Tuesday, November 20, 2012

Internet heartbeat, the Canadian way

More than a decade ago, Sun Microsystems' CEO Scott McNealy had the vision that every household or commercial electronic device would have an "internet heartbeat". Things ranging from light bulbs to refrigerators would be networked and speak the same language. Of course, in McNealy's vision, the enabling technology was Sun's Java platform.

McNealy was ahead of his time. Sun has since been swallowed by Oracle.

But the vision lives on, And its form has morphed.

The internet heartbeat beacon is now carried by Android. At the moment, Android is still just the software which powers mobile phones. But it's slowly changing. Android is turning up in unexpected places. If you don't believe me, take a look at this array of (weird) espresso machine and washing machine , this platform for medical devices, this latest and greatest camera made by Samsung, or this Android-powered satellite built by NASA.

Okay, I've stretched my argument a bit too far. There is no cellular network in the space. NASA doesn't put Android into the satellite in order to connect it to the cloud. But my point is, Android is becoming the common denominator for everything electronics. Every electronic device requires a real-time operating system (RTOS), be it a dumb firmware burnt into the circuit or a smart one. If you are a manufacturer and someone is giving away a free RTOS which has baked in wireless cloud-connectivity, is proven to run well on embedded architectures like ARM and offers a whole array of other bells and whistles, it's an offer too good to refuse.

To give McNealy more credit, Android is actually a descendent of Java. (That's why Oracle sued Google for intellectual property infringements.)

However, I've been blind to one thing until I spotted a writeup on SeekingAlpha today. There is another contender to proliferate the internet pulse: Blackberry 10. Or more precisely, QNX.

When I decided to invest in RIMM, my focus was the downside protection. The beauty of this approach is there are more than one way the upside can unfold. High uncertainty, yes. But you don't need to predict precisely which way it goes. And out of all the possible paths, apparently, a sustainable BB10 ecosystem will deliver the true multi-bagger result. To achieve this, RIMM doesn't need to unseat Android or iPhone from the market. It just needs to have enough critical mass. This in turn requires a solid BB10 OS. So, as long as I knew QNX is a solid RTOS with good reputation, I stopped investigate further. (If you don't know what QNX is, it's enough to say that it's been powering cars, medical devices and even nuclear power plants.)

What has escaped my mind is the possibility RIMM has more far-fetched strategic plans for QNX. What will the possibility be if QNX is married to RIMM's secure network on which BBM and BES currently run? You get an end-to-end "smart grid" solution with some interesting mission-critical applications in vertical industries.

Will it be successful? I don't. In a world where everything is converging towards TCP/SSL, do we need a solution based on proprietary network? Again, I don't know. But I won't sweat it. I'm more than happy to have an additional way for the investment thesis to work out.

(Disclosure: Long RIMM, ORCL)


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