcomm comes an ability to deal with the exit of Jabil Circuit, who has manufactured BlackBerry handsets for years, by providing manufacturing and component relationships.

With an easier path to takeover, enough money to make the purchase and an increased ability to pivot and execute, this bid could be the one that wins and ends an extremely messy auction. The only question is, is it possible for this group to make an effective pivot that will not alienate Qualcomm's other business interests.

In being a major supplier of processors for smartphones of several categories, including Android and Windows Phone, Qualcomm has a lot of potential to lose business if suddenly they become competition against the platforms they support. On the other hand, Google purchasing Motorola or Microsoft purchasing Nokia has not discouraged either ecosystem, nor has Samsung's dominance prevented them from supplying screens to Apple.

So, is it possible to turn BlackBerry around under new management, or is the company worth less than the sum of its parts? Let us know your thoughts in the comments section.

FAA to Finally Ease Up Electronic Usage, Agrees with Committee Recommendation

posted Friday Nov 1, 2013 by Nicholas DiMeo

FAA to Finally Ease Up Electronic Usage, Agrees with Committee Recommendation

Just five months after putting together the committee and only a month after the committee's recommendation, the FAA has actually agreed to ease restrictions on portable electronics during takeoff and landing. E-readers, MP3 players and other small devices have been approved by the FAA to be used during all phases of domestic flights.

From the FAA press release about the news,

Due to differences among fleets and operations, the implementation will vary among airlines, but the agency expects many carriers will prove to the FAA that their planes allow passengers to safely use their devices in airplane mode, gate-to-gate, by the end of the year.

The FAA based its decision on input from a group of experts that included representatives from the airlines, aviation manufacturers, passengers, pilots, flight attendants, and the mobile technology industry.

Delta and JetBlue will be the first two airlines to implement the changes, and both companies have said all of their aircraft are "ready to go" for use of portable electronic devices. JetBlue even said that, technically, they could make the change "today" but would wait until the FAA issued the guidelines for the new policy.

Obviously, the use of a cell phone or tablet for making phone calls will still not be permitted during any portion of the flight and connecting to the Internet will still not be allowed during times when a plane is less than 10,000 feet in the air. The FAA also mentioned that the group agrees with the committee's recommendation that devices can still be requested to be turned off by flight staff for safety. The administration cited one percent of flights operating in low visibility noticed significant interference in guidance controls from portable electronic devices, so in those circumstances, passengers would have to comply with instructions to turn the gadgets off.

Here's the ten things you should know, according to the FAA, about PEDs. And we're not talking about A-Rod stuff here.

  1. Make safety your first priority.
  2. Changes to PED policies will not happen immediately and will vary by airline. Check with your airline to see if and when you can use your PED.
  3. Current PED policies remain in effect until an airline completes a safety assessment, gets FAA approval, and changes its PED policy.
  4. Cell phones may not be used for voice communications.
  5. Devices must be used in airplane mode or with the cellular connection disabled. You may use the WiFi connection on your device if the plane has an installed WiFi system and the airline allows its use. You can also continue to use short-range Bluetooth accessories, like wireless keyboards.
  6. Properly stow heavier devices under seats or in the overhead bins during takeoff and landing. These items could impede evacuation of an aircraft or may injure you or someone else in the event of turbulence or an accident.
  7. During the safety briefing, put down electronic devices, books and newspapers and listen to the crewmember's instructions.
  8. It only takes a few minutes to secure items according to the crew's instructions during takeoff and landing.
  9. In some instances of low visibility - about one percent of flights - some landing systems may not be proved PED tolerant, so you may be asked to turn off your device.
  10. Always follow crew instructions and immediately turn off your device if asked.

So there you have it. We'll have to see how long airlines take to implement these changes, and if it's anything like the dreaded "carrier testing" for smartphone updates, it might take a while. The good news is that I finally have a use for Airplane Mode again.

Softbank on a Purchasing Spree, Picks Up Majority Stake in Finnish Game Studio Supercell

posted Friday Oct 25, 2013 by Nicholas DiMeo

Softbank on a Purchasing Spree, Picks Up Majority Stake in Finnish Game Studio Supercell

What else can Japanese company Softbank get into? Apparently the gaming business. After picking up 70% of Sprint for $20.1 billion and then turning around to purchase wireless distributor Brightstar for $1.26 billion, the company has now looked overseas, to Finland's mobile game maker, Supercell.

Supercell, the up-and-coming gaming studio behind Clash of Clans and Hay Day has sold a majority stake, or 51%, of its company to Softbank for a total of $1.53 billion. Softbank has teamed up with entertainment company GungHo Online, a company that's been around since 2002, to invest the money, and the two conglomerates will work together on the investment, with Softbank putting in 80% of the total capital. The acquisition also values Supercell at right around $3 billion, and the company pulls in $2.4 million in revenue daily.

Here's the word right from the press release about the acquisition and business deal.

Supercell is a mobile game company headquartered in Finland. Their two game apps, Clash of Clans and Hay Day, reached the top position in Top Grossing ranking of Apple's App Store in 137 countries and 96 countries, respectively. From February 2013 to August 2013, Supercell was the No.1 publisher in the world among the apps in the Games category of the App Store. This new strategic partnership with SoftBank and GungHo will help accelerate Supercell's goal of becoming the "first truly global games company".

GungHo started its online game business in 2002, and it has since then accumulated significant expertise and produced notable results in the development and operation of online games. As its Puzzle and Dragons for smartphone has hit over 19 million downloads in Japan and over 1 million downloads in both North America and South Korea, GungHo is focused on expanding to other markets. Through the Transaction GungHo will leverage Supercell's position among the apps in the Games category of the App Store and marketing power abroad to enhance its global expansion.

The plan is to have all of the transaction closed out by the middle of November, so this looks to be a quick turnaround for Softbank. While all of these purchases seem to be surprising coming from a company not many North Americans may be familiar with, Softbank currently has the third largest market capitalization in Japan. And, with now owning a quickly-rising mobile game studio, the company clearly is looking to invest in highly profitable ventures.

Other studios have also been acquired by different companies in the past few years. Zynga picked up OMGPOP of Draw Something fame for $200 million, only to see stocks plummet, employees leave and Microsoft's Don Mattrick take over as CEO. On the other side, EA's acquisition of PopCap, while shutting down the PlayFish studio, has seen an uptick in sales of several titles and the newest rendition of Plants vs Zombies has been highly anticipated since its announcement at E3. With all of that considered, this could go either way for Supercell, however the company affirmed that it will keep its independence and the CEO, Ilkka Paananen, will remain on as the head of the company after the transaction is finalized.

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