Recapping The PolyCapitalist's 2011 Predictions

For those keeping score three topics I made 2011 forecasts on were:

1. Rise of Android
2. China's bubble
3. U.S. Housing

On Android, the verdict is in:

The U.S. housing market officially double dipped in May and then continued to fall, so that call looks correct as well.

The China prediction is a bit murkier, but here are some points worth noting:

• The Hang Seng and Shanghai stock markets are in a bear market and down roughly 20% for the year, or 30% since May. From its peak in 2008 Shanghai is off 60%.
• Housing prices are softening quickly; in Beijing new home prices dropped 35% in November alone.
• Coastal cities such as Wenzhou and Ordos appear to be experiencing a credit crisis with reports of businessmen leaping off rooftops.
• Hot money appears to be flowing out of the country: China's $3.2 trillion in foreign reserves have been falling for three months despite a trade surplus.

Things aren't shaping up too well for China or trade relations with the U.S. in 2012 either. For more on this see here, here, here and here.

Overall, does 2.5 out of 3 predictions sound about right?

Two more quick ones: bullishness on gold has been a steady theme since starting this blog in May 2010. And how did gold do in 2011? Despite the autumn selloff gold priced in U.S. dollars has returned around 10%. Not too shabby given that the S&P500 is flat YTD. I also managed a correct mid-year bearish call on the euro.

Check back later for The PolyCapitalist's 2012 predictions.

Updated: Bin Laden Raid Video

Live: the Obama Admin. watches the raid

A discussion of the technology behind the wireless video equipment used by Seal Team Six and a mock video, courtesy of the BBC.

The raw video stream was fed real-time to the the Obama National Security team (pictured right in the White House situation room) during the bin Laden compound raid.

With confirmation yesterday from CIA Director Leon Panetta that an official death photo of bin Laden will be released, the next question becomes whether WikiLeaks or some other outfit will be able to obtain the actual footage of the bin Laden compound raid?

In the meantime below is an ABC dramatization, and more details on the raid and the extraordinary Seal Team Six which conducted the raid here.

Review: Unlocked/Off-Contract Smartphone + giffgaff = Mobile Heaven

Does your phone company advertise with a gimp?

I regularly travel back and forth between the U.S. and the U.K., with extended stays (approximately a month) during each trip. Every time I make the transatlantic jaunt I receive a stark reminder of how much better Brits have it when it comes to mobile providers. Before I explain, a little further background:

Last year after owning all of the first three iPhones, each locked and on multi-year contract to AT&T, I made the smartphone switcheroo. Crucially, I decided to purchase my new device outright to avoid any multi-year contracts or being locked to a single carrier. In exchange for paying a relatively hefty ($500+) up front for an unsubsidized smartphone, my total cost of ownership should come in around or under $1K, or 1/2 to 1/3 of the $2-$3K cost for something like the iPhone 4 on two-year contract.

How are the above savings possible? Part of the answer is the wonderful U.K. mobile provider with the quirky name called giffgaff.

Still think the name 'giffgaff' is weird? It gets weirder: my mobile plan name is called the Hokey Cokey. Funny name alright, but this plan is anything but hokey: for only £5 a month (about $8) I get 60 UK anytime minutes, 300 UK texts, 100MB/day data, a free extra minute for every minute I get called, plus free giffgaff to giffgaff calls and texts on top of that.

Another nice feature that giffgaff offers is that I don't have to pay when I'm not in the U.K., and when I don't pay I don't lose my phone number. I'd be more excited about this if I was getting charged the $80 or so I pay in the U.S. for a comparable plan, but it's nice all the same.

$8 for all that? Yep. There must be a catch? Yes, but it's pretty minor.

First, the Hokey Cokey is a giffgaff 'labs' plan, meaning it's experimental and may not be around after June. Also, the 100MB/day data* (see comments for further discussion) portion of the plan is not normally a part of the Hokey Cokey, but is being offered to all giffgaff customers through at least the end of May June.

Bottom line: there is no guarantee that I'll have the same, exact plan come June. What then? If the Hokey Cokey goes bye-bye for jusst £10 a month (about $17) I can sign up to to next plan, which has 250 UK anytime minutes, unlimited UK texts, and unlimited mobile Internet (plus the same free giffgaff to giffgaff calls and texts as the Hokey plan).

So the plans and pricing sound incredible, but what about the network coverage? Giffgaff runs on O2's network, which is the second largest in the U.K. So far as I can tell I receive the same service quality and coverage as a regular O2 customer. In London, for example, call quality is excellent and I have no problems streaming music while on the move at the highest bitrate (320 kbps) offered by Spotify (which is another great thing the U.K. has going over the U.S., and perhaps the subject of a future review).

Auf Wiedersehen iPhone

At the time of the iPhone 4 launch I wrote an unexpectedly controversial article about my reasons for holding off on upgrading my 3GS. Well, my 3GS just went kaput (right outside the 12 month warranty, naturally) so it's time for a new phone.

In my June iPhone 4 launch writeup I only mentioned Android as a possible alternative. However, I've also been quietly keeping an eye on the new Microsoft mobile phone OS, blandly named Windows Phone 7.

I say 'quietly' because until recently anyone caught considering a Microsoft phone product would have received a heap of public (and deserved) ridicule. Microsoft's mobile phone effort is perhaps one of the more well publicized tech disasters. CEO Balmer's bonus was slashed by 50% due to the Kin debacle.

In my case, there were further reasons not to consider Microsoft. Chiefly, I have a Mac computer and don't plan on switching from Mac OS X anytime soon. Windows Phones at present won't sync with Macs. However, amid reports of the temperature cooling in Hell that's apparently about to change.

Still, with the iPhone generally considered the class-leading platform why would I consider switching to something else?

Apple's Innovation Slowdown

As noted in my June article, iPhone 4 failed to generate the same level of excitement as previous iPhones. I believe the main driver of this disappointment is that Apple is innovating at a slower clip than in years past. One of iPhone 4's big selling points was multitasking, which has been available on Android and Palm devices for quite awhile. And Steve Jobs' "one more thing" was video conferencing, a technology which has been around forever (by tech standards) and currently only works over WiFi.

The slowdown in innovation can be observed in other Apple products. Take the recent 13" MacBook Air refresh. Its uses the same Core2Duo chipset as the MacBook Air I purchased two years ago. The Air is billed as an "ultraportable" but there has been no material reduction in its 3 lbs. weight since it was first launched nearly three years ago. And it is still useless as a "laptop" as it continues to get too hot for comfortable use in your lap.

Overall, the pace of innovation appears to be slowing in Cupertino.

While the iPhone Has Lost its Hardware Edge...

The iPhone no longer possess the top-of-the line hardware kit.

Don't believe me? I encourage anyone to put an iPhone 4 with its highly touted "retina display" next to one of Samsung's Super AMOLED screens (e.g., Samsung Omnia 7). To use Steve Jobs' favorite term when describing displays, compared to the iPhone's the Super AMOLED screen is "gorgeous". Further, Super AMOLED crushes the iPhone's IPS tech in power consumption (30%), viewing angles and contrast.

We're also starting to see other hardware innovations leapfrog the iPhone 4's specs, such as faster processors, better WiFi, and other features which are already making the only four month old iPhone 4 look dated.

If hardware inferiority weren't a big enough challenge for Apple, the iPhone is also wrestling with poor design. The much ballyhooed death grip problem has been followed up with reports of increased glass screen damage. In all, it appears that the chorus of iPhone gripes is growing, not shrinking.

What makes these hardware and design shortcomings particularly problematic is Apple's product refresh cycle. Apple's pattern has been to release three versions under the same basic design, which means iPhone users are likely to be stuck with the same design until iPhone 7 (summer 2013).

...Apple's Software Advantage is Rapidly Eroding

Nokia mobile boss's characterization of using Android as being like “peeing in your pants for warmth” in winter is a bit much. However, the iPhone's strongest selling point over Android has been its software. Three strengths commonly highlighted are:

• User Interface
• Multi-touch (e.g., accuracy)
• App store

While Android has made big strides in catching up to Apple's App Store, the overall user experience is still inferior to the iPhone. The opposite is the case with Windows Phone 7.

I had a chance for the first time yesterday to test drive the Windows Phone 7 (on a Samsung Omnia 7). I have to say that the Windows Phone 7 UI rocks! And don't just take my word for it: influential Apple fanatic John Gruber of Daring Fireball agrees.

While Windows Phone marketplace lacks the sheer number of iPhone apps, this statistic is misleading. Microsoft's Phone already has many of the most popular apps (i.e., Twitter, Facebook, Netflix). Given Microsoft's resources I expect that, like Android, it will quickly close the app gap.

Last, has anyone else out there grown tired of the iPhone's cutesy candy icons, which have been copied ad nauseam? If so you'll find Microsoft's Phone UI, called Metro, a breath of fresh air. I'll be the first to confess that this an altogether superficial factor, but it's a factor.

Apple's Stock Price: Where to From Here?

Apple's stock price is bubblicious. The company has been on a tear for years now and the stock price has responded accordingly.

However, as evidenced by Samsung and Motorolla on the hardware side, and now Google and Microsoft on the software side, the competition has not only caught up but is leapfrogging a slowing Apple.

Further evidence on how times have changed: recent discussion of the upcoming 2011 launch of the first CDMA iPhone centered on how Apple needs Verizon a lot more than Verizon needs Apple. Prior to the original iPhone when Apple was seeking wireless carrier partners, Apple spurned Verizon. Apparently Verizon hesitated on Steve Jobs' request for carte blanche control over the iPhone's design and features, leading Apple to partner with AT&T (its second choice). With the iPhone's early blockbuster success Verizon was roundly criticized for its obstinance. But the proverbial Mountain would not to come to Mohammed, and now Steve Jobs and the iPhone need Verizon.

Apple investors may possibly see some modest stock price appreciation from here, but we're definitely in the late innings of the extraordinary run in AAPL.