It is very common to launch a cost-reduced variant of a product when cheaper alternatives of components are available on the market. This redesigns give an extra slack of margin and enable price reductions when competition becomes tougher. But, in this case, the reduction of storage capacity wasn’t necessary because 8GB Flash chips are as cheap as 16GB versions, if not more expensive. So, Apple could have reduced the BOMs of its iPhones without creating a new version (SKU).

So, if this 8GB iPhone is confirmed, Apple needs it for another reason. And it could be linked to the future arrival of the next generation (iPhone 5 or iPhone 4 S).

The competition is getting tougher for Apple and its iPhone, so Apple needs to reduce the price difference with its competitors. But, Apple probably doesn’t want to reduce the price point of the existing versions of the iPhone, just before the launch of its fifth generation. So, they need a cheaper iPhone 4 that can sustain the price of the existing versions and the one of the iPhone 5. And, in order to avoid to cannibalize them, this cheap version needed to be under-featured in a way that customers understand easily and without compromising their experience. Storage capacity is perfect for that, especially because a lot of customers can do with 8GB of storage.

So, even if it doesn’t cost less to produce and will be sold with lower margin, this new version of the iPhone will definitely play an important role in Apple product line-up: give an affordable iPhone to customers who can’t afford the more expensive ones and would have gone to the competition; without compromising the premium price of the iPhone 5.

As we can see, Google could look quite spared from lawsuits, except the Oracle who is suing Google for its use of Java in Android. But if you look at the green dots, you see that Apple and Microsoft are suing almost all vendors using Android, creating a indirect threat for Google. Strange to see that Microsoft is focused on the ebook reader vendors, Amazon and Barnes & Noble.

But overall, Apple win the lawsuit palm with 4 ongoing lawsuits, and probably more to come.

And, as we can see, most of these arrows are blue, because the best tactic when sued over a mobile patent is to counter sue the attacker. Otherwise, the lawsuit could end up in a licensing agreement that would compromise your product Bill Of Material (BOM) with too many licenses. For example, it’s clearly the aim of Microsoft when they ask phone vendors to pay $15 of license per device, to use their patents included in Android. $15 is way too expensive for a vendor to add on their smartphone BOM. If the goal of Microsoft was really to license the software, they would try to make a global license agreement with Google.

A few weeks ago, Google lost the Nortel patent deal in favor of Apple and Microsoft, creating a serious threat for its mobile operating system, Android. But apparently, this wasn’t the only ongoing battle for the mobile OS dominance. As Business Insider revealed today, Microsoft was in discussion with Motorola to strike a deal over 17 000 patents owned by Motorola when Google came in and acquired it. This clearly explains the defensive aspect of this acquisition because Microsoft is agressively trying kick Android out of the market by making it more expensive that Windows Phone 7 for phone vendors. They already demanded HTC and Samsung to pay $15 of license per phone for the use of its patents used by Android.

This acquisition was surely already in discussion for a long time, but it became critical for Google to win it when they lost the Nortel deal. Otherwise, Microsoft would have been in a position to simply kill Android with its patents. However, being in a situation were you have to strike a deal doesn’t put you in a comfortable situation to negotiate, so Google may have paid a bit more than expected.

Anyway, even if it was a necessary move, it remains a bold move for Google: 12.5 billion dollars spend, almost 20 000 more employees to integrate and a completely new business to enter.

But, these are all workable problems, especially with the skills of Motorola’s employees. What looks much tricker is that Google just became a major competitor for the phone and tablet vendors who chose to us Android as operating system. Let’s take Samsung as an example, even if it’s a special example. Officially, Samsung takes this acquisition as a proof of Google commitment towards Android.

“Samsung Electronics welcomes Google’s proposed acquisition of Motorola, which is aimed at protecting the patents owned by the Android camp,” Samsung’s spokesman Kevin Kim said.

Indeed, this move was necessary for Google to keep Android alive, but Samsung can’t be extremely happy to become dependent of one of its major competitors. However, Samsung knows this situation very well, but the other way round: they are one of the major competitor of Apple iPhone and iPad, and also a supplier of their critical components: the LCD screen, processor and Flash memory. And, in the case of Android, the situation is slightly easier: it’s open source software, so even if the product dependency is quite high, there is very limited impact on the supply chain itself.

So, for the time being, Android phone vendors will deal with this new situation, but they will keep an eye on Google’s behavior and it will be a key element of the future software strategy of all the Android phone vendors.

Another interesting impact of this acquisition is that Apple’s lawsuit against the Motorola Xoom in Germany for copying the iPad design now involves directly Google. So, they will have a chance to indirectly push back on Apple trying to ban all non-Apple tablets from the market.

And now? What’s next for the TV manufacturers?

And, if 3-D never gets traction, what can be the next technology that drives customers to the shops for a new TV.

No short-term innovation seems able to disrupt the TV image quality. LED backlighting technology is slowly generalizing and even if it brings more vibrant colors, this won’t be enough to justify a TV purchase by itself.

Manufacturers are betting a lot on Internet enabled TVs, called “IP” or “Smart” TVs. Such TVs give access to the Internet and in particular video streaming services like Youtube, Hulu, Netflix or Pandora. But, up to know, none of the product launched got any traction due to major usability issues. Even the Apple TV or the Google TV devices failed to convince a large audience.

Even if Samsung announces 2 million smart TVs sold worldwide, only about 50% of them are connected to the Internet. Another major challenge in the adoption of these TVs, is that a lot of devices connected to the TV already offer these capabilities, from the gaming consoles, to the ISP set-top boxes, especially in France and many other European countries. And, at the end of the day, there are already so many screens connected to the Internet -laptops, tablets, phones- and these devices are so much easier to use with there touch interfaces that the TV will have difficulties to convince in this area, except if some innovative user interfaces are brought in.

As a confirmation that these innovations aren’t getting customer excited, a study by DisplaySearch in 13 large US markets showed that individually LED, 3-D or Internet connectivity aren’t enough to drive a replacement of their TV.

Looking ahead, organic LED (OLED) lighting produces even more vivid colors and lower power consumption, but large OLED displays aren’t anywhere to be seen at a reasonable cost in the next couple of years, says Paul Peng, executive vice president at Taiwan-based TFT-LCD panel maker AU Optronics (AUO). Even if LG Display plans to offer 55-inch OLED TVs, the production cost of these large-sized panels will stay much higher than that of LCD panels until 2014 according to Peng. And, even then, consumers may not perceive these technologies as groundbreaking, says Ross Rubin, an NPD consumer-electronics analyst.

“There doesn’t seem to be anything on the scale of HD in the foreseeable future,” Rubin said.

So, apparently, for the next few years, the only reason to change a TV set will be when it breaks down…

Ever used your phone next to a swimming pool? Do you bring your phone on the beach? Didn’t you ever drop a glass? Then, this phone may be for you because it is water and dirt-proof. And this is not just marketing: the phone is IP67 certified. The Ingress Protection Rating (IP) certifications are very strict and demanding. To be precise, IP67 means that the device passed the level 6 of dirt resistance and 7 of mater resistance, corresponding to the following tests:

• Dust test: No powder in the test sample after 8h in dust-test chamber containing talcum powder in suspension in an airflow of 60 volumes per hour.
• Water test: No moisture ingress after submersion of the test sample under 1m of water for 30 minutes.

Apple just won a big battle in its patent war against Samsung. The Landgericht (district court) of Düsseldorf granted Apple a preliminary injunction against Samsung Galaxy Tab 10.1 for infringing on its design copyright and copying parts of the iPad 2. Even if the judgement was made in Germany, Samsung is asked to stop selling and marketing its tablet all across Europe except The Netherlands were the intellectual property laws are different and another lawsuit was filed by Apple.

Even if Samsung can and probably will appeal against this judgement, the injunction will continue during the procedure which should take about 4 weeks. But, intellectual property analyst Florian Muller said that “such injunctions were in force and effect until the end of a main proceeding, which could easily take more than a year”.

Muller added that “the Düsseldorf district court has a reputation for being our equivalent of the Eastern District of Texas in terms of a strong tendency to favor the interests of right holders over those of alleged infringers. About half of all European (!) patent litigation takes place before that court”.

Even if this decision is based on some legal ground, we can wonder if the judge realizes the costs involved in such a decision, especially just a week after the product launched in UK, for example. In any case, after this second victory for Apple, things could become difficult for Samsung and its Galaxy Tab.

So, even if the active 3D TV systems deliver an overall better image quality, they also come with quite some drawbacks. Indeed, the big advantages of the passive 3D TV systems, which use a polarizing film on TV screen, are the inexpensive and lightweight battery-less glasses which don’t need to synchronize to the TV. This makes them universal and allow the manufacturers to deliver a few pairs of glasses with the TV. In comparison, the active systems are dependent on the manufacturer, no glasses are delivered with the TV and each pair of glasses costs up to $150. So, when you buy an active 3D TV, you can almost double the cost if you’re a family with 2 kids, and you’ll have to buy your next TV from the same manufacturer, if you want to reuse the glasses.

Conscious of this major barrier to adoption, Panasonic, Samsung and Sony decided to work on a universal active 3D glasses standard with Xpand, a vendor of universal 3D glasses. The common objective on this group is to be able to launch the first universal products as early as next year, and make sure that these glasses will be compliant with this years TV set models.

“We are delighted to contribute our efforts and technologies to the Full HD 3D Glasses Initiative for both RF and IR technology that we announced today with Panasonic, Samsung and Sony,” said Xpand 3D’s CEO, Maria Costeira.

The Initiative wants to develop and license a standard technology based on Bluetooth that would work with all compliant TVs, computers, projectors and even cinemas. The standard will also include multiple IR synchronization systems, which are used by certain TVs. As its name suggests, the group is targeting HD systems capable of delivering 1080p resolutions to each eye, where passive systems are limited to 540p.

This Initiative isn’t a first: Panasonic and Xpand already worked together on universal glasses projects based on inter-operable IR protocols. The Panasonic Xpand glasses is sold for more than a year and is compliant with products Funai (Philips, Magnavox, and Sylvania brands), Hisense, Hitachi, Mitsubishi, Seiko Epson, SIM2, and ViewSonic. But, until now, Samsung and Sony were using proprietary technologies, even if Samsung lately migrated to Bluetooth-based protocols.

This project looks promising, but will the different participants succeed in aligning their interests? And, in the longer run, will this standard help the adoption of active 3D TVs? Will it impact the 3D TVs even further until its launched, despite the backward compatibility promise?

The lost 3-D illusions

10 years ago, the key advantages of flat-screens compared to the old tubes were obvious: it takes less space in the living room even for very large screens; it’s ready for the switch to digital broadcasting; and the image was so much sharper. And, last but not least, most of the TV sets were old enough for a well-deserved retirement, so the purchase decision was very easy to make.

But, today, the perceived advantages of these new features aren’t that obvious. Let’s take 3-D as an example; the user experience is far from perfect: uncomfortable glasses and motion sickness that some people experience are serious barriers to adoption. But the main issue is that TV isn’t broadcasted in 3D, so customers have to by an expensive 3-D Blue-ray player and some discs with it. That’s not an easy sell in a trend towards on-demand services like Netflix or Hulu.

It’s true that more 3-D TVs are sold compared to last year, as reported by NPD Group. But the number of high-end TV sets with 3-D drives this increase. People who want a new TV are more looking for the best quality of image they can get and if it happens to have 3-D, it’s the icing on the cake.

So, despite all the R&D and marketing efforts of the manufacturers, TV shipments are flat and the 3-D TVs didn’t live up to the expectation, yet.

“The LCD panel industry remains in the midst of a secular slowdown that is likely to only deteriorate further over the next couple of years,” wrote Brian White, analyst at Ticonderoga Securities, in a recent report.

But all 3-D hopes aren’t gone yet

Despite the very limited adoption of the 3-D TVs, major manufacturers still need the 3-D technology in their mid-term strategy. For example, Sony sees 3-D movies as Premium revenue for Sony Pictures, and 3-D cameras and camcorders as a new opportunity for its camera business. So, they dropped the price of the entry level 3-D TVs to accelerate the adoption and added to more models. Same for Samsung who offers 3-D in 60% of their lineup

“What customers are looking for is the best TV picture quality that they can buy,” said Mike Abary, senior VP at Sony Electronics Home Division. “And if that TV happens to also have 3-D capability, that’s just icing on the cake.”

As one of the main barrier to adoption of 3-D is certainly the lack of availability of content, but a few channels are starting to produce 3D TV shows. For example, in the UK, Sky launched a 3D channel a few months ago, airing high quality 3D contents like Disney’s 3D films, such as Toy Story 3. They also just created their own 3D production company, Colossus Productions. It will contribute to Sky’s commitment to making more original 3D content and will also distribute the 3D programs produced worldwide such as the ones from MTV, the Discovery channel. However, not all broadcasters are that committed: AT&T U-Verse just abruptly decided to remove ESPN-3D from its channels.

Read the third part: And now? What’s next for the TV manufacturers?

Back to a tough reality

Nowadays, after ditching their old tubes for high-quality flat-screens a couple of years ago, most consumers can’t find a good reason to buy a new TV.

And after a few years of LCD euphoria, the situation is becoming critical for TV manufacturers. The forecasts of LCD TV sets shipments went down from 215 million to 205 million units for 2011, according to Paul Peng, executive vice president at AU Optronics (AUO). The continuous decrease of the TVs retail price pushed the panel price to its lower limit, leaving no room for further price-cuts at retail level. Therefore the global demand will fall bellow the original forecasts. Based on AUO’s shipment projections in 2011, 3D TVs and LED-backlight TVs should account for 10% and 40-45%, respectively, Peng indicated.

Limited demand for LCD TVs is putting great pressure on all parts of the value chain; from LED backlight and LCD drivers manufacturers, to panel makers and TVs set vendors. While the third quarter should be a high season, the market is flat and slowly creating a high level of inventory. Mechanically, TV price are falling rapidly with gross margins getting smaller, said industry sources. Many vendors had to reduce their production capacity because of this increasing inventory in the supply chain. They now hope that the Christmas season demand will help restore reasonable levels.

But, the situation is so serious that some TV vendors simply give up and leave the TV business. Amongst them, Hitachi is considering outsourcing its production and Pioneer stopped producing TVs in March 2010. Sony won’t give up that easily on a business that they were dominating a few years ago. But even if the are still shipping lots of panels, “markets are maturing and price competition is stiff” says Chief Financial Officer Masaru Kato. He also added that they aim at turning their TV business “into one that can be profitable even if we do not pursue volume.”

Of course, TV manufacturer tried to anticipate this situation and invested large amounts of money in R&D to find the next innovation that would push customers to renew their television and maintain their sales. The high-end TV sets can now offer 3D viewing (with or without clumsy glasses), Internet browsing (with a very questionable usability) and LED backlighting for brighter and nicer colors. 3-D was mainly perceived as the key sales driver and was at the center of big marketing investments.

Read the second part: The lost 3-D illusions

In Las Vegas at the Def Con 19 conference, Miller how some Apple mistakes helped him a lot in accessing the firmware of the MacBook battery and change it. He indeed found out that Apple forgot to change 2 of the default passwords of the Texas Instrument battery processor. These password which give full access to the battery firmware were still the ones set by the manufacturer.

Miller added that, if Apple or its battery supplier would have changed these passwords during production, it would have been probably impossible to access and compromise the battery firmware.

This is a good lesson for all of us, consumers and manufacturers, leaving the default password unchanged is a big security mistake. So, we should change them to a strong password, as soon as we set any device up. Even if this makes it sometimes difficult to remember all these passwords, it’s a very good exercise for our memories and it’s essential to prevent hackers to access our systems.