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A group of Rakon shareholders are getting impatient with its undervaluation and want directors to put the company on the block.

In Tech company shareholders frustrated at low value RNZ reports:

A group representing 14 percent has written to the board asking it to immediately market the company to international investors through a tender, amid reports that some Australian investment funds have been showing interest.

“[We] believe the company is significantly undervalued and the company is failing to highlight this value to outside investors,” the letter said.

The story doesn’t carry a byline.

Rakon’s disgruntled shareholders want the company sold to international investors as a way of unlocking their investment. They make it clear they don’t think they will get a big payout from what should be a boom as the 5G mobile telephony market gathers momentum.

Waiting for 5G acceleration

RNZ goes on to quote Rakon chief executive and managing director Brent Robinson. He says:

“As 5G accelerates, so will Rakon and its financial position will be more attractive.

“Be patient, it’s early days for 5G and I believe Rakon’s performance should improve a lot, as far as profits are concerned over the next few years.”

Rakon is a 50 year old New Zealand technology company. It makes frequency control components including quartz crystals. Telecommunication accounts for over half the company’s revenue.

On paper, Rakon is well placed to profit from the worldwide 5G roll out. It appears to be the kind of company New Zealand’s economy needs.

Mobile carriers are spending billions building 5G networks and will continue spending vast sums for the best part of a decade as they build out 5G further and further. Rakon sells its components to 5G equipment makers like Huawei and Nokia. It should be a bonanza.

Not fast enough

The problem is that despite the huge investments in 5G, the roll-outs are not proceeding at the predicted speed. Asia is moving fast. Vodafone has already built a network here, Spark is about to follow. Other countries are not moving as quickly.

It doesn’t help that Rakon’s customers are caught up in a trade war, possibly an espionage row, between the US and China. It is possible that Rakon can supply one team, but not the other. That would hurt its market.

Rakon’s share price has languished to the point where it is a possible takeover target. The shareholder letter suggests at least some of Rakon’s owners want out.

 

Google doesn’t like to talk about it, but there’s one type of Android hardware you really shouldn’t be buying.

Writing at Computerworld JR Raphael reveals: The Android hardware truth Google won’t tell you.

Before we go further, note that Raphael writes a regular Android column. This isn’t an attack from outside the tent.

He says:

“Google’s priorities and the desires of the companies making the bulk of the devices don’t always align. And that forces Google to do a delicate dance in order to push forward with its own plans without saying anything that’d go directly against a device-maker’s interests.

Well, it’s time to stop beating around the bush and just say what Google won’t openly acknowledge: You should not be buying an Android tablet in 2020. Period.”

Long wait for Android tablet OS updates

It’s a long story well worth reading. The gist boils down to Google having some good ideas about how Android should work with tablets, then it lost interest for a while. That while turned out to be too long.

Now we’re in a position where Google isn’t updating the tablet version of its operating system at anything like an acceptable pace. Raphael points out Samsung’s Galaxy Tab S6 got Android 10 eight months after the software was first released. And that’s the Android tablet with the best OS upgrade record.

He says:

“Plain and simple, buying an Android tablet is setting yourself up for disappointment — when it comes to both performance and capability and when it comes to the critical areas of privacy, security, and ongoing software upkeep.”

Get a Chromebook instead

Raphael recommends people who want an Android tablet would do better to buy a convertible Chromebook.

All this is one reason why Apple continues to dominate tablet sales with iPad and iPad Pro models. The only other serious player in premium tablets is Microsoft with its Surface range. These two brands run iOS and Windows. The Android tablet market skews towards the low end with a lot of low value, undifferentiated tablet models.

Sure, plenty of people are happy with these devices. No doubt many reading this love their Android tablets. Yet the Android world hasn’t got its tablet act together enough to mount an assault on the premium market. That’s odd considering how, outside of the US, Android has a huge share of the phone market.

A bill introduced in parliament this week aims to tackle extremist content.

The Films, Videos, and Publications Classification (Urgent Interim Classification of Publications and Prevention of Online Harm) Amendment Bill introduces new criminal offences. It hands power to a chief censor who can make immediate decisions to block content.

It also allows the government to create and deploy internet filters. The filters would screen out material the chief censor decides is objectionable.

Response to Christchurch terror live-streaming

The bill matches the proposal first tabled in cabinet last December by Internal Affairs Minister Tracey Martin.

It aims to update the Films, Videos, and Publications Classification Act 1993 after last year’s live-streaming of the Christchurch terror attack.

The focus is on stopping the people or organisations from livestreaming objectionable content. It does not target companies who provide the infrastructure used to distribute content.

Take down notices and filters

Yet carriers and hosts will need to acknowledge government imposed take-down notices. This includes removing links to objectionable content. Failure to do so could result in civil action and fines.

The legislation will allow the Department of Internal Affairs to create internet filters. The DIA must consult with internet service providers before it launches a filter.

InternetNZ opposes the filter plan. In a media statement CEO Jordan Carter says there can be dangerous side effects from a filter.

He also says: “The proposed filters would work at the network level, in a way that is a mile wide and a millimetre deep.

“People who want to get around these filters can easily do so by using a VPN, technology that many Kiwis have been using when working from home recently.”

Filters can be ineffective

As Carter points out, the problem with filters is that they often don’t work as intended. Determined people who want to see or distribute objectionable material can workaround them. Everyone else may suffer a degraded internet experience.

Internet filters are, by their nature, blunt tools. There’s a trade off between failing to block bad material and blocking harmless content.

The same goes for artistic content. Filters are incapable of drawing lines in the right place.

False positives, false negatives

In the past researchers have found that filters designed to shield young people from pornography might block 90 percent of adult content. At the same time they can block up to a quarter of inoffensive pages.

Tinker with algorithms to permit more inoffensive material generally means letting more porn through.

Filter advocates talk about artificial intelligence helping, but that often makes matters worse. Filters don’t understand context or nuance. AI is usually terrible at context or nuance.

Risks elsewhere

Much of the focus with internet filters is on dealing with web pages. These days they account for a fraction of online material. Peer-to-peer networks, instant messaging and social media platforms are a bigger problem.

There are other issues with filtering. Protecting children might be straightforward, but teenagers are often more tech-savvy than adults.

Filtering can create a false sense of safety. It’s the same when not-very-tech-savvy people install security software. They feel safe from malware threats but can relax and fall victim to phishing or other scams.

While filters they are often set up with good intent, they can be used for broader censorship, even shutting down political opponents.

On the positive side

In practice, the slippery-slope argument doesn’t wash. New Zealand already has successful voluntary filters blocking child abuse material. That appears to be working well. There has been no slippery slope effect.

Determined viewers can bypass these filters. Yet they stop everyday users from stumbling over the objectionable material.

New Zealand’s child abuse filter gives service providers the option to opt-in. There is independent oversight.

The planned filter in the new legislation would be compulsory. There is no mention of formal oversight.

Gartner’s latest New Zealand shipment forecasts makes for grim reading if you are in the device business.

The total device market is set to drop by 14.6 percent in 2020 when compared with 2019. That means a total of 360,000 fewer devices.

New Zealand fares worse than the rest of the world which Gartner says will see a 13.6 percent fall in device unit shipments.

Falls everywhere

There are falls in each category Gartner measures, see the table.

New Zealand shipments forecast by device type (thousands of units)
Device Type20192020
Traditional PCs (Desk-Based and Notebook)439396
Ultramobiles (Premium)199190
Total PC Market637585
Ultramobiles (Basic and Utility)538474
Computing Device Market1,1761,059
Mobile Phones1,3251,077
Total Device Market2,5002,136
Due to rounding, some figures may not add up precisely to the totals shown.
Thin and light notebooks are listed under premium ultramobiles
Tablets and Chromebooks are listed under basic ultramobiles
Source: May (2020)

Mobile phone sales have fallen faster than computing devices. Gartner forecasts 1.08 million units in 2020 compared with 1.36 million units in 2019. That’s a drop of nearly 19 percent.

The analyst company says it expects consumers to extend the life of their mobile phones replacing them on average once every 2.7 years. For more on this see How long should I keep my phone?

Pandemic device impact

Looking at the worldwide numbers, Gartner says the fall could have been so much worse if it were not for pandemic lockdowns. Because millions of people were forced to work or study from home there was an increase on spending on notebooks and tablets.

Gartner says getting on for half of all employees will work remotely for some or all of the time after the pandemic. This compares with around 30 percent of employees beforehand.

This has accelerated the move from desktop PCs to notebooks.

Phones

While people have used their phones more during the lockdown, Gartner says lower disposable incomes mean that people will upgrade more slowly than in the past. Gartner sees the average life of a mobile phone increase from 2.5 to 2.7 years.

One other trend spotted by Gartner is the relative lack of interest in 5G handsets. Before the pandemic it was widely thought that the appearance of 5G mobile networks would kick-start a handset upgrade cycle.

Gartner now forecasts that 5G phones will only account for 11 percent of handset shipments this year. In part this is because of the delayed delivery of new handsets. Gartner also says the extra charges imposed on 5G customers is inhibiting sales.

If you look at the latest International Telecommunications Union affordability rankings you’d get the impression that New Zealand is doing better than Australia at mobile, but is behind on fixed broadband.

That’s not the case, but it looks that way because of the methods used to create international table rankings. The rankings are not meaningless, but they are hard to interpret and make sense of.

The ITU ranks New Zealand at number eight in the world for high-consumption mobile-data-and-voice. Australia sits at 22.

Meanwhile New Zealand is 41 for fixed broadband while Australia sits at 36.

Not the lived experience

These two rankings are opposite to the everyday experience of telecommunications customers in the two countries.

These kind of ranking tables are often a little strange. That’s because they tend to use artificial user cases to illustrate difference between markets where in reality there is a lot of nuance.

Remember here the tables are about affordability. The ITU measures and compares the prices of entry-level fixed broadband plans.

It then compares these prices with a nation’s gross national income (GNI). This is a way of relating prices to people’s earnings.

Affordability

As a rule countries with a lower income pay proportionately more for telecommunications services. Which is a way of saying they are less affordable.1

It turns out New Zealand’s entry level plan is a 50mbps fibre plan with a 60GB cap. Prices are converted to US dollars. In this case it comes in at US$44.97. The price also includes 15 percent GST.

That may well be the lowest plan on offer in New Zealand, but it’s a plan almost no-one buys.

Australia’s entry level plan is 20mbps with a 100GB cap. It sells for US$52.30. Australian GST is 10 percent. In other words the plan used for comparison is far slower and more expensive, yet includes more data.

According to the ITU when the GNI is taken into account Australia gets an affordably score of 1.2 while New Zealand gets a score of 1.3. So we sit a few places behind Australia in the fixed broadband table.

Mobile voice and data

The same methodological weirdness works in New Zealand’s favour when it comes to measuring high consumption mobile voice and data plans.

New Zealand’s plan costs US$14.53 and buys 200 voice minutes, 500 SMS messages and 1.8GB of data. Australians get unlimited calls, unlimited SMS and a whopping 15GB of mobile data for US$36.61.

Going back to the affordability scores, New Zealand gets 0.4 while Australia gets 0.8.

These ITU tables are useful when comparing, say, New Zealand’s year-on-year performance. That tells you if telecommunications is becoming better or worse value.

They are also useful in aggregate. The latest report tells us that entry level mobile-voice is affordable in most countries. It tells us prices have fallen in the last few year relative to income.

It also says that while fixed broadband prices around the world have remained more or less stable, download speeds have increased.

Yet when it comes to benchmarking, say, New Zealand’s performance against other countries, it’s hard to tease out useful data. Anyone who has operated in Australia and New Zealand knows our fixed broadband is better priced, while Australian mobile data is less expensive.


  1. Economists reading this may think this explanation is too simple. ↩︎