Why a Windows Phone 7 Based Samsung Galaxy S 2 is the Right Move for Samsung

The Samsung Galaxy S was the most popular Android smartphone of 2010. Its successor, the Samsung Galaxy S 2, which was launched about 2 months back has been a huge hit too, selling over 3 million units in just 55 days. It has been declared the best Android smartphone of 2011 by almost every gadget review blog, and is the one of the few phones which can rival the popularity of the iPhone.

Naturally, when there were rumors that Samsung was working on a Windows Phone 7 based version of the Galaxy S 2 (codenamed the Samsung SGH-i937), everyone, including me, was very excited about the possibilities. Windows Phone 7 is a very promising OS, and with the Mango update, it is probably the best alternative to iOS.

Many people I know prefer Windows Phone 7.5 to Android 2.3.4, but since Android has a much better choice and selection of hardware, they have stuck with Android. You may argue that Android has far more apps than Windows Phone 7, but Windows Marketplace’s app count is growing rapidly; it recently passed the 25,000 mark and is still growing.

If Samsung does launch a variant of the Samsung Galaxy S 2 powered by Windows Phone 7, it would probably be the best option for anyone wanting to buy Windows Phone 7 devices. It could capture a majority of the Windows Phone 7 market share in one move, before Nokia even manages to launch its first Windows Phone 7 device. It would have a much better chance at becoming the world’s largest smartphone vendor then, with devices on three smartphone platforms – Android, Windows Phone 7 and BADA OS. This is why launching a Windows Phone 7 based variant of the Samsung Galaxy S 2 would be an excellent move for Samsung. If I wanted to, I would probably go short some Nokia stock. Its prospects aren’t looking very good.

Disclosure: I have no open stock positions in any of the companies mentioned in this post.

15 Million iPhone 5 Units Ordered for September Launch?

Apple has supposedly placed an order for 15 million iPhone 5 units with Pegatron, its primary supplier in Taiwan, according to Digitimes, the most prolific source for Apple rumors.

According to most rumors, Apple will start shipping the iPhone 5 (or the iPhone 4S) in September 2011. Placing such a huge order now would ensure that there are no supply shortages for the next version of the iPhone, for which the anticipated demand is extremely high.

Pegatron has significantly expanded its plants, human power and equipment since 2010, to complete the orders for the CDMA iPhone 4 by Apple. It has also been trying to get orders for the production of the iPad and the Macbook from Apple, but it hasn’t had much luck there.

Apparently, the iPhone 5 “does not seem to have any major update from iPhone 4″, which leads me to believe that it might be branded the iPhone 4S after all.

iPhone 5

The iPhone 5 / 4S is expected to come with a dual core A5 processor, a larger 4 inch display and an 8 MP camera with a dual LED flash. It will compete with Android heavyweights like the Samsung Galaxy S 2 and the HTC Sensation.

Zynga Files for $20 Billion IPO

Zynga, the social gaming giant, which created games like Farmville, Cityville, Frontierville and Zynga Poker has finally filed its S-1 with the SEC. According to its S-1 filing, Zynga aims to raise about $1 billion in the offering, implying a valuation of close to $20 billion. The IPO will be underwritten by Morgan Stanley, BofA Merrill Lynch, Barclays Capital, Allen & Company, Goldman Sachs and J. P. Morgan.

Zynga was founded in 2007 by Mark Pincus, and has been the creator of some of the most popular games on Facebook. It has grown extremely fast, either organically or through acquisitions. It makes most of its revenues by selling virtual goods to Facebook users who play its games. While it does have millions of users, whether or not it will be able to monetize them well and generate enough revenues to justify the $20 billion valuation is what many are worried about. It places Zynga at a valuation which is roughly the same as EA and Activision Blizzard combined.

It had revenues of $597.46 million in 2010, and made close to $235 million in revenues in the first quarter of 2011. While it has good revenue figures, its net income and profit margin isn’t all that impressive considering that its primary product is virtual goods. It had a net income of just $90.56 million in 2010, implying a P/E of 222. It has had tremendous growth in the past 2-3 years, but it seems to have plateaued in the last couple of months.

Besides, the very first risk factor that they state in their S-1 says it all: “if we are unable to maintain a good relationship with Facebook, our business will suffer”. Zynga’s entire business depends on its relationship with Facebook. It has been trying to expand its offerings to other platforms, but without much success.

News of the Zynga IPO will undoubtedly trigger discussions of whether we are in a tech bubble, which even I’m starting to believe now. Zynga may turn out to be the Pets.com of 2011.

Check out the complete Zynga S-1 filing at the SEC.

Microsoft, Apple, RIM & Others Win the Nortel Patents that Google was Desperate For

Google was desperate to win the Nortel portfolio of patents, so that it could stave off patent trolls and other companies trying to sue it. Nortel’s huge portfolio of over 6,000 patents would have given Google a lot of leverage over its competitors. When Google first made the $900 million bid for those patents, it was expected that it would be very aggressive in trying to win them. The Department of Justice first played spoilsport, but later cleared Google to make the bid, setting the stage for Google to make the winning bid.

Today, Nortel announced that it had concluded the auction of all its remaining patents. The winner, it said, was a consortium consisting of Apple, Microsoft, Research in Motion, Sony, Ericsson and EMC. The consortium won the entire patent portfolio for $4.5 billion.

“Following a very robust auction, we are pleased at the outcome of the auction of this extensive patent portfolio”, said George Riedel, Chief Strategy Officer and President of Business Units, Nortel. “The size and dollar value for this transaction is unprecedented, as was the significant interest in the portfolio among major companies around the world.”

From the looks of it, it seems like all the members of the consortium teamed up against Google. Losing the auction means that it is still vulnerable, with a portfolio of less than 1000 patents. It is currently being sued by Oracle over the use of Java in Android, for damages estimated to be over $2.6 billion.

Many Android device manufacturers are also being sued by Microsoft. If it had won this patent portfolio, it might have been able to fight off its opponents.

via Marketwatch

How Skype Screwed its Employees Out of their Equity Option Grants

Microsoft announced that it would be acquiring Skype for $8.5 billion last month. It was good news for everyone involved with Skype, but ever since the deal was announced, it has been fraught with some or the other problem. Many analysts and bloggers have already bashed Microsoft for spending such a huge amount to buy Skype at a huge premium over its last valuation of approximately $3 billion in 2009.

Recently, Skype came under fire, for allegedly firing senior executives just weeks before the sale was finalized, effectively cutting them off just before a huge payday. Apparently, Silver Lake Partners, the majority owner of Skype stood to make more money, which would explain their motivations. But soon after these reports leaked, many anonymous Skype investors stated on various blogs that the firings were handled by Tony Bates, Skype’s CEO, not any of the investors.

Now, it seems that some previous employees of Skype are getting screwed out of their equity grants by Silverlake Partners, the PE firm which had majority ownership of Skype, and stands to make a huge windfall from the Microsoft deal.

Case in point: Yee Lee, an employee at Skype who quit some time back, just learned that all his vested options had been rendered worthless after Sliverlake Partners secured to buy back the vested options at the grant price, effectively taking away all the profits that Lee could have made by exercising those options.

The point of a vesting schedule is to keep employees working with the company, but once options have been vested, the company cannot take them back. In this case, Skype has done exactly that to all employees who left Skype with options that had already vested, thus screwing them out of their rightful earnings.

Everyone knows, that the currency of a startup is equity, not cash. Equity in a company is what motivates us to join other startups, taking substantial salary cuts to work in a startup, instead of taking up a comfortable job in BigCo, or starting up ourselves. Everyone joining a startup is looking for that big payday which comes when a major liquidity event like an IPO or acquisition happens.

Even if Silverlake Partners is legally in the right, having mentioned the vested option buyback in the option grant agreement somewhat surreptitiously, the point is, that it isn’t a standard practice. This is the first time any PE/VC firm has done anything like this. While they stand to make billions from the deal, acting in this manner taking away a few million from their employees just makes them look petty.

In Lee’s own words: “Now, I’ve seen my share of legal documents for tech companies. I’ve worked in Valley tech companies for over 15 years, have founded startups, done VC financings, and invested in companies. None of that prepared me for the kinds of legal shenanigans that the PE guys at Silver Lake pulled because I had never come across those kinds of terms before, let alone the fact that these clauses were hidden as one-liners in otherwise pretty standard-looking documents”.

I just hope that this doesn’t set a precedent for startups in Silicon Valley or anywhere in the world. There is a certain level of trust that exists in the startup ecosystem, and if there are more such incidents, it would be very detrimental to everyone involved – be it entrepreneurs and early employees who would have to waste more time on their due diligence, going over each and every clause of the contract, before they finalize their funding, and investors who have worked hard to gain the trust of entrepreneurs over the years, who might have to work even harder to regain it.

The whole fiasco can be summed up perfectly by Lee’s statement: “Even as Skypers were celebrating the huge potential of the Microsoft deal, the PE bankers were sharpening their knives and plotting which employees to fire in order to maximize profits and minimize payouts to non-owners. Seriously, how greedy do you need to be to make $5B and still try to screw the people who made that value possible? I mean, Silver Lake is trying to hyper-optimize their returns to the point that they’re trying to deny employee payouts that amount to less than 0.3% of the returns that they’ll get from the deal. Srsly. Really?

So, just be warned: Silicon Valley startup folks may think we’ve had hard dealings with venture capitalists… But in my opinion, VC greed pales in comparison to the level of greed exhibited by the Silver Lake private equity firm.”

EA to Buy PopCap Games for Over $1 Billion

EA may be in talks with PopCap Games, the creator of popular games like Bejeweled and Plants vs Zombies about a possible acquisition. A report by Techcrunch suggests that EA may be planning to buy PopCap for a sum over $1 billion.

PopCap has raised just about $22.5 million in funding so far, so it would obviously mean a huge payoff for its investors and founders. With PopCap’s revenues hovering around the $100 million mark, the acquisition figure is at a 10x revenue multiple.

EA acquired Playfish in 2009 for around $400 million, but is still trying to become the dominant player in the mobile and social gaming space. With the PopCap acquisition, EA might just manage to do that. Other major players in the space include Zynga and Rovio Mobile.

With the acquisition, EA may be able to boost its games portfolio to rival that of Zynga’s.

The deal is expected to close in a day or two. We will keep you updated.

Rumor: iPhone 5 to sport Dual LED Flash

As the expected launch date of the iPhone 5 draws near, the rumor mills seem to have gone into overdrive. Digitimes, which has been credited with many leaks, has reported that the iPhone 5 will sport a dual LED flash.

It also states that the dual LED flashes will be supplied by Taiwanese firms like Everlight Electronics, Edison Opto and Lite-On Technology. Apple will be switching to these firms for its LED flash requirements, from Philips, which made the LED flashes for the iPhone 4.

Many rumors about the iPhone 5 have been floating around in the past few months. According to most rumors, the iPhone 5 will come with an 8 MP camera, a dual core A5 processor and possibly a larger 4 inch display.

It has also been reported that the iPhone 5 will come with a radical new design and form factor. Most sources expect the iPhone 5 to launch in September 2011.

iPhone 5

Archos 80 G9 and Archos 101 G9 Android 3.1 Honeycomb Tablets Unveiled

We told you about the $99 Archos Arnova 7 Android tablet yesterday, but it seems Archos isn’t done yet. Today, it announced two more tablets – the Archos 80 G9 and the Archos 101 G9.

Both these tablets will run Android 3.1 Honeycomb and come with a 1.5 GHz dual core ARM Cortex A9 processor, as well as a 250 GB hard drive by Seagate. The Archos 80 G9 will come with an 8 inch display, while the Archos 101 G9 will come with a 10.1 inch display. Unlike the Archos Arnova 7, both these tablets will come with access to Android Market.

The Archos 80 G9 will have a display resolution of 1024 x 768 pixels while the Archos 101 G9 will sport a resolution of 1280 x 800 pixels. Archos has priced both tablets very competitively, with the Archos 80 G9 priced at $279 and the Archos 101 G9 priced at $349. Both the tablets support 1080p video playback and will come with 3G support.

The only concern is the presence of an HDD instead of an SSD, which are much faster and consume much less battery. Both the tablets will be available for purchase by the end of September.

Archos 80 G9

Archos 101 G9

Amazon to Launch Android Tablet in August 2011

Digitimes, the premier source for all news about the rumored Amazon Android tablet, is back with another interesting piece of news.

Apparently, Amazon is working to time the launch of its Android tablet around the peak sales period before Thanksgiving in the US and year-end holidays in the US and Europe.

It will launch its Android tablet in August or September, and is estimating sales of about 4 million tablets globally in 2011, which seems to be quite a realistic estimate.

The Amazon Android tablet will be powered by processors by Texas Instruments, touch panels by Wintek, and LCD driver ICs by ILI. The tablets will be assembled by Quanta Computer.

Amazon will provide movie streaming services to its tablet users via the Amazon Prime program.

The Amazon Kindle has been a bestseller, but Amazon needs to launch a tablet soon, in order to prevent B&N from further capturing the ebook market with devices like the Nook Color. Amazon is in a very good position currently, to launch a viable competitor to the Apple iPad.

Archos Arnova 7: The $99 Android Tablet

The homepage for the Archos Arnova 7, a 7 inch Android tablet priced at just $99 has gone live. Details of the Archos Arnove 7 were first revealed through its FCC filing, but now we have some more scoop on the cheapest Android tablet.

The Archos Arnova 7 comes with a 7 inch resistive touchscreen display and has a resolution of 800 x 480 pixels. It supports 720p video playback and comes with USB 2.0 and Wi-Fi connectivity.

It also has 4 GB internal storage, but we don’t know much about the processor or RAM. It will come with Android 2.2 Froyo, and I expect the developer support to be quite low, so don’t expect any unofficial ROM upgrades.

It won’t support the Android Market, but comes with AppsLib store support. At this price point, it is one of the cheapest Android tablets, and seems to be well worth the money.

Archos Arnova 7