Today in Tech: Apple's Loss Is Amazon's Gain, but Not So Fast
Apple is going to fight the DOJ, and it might win.
Several of the publishers that were charged along with Apple have already thrown up the white flag and settled, but Apple is fighting. The charges? The government’s case couldn’t have been laid out better than by Steve Jobs himself in his biography:
Amazon screwed it up. It paid the wholesale price for some books, but started selling them below cost at $9.99. The publishers hated that — they thought it would trash their ability to sell hardcover books at $28. So before Apple even got on the scene, some booksellers were starting to withhold books from Amazon. So we told the publishers, ‘We’ll go to the agency model, where you set the price, and we get our 30%, and yes, the customer pays a little more, but that’s what you want anyway.’ But we also asked for a guarantee that if anybody else is selling the books cheaper than we are, then we can sell them at the lower price too. So they went to Amazon and said, ‘You’re going to sign an agency contract or we’re not going to give you the books. One Apple analyst tells Bloomberg that choosing to fight it can cost as much as $200 million, which is approximately nothing for such a cash-rich company as Apple.
E-books will most definitely be cheaper if this gets broken up. The winners will be readers, gloats Amazon, especially Kindle owners, who can bask in the glory of Amazon’s habit of undercutting competitors on price. Then again, as CNET notes, the DOJ’s case is pretty weak since Apple wasn’t present for the alleged breakfast meeting where the collusion took place.
Investors seem to be optimistic about Google (GOOG) ahead of its earnings statement this afternoon. Investors are expecting earnings of $9.64 per share for the last quarter. The stock is trading up 1.88% today and at $644.78.
Forget the talk of a “post-PC age.” Personal computer shipments actually rose last quarter by 1.9%, according to Gartner, a technology research firm. A 1.2% drop was predicted. PC sales are slowly recovering from the hard-drive shortage caused by the Thailand floods. Shipments might get another boost later this year after Microsoft (MSFT) officially launches Windows 8.
Yesterday, Nokia's (NOK) stock dropped 15.7% after it cut its profit forecast for the first quarter and warned that losses might mount in the six months to come. Nokia is betting the farm on the success of the Windows phone platform, after ditching the passe Symbian operating system. (Not-so-oddly enough, CEO Stephen Elsop used to be a Microsoft executive; go figure.) The transition is still under way. The Lumia 900, the brand-new flagship Windows/Nokia phone, is selling pretty well (about 2 million sold this week) despite a botched Easter Sunday launch and the discovery of software bugs in the phones.
Today, the stock dropped another 4.25% to a 52-week low of $4.03. The drop in the company’s value might be stemming from polls of industry analysts by Bloomberg and Reuters that indicate that Nokia’s handset sales in the last quarter were eclipsed by Samsung (SSNLF.PK). Nokia had consistently outsold every other phone maker on earth for 14 years. Nokia will report first-quarter earnings on April 19; Samsung will report on April 27.
Honeywell (HON) is suing Nest Labs, an innovative smart thermostat company started by Apple veteran Tony Fadell, for intellectual property infringement. Unlike so many startups hit with “patent trolling” cases, Nest is not rolling over. Nest filed Answer and Counterclaims against Honeywell, claiming that some of the patents for the “blah-looking” Honeywell thermostat are old or invalid because of previous art.
Sony (SNE) confirmed reports that it will be laying off 10,000 people worldwide -- about 6% of its work force -- as part of its massive reorganization plan. Sony suffered a loss of about $6.4 billion in the year ended March 31. CEO Kazuo Hirai vows to strengthen the company’s core businesses, namely digital imaging, video games, and mobile. One interesting step in that direction came today as Sony’s Android-powered SmartWatch debuted in the US. With the SmartWatch, you can do a lot of the same things that an Android phone can do, like listen to music, use apps, and read emails.
Samsung will release the Galaxy Tab 2 7.0, a light 7-inch tablet, on April 22. This tablet goes head to head with Amazon’s Kindle Fire, and Barnes & Noble’s (BKS) Nook. Unlike those two, the Galaxy has full access to the Google Play store and runs the latest version of the Android operating system, nicknamed Ice Cream Sandwich. While this is no iPad, early reviews, like this one at the Verge, have been positive. The Galaxy will sell for $249.99.
While BlackBerry sales in the US plunge, Research In Motion’s (RIMM) once-ubiquitous mobile device is still in demand in the Middle East. RIM is working to establish a new flagship retail location in Dubai, the United Arab Emirates city known for shopping and architectural hubris. The company aims to sell the device in emerging markets in Africa and Asia, where they will compete with cheaper Chinese handsets that run on Android.