Lou Jiwei, Chairman of China Investment Corp

Update: February 8, 2010: Thanks to a recent regulatory filing (SEC 13F), China’s sovereign wealth fund China Investment Corporation (CIC) provided a rare glimpse into its U.S. listed assets ($9.63 billion). CIC holdings includes a nominal position in Apple, Inc. ($6.3 million). While the amount invested in Apple (AAPL) is “play money” for China, it’s more than CIC has invested in any other US tech company. Yet, upon further review, China’s position in Apple (AAPL) is actually (indirectly) a bit more than $6.3 million. How so? China holds a $714 million stake in BlackRock, Inc. (BLK), a New York based private equity firm. On Feb. 4, 2010, The Wall Street Journal reported that BlackRock, by virtue of their acquisition of Barclays Global Investors, now owns 5.6% of Apple (AAPL) shares.

Not surprisingly, China’s major positions are in US Treasuries ($790 billion in Nov. 2009). China’s CIC also holds about $10 billion in commodity producers worldwide. Moreover, according to CIC’s 13F filing, approximately two-thirds of its foreign equity holdings are comprised of:

• a $1.77 billion stake in Morgan Stanley
• a $3.54 billion interest in Teck Resources Ltd, Canada’s largest diversified mining company;
• and the aforementioned $714 million position in BlackRock.

From 2008 …

March 23, 2008: I came across this article (below) in China Trade Information and wanted to share here.  This is a scholarly work (not light reading) and well researched. One salient takeaway is the truly massive amount of capital that China needs to invest at home and abroad. With 500 billion (US$ equivalent) per year to play with … this makes for one heck of a sovereign wealth fund.  Much of this capital will be invested under the direction of State controlled banks, the China Investment Corporation (CIC) and other private “China owned” companies … NOTE: It’s virtually impossible to discern where China nation/state ends and private industry begins. It’s intentionally opaque in China.

See related (March 2008) article here > Chinese premier deeply worried about world economy

Understanding the changes in the management of China’s foreign assets

What to do with over a half a trillion a year?

Understanding the changes in the management of China’s foreign assets

~ Brad Setser

Fellow, Geoeconomics Center, Council on Foreign Relations

January 14, 2008

EXCERPT: The China Investment Corporation’s $5 billion investment in Morgan Stanley, its $3 billion investment in Blackstone and the China Development Bank’s likely $2b investment in Citigroup have attracted an enormous amount of attention. Together, though, Morgan Stanley, Blackstone and Citigroup account for about 2% of the increase in the foreign assets of China’s government in 2007. China added $427b to its reserves (after adjusting for valuation gains) and an estimated $17b to the foreign assets of the China investment corporation in 2007. The state banks are on track to receive $60b from the government in 2007 – and it isn’t clear if this total includes the potentially large sum of dollars the state banks may have been asked to hold to help limit overall reserve growth. Consequently, total foreign asset accumulation is at least $500b (Figure 1). It is likely closer to $600b. The record increase in China’s foreign assets is all the more impressive as it came in the face of a commodity price shock that increased China’s import bill. ??

The acceleration in the pace of Chinese foreign asset growth coincided with a policy decision to experiment with alternative ways of managing China’s foreign assets. The creation of the China Investment Corporation (CIC) is but the most visible example of a broader trend. The foreign exchange managed by the state banks has increased as a result of the recapitalization of the China Development Bank (CDB) and the increase in the amount of foreign exchange that the st?ate banks have borrowed from China’s central bank, the People’s Bank of China (PBoC). Moreover, state firms also have been encouraged to increase their foreign investment.

Full article > HERE

iPhone 4G concept

It is unclear how Foxconn (Hon Hai Precision), which manufactures current iPhones for Apple, will be affected by this move. Foxconn will almost certainly continue to be deeply involved in production of numerous Apple devices (Macs, iPods) including the new iPad. It is also possible (if not probable) that Apple will broaden their iPhone product lineup in 2010 and Foxconn could retain a large share of the iPhone production.

In addition to the rumored Apple contract coup, DigiTimes reports that Pegatron has landed handset orders from various telecom carriers. Pegatron declined to comment, although it stated in previous reports that it expects its shipments of handsets to grow substantially in 2010.

Update – February 3, 2010: On Jan 27, 2010, iPad was unveiled to the world along with the Apple iBooks Store and an integrated iBooks reader app. Five major publishers have signed on with Apple’s iBooks and Amazon is whistling past the graveyard and trying desperately to shore up relations with publishers. One sign of Amazon’s iPad angst is their new “keep your Kindle for free” promotion.

Now the next logical shoe has dropped. The Wall Street Journal is reporting that major publishers have approached ScrollMotion to adapt their textbooks for use on the Apple iPad. ScrollMotion has a popular app on Apple’s App Store. The company adapts print texts to e-format and enhances them with built-in search, indexes, dictionaries and interactive flourishes.

Update – May 3, 2009: CNBC reported today that six colleges are moving to digital textbooks and looking at Kindle. My advice to universities and students … wait for the Apple iTablet iPad.

Update – April 19, 2009: Since this post first appeared on Feb 3, several things have happened:

• Kindle launched an app for iPhone
• Several new ebook reader apps have appeared in the App Store
• Google Books for iPhone adds 1.5 million reading choices to iPhone/iPod Touch
• Virginia to use iTunes U in a new education initiative
• iTunes ebook sales are zooming!

iPhonAsia comment: You can already find a number of e-books and a few e-reader apps through the Apple App Store. We think this is only just the beginning. Apple may very well develop their own e-book reader app for iPhone (read and swipe pages with your finger or slip in your ear buds and touch “audio”), iPod Touch and Mac platforms and get busy on content deals with publishers. This is a bigger market than you might think. Stay tuned …

Jan 27, 2009 – Imagining an iTunes eBook Store

(imagine no more – Apple’s iBooks launched on iTunes exactly one year after this article was written)

by Kirk Biglione

EXCERPT: Confession time. I was wrong about reading ebooks on the iPhone.

When I evaluated various ereading devices a few months back, I came to the conclusion that the iPhone was not suitable for long form reading. Months later, I’ve now read several books on the iPhone and I have to admit that the experience is growing on me. In fact, I frequently find myself looking at my bookshelf and thinking, “I wish I had that book on my iPhone”.

In most cases those wishes are an impossibility because there’s no (legal) way to get the book in question onto my iPhone — or any other reading device, for that matter. In some cases, where digital editions are available, they aren’t available in a format that would work with any of the current iPhone reader applications.

There’s hope that all of this may be changing soon, as publisher interest in the iPhone/iPod Touch seems to be growing by the day. Publishers are rushing to experiment with all manner of ebook releases targeted at the iPhone.

Read full article > HERE

Read also Wired article > E-Books have a future in iTunes

Apple’s iPhone carrier partner in Japan, Softbank, said profit soared in its mobile operations for the Oct – December quarter. via Associated Press …

Softbank said mass adoption of the iPhone drove its profits during the quarter, and Apple’s Internet-friendly device helped drive its data-related revenue per user to a new high. Operating profit in its mobile business, which is its biggest division, shot up 80 percent from a year earlier.

Oct 29, 2009 - Softbank nearly doubles net profit thanks to iPhone

Posted in iPhone in Japan on Oct 29th, 2009

Quick … someone call John Strand and tell him his thesis “no carrier has ever made a dime by contracting with Apple to sell iPhone” is in serious jeopardy of being dead wrong. Read > The INcredibles – Rob Enderle and John Strand
“14 years we [Strand Consult] have never made a mistake in our predictions [...]

Read Full Post »

Well lookie here … Google’s latest Android OS update activates multi-touch (enabling pinch-to-zoom) on the Nexus One … the so-called Google phone.

I wonder whether Google is counting on the same “prior art” claim (invoked by Palm in a PR campaign) to get around Apple’s patents? You also have to ask why Google did not activate multi-touch on Nexus One from the get go? Perhaps because they know that Apple has a solid claim to several important multi-touch patents.

Despite Apple’s patents, Palm defiantly enabled multi-touch on the Pre (read post below). Several patent attorneys have suggested that Palm’s prior art stance might be shot down in court, yet Apple chose to take no immediate action. Why? Only a handful inside Apple know. I suspect Palm has not sold enough Pre phones to warrant a move by Apple’s Legal team. But Apple’s lack of action against Palm might have emboldened Google. Now that Google too has crossed the proverbial line in the sand, I would not be surprised if Apple Legal metes out some Dirty Harry street justice on multi-touch patent violators.

June 17, 2009 – Palm betting on “prior art” to keep multi-touch on Pre

Now that the Palm Pre has launched … it might be time to recall that Apple holds the patent rights for multi-touch gestures on touch-screen mobile handsets.

Other touch-screen handset manufacturers have been careful to avoid a direct mimicking of Apple’s trademarked touch-screen controls (e.g. two finger pinch-in, pinch-out, etc.). But Palm is taking an “in your face” stance on the rights to multi-touch via their new Pre smartphone.

Lefty the Chimp creating prior art

Notwithstanding Apple’s patent (US Patent 7,479,949) and acquisition of FingerWorks‘ IP in 2005 … Palm’s lawyers are apparently betting big on “prior art” to undermine Apple’s rights and avoid legal rulings that would support Apple’s IP. And many are expecting Palm’s team of legal eagles to prepare examples of prior art along with depositions from the “creators” themselves. Palm’s team are even helping “Lefty the Chimp,” a brilliant multi-touch artist (photo – above right) to prepare his deposition, as he has trouble with written English.

Apple's Mona Lisa was inspired by "prior art" (example above) ... so says Palm

I’m reminded by my pal Daugherty that Leonardo da Vinci too was a lefty.

Ya had to do it, didn’t you Palm? Traipse out your artistic chimp and pretend he’s the great da Vinci. Let me tell you something Palm … I knew Leonardo da Vinci … Leonardo was a friend of mine … and Palm, Lefty the Chimp is no Leonardo da Vinci!

Positive impressions:

• Walt Mossberg (WSJ All things D) > watch video
• Clayon Morris (Fox News) > watch video
• Tim Gideon (PCMag.com) > iPad demo

iPad “Haters”:

• Dan Lyons (Fake and increasingly synical Steve) > watch video
• Vicious Dave > watch video

For the tech purists who’ve slapped the #fail hashtag on iPad (It’s just an oversized iPod Touch! What!? No Flash? It has no camera, and no multitasking!) without actually touching it, my comment is simply this … who cares! Seriously.

Apple didn’t fail with iPad’s design. Geeks failed to comprehend that they aren’t the most important audience.

Apple’s cool new infotainment device (with vibrant screen, super fast A4 SOC*, highly precise and responsive touch interface) with a WiFi-enabled $499 entry price, appeals to Stephen Colbert (<watch) and the mass market.

• Tech elites (geeks) = .025% of the market
• John/Jane Q Public = 99.075% of the market

For a rundown on what’s to like about iPad, read > here

In case you missed the video replay of the Jan 27 iPad unveiling … here’s the 180 second version (watch below)

*While it has not been confirmed, several tech sites are speculating that Apple’s A4 SOC is based on central processing unit (CPU) and graphics processing unit (GPU) technology that Apple has licensed from ARM.

In the video below, listen carefully to the Jan 27 conversation between The Wall Street Journal’s Walt Mossberg and Steve Jobs. At one point Mossberg asks Steve Jobs about the price advantage ($9.99 @ Amazon vs $14.99 @ Apple’s iBooks) Kindle owners enjoy for certain Amazon.com ebook offerings. Jobs tactfully corrects Mossberg.

Mossberg: “[first part is inaudible] why should she buy a book for $14.99 on your device [iPad] when she can buy one for $9.99 at Amazon [inaudible]?”
Steve Jobs: “Well, that won’t be the case.”
Mossberg: “You mean you [iBooks] won’t be $14.99 or they [Amazon] won’t be $9.99?”
Steve Jobs: “The prices will be the same.”

Macmillan leaves Amazon at the Altar … runs off with Apple