UKRAINE- AIRLINE DOWNING- BLAME SIEGE MENTALITY OF THE WEST

22 Jul

1) The tragedy of Malaysian airline shot down in Eastern Ukraine has now more or less been blamed on the Russian supporters in Ukraine. All the western news reports and commentators seem to point the fingers at the Russian supporters within Ukraine and specifically on the separatist territory in Eastern Ukraine.

 

2) I however, no matter who shot down the passenger airlines, blame on the SIEGE MENTALITY of the WEST against anyone else. I blame the small European nations such as UK, France, Germany, Italy, Poland, etc for this whole tragedy in Ukraine and the downing of the Malaysian Airline.

 

3) I also blame the clueless US political leadership and military leadership for reading too much, and in some cases, ever only reading, European history. I blame their small brains for not understanding that in a region smaller than US and Australia, there are too many nations that for centuries have been warring against one another. I blame the US leaders and military for not understanding in such region like Europe, of course there will be lots of wars and hence the SIEGE MENTALITY would exist. I blame the US leaders and military for not understanding that large nations like US, Russia, China, Canada, India and Brazil do not need to involve in Europe or continue support this SIEGE MENTALITY within Europe. I blame the US for expanding NATO to try to fence off Russia.

 

For those that do not understand my thesis on this, please read my other story on this Ukrainian crisis which I copy below… Think carefully and just look at the situations in Europe. After this, I also will add more comments….

Thanks

*********************************

 

UKRAINE- CRIMEA CRISIS- RESULT to SIEGE MENTALITY of EUROPEAN………

1) I am not European however I have always had deep interest in history of different regions in the world. Europe, US, China and elsewhere.

When I look at European history and I make some comparative analysis with that of say Chinese history, the differences are quite glaring.

 

2) For more or less the same land mass, there is only one nation in China. In Europe, without counting the former Soviet Union republics, there are about 30 different nations. 30 vs one….

 

3) In any region, whenever there are many nations, there is usually more wars fought among the nations. This is like in an industry where there are lots of participants and there are no large dominant players, the competitions are fierce and the outcomes are usually bloody. Literally, this has been the experiences for Europe and European people.

 

4) Just count how many wars there have been since Napoleon’s France in 1800? Compare that with that in USA and China.

In Germany alone, there have been some 20 wars of one sort or another. Most were fought during the process of Prussian dominance and take-over of whole Germany till 1867. Then there are wars started by or involved Germany since which are 5 that I could count since. So just in the name of Germany, there are about 25.

 

5) Then how many wars that Britain and France have been part of since 1800? More than 10 each? Both Britain and France only in the last few years more or less started-aided in the civil war in Libya with air strikes.

 

6) What is the issue with SMALL NATIONS that they have one thing in common throughout history? They all want to be bigger. When you are small in size, getting into armed conflicts usually have more to gain than what one could lose. It is like very poor people often take risks in gambling as, for them, there is more to win than what they have already.

 

7) Europeans and European nations as a whole, given their history, more or less are greedy for their neighbours resources and lands. War after war is the clear evidence. This has been going on, not just recent memory, but for centuries. Since the fall of the Western Roman Empire, the whole European continent has been in this mode.

 

8) Think about this. If you have neighbours for centuries now and then have waged war against you, would you actually trust them even during peace times? No. That is just human nature. So what you carry in your head is simply SIEGE MENTALITY deep down.

 

9) Siege Mentality means that one has this constant fear that one would be under attack. Hence one reacts with either first strike strategy or one uses others to fence off your so called potential enemy.

The whole of Ukrainian crisis recently is due to this Siege Mentality in Europe as a whole.

 

10) NATO is formed by USA, Canada and most of Western European nations after WW One to counter against the Warsaw pact under Soviet control. France, under de Gaul, did leave NATO and France did not rejoin till the recent years.

 

11) I can understand why NATO was needed when Soviet Union held sway in Eastern Europe in the form of the Warsaw Pact. However, why would you need NATO since 1989 is beyond me? And indeed, can anyone explain to me why NATO needs to expand its membership all the way to the Russian border at all?

 

12) NATO- Northern Atlantic Treaty Organisation. Northern Atlantic…. Is Poland part of Northern Atlantic? Come on, Baltic Sea may be part of the great ocean but no one would say that Poland is anywhere near the Atlantic. So why is that NATO have Poland as one of its new members so quickly?

How about Turkey? Czech Republic and Salovakia are landlocked nations so what has it to do with the Atlantic? Albania? Romania is no where near Atlantic.

 

13) Come on, the pattern is clear. It is the deep distrust among European nations that force everyone to join NATO. It’s the Siege Mentality.

This Siege Mentality against Russia is simply just extensions of the internal distrust of Europeans and European nations among themselves. They are together now simply to show the world that they are for peace. But deep down they still dislike one another. Otherwise, they would not have tried to expand so widely since the fall of the Soviet Union.

 

14) Think about the European Economic Crisis since 2008. UK more or less put Iceland into bankruptcy. 70m Britons kicked the butts of 350,000 people in Iceland and it’s so easily done.

Spain and Portugal have been punished by US since WW Two when the two Iberian peninsular nations refused to fight against the Nazi’s in WW Two. So their economies have been weak and hence more susceptible to external shocks such as the GFC since 2008. Other Europeans nations simply do not care about them.

 

15) Germany which spends less than 1% of its GDP on defence in the guise of a peace dove vs 2% spending by other European nations, of course, could easily save money and have good government budge performances most of the time. (After all, most government budget deficits are around 1~2% of GDP.)

Now look at Germany’s stance since GFC. They refuse to help most of fellow European nations. Their political leaders state that if they could control their own budget spendings, other should do similar. The average Germans in the street also have the view that they hard earned savings should not be used on Greece of the world that just spend and spend.

Come on, 1% less in GDP spent on defence for 65 years is a lot of savings for any nation. If you do the compounding, it is more than 100% of GDP as it were. As a matter of fact, if you use simple 5% compound rate which would be perhaps average growth of the German economy (inflation included or nominal term), the savings amount to over 400% of the current German GDP. Or, another word is that Germany’s peaceful dividend is some 4 times of its current GDP cumulated for the last 65 years. Being the biggest economy in Europe, this is more than significant. Gee, Germany, are you sure that you have been a good citizen for Europe? NOT in my book.

 

16) Europeans and European nations still carry this Siege Mentality against fellow European nations. No doubt about it.

 

17) But many would say that NATO is mainly US effort. Well, this is true. But what do US politicians and military leaders read? European history. US own history is so short and there have been only 2 wars fought on US soil, so what would US military teach their officer corp? They look at the European wars and European history.

So, average US politicians, military officers and people see their sense of history partly from the eyes of Europeans. Hence Siege Mentality is also something easily built up in their mind. And indeed this has been so in good evidence.

 

18) Being part of NATO, of course, all the internal disgust of European NATO members would have rubbed off on the Americans and Canadians. So what do US foreign policies and military stances are based on? European Siege Mentality.

No wonder, NATO have been busy signing up new members that were once members of the Warsaw Pact. So they could fence off Russia.

 

19) The courtship of Ukraine by western Europe and NATO and US is hence just extension of the paranoid Siege Mentality mentality in European-US mindset. No wonder, US and Europe never condoned the overthrow of pro-Russia government of Ukraine in the last few months. In other parts of the world, if any pro-US government is overthrown, US would have attacked them at least with sanctions. But not Ukraine at all. The European Parliament and EU Commission have not said a word agains this at all of course. On the contrary, they are actively supporting the illegitimate government in Ukraine at this moment.

 

20) Ukraine and Kiev are the cradle of Russian civilisation and Russian nation. Without Kiev, what we know of Russia would not have existed. Moscow Russia only gained ascendancy in the 1,300 and 1,400’s AD. Just ask any proper historian for the Russian history, and they will say you this is the fact.

It’s the Moscow princes that finally kicked the Mongols out of Ukraine and Russia. It’s under Moscow-St Petersburg Moscow in the reign of Catherine the Great that southern Russia and Southern Ukraine and Crimea were gained from the Ottoman. Ukraine did not gain its southern lands and Crimea independently by itself at all.

 

21) Western Ukraine in history past was sometimes part of the Polish kingdom who were often hated enemy of Russians and Ukrainians themselves. Many in Western Ukraine now would have this Polish heritage hence their sense of being part of Russia is never there in the first place. Of course, they would prefer to leave Russia’s influence altogether. They are the traitors to Ukraine themselves. They do not belong to Ukraine at all.

 

22) Far west of Ukraine should be carved out to be their own independent nation if they so desire. The rest of Ukraine should fold back to Russia. The western Polish-Ukraine could have their days in the sun as it were. However, history also says it clearly. Being the meat in the sandwich in European Siege Mentality would mean that western Polish-Ukraine would be the killing fields for many centuries to come. Poland has been the battle field since before Napoleon’s days. Only silly people would think that big brothers will come to their aide. When the time comes, NATO would not have the means to react. Indeed, Poland and Germany would have a go at Polish-Ukraine. Germany, the contemporary peace dove, will one day get its military aggression psyche back and would strike Poland and Ukrainian-Poland soon enough. Otherwise, why would Germany still keeps the Branderberg Gate which is the quintessential symbol of Prussian militarism even today? A real peaceful nation would have pulled the bloody thing down by now. 

 

23) Siege Mentality is in the psyche of average European and their leadership. This is the same for US and her leaders. If this is not so, why is that US is trying to fence off China?

Just go and ask SE Asian nations what they think of China- honestly and truly? No one would say that China ever fought any war against them. The Vietnamese in 1980 tried to take more land from China but the Chinese military kicked their butts. It’s the only time in the last 1,000 years I know of that China had fought a war in SE Asia.

 

24) Why is that Japan happy to fence off China as part of US Siege Mentality? Well, when you yourself have invaded other people’s land and butchered tens of millions of innocent people in China as Japan had in the recent memory, of course you fear others and your victims may exact their revenge on yourself. Well, tough luck to have restless sleep. Japan even today still do not admit that they murderously invaded China and the rest of SE Asia.

Korea, well, THE great aide receiver of OECD member. US aide in military and in finance have propped up Korea for decades. In addition, while US politicians cry foul about Chinese imports and Chinese currency. Korean imports and Korean currency’s artificially low level are never a question for US to ask. Why? North Korea. I would not be surprised that many South Korean leaders do not really want North Korean matter to be resolved so that US could be continued to be milked for all her worth as it were.

So it is easy for US to try to use Japan and Korea to fence off China. And let us not forget the Philippines which since its first day of independence from Spain after the US-Spainsh war of 1905 has more or less relied on Uncle Sam. Of course, it has to pay her dues back to her master.

 

25) SIEGE MENTALITY is clear in Europe and hence within US psyche. Switzerland which has not been to war for over 600 years have one of the highest tax regime in the world. A huge part of tax take has been spent on constructing and maintaining thousands of km of tunnels in the Swiss Alps. In these tunnels, there are defence measures, provisions for all their citizens to survive for months.

Why do the Swiss do this?

SIEGE MENTALITY within the Swiss population and that of the greater European and US people about others including their own neighbour nations.

It’s a madness…..

 

26) Those that read this, please just think about it. Would most Americans worry about the Canadian regardless of the difference in might? No? Why, the two nations have never fought a war so there is good mutual trust even if not all issues are agreed on by both parties. In Europe, one would need at least another 500 years of total peace in that continent for the Europeans to rid off this Siege Mentality from their minds. However, from what I know of the Europeans, I doubt it will be so.

 

Siege Mentality…. Come on….. Leave it to the Europeans to kill one another. Large nations such as USA, Russia, China, Brazil, Canada and India should just let the Europeans to kills off one another without any interferences. At the end, it would be much better off for everyone…..

************************

 

1) Those Americans and Aussies that read this note should ask their own families why they migrated from Europe, China, and elsewhere in the world.

 

2) Most migrations occur due to wars and prolonged hunger. In the mid 1800’s, the famine in Ireland forced ⅓ of her population to leave Ireland, most of whom went to US and some to UK itself.

 

3) In the 19th century, most of immigration into US is due to the wars rampaging now and then in Europe at the time. Many Americans have German blood in them. Why is that there are so many German Americans? Well, the Prussian war machine was going through Germany in the goal of forming a German empire. Contrary to popular belief, modern day Germany only was first form in 1867. Before that there was never such unified German nation at all whatsoever.

 

4) So the wars in Germany in the process since late 1600’s to 1867 more or less forced many Germans to leave Germany and Europe as a whole. Some are also Polish as part of the process involved Poland too. Even President Eisenhower’s family came to US after one of the wars in Germany not long before US own Civil War.

 

5) In Australia and Canada, there have been many millions of Europeans arriving after the end of WW Two. Why? War ravaged Europe simply could not cope with their own people. Many were simply sick and tired of wars and the misery caused by such. So they fled Europe as their last resort.

 

6) Without European wars, US, Australia and Canada, before mid 1950’s would not be with large populations as they had since 1950’s. 

 

7) And ask yourself why US, Canada and Australia are such good destinations for European war refugees. It’s not the pavement paved with gold. It’s the fact that there is hardly any war fought on US, Canada and Australia. Besides the wars for the control of North America between the French and UK and besides the US Independence War and Civil War, thee has not been any war in North America. Yes, there have been wars with the American Indians and they are not to be ignored of course. But in term of scale, they were small. In Australia, there is no war besides the conflicts with the local aborigines.

 

8) So, it’s natural choice that most Europeans would come to US, Canada and Australia.

 

9) We should always look at history and ask why Europeans are so war-obsessed. They distrust one another. They have siege mentality. There are too many nations in Europe (without counting the former Soviet Union) in a region that is smaller than US, China and even Australia. Too many nations mean wars as SMALL NATIONS are greedy for others’ resources.

 

10) Political leaders and military leadership should not be sucked in by the European experience and history. They should not think that SIEGE MENTALITY of Europe is the only way to deal in international intercourses. But this is exactly what US led NATO has been doing.

 

11) NATO is expanding to regions that far away from the Northern Atlantic. Turkey is no where near the Atlantic. Ukraine too. Belorussia is a landlocked nation and so are Slavic Republic and Czech Republic. Come on…

 

12) SIEGE MENTALITY is simply inconstant with the goal of world peace and prosperity for all. Let us tell our political leaders to stop this SIEGE MENTALITY in dealing with other nations.

 

Thanks

WHY GOOGLE-ANDROID IS A FAILURE ?

1 Feb

1) The Wall Street and most in the IT media use the success of PC/Windows vs Mac as guide to the war of Android vs iOS. They forget that in the 1980’s, half of the world manufacturing power was closed off- CHINA. China did not enter the pc making at all in the early days. The number of pc OEM’s were limited to some brand names from US, Japan, Korea and Taiwan. With Android, suddenly the OEM participants jump by several folds most of which none of us have heard- even those large ones with China itself. 

 

2) PC OEM’s in the 80’s to the mid 2010’s, more or less enjoying good profit level due to the initial limited number of OEM’s when China was not open. Their names and brands built and hence could cope with the entrance of the Chinese non-brand OEM’s in the last 10~15 years.

 

3) With Google’s Android, the situation is totally different. Huge wolf pack of Android OEM’s from China plus the brand names of western-Japanese-Korean-Taiwan make the sharing of the killing much less rewarding. In Nazi U-boat wolf packs, very few sub got to sink anything. But most got hunted down instead.

It seems to me, Google Android dominance in this OEM wolf-pack is translating into continuing carnage for the OEM’s as the Nazi subs did suffer in WW Two. 

 

4) Google itself directing this wolf pack attack has of course been targeted. Motorola Mobile was/is only part of the wolf pack. It has some kills but it also gets hunted down by the destroyers-sea planes escorting in the convoys. Its pans are bombed to simmering.  No wonder Google is abandoning Motorola hardware.

 

5) Worse, the Android wolf pack, dominant males and pups, are turning to advertising revenues to compensate for the low and often negative profitability. Google the Nazi u-boat high command is now losing its grip on its prize of lootings gradually and, within a short year or two, significantly. And this is just from advertising revenues in Android.

 

6) Apple’s own iOS devices still account for over 50% of all advertising revenues for Google from all mobile devices. Apple is clearly trying to get its hand on this with various projects and initiatives. Surely, once Apple’s own presence reaches some critical mass, the advertisers will switch away from Google en-mass. This is the type of phenomena experienced commonly in the tv-radio media. 

 

7) So how has Google got from Android’s market share? The Wall Street, the IT media and many commentators seem not looking beyond the bloody obvious. Yes it is bloody by just looking at the cash carnage of all Android OEM’s (Motorola included) have suffered since Android’s introduction in 2008. 

As in the Chinese saying, the glory path of a general is strewn with the dry bones of thousands…..

 

8) However would the glorious general in Google-Android getting the lion share of the mobile devices be sustained?

NO…..

WHY????

Android MALWARE…….

 

9) Windows have had the history of malware creating a separate anti-virus sub-industry for the IT world. The corporate had to make sure that these anti-malware measures as their top priority in their IT strategy and day to day management. The concerns are bloody obvious.

 

10) And yet, Google-Android ignore the need for this. It’s never offered any sense of preventing malware as though it is a mere after thought while the DOS-Windows virus saga has been around for as long as Eric Schmidt has been in the IT industry.

 

11) No wonder, more than 5 years after Android’s introduction, Android hardly makes a dent in the corporate world. Apple iOS, with just one year lead, on the other hand has built some inroad in the corporate segment for the first time in Apple’s history. GE has over 20,000 iOS devices and tens of apps for iOS for internal uses alone. Look at Apple website for such corporate presences and uses of iOS devices.

 

12) The 2008 Android birth might have been like a 2013 late delivery. This has allowed MSFT Windows for mobile devices time to sort out their problems. By  sticking with original Windows platform, MSFT have also brought with it all the anti-malware apps for its mobile devices. Plus the existing corporate internal security for Windows pc, Windows mobile devices have a secured home even with Apple iOS presence.

Android on the other hand is still knocking on the door- more than 5 years after its first introduction. Poor bugger as Aussies would say….

 

13) If the PC-Mac history has any guide, it is this MALWARE and security matter that should be the loud lesson. Once the malware problem is under control, internally and off-the-shell, corporate remain happy with PC and no amount of glamour that Apple has, it could not bring Mac to the corporate world in a significant manner.

 

14) That is, Google did not learn the lesson of PC-Mac that it is the security matter and the corporate sector that will decide the fate of any IT devices that could be used by the consumer and business segments. Android’s 2008 birth is more like 2013 if not later.

 

15) I am now more and more confident that, once Windows mobile devices reach some critical mass sale volume both for the consumer and corporate segments, Android’ days are numbered.

At best, Android will remain consumer offering as only one of the 3 platforms. The OEM’s then still will fight for the small share each in bloody pitch battles.

At worse, Android may be assigned to history altogether leaving Windows mobile devices dominating over Apple iOS while Apple continues its way of being the maverick that most of its users love.

 

16) So what has Google for out of Android? AGAIN. What has it got out of it?

The advertising revenues from Android have never been as high as Apple iOS- Google has reported this quarter after quarter.
Google is now losing own share in the Android advertising revenue.
By all indications, Android advertising revenues will be lost in significant manner to Google in the next year or two.

I will not be surprised, even vs iPod, the total revenue from Android made by Google itself is not as high as Apple has got from its MP3 players.

How about vs Wii, Nintendo, Sony PS, and even Xbox?

Let us not even worry about Mac and Windows pc’s as it would be unkind to Google.

 

17) Google should have a) NOT have licensed Android to any OEM’s but built Android devices in-house with Motorola or otherwise when iPhone was still new to the market in 2008; and b) should have chosen the close platform as Apple has for iOS so that the corporate could accept Android with the same ease that iOS has.

a) would have built pile of cash for Google while MSFT fumbling in its Windows mobile efforts till well into 2013 and perhaps 2014. Cash is cash and look at how Apple has been using its $150bn and how it will be using it. (watch this space…..)

b) would have put Android in the corporate embrace allowing Android a more secured long term future even against Windows mobile devices from 2013 on.

 

18) To me, Google-Android episode is one of the worst corporate strategic mistakes in the business history worthy of MBA case studies, economic history dissertations and Pulitzer Prize winning writing for at least 2 decades to come. The IT insiders will talk about it till they are grey and rickety. Even the Wall Streeters will look back with their heads shaking- not just at Google’s mistakes but their own mis-judgements.

 

19) The lesson for Microsoft-Windows in mobile devices?  Simple…

a) Do not create a huge wolf pack the manner Android packs are killing one another since its first day.

b) Licensing Windows mobile devices to existing brand name Windows OEM’s and a small handful of rising Chinese-Indian OEM’s. This will maintain good profitability for all the OEM’s.

c) If MSFT wants to continue its hardware efforts, perhaps it should go for the VERY-TOP-end sub-segment which would then show its own hardware prowess over time against Apple’s offerings. This then will also leave the OEM’s happy.

Business is about win win for all parties. The wolf pack mentality has not been wise….

PRIVATISATION- A CAPM & DEBT vs MARKET RETURN ANALYSIS

19 Jan

In 1990 March edition of the famed respectable Harvard Business Review (HBR), there is a note on the Efficiency of Privatised Former Government Enterprises.

The article is a summary of the researches to verify the claim of better efficiency from the privatisation process of formally government owned enterprises. The team involved spent 2 years going through all the available studies done according to academic research robustness standard in any language they could find.

The outcome of the study turned out to be very surprising.

Contrary to the assumption that a privatised enterprise will be more efficient than when it was under government ownership, the proof could not be obtained. Indeed, when the costs of higher charges to the users are included, the privatised entities become even less efficient than under government ownership. This is not an isolated case. Example after example, this is so in all the countries where privatisation programmes had been carried out. The conclusion is beyond all doubt that the claim of higher efficiency from privatisation process is non-sense.

I first read this article in 1993 while at the university library for some readings on finance.  It had been several years since I left university with an honours in Finance. I had worked in Treasury capital market issuing bonds-debts for a bank, I had worked as share analyst and share portfolio manager for the same bank, for over 3 years I was a senior bond analyst for another bank during which I also had worked as an assistant bond option price maker. Later I worked as share analyst and portfolio manager again. My career was involved in high finance and at the coal face of capitalism.

Government ownership was something to me less than ideal. And privatisation was something logical as ‘efficiency gain’ was assured as most of us would assume.

Then this article appeared. For a while, I could not work out the logic behind it. Yes, LOGIC.

I say logic as the evidences are stark.  Research Studies are not easily accepted for publications or put up for university academic research discussions. Other academics would go through the research materials, data, methodologies etc with fine comb. A small chink in the armour would be used to knock back the analysis and a paper would be in the bin and perhaps even academic career ruined along with it.

Hence with no exceptions, such conclusion that privatised enterprises actually become less efficient has to have some LOGICAL BASE. The logic has to be consistent with known and accepted Finance concepts.

There is one Financial Theory which could explain this phenomenon of less efficient privatised enterprises. I could not think of other Financial theories that could over turn this explanation. So here we go and let me explain what the logic behind this Harvard Business Review finding might be.

CAPITAL ASSET PRICING MODEL- CAPM

CAPM is a model that describes the EXPECTED RETURN OF A PROJECT.

ER = Rf + (Rm – Rf)B

ER is the Expected Return

Rf is the Risk Free Rate which is usually the government/treasury bond rate

Rm is the Market Return (market means the stock market in general)

B is Beta and represents the correlation between the project return and the market return, it is a measure of the performance of a project against the market, the higher Beta is, the higher the project’s return is vice versa. Each project, business, stock, investment etc has its own Beta.

All these parameters are time-dependent or they change with time and not constant. This is a crucial point for our discussions. We need to compare period to period. One period should not be used as the standard for all other periods.

This CAPM formula is not difficult and quite easy and we have good records for all of the factors involved especially the Rf (risk free rate or government bond rate) and Rm (market return).

While CAPM is only a model in term of the robustness of concept, it is used extensively in modern business management. From mining projects to government projects, CAPM is applied throughly to justify one project over another. The computed Expected Return from CAPM process is then used to work out the Net Present Value of a project and hence the viability of a project. In the stock market investment, CAPM and its market model (using actual market data) are used on a day to day basis for one method of investment approach.

CAPM hence is widely accepted and is a crucial tool in deciding the viability of a project and in some aspect of the investment industry.

So let us apply CAPM to the issue of Privatisation.

We have good data for the parameters for this formal except one.

Rf is the risk free rate or the government bond rate. We have such data readily available.

Rm is the market return or the stock market return data for which is also easy to obtain.

B or Beta is less well defined. It depends on the nature of the projects and the history of similar projects against the market performance. Luckily, most projects could be classified and assigned to their appropriate business-industry sector and even down to their sub-sector. We have the stock market returns of the stock of these industries and sub-sectors in general. So we could worked out the Beta for each sector-subsector and hence applicable to a project.

Let us however not focus on the Beta as it is project specific for the moment. The other two parameters are very easy to base our analysis on.

Back to the Harvard Business Review article. It was written in the early 90’s and with study subjects or privatisation processes mostly happened in the 1980’s. Now we are talking about economic history.

What happened in the 1974 and 1982 and hence the interest rate for this period?

We had first oil shock in 1974. We had second oil shock in 1982. These two major events gave the world high inflation rates that not seen in most economies since the 1920~1930’s. Well, the inflation rate levels in the 1920’s~1930’s were much higher than that in the 1970’s~1980’s.

With this high level of inflation rate, the interest rate was also high. The government bond rate used as the risk free rate in CAPM determination hence would be high.

And how about the stock market return or the Market Return for CAPM for the same period? Well, the return while not excellent was positive and certainly not negative.

CAPM formula for this period of the 1980’s would be high.

The Rm-Rf may be negative as the Rf was very high. But the difference is low, so the net result is that the ER is high even if the Rm is lower than Rf depending on the period chosen.

That is the ER for this period is high. Or in another word, any project would have high return expected due to the high bond rate at the time. If a project has very high Beta or its sector performed much better than the market as a whole, such expected return (ER) would be even higher. Or when the market return is low or negative, it would be higher or positive.

This high ER level of course would have been translated into higher profitability for any privatised enterprises.

But how is this compared with the RF under government ownership?

Well, in general, while the governments do use CAPM for some projects, the computed rate is often not used as there are other benefits that could not be quantified. These could be social benefits such as lower unemployments, better skill base for the economy, better health level, higher productivity, lower crime rate etc which could not be assigned a number easily. As a result, the adjusted CAPM ER would be lowered under government ownership.

That is, under the government ownership, ER for the same enterprise would be lower than under the private ownership.

This is just logical. If an enterprise is not making decent enough return, no one would ever invest in it in the private world. So a privatised enterprise has to have higher return than under government ownership which does not expect high monetary return as other non-monetary benefits compensate any low monetary returns.

Now how about the experiences in the 1990’s and first decade of the 21st century?

Well, while inflation rate has been benign in most of economies, the market return or the stock market performance has been brilliant to say the least till 2008. We had almost 2 decades of un-broken bull run.

So applying CAPM for the period of 1990s’ and 2000′ to 2010, of course we are going to have high ER again.

Hence, without considering Beta, in the last 3 decades, ER for any privatised formerly government enterprises would have to be high. Compared to the return under government ownership, these ER’s levels have been very high.

Let us look at Beta.

No business CEO would tell anyone that their business would under perform the general market as it would be a sign of incompetence. Regardless of the fact, no CEO would be that honest as the CEO would be out of the job immediate. This simply implies that these CEO’s would work out high CAPM ER. Then they would adjust their business practices which include higher charges to achieve these high levels of ER.

This CAPM based analysis is hence the logic behind Harvard Business Review’s findings on privatisation- privatised enterprises cost the whole economy more with higher charger to the users in general. I have a feeling this analysis has also at work for the privatisation outcomes around the world in the last 20 years. That is the HRB analysis outcome would be repeated had it applied to those in 1990’s to 2000’s.

In Finance, the economic term of efficiency is only looked at narrowly. There are no analyses of other efficiency gains such as lower workforce, higher productivity and better management plus higher investments as claimed by those supporting privatisations. However, I am not economist, and I have no data or any research that any or combination of the above considerations have been met by the privatisation. That is, the perception is non-supportive.

The HRB article authors see efficiency level in term of the charges to the users. They seem to say that higher chargers to the users are sign of lower efficiency. This does make sense. If a business privatised to become more efficient, such efficiency gains could be passed as lower costs to the users. When such higher gains are not passed down as lower charge but in contrast higher chargers are imposed, of course this would be seen as the outcome of lower efficiency. (I hope some economist could explain to me the definition of efficiency in business sense.)

Benefits of Privatisation to Government

Some will argue that the benefits for the privatisation process should not be enterprise centric or in another word, there are other benefits other than to the business itself. Eg, Some say that the government uses the proceeds to finance other projects and other enterprises. Some say that by using parts of the proceeds to pay back government debts, that is a good thing too. Let us look at the facts.

First let us examine the claim that the proceeds of the privatisation could be used to finance other projects or enterprises within the government. This is an interesting point not from the new project or new enterprise point of view. The focus should be on the amount of the proceeds or to be precise the valuation set for sale to the private sector- share market listing or direct sales to the private sector without going to the stock market.

The experiences of privatisation process, as far as stock market sale, is concerned has been a pitiful one from the government point of view. Almost all such privatisation valuations have been set at such low levels, that the proceeds to the government are low compared to the value of the enterprises in the stock market within a short period after privatisation.

In the stock market investment, there is a un-spoken rule that a newly issued stock has to be priced at ATTRACTIVE LEVEL for the stag to occur. The stag means the initial subscribers to the sales of the shares fist ever come to the market expect some comfortable return. That is, it must be a gift to the initial subscribers as it were. Otherwise the market wisdom would say that very few would participate in such initial sales and the sale may be aborted. That is why there is always an underwriter to such initial sales. The underwriter would take the losses. But underwriters always try to palm off such risks to others no matter what.

The stag is a very short period of time. It is usually less than 3 months. At say 10% return in less than 3 months, it is analysed equivalent is more than 40%- compounding effect.  I can assure you that 10% is not high for most initial offering stags.

That is, automatically, the proceeds from any privatisation would not justify the true value of the enterprise. So how is that the government benefits from it using the proceeds to finance the other projects? Would it not mean the new investments would be lacking in finance already everything else being equal? Would it not also mean that the government has to divert resources from another means to cover the short fall? Or out another way, automatically the NET WORTH of the government is lowered. Net worth being the total sum of values of projects, enterprises and assets owned by the government. The assets also include cash such as the proceeds from the privatisation process. With one day, the Net Worth for the government is lower by the profits of the stag.

Secondly, let us look at the use of the proceeds to pay back government debts as the obvious benefit of selling government assets and enterprises.

Gee, let us go back to the 1970’s and 1980’s. The government bond rates were rather high. However it is well known that for 15 years to 1985, the average bond rate (long term bond rates) was 1% less than the inflation rate for the same period. (this was the figures in US and not dissimilar for other western economies.). That is the inflation rate was so high, government was better off to borrow at its favoured rate. So what was the sense of selling assets-enterprises to pay down government debts in these years? Indeed, most governments of the day did not bother as it was not wise at all. But there were some just would not take this into considerations.

How about the period since mid 1980? Well, up to mid 1990’s or for 10 years, the inflation rate was still relatively high but at the same period the government bond rates went lower with the inflation rate. The real rate of bond rate was just above negative for the 15 years period.

It was not till from 1996, have we seen consistent real positive government bond rare or the bond rate has been higher than the inflation rate. So intuitively one would say that paying government debts by selling government assets and government owned enterprises would be appropriate.

But there is an irony here.

Since mid 1990’s, the general interest rate level has been very low against the recent history as inflation has been benign.  In the last 10 years and since the GFC, they are at historically low level.

Back to Finance 101. There is this more or less truism which says that when the general interest rate leave is low and at the same time when the market return is relatively high, one should borrow and invest the borrowed amount in the market at higher return. That is, one should not repay debt by selling any investment, asset or enterprise  in such environment.

And we all know about the market return since the early 1990’s. There was a bull run longer than any other periods in history till late 2007.

Privatisation and using the proceeds of privatisation to pay back government debts since mid 1990’s would be against this Finance 101 law. It is anti-logic to sell high performance asset to pay low interest rate debts. Instead one should borrow more to finance more high return assets.

DOUBLE WHAMMIES

Hence the privatisation since the 1990’s would have been in general have 2 adverse impacts.

First, the governments have sold assets-enterprises at low valuation level making the finance of next projects more expensive. Or the government uses the proceeds to pay debts though the government bond rate has been low when the assets could have returned more. These 2 are the government side of the equation making government less efficient.

Second, the owners and the management of the newly privatised enterprises would, using CAPM against the high RM and high Beta, charge higher fees to use the same services to achieve high CAPM determined rate of return.

That is, not only the average users of the privatised enterprises pay more to use the same services, the government’s finance actually have got worse.

While the average users have no control over charges in most cases, the government certainly has different stance in privatisation.

CAPM and Debt Return vs Investment Return are two major concepts in Finance. It seems from the above analysis, privatisation processes have been conducted against the logics of these two most fundamental concepts in finance.

GOOGLE-ANDROID PAINS-DEMISE ARE NEAR……….

16 Jan

I am a known Apple loyalist. From my experiences of using Mac since 1985 (30 years soon) and observing the IT industry closely, I have to say that Google-Android platform will not enjoy its dominance for long. Indeed, I will not be surprised that Android may even die out in the second decade of the 21st century.

1) The market share surge in Android has mainly been due to the DUMPING of pre-2012 Android models that OEM’s could not sell before the public wholesale moved from non-touch-screen phones to touchscreen models. This applies to Android tablets as well.

High end Android phones, as a group, sell not even half in volume vs Apple iPhones and the high end Android tablets have even less success vs iPad even the last 18~24 months.

2) These dirt-cheap tax-write-off models (phones and tablets) and public expectations now force all Android OEM’s to low margins and also create dilemma for the high-end makers.

The known brand names had suffered carnage from initial Android failure. They are now facing the Replacement Cycle for this dirt-cheap tax-write-off Android models (mostly phones) in 2015.

Without equally low pricing and after more education about smartphones and tablets, these Android users will have to make decisions on NOT just on pricing alone come 2015. 2015 will also see improvements in European economy and sustain recovery in US itself. This allows more to move from low end models.

3) The sale of apps on these pre-2012 models has been low as Android 2.3 is not popular among app developers. App developers are aware of this. App developers also have multitude of OEM’s to deal with in app sale lowering the profitability of app sale even more vs Apple iOS apps.

4) The leakage from Android to Apple iPhone-MSFT Windows phones from 2015 will be a certainty. Most Android OEM’s are not making significant profit and their choices will be stark from 2015.

Will they stick with low end Android models or focus on high end offerings?

Will they switch back to MSFT-Windows platform en-mass?

5) Why would known brand OEM’s switch back to MSFT-Windows platform en-mass?

MSFT must have learned the lesson of the chaos and carnage within the Android sphere. The known brands have lost, as a group, tens of billions in cash on Android since 2008. Ironically, it is the Window-pc sales that still prop up their cash flow for most known OEM’s except for Samsung.

MSFT will hence not give Windows license to just any OEM’s the way Google allow Android to be used by anyone. MSFT will know that to protect itself (its own Nokia brand and Surface tablet efforts) and OEM as a whole, it has to be selective. Among the known brand names, this is a safe bet from MSFT.

The known brands will appreciate MSFT as a result while they will be reminded of the carnage-pains that Google-Android have wrought on them.

6) That is, once the CRITICAL MASS market share is reached for Windows mobile devices, the momentum will not be stopped by Google-Android at all.

The brand name OEM’s will then stick with the high end for Android phone-tablet models while they benefit from wider spectrum offerings in the Windows mobile devices with this LIMITED OEM selection policy by MSFT.  They know which side of the bread the butter is spread on.

7) Why I am confident with this?

Well, Android presences in the enterprises are limited and alarmingly low after 5 years. It has hardly made a dent against Apple iOS which till 5 years ago was seen as no-no for enterprises. What makes it worse is that OEM’s have tried their hardest in bringing Android to the enterprise without much success. Even Samsung has no luck.

This leaves MSFT Windows mobile devices left for known brand OEM’s to fight against Apple iOS on the enterprise front- high end phones and tablets in general.

With losses in both consumer and enterprise segments in the Android efforts, most known brand OEM’s will abandon Android in not just the low end but also the enterprise segment by 2017 end.

8) The Critical Mass for MSFT Windows mobile devices will reach at the expense of Google-Android. Google, in the meantime, will continue to lose market share in advertising revenues as OEM’s, small and large, fighting to get sales to cover their loss-low margin in hardware.

The critical mass for MSFT Windows once reached means app developers will switch also en-mass to this platform. I am sure many are waiting for this inevitability and save their bullets on Android for the moment.

At the end of the day, Android more than likely will end up as consumer smartphone-tablet offerings. The market share for Android will continue to shrink gradually. The main war will remain between Apple and MSFT Windows from 2017 for a few years.

9) I am sure Steve Jobs, Tim Cook and et la in Apple would have anticipated MSFT march into the mobile devices. Google-Android was a bit of surprise to Apple and its management in 2008.

However, Google has made a mess of Android sphere as Google-OEM’s and the public in general did not understand the mobile device market in its initial stage. This has allowed time for Apple to consolidate.

The strategies of ‘high end’ Apple iOS devices and non-use of OEM have been good in term of cash building for Apple.

10) Apple is now using its cash-flow from iOS to reduce costs across the board.

Apple bought an old semi-conductor plant in Taiwan after TSMC rejected 25% stake investment. 25% stake is about 4~6 plants. 4~6 plant capacity is not small ambitions. It would not be just chips but also for LED.

Apple also have bought sapphire lens maker. It also has started to buy and ship parts for its contractors to reduce cost.

11) That is, Apple, as Steve Jobs and Tim Cook would have anticipated, is preparing for the war in the mobile devices.

Vs Apple, OEM’s as a whole (except Samsung) has been bleeding cash since Android. They will not easily forget this episode. However at the same time, they will not be in the similar position as Apple in reducing margins even more. Certainly no one besides Samsung could make chip in-house and could even source parts for contractors in the immediate future.

The MARGIN WAR is only starting between Apple and MSFT OEM’s and Wintel alliances (with Android on the sideline from 2017).

12) Google, the initiator of Android and the cash-carnage of the OEM world, is the only one benefit from Android besides Samsung. However its advertising revenue market share is going to be shrinking as OEM’s of one size or another start to drain the own advertising revenue from their own devices. This trend is clearly setting.

Google own Android hardware is not significant as a whole. The contribution is minimum. The strategy of even low end Google-Motorola models will only mean more fierce competitions from OEM’s. Google will bleed the way OEM’s have in Android hardware.

13) Google Glass, it seems to me, will be nothing but a specialist use only. By all accounts the average people have reservations about Google Glass. It certainly will not be a consumer item in the same popularity of watch or smartphone at all. Otherwise, Google would have sold it to the average consumer by now.

In my sceptical assessment, Google started the Google Glass hype and after some time understand it will not be a consumer success. So Google is probably cynically using Google Glass hype as a trojan horse to  PICK THE BRAINS of app developers and the specialist user sector for its own future uses.

14) Chromebooks are Cloud computing. The chief reason for the success of pc as a whole is it takes the average user and business people from the shackle of centralised computing. The whole CLOUD COMPUTING, to me, will end up to be no more off-site data storage for most.

PC sales and mobile devices will, against Chromebook-Cloud, continue to be the preferred choice of most.

15) Google, in Android, is facing a difficult period from 2015~2016. Besides notoriety, it has not got much from Android’s success as advertising revenues are still mainly from Apple iOS. Now, Android OEM’s are taking market share of advertising from Google. Google Android hardware is not making a dent in market share to provide a secured cash-flow for Google.

Known brand OEM’s sufferings from Android will be remembered when MSFT insure their financial security with limited selection of Windows mobile device licensing.

16) Google did NOT learn well from Windows experiences with malware. Had it adopted strict sandbox approach as Apple with iOS, the enterprises would let Android in en-mass while MSFT-Windows still struggling.

This is one of the lesson that IT and MBA would learn. There is a known clear weakness and known concerns with OPEN-SYTEM PROGRAMMING for 3 decades. Google simply did not learn it would be a major obstacle in some field. It could have easily fixed the weakness but it chose not to. This has allowed MSFT-Windows time to recover itself while Apple makes some inroad in to the enterprise field.

At the end of the day, Google also has made a strategic mistake of allowing any OEM’s to make Android devices and it has not kept Android in-house. An in-house strategy while iPhone was still new would have created much more cash for Google. Even with MSFT Windows OEM’s, cash flows would benefit more for Google. After all, it is more than likely MSFT-Windows will dominate over Android platform sooner or later.

17) To challenge MSFT with Android without fixing the main weakness of the Open-System Programming that MSFT-Windows suffers and without considering for the benefits of OEM’s, Google has made a monumental strategic mistake that is worthy of MBA case studies, business textbooks, and economic history and Pulitzer Prize winning writings.

Note on Microsoft vs Google Chrome

24 Oct

Due to the huge losses from early failures of Android tablets, all non-Apple pc makers are watchful of the likely success or otherwise of Windows RT tablets. That is, the OEM’s are as scared for their own survival as anyone in this fast moving changing episode of pc-tablet era.

This may seem bad for Microsoft when Google Chrome and Android tablets seem OEM’s favours at this moment. However, it also means that the market is then wide open for Microsoft to make and sell its own Windows tablets.

Keep this in mind, failure of last Windows tablets is not that surprising for a brand new initiative in a filed that Microsoft was alien to only 2 years ago. People perhaps expect too high from Microsoft. Afterall, even Google has not been doing well with Moto X phones and Nexus tablets though they have much more time and more experiences. And Moto X has Motorola genes in them too. Had Motorola stayed independent, it might have done better with Moto X sale efforts.

That is, let us not write off Windows for tablet as a segment.

As far as HP etc see Microsoft as competitors, well, why is that Google not similar to them? After all Nexus tablets is also a major threat to pc makers who have made billions of dollars of loss due to earlier failed Android tablets. Gee, why is that Google get away so easily thus far?

Google Chrome notebooks and various OEM models may seem attractive in term of pricing. Fine. However, the game is still with Google’s favour over long term.

OEM seem not understand that at such low margin and low price range, bloodbath will only ensure in the Chrome sphere with Google laughing all the way to the bank. Have OEM not learned their lesson from Android tablet failure of only 2010~2012?

One matter is this. If OEM is demanding free Windows as the way Android is given out free, why is that they believe Microsoft will given them so without something in return?

Google after all, via Android, getting ad avenue and shares in the app purchases on Android devices. Microsoft may just take this route. If this so, OEM themselves also have given away the revenue for ads and app purchases themselves.

Yes, thus far, very few OEM’s take this avenue. However, why should Google be the only one when it is a matter of some added layer of software tweak for all of the OEM. Think about how different Android device brands have their own unique layer of apps for users to navigate. Such layer is conducive to introduce link ads and app purchase for the Android device makers.

Samsung, clearly, through Tizen, is working on this. Once most of Android brand makers take this ad revenue and share of app purchase route, my bet is that Android will not be freely given to OEM as Google sees its main revenue source falls. HP, why don’t you consider this as some small Chinese Android makers are doing with their air-thin margin products?

Then think about the reverse effect on Google if heavy weight like HP and Samsung start to access ad revenue and demand share of app purchase via Android? My bet is that Google will then start charging Android for each of the device when the day comes its Android ad revenue drops too low.

This of course does not assume that Apple comes up with a way limiting Google pity-freeride its successful iOS platform. (Yes, Google bulls watch this space….. The days of high ad revenue for Google may not stay around long..)

Hence, why is that OEM expects Microsoft free as Android is when, if they are keen, they could access to ad revenues and cut on app purchase themselves sooner or later. Microsoft should argue with the OEM’s and alert them to this opportunity to share ad revenue and app purchase spendings as way of getting something back for their, clearly into the future, feather thin margin hardware industry.

OEM’s are not stupid and Microsoft should encourage this. In the meantimes, Microsoft should take advantage of the hiatus in OEM efforts for Windows tablets to wisely boost up its tablet and smartphone efforts. There is plenty of growth left in the tablet sub-segment. Huge amount of it.

Microsoft should not panic. Get the management right (but please no Management Consultant type in charge as IBM has for last 20 years killing itself) and spend some good brains on tablets and they will do well.

Also bring out Office for Apple iPad soon before Apple’s iWork become defacto standard for general productive tools for tablet sphere if Apple decides also to allow iWork in the Cloud to be accessed for free with some limitation to all including Android users.

I as a long time Apple loyalist (my first Mac in 1985 and never any other brand for personal uses) but given Microsoft’s presence in the business segment, I will not write it off. However for Google, its main revenue sources in ad revenue could be cracked by OEM’s themselves if OEM’s are organised enough.

Note to Apple Sceptics

24 Oct

….. This note is in response to an article in Seeking Alpha investment site……

 

1) 00’s of millions of new Android users since early 2012 are mostly first time touch-screen smartphone users. They are not iPhone deserters. Many are low usage people hence many are always not going to be iPhone users unless Apple allow iPhone clones.

2) Not sure if the Josh Aronold has both iPhone 5 C and Samsung Galaxy 4 on his palms side by side. Galaxy 4 positively look and feel cheap in comparison. Try if you could. Josh, BTW, next year, when the new C model comes out with 64-bit chip, it will render all Android phones out of date. After all, Google has not update Android to 64-bit yet and perhaps not for a while. Users are more discerning than most analysts and journalists give them credit for.

3) iPhone 5C is one year old technology specs. However both Galaxy 4 and HTC One were already 6 months old when 5C first arrived. So, in term of lagging, it is fine in term of tech-specs. Curiously analysts and journalists seem not look at this.

4) iPad mini with the 64-bit chip will explode in demand among the younger users- boys and young adults with their game playing. After all, we still see EA Stores in malls. 64-bit in iPad mini is a major threat to all other computer-monitor based game experiences from now.

5) Evolution and revolution are different. Non-Apple brands are only conducting evolutionary changes since iPhone and iPad. To say otherwise, a person needs to look up their dictionary.

6) There are only 2 Nobel laureate that won Nobel prize twice. One did it second time in peace and not in science (chemistry initially). That is, revolutionary ideas-products are hard to come by. All should take this into account with their expectations and analysis.

7) Google, if written in certain way, looks like the shape of a dog. Like all dogs, Google tries to leave its marks on every corner and every post. However, we all know that dogs usually do not succeed in defending its so-called claimed new territories. It seems to me, just like its word-shape, Google tries many things and seldom gets anything right at all. The revolutions that Google claim to have had are just WOOF WOOF WOOF….

8) On the contrary, Apple is steady and quiet and pounces like a cat, a tiger, a snow leopard and a lion. It meows and roars every so often with great success. And like any Maverick, Apple does not follow others and pretend.

9) Google Android faces 2 horrible fire-fronts- Samsung Tizen may cut Google access to its AD REVENUE in Samsung mobile devices, and other OEM’s may follow Chinese Android phone makers to access AD Revenue too. 000’s of millions of loss in early Android tablets and phones need to be recovered by HP, Sony, Acer, LG and Lenovo of the world, Dr Eric Schmidt !!!

Then let us see how much Google could be spending in R&D and new ‘revolutionary’ ideas and products.

10) Apple doubters and haters should also look into its chip design and making efforts. It’s clear that Apple wants to control the most vital parts of its business as much as possible. This must be also on top of its own assessment that Samsung chip-making and ARM chip designs are now coming to their limitations as far as mobile devices go. That is, Samsung and ARM are not meeting the ‘revolutionary’ pre-requisite for Apple uses.

11) There is no IBM to rubbish Apple the way Mac was assaulted in mid 80’s and late 80’s. Many OEM’s are in cash-flow issue and if Android-Windows-Tizen fail them again against next Apple’s revolutionary product offering, well the IT hardware industry is going to be very interesting.

12) Just assume that long term iOS platform becomes small in market share. It however does not mean that Apple will not continue to grow in revenue and profits. The gradual transitions will take a long time for after all investments in apps are not something easily re-coverd if switching to Android from iPhone-iPad. Even then Google may face dwindling revenue as OEM’s take their share of ad revenue and app purchases.

13) High-end brand names do survive to fight for another day. Dalmer-Benz, Louis-Vutton, Ferrari, Versace etc all have done well in their small world. Interestingly, many aspire to be like these brands and not just own some of them. Audi e.g. with Dalmer-Benz.

14) Lastly, keep this in mind, both US and Europe are in their worst economic conditions perhaps since the late 1930’s. It’s still stunning that Apple has done so well with iPhone (2007) and iPad (2010). Think about the Apple sales if and when the US economy does get much better now and for EuroZone too. Do Josh and other Apple haters take this into considerations?

A4 Size iPad Is Coming in Q1 2014

23 Oct

My prediction is that 12″ iPad shaped-sized like A4 (with bezel together) will come to be part of iPad line-up sometimes in 2014. Below are explanations.

1) Today’s Apple’ Keynote presentation brings out iPad Air which is the evolutionary iPad of 9.7″ in screen size. Due to the much thinner body and smaller side bezel, it weights just 1 pound or 372 grams. This is from the 1.4 pounds of 2012 iPad.

It is clear that a larger iPad with similar thickness and smaller bezel could be made and users will not feel too heavy in their hands.

2) Non-Apple makers have been busy coming up with tablet-notebook hybrids. HP, Acer, Samsung and even Microsoft itself have such offerings. Most are around 11~13″ in diagonal in size. There is market for it.

3) Apple’s Macbook Air which has both 11″ and 13″ sizes mean there is demand for 11~12″ tablet alternative.

4) I also put this apps issue as my argument.

There are many apps that could do with a large 12″ screen for many reasons. eg, iBook offerings clearly will benefit from large real-estate for annotation. A screen-in-screen in some apps will benefit from such larger screen size. There are plenty of possibilities.

How about the timing if indeed this large 12″ A4 size iPad is coming?

My guess is Q1 2014 or around March. Why?

The rumoured 4.8″ and 6″ iPhone models have been seen for their reliable testing data. Interestingly, Apple have not released them though clearly they could be available to the market even now.

So March is a good timing to fight off Samsung usual late March announcement for its large screen Galaxy smartphones.

Apple hence needs to match the timing with its archival in large screen devices. It makes sense for another reason for the March roll-out.

A8 chip may be introduced to the large iPhones and hence larger iPad (A4 size) in late March quarter. Given the production constraints, they will then come on at full speed for the northern summer holiday. 

This means the large models become the flagship offerings or separate offering line-up for Apple’s mobile devices. This makes sense too.

This then leaves the smaller iPhone and iPad models take up the new A chips in September and October. This way, the guts of iPhone and iPad are more or less in synchrony within 6 months of each other for all the models. Hence there will be less criticism on the specs themselves.

Lastly, March quarter traditionally has been quiet time for Apple in regard to new product presentation. Large mobile devices for this time will nullify such criticism.

With the new management responsibility delineation clearly presented in today’s Keynote, It is clear that the lull in new-product roll-out from Apple in 2012 and mid 2013 was a purposeful move to re-aligh model roll-out timings and for the new management structure to cement comfortably itself.