More Talk About Apple Choosing TSM
Particularly since one analyst started saying that this was such a bad thing for Intel (INTC) since it continues to invest in capacity that would most likely go empty. So was this such a good deal for Apple (AAPL) or such a bad deal for Intel?
Apple is joining hands with a company that has always lagged Intel in process technology and also had significant yield issues on transitions to lower nodes -- something that at one point cost Advanced Micro Devices (AMD) some market share. Intel, on the other hand, is seeing its core computing market melting away and it still has limited exposure to the mobile segment.
Apple is obviously distancing itself from Samsung, which has traditionally manufactured some of its components. But alternative capacity was necessary because of the growing animosity between the two. TSM was the logical choice because most Apple components are manufactured in Asia.
Also, TSM remains the leading foundry, and being a foundry, it is less likely to turn into a competitor. The partnership would help it grow not only in its traditional markets, but also in other areas, such as wearable devices.
Growth projections for things like Google (GOOG) Glass and smart watches indicate that this market will go through the roof in the next 4-5 years. Google Glass has already become a hot topic of conversation and Google is already in the market for watches through Motorola (MotoACTV). Last week saw Apple trademarking iWatch in Japan.
Intel too is not adding capacity for nothing. At this point it definitely looks like the chip giant is placing its bets on mobile. Recent news reports indicate that its new mobile chips are going to be better than those showcased, with cheaper and better Atom processors also on the way.!
So this holiday season, we are likely to see a number of tablets from companies like Samsung, ASUS, Hewlett Packard (HPQ), Dell (DELL) and Acer with Intel inside. Intel will earn better margins on its own chips than it could on a foundry deal with a competitor. Strategic foundry partnerships like the one with Altera (ALTR) also remain in the cards.
About Microsoft Re-"Surfacing"
Microsoft's (MSFT) Surface tablet did not pick up as expected and the company is doing all it can to grow sales. The RT version was heavily discounted and pushed toward students in particular, which is just as well because it is likely to die a natural death.
The Pro, on the other hand, could grow with some help. Or so Microsoft thought when it authorized distributors like Ingram Micro (IM), SYNNEX and Tech Data (TECD) to sell the device to authorized resellers.
Microsoft also launched AppsForSurface for ISVs, to promote the development of apps around the platform. The increased availability and app support is expected to encourage enterprise buyers.
Google: One Battle at a Time
Google's books project scored a small win last week, when the judge held that evidence regarding "fair use" was necessary before authors could bring a class action lawsuit against the company. Google has been digitizing copyrighted material ( it has already scanned 20 million books) and displaying snippets from them, for which the Authors Guild is suing it for $3 billion.
The "fair use" doctrine allows the use of copyrighted materials for educational, research or news purposes. This decision is what Google was looking for because it has for long held that its actions constituted "fair use."
Also, since some of the concerned copyrights belong to untraceable holders, which is leading to extinction of the concerned books, Google could show an altruistic motive. However, the inability to file a class action lawsuit could make it difficult to fight Google.
And ! a Qwiki f! or Yahoo
Yahoo (YHOO) has been snapping up companies with great regularity and last week it acquired an iPhone app maker called Qwiki. The only difference is, this time, Yahoo is not going to withdraw support to the existing app, probably because it is trying to befriend Apple. Both the other acquisitions (fantasy football maker Bignoggins and address book manager Xobni) that it acquired last week are being absorbed into Yahoo.
Apple is the only one that beat the market last week, with Google trading more or less in line and all the others notably weaker.
| Ticker || Last Week's Performance || 6 month performance |
| AAPL || +6.95% || -20.54% |
| MSFT || -0.98% || +28.85% |
| FB || -2.13% || -16.14% |
| GOOG || +2.08% || +21.85% |
| INTC || +0.65% || +14.08% |
| YHOO || +1.10% || +30.62% |
| CSCO || +0.53% || ! +20.97% |
The week ahead –
Microsoft is internally discussing restructuring actions although officials continued reserve comment. However, a number of details reported by Businessweek and AllThingsD indicate that the restructuring is real.
As a result, Windows chief Julie Larson-Green, Windows Phone software chief Terry Myerson, Server and Tools chief Satya Nadella and Skype president Tony Bates may be expected to see an expansion in their roles. It's also being rumored that the departure of Xbox chief Don Mattrick was a part of this restructuring. A formal announcement is expected this week.