Tuesday, October 28, 2008
The power of focus: Apple & Nintendo vs SONY
Lets benchmark three iconic companies:
- APPLE: Wednesday October 22 APPLE announced spectacular full-year results with a year-on-year net income increase of 38%. The results are even better than they look, because iPhone sales and income are spread forward over 2 years due to accounting rules. (See our comments on CNBC here)
- NINTENDO: on August 29, 2008 Nintendo revised the forecast for full-year net income upward by +26.2% (See our comments on CNBC here)
- SONY: in contrast, on October 23, 2008, SONY said that full-year net income (for the financial year ending March 2009) is expected to be 37.5% lower than previously predicted (see our comments on SONY's 1Q results here on CNBC)
Lets look at today's market caps:
- APPLE market cap = US$ 85.6 Billion (about 4 x SONY)
- NINTENDO market cap = US$ 37.2 Billion (about 2 x SONY)
- SONY market cap = US$ 19.9 Billion
Why this dramatic difference? We believe its focus. Apple and Nintendo are companies with clear focus. Lets look at the details below:
In terms of sales:
- SONY = 3 x APPLE
- SONY = 4 x NINTENDO
In terms of annual operating income:
- APPLE = 3 x SONY
- NINTENDO = 3 x SONY
In terms of operating margin:
- APPLE = 9 x SONY
- NINTENDO = 15 x SONY
- APPLE: Wednesday October 22 APPLE announced spectacular full-year results with a year-on-year net income increase of 38%. The results are even better than they look, because iPhone sales and income are spread forward over 2 years due to accounting rules. (See our comments on CNBC here)
- NINTENDO: on August 29, 2008 Nintendo revised the forecast for full-year net income upward by +26.2% (See our comments on CNBC here)
- SONY: in contrast, on October 23, 2008, SONY said that full-year net income (for the financial year ending March 2009) is expected to be 37.5% lower than previously predicted (see our comments on SONY's 1Q results here on CNBC)
Lets look at today's market caps:
- APPLE market cap = US$ 85.6 Billion (about 4 x SONY)
- NINTENDO market cap = US$ 37.2 Billion (about 2 x SONY)
- SONY market cap = US$ 19.9 Billion
Why this dramatic difference? We believe its focus. Apple and Nintendo are companies with clear focus. Lets look at the details below:
In terms of sales:
- SONY = 3 x APPLE
- SONY = 4 x NINTENDO
In terms of annual operating income:
- APPLE = 3 x SONY
- NINTENDO = 3 x SONY
In terms of operating margin:
- APPLE = 9 x SONY
- NINTENDO = 15 x SONY
Wednesday, October 22, 2008
Today's APPLE 4th quarter results vs NINTENDO
A few hours ago (Oct 22, 2008, 6am Tokyo Time) APPLE announced 4th Quarter and Full Year results - we are here updating our comparison between APPLE and NINTENDO. With 6.9 million iPhones sold in APPLE's 4th Quarter (July + August + September 2008), APPLE has achieved 2.76% market share of all mobile phones globally.
APPLE strongly accelerates lead over NINTENDO in term of sales (see figure below) - even more dramatically, if we take into account that the iPhone in 4th Quarter now accounts for 39% of APPLE's sales. APPLE accounts for iPhone sales in terms of a subscription model over two years because of free software updates for iPhones. If we would use APPLE's non-GAAP figures, which book iPhone sales fully at the point of sale, then APPLE's sales lead over NINTENDO would be even stronger.
In terms of margins we see the opposite trend: NINTENDO's lead over APPLE in terms of higher margins expands (see below).
Watch our interview about APPLE's 4Q results today 11:50am (Tokyo time) on CNBC as a video clip.
Apple accelerated lead over Nintendo in terms of revenues. Apple's lead would be more dramatic if correcting for Apple's subscription model used for iPhone sales according to GAAP rules.
While Apple's lead over Nintendo in terms of sales is growing, Nintendo's lead in terms of operating margins is expanding.
APPLE strongly accelerates lead over NINTENDO in term of sales (see figure below) - even more dramatically, if we take into account that the iPhone in 4th Quarter now accounts for 39% of APPLE's sales. APPLE accounts for iPhone sales in terms of a subscription model over two years because of free software updates for iPhones. If we would use APPLE's non-GAAP figures, which book iPhone sales fully at the point of sale, then APPLE's sales lead over NINTENDO would be even stronger.
In terms of margins we see the opposite trend: NINTENDO's lead over APPLE in terms of higher margins expands (see below).
Watch our interview about APPLE's 4Q results today 11:50am (Tokyo time) on CNBC as a video clip.
Apple accelerated lead over Nintendo in terms of revenues. Apple's lead would be more dramatic if correcting for Apple's subscription model used for iPhone sales according to GAAP rules.
While Apple's lead over Nintendo in terms of sales is growing, Nintendo's lead in terms of operating margins is expanding.
Labels: apple, i-phone, iphone, nintendo
Tech Sector Outlook (CNBC TV interview)
More in our J-ELECTRIC report: http://www.eurotechnology.com/store/j_electric/
Labels: apple, docomo, KDDI, ntt, panasonic, sony
Saturday, October 18, 2008
Stuart Chambers, CEO of NSG Group
Stuart Chambers, CEO of NSG Group, gave a press conference on October 16, 2008, here are some notes and thoughts.
On February 16th, 2006, Nippon Sheet Glass' offer for the 80% of Pilkington plc it did not already own, for US$ 3.14 billion in total, was accepted by Pilkington's share holders and the acquisition was completed in June 2006. At the 142nd Annual Shareholder Meeting on June 27th 2008, Stuart Chambers was appointed Representative Executive Director, President and CEO of NSG Group.
Here some essential points of Stuart Chambers' presentation, entitled "Four critical factors for Japanese corporates making major international acquisitions".
The four critical factors in the title are:
1. Integration (share holders and customers demanded integration, because the value of the combined NSG + Pilkington after the acquisition must become bigger than the sum of its parts -> must change HR management, and board)
2. Repaying debt -> senior management must understand the balance sheet
3. Identifying growth opportunities for the future (glass for solar energy)
4. Succession
From the outset the aim was not to create a Japanese company with overseas subsidiaries, but to create an international company, headquartered in Japan and listed on the Tokyo Stock Exchange. Therefore the greatest changes needed to be made in Japan.
NSG Group changed from an exclusively Japanese Board, to a new Board structure:
Board of Directors: 12 (7 Japanese + 5 non-Japanese) and
Executive Officers: 23 (11 Japanese + 12 non-Japanese)
These changes were necessary in order to retain non-Japanese management talent from leaving the acquired company after the merger.
The Board structure was changed from the traditional Kansayaku (Corporate Auditor) structure to a Board with Committees.
HR management changes from internal promotion according to time served in each job level to the international practice of combining internal and external hiring according to capability and demonstrated performance ignoring age as a factor.
On February 16th, 2006, Nippon Sheet Glass' offer for the 80% of Pilkington plc it did not already own, for US$ 3.14 billion in total, was accepted by Pilkington's share holders and the acquisition was completed in June 2006. At the 142nd Annual Shareholder Meeting on June 27th 2008, Stuart Chambers was appointed Representative Executive Director, President and CEO of NSG Group.
Here some essential points of Stuart Chambers' presentation, entitled "Four critical factors for Japanese corporates making major international acquisitions".
The four critical factors in the title are:
1. Integration (share holders and customers demanded integration, because the value of the combined NSG + Pilkington after the acquisition must become bigger than the sum of its parts -> must change HR management, and board)
2. Repaying debt -> senior management must understand the balance sheet
3. Identifying growth opportunities for the future (glass for solar energy)
4. Succession
From the outset the aim was not to create a Japanese company with overseas subsidiaries, but to create an international company, headquartered in Japan and listed on the Tokyo Stock Exchange. Therefore the greatest changes needed to be made in Japan.
NSG Group changed from an exclusively Japanese Board, to a new Board structure:
Board of Directors: 12 (7 Japanese + 5 non-Japanese) and
Executive Officers: 23 (11 Japanese + 12 non-Japanese)
These changes were necessary in order to retain non-Japanese management talent from leaving the acquired company after the merger.
The Board structure was changed from the traditional Kansayaku (Corporate Auditor) structure to a Board with Committees.
HR management changes from internal promotion according to time served in each job level to the international practice of combining internal and external hiring according to capability and demonstrated performance ignoring age as a factor.
Thursday, October 16, 2008
Games: Nintendo - the winner takes it all
Game industries in total are MUCH bigger than music industries... in Japan game industries are about 10 times bigger business than music industries... Last weekend we had the Tokyo Game Show - read some key points below! From 2006 Japan's game sector changed dramatically- Nintendo created several paradigm shifts, and "took off". Read more about Nintendo driven paradigm shifts below. US games giant Electronic Arts (EA) would rank 5th in sales, was EA Japanese. Japan's games industries are big!
Nintendo income takes off: Nintendo broke the PC-style race for faster machines, and broke out of the limited market of hard core gamers. From FY 2007 Nintendo's income takes off:
Nintendo's DS: braintraining instead of shooting. SONY's PSP goes for power, and Nintendo's DS changed the paradigm + went for lower price. By the way, we see a shift from TV video games to portable and mobile phone games in terms of numbers: for current 7th generation game platforms portables outsell TV video consoles 2:1. DS's success encouraged Nintendo to develop the Wii.
Avoid the dinosaurs: global sales of Nintendo Wii, SONY Playstation PS3, and Microsoft Xbox-360 "Too many powerful consoles are like ferocious dinosaurs. They might fight and hasten their own exinction" (Nintendo's Shigeru Miyamoto in an interview). Nintendo's Wii has much less power, lower screen resolution, and is much cheaper to make and cheaper to buy than PS3 and Xbox360. Nintendo makes money on every Wii sold.
Report: "Nintendo and Japan's games industries" (9th edition, 181 pages, release October 15, 2008, pdf-file for download):
Nintendo income takes off: Nintendo broke the PC-style race for faster machines, and broke out of the limited market of hard core gamers. From FY 2007 Nintendo's income takes off:
Nintendo's DS: braintraining instead of shooting. SONY's PSP goes for power, and Nintendo's DS changed the paradigm + went for lower price. By the way, we see a shift from TV video games to portable and mobile phone games in terms of numbers: for current 7th generation game platforms portables outsell TV video consoles 2:1. DS's success encouraged Nintendo to develop the Wii.
Avoid the dinosaurs: global sales of Nintendo Wii, SONY Playstation PS3, and Microsoft Xbox-360 "Too many powerful consoles are like ferocious dinosaurs. They might fight and hasten their own exinction" (Nintendo's Shigeru Miyamoto in an interview). Nintendo's Wii has much less power, lower screen resolution, and is much cheaper to make and cheaper to buy than PS3 and Xbox360. Nintendo makes money on every Wii sold.
Report: "Nintendo and Japan's games industries" (9th edition, 181 pages, release October 15, 2008, pdf-file for download):
Nokia & Sony Ericsson Results Likely to Disappoint (CNBC TV interview)
More in our J-ELECTRIC report: http://www.eurotechnology.com/store/j_electric/
Labels: nokia, sony, sony-ericsson, sonyericsson
Friday, October 03, 2008
Paradigm change of the global mobile phone business and opportunities for Japanese mobile phone makers
Presentation at the CEATEC Conference, talk NT-13, Meeting Room 302, International Conference Hall, Makuhari Messe, Friday October 3, 2008, 11:00-12:00.
The emergence of iPhone, Android, open-sourcing of Symbian, and the growth of mobile data services are changing the paradigm of the global mobile phone business opening new opportunities for Japanese mobile phone makers. Japan's mobile phone handset makers have missed most opportunities during the first wave of mobile phone opportunities. The developing paradigm change opens new opportunities for Japanese makers. The talk will explain the paradigm shifts and trends of the global mobile phone handset market, and resulting opportunities for Japanese mobile phone makers, and will indicate how these opportunities can actually be realized.
Download the presentation as a pdf-file here (in Japanese language)
The emergence of iPhone, Android, open-sourcing of Symbian, and the growth of mobile data services are changing the paradigm of the global mobile phone business opening new opportunities for Japanese mobile phone makers. Japan's mobile phone handset makers have missed most opportunities during the first wave of mobile phone opportunities. The developing paradigm change opens new opportunities for Japanese makers. The talk will explain the paradigm shifts and trends of the global mobile phone handset market, and resulting opportunities for Japanese mobile phone makers, and will indicate how these opportunities can actually be realized.
Download the presentation as a pdf-file here (in Japanese language)
Labels: android, Japan, maker, mobile phone, panasonic, sharp
