Fortnightly markets column
Chris Woodcock monitors the markets, keeping a careful eye on the biggest technology stocks in the world. Every fortnight he’ll bring you his latest insights on market movements and more.
This week Chris takes us through Tesla’s rapid rise, asks if Nokia’s only choice is Android and picks apart GE’s $105m investment in Pivotal.
Tesla takes off, triples in value
Elon Musk may not quite have the same status as Henry Ford just yet, but if the recent performance of his electric car firm Tesla continues it might not take too long. Rather than producing squashed two-seaters with slightly more power than a golf cart, Mr Musk has taken a different approach to battery-powered cars, aiming to develop premium vehicles with price tags to match.
First up in 2008 came an all-electric roadster and in June 2012 they started shipping the Model S, a sporty hatchback.
That strategy is starting to look visionary. The Model S recently scored 99/100 on a Consumer Reports test, the highest ever. The author of the report joked that had it taken three minutes to ‘refuel’ like a petrol car it would have scored 110.
The previous day Tesla had released their latest quarterly results, reporting a profit for the first time and increasing expectations for sales this year to 21,000 units. The market was ecstatic, pushing the stock up 25% in a single day. It has since broken $90 and has nearly tripled in value so far this year.
International sales of the Model S will begin in the autumn and the waiting list for UK would-be buyers is already open, but do not expect to pick one up for less than £50,000.
Nokia – time to grab onto the lifeboat
Nokia was once a pioneer itself but its struggles in recent years have been well documented. Earlier this week they announced their latest attempt to break the iPhone/Android duopoly in the form of the Lumia 925. It is fair to say that reaction to the event has been muted.
Nevertheless there are signs Nokia are mounting a quiet recovery.
Analytics firm Kantar reported market share for Windows Phone has reached 4.1% globally, up from 2.7% the previous year.
In the UK it has more than doubled share from 3% to 6.7%.
The stock has also shown signs of life in recent months, moving off an all-time low under €1.4 in July last year to comfortably about €2.5 this week.
Nokia is still sinking. Time to grab onto the lifeboat.
The major problem with the Windows Phone experience is the gaps in the app marketplace. There is still no Instagram for example. Aside from in a few old strongholds like Argentina and Poland, current smartphone users will not switch in earnest to a trailing platform.
Could it be time for Nokia to try an Android device? Two years ago that looked like a short route poverty not unlike the PC manufacturers, but the experience been somewhat different. Consumers pay up as much for aesthetics as capabilities, so there are profits to be made.
Having famously jumped from the burning platform, Nokia is still sinking. Time to grab onto the lifeboat.
GE & Pivotal – a match made in $150m investment heaven
The Pivotal Initiative is not something many people will have heard of, but a good deal more are starting to take notice after General Electric just invested $105m. Why is a $220bn multinational corporation like GE doing investing in what is essentially a technology venture start-up?
Pivotal has ambitious plans to build a powerful cloud computing platform, targeted at big business. According to a blog post from Chuck Hollis, a VP at parent company EMC, GE have two big ideas in mind: the internet of things, and big data analytics.
In the next wave of the internet machines will talk directly to other machines, generating oodlums of data in the process. For areas that are important to GE like energy and healthcare this will be particularly true. They need industrial-strength computing capabilities, in the cloud, to manage and analyse this data. Their investment into Pivotal shows that they are taking this new era seriously, and that cloud computing is starting to come of age.