Category: Featured Tech.pinions

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If you read too much of the tech media you sometimes get the impression that the tech world is ending. The PC industry is in decline and many are quick to declare it dead. Now, our love affair with tablets are over according to many recent articles. Smartphones growth is slowing. We are in a tech bubble. I could keep going with apparent bad news. The media has to do what it needs to do to survive. Bad news sells. But the end of the technology industries growth period and innovation is hardly over.

Mature, Maturing, and Green Fields

Something I think gets largely missed by most who observe this industry relates to its maturity. Is the technology mature or is it not? If it is not mature it will act one way. If it is mature it will act another. What makes the answer to this question fascinating is that it is both mature and maturing at the same time. In developed markets the technology industry is mature. This is why we see competitive dynamics like differentiation, segmentation (in both product mix and price tiers), and more savvy consumers to their needs, wants, and desires for the products they shop for. Some may look to segmentation as the biggest indicator of a mature market but I choose to look at consumers themselves. Once consumers start becoming self aware to the point that they are specifically selecting this product over that one for reasons only they have worked out that are important to them, then we know we have a mature market.

Mature markets, and in this case industries, are what lead to new technologies to be adopted very quickly. In the case of the tablet, its success and rapid adoption was a direct result of consumers being familiar with PCs and smartphones. When the iPad came out it was easier for consumers in mature markets to grasp its value. This is why the tablet has been the fastest adopted consumer electronics device to reach 500m install base which it achieved in 2013. This point, of a mature market, was one of the underlying points we used in our logic to forecast the aggressive tablet volumes we did in 2010.

The mature market dynamics also explain why the segment is slowing as well as its now fully established seasonality. Note the peaks at each Q4 for tablet shipments since 2010.

Now Let’s take a look at a few other charts showing certain products in a mature market with full swings in seasonality. Note the shape and the peaks.

What you notice about the two charts above is the ramp up and then a peak. We have reached peak desktop notebook form factor. This market is no longer growing and in fact it is contracting. The PC as we knew it–a desktop or a notebook–has passed its peak. This market will remain since a good many people still need a device they can sit at a desk to do long form deep work like spreadsheets, create CAD documents, write software, make a motion picture, edit professional photographs, etc.

Unlike the PC market, the iPod is fading into irrelevance. The capabilities of the iPod have been integrated into the smartphone. Now while I believe there is a market–just a rather small one–for the desktop and notebook form factor, it is interesting to think about what core features that were unique to the PC are now integrated into the tablet? ((This was the core of my article from yesterday) In many of the same ways the iPod was the only device for music, the PC has been the only device for other use cases which have now started to be taken over by the tablet. Web browsing, watching videos, using social media, and many other things were once desktop use cases and have now been integrated into the tablet.

The other key thing to point out with regard to the PC chart is that not only did we pass peak PC, the device itself shifted to longer life cycles. During the highest growth period of the PC the refresh rate was every 2 years. Now, the average is 5 years and growing. All the above is useful to understand what is happening with the PC market. It is not dying, the market is simply correcting itself. The PC over served the needs of many consumers and once they got a netbook or tablet they realized it. The PC still exists in their home but they don’t use it as much. Stock markets correct themselves as investors settle at a valuation that seems to be accepted. So the PC market is correcting itself and it too will settle into a degree of steadiness in annual shipments.

The tablet is undergoing a continued growth period but is also experiencing much more seasonal swings than the PC did. The lifecycle of the tablet is still also unknown. When we look back in 2-3 years at these updated charts for tablets, I believe we will see patterns that have shades of both the quarterly data points of the PC and the iPod. Yet, we are no where near peak tablet.

As interesting as mature market dynamics are to observe, the real question is where do we go from here. If you follow my analysis you know that I have thrown the stat out from our research that 90% of current tablet owners also own a PC. That leaves about 5.5 billion people who don’t have a PC or a tablet. The install base of smartphones either has passed that of PCs or will pass any day now. Bringing computing to the next 5 billion plus is going to happen and it will likely be a 20 year journey, or longer. However, the key thing to remember about being on a journey is the scenery changes.

This is the question I get asked most when I use my current iPad set up in public. ((The case is the iPad Air Folio case from Zagg)). People see my iPad and keyboard set up and assume it is some new type of computer they haven’t seen before.
   
From the first day I started using the iPad I have used it with a keyboard and tried to use the solution for my day to day computer needs.  With each new iPad, version of iOS, and with each new keyboard solution, I noticed the iPad + keyboard combo beginning to get closer and closer to being used as a substitute for the vast majority of both my personal and my commercial computing needs. 

A Look Back at Commercial Computing to Personal Computing

I think it is often forgotten how Windows rose to dominance.  Microsoft, and their ecosystem partners, won over the enterprise by catering to those responsible for deploying and managing PCs in the workplace. Windows became the computing standard for the commercial market.  Then, as consumers began to want a PC of their own for home or personal use they purchased a Windows based one because it was the one they were the most familiar with. They brought Windows home with them you could say. It is worth bearing in mind that Windows was what they had to use at work not necessarily what they choose to use at home due to a genuine limit of choice. ((The Mac did not support many of the software platforms and consumers were familiar with and was too expensive to be mainstream.)) This is an important distinction that helps us understand what is happening in the market today now that consumers do have more personal computing choices available to them. 

What is in question today is not computing, or the future of computing, but Windows role in the future of computing. We are not watching the PC market contract because people don’t want a computer. Rather, consumers are choosing other products than traditional PC form factors to serve their basic computing needs.  

Note the below slide of my firms outlook for the next few years in these categories.

What is fascinating about what is happening with tablets is that consumers may not be choosing them as a PC replacement. In fact, I am certain this is not the case for most consumers, at least not yet.  They are choosing them for the very reason that Microsoft wants to mock them for.  They are choosing tablets because they primarily want to use them for consumption and entertainment.  Tablets are easy to use and they have fun and relax while using them. But what happens when they realize they can also use them for more productivity and creativity tasks? What happens when they realize the tablet is capable of the tasks they used to depend on their PC for?  What happens when they become aware, as I did, that a keyboard option (if you need it) can actually start serving their basic computing needs? What happens when they realize the touch interface and the software built for it is actually easier to use? Will they start doing more with this tablet? I believe the answer is yes.

I can’t talk about personal computing and not think about Microsoft’s role. The setup I am using could very well be considered a Windows based 2-1, like a Surface, by usage standards. In fact, often when I show people my iPad and keyboard setup they ask my why I didn’t choose a Surface. The answer is because I don’t need Windows for either my work or personal life.  How many other tablet owners have come to the realization that they don’t need Windows any longer? They already have a capable computing OS in their hands in the device they choose primarily as a consumption device.  When this settles in it could be industry changing for personal computing.  

What all of this hints at is that while there is a clear commercial computing application for the time being for Microsoft based solutions, there is a waining value proposition in personal computing (consumer) markets.  As more and more people find that their tablets with alternative operating systems to Windows meet most of their needs, the role–and value–of Windows diminishes.

During Microsoft’s rise, consumers brought Windows home with them. What should concern them about their future is that consumers are bringing iOS and Android devices to work with them.

When Richard Nixon was elected president, Herblock, the ascerbic Washington Post cartoonist who loved to draw Nixon with a menacing 5 o’clock shadow, promised the new president a clean shave. I’ve been a bit rough on Microsoft lately, but the appointment of Satya Nadella as chief executive officer merits a fresh look. And while the company faces many challenges, especially in consumer markets, Nadella also takes over a company with tremendous strengths, many of them in the areas for which he has been responsible.

The important thing to note about Microsoft is that while the company faces serious long-term problems resulting from the stagnation (at best) of its traditional PC business and its failure to gain notable traction in the growing mobile market, the company is nowhere close to being in crisis. It is not IBM in 1992 or Apple in 1997 or even Nintendo today.[pullquote]In effect, the choice of Nadella to head the company is a decision by the board to reward strength rather than reinforce failure.[/pullquote]

The money machine. In fact, Microsoft remains a money machine. In the six months ended Dec. 31, Microsoft earned an operating profit of $14.3 billion on revenues of $29.7 billion, a gross operating margin of 48% (the profit would, of course, have been significantly lower if the losses of the Nokia handset operations Microsoft is buying were incorporated on a pro forma basis.) Microsoft’s commercial operations, of which Nadella’s cloud and enterprise group is a large part, account for 55% of the sales and 66% of the profits of the corporation. In effect, the choice of Nadella to head the company is a decision by the board to reward strength rather than reinforce failure.

Technology journalism and analysis is so tightly focussed on consumer and mobile markets that it has largely ignored Microsoft’s remarkable success in business software and services. The enterprise, and to a very significant extent, small and medium business, remain Microsoft territory. Tablets, mostly the iPad, are gaining ground but business is still overwhelmingly PC country, it is likely to remain so, and it runs on Windows and Office. Corporate mail and collaboration is largely Exchange and SharePoint, SQL Server has a big chunk of the mid-range database business and Dynamics has been coming on strong in CRM, ERP, and analytics.

Cloud success. Microsoft has had considerable success converting its software business into a subscription model for both business and consumers. And it has made great strides moving into the cloud, from  its Azure Platform as a Service business to OneDrive (formerly SkyDrive, until it lost a trademark battle with Sky Broadcasting.)

As venture capitalist Brad Silverberg, who headed Microsoft’s Windows 95 development, wrote for Cnet:

Satya has reinvigorated Microsoft’s server and tools business. He’s done a remarkable job getting Microsoft to move fast on the cloud and begin staking out a strong position against difficult competitors, such as Amazon. Most of all, he recognized that the world has changed and that to be relevant and become a leader again, Microsoft needs to embrace those changes and offer solutions for customers that fit in that new world. Whereas once open source was regarded as a cancer at Microsoft, Satya has found a way for Microsoft to add value while supporting new standards, like Linux, Hadoop, Ruby on Rails. It’s exciting to see Microsoft play well in this new world and offer differentiated solutions.

Keeping the parts of the company he knows well on track is the easy part for Nadella. Fortunately, the cash that continues to pour out of the Microsoft enterprise engine buys plenty of time to fix the not so good parts. The first challenge is dealing with Windows. Not being a stupid company, Microsoft realizes that it made a fundamental mistake in the design of Windows 8. The notion that cramming both touch-based and keyboard-and-mouse driven user interfaces into a single package and forcing both table and traditional PC users to deal with both to varying extents was a really awful idea. But Microsoft took a step back with Windows 8.1, is about to take another with Windows 8.1 Update 1 and may go the rest of the way with what may or may not be called Windows 9. due to be previewed at the Build developer conference in April.

Winning the  enterprise. To win enterprise support for Windows 9 and keep Windows 7 from becoming the XP for the next decade, Microsoft needs to give customers the good stuff from Windows 8, such as the cloud integration, while freeing it from a touch-first UI that no one wants on traditional laptops and desktops that are still the backbone of business. At the same time it needs to free tablet users from the legacies of the desktop, which require that the Surface be shackled to a keyboard. The answer may be a rebirth of Windows RT, but this time backed by a rich suite of touch-only apps, including a new version of Office.

Fixing Windows Phone is even more difficult. Many of the same people who hate Windows 8 actually like Windows Phone and also like the new Nokia handsets. But outside of a few markets in Europe and Latin America, it just hasn’t gotten much traction in a field dominated by Apple and Android. Microsoft’s existing hardware business, which consists of both Surface tablets and Xbox consoles, along with a profitable range of accessories, eked out a gross margin of $617 million on sales of $6.1 billion last year–Microsoft did not report the operating margin for hardware, the but the businesses were probably in the red after expenses were fully allocated. Nokia is continuing to lose money by the bucketful.

Struggling phones. There’s no easy way out of this mess. Microsoft has picked up all the business it can from the collapse of BlackBerry, leaving it to fight iPhone and Android. Windows Phone gains have come mainly in the low end of the market, where sales are easier to come by than profits, and it could end up fighting for share with the Nokia Asha feature phones it will still own. Fortunately, the losses from the phone business are modest, even with the Nokia red ink added in, and Microsoft can go on absorbing them for some time while it looks for a solution.

Another interesting dynamic for Nadella will be the role played by Microsoft founder Bill Gates, stepped down as nonexecutive chairman to be succeeded by John Thompson, a former IBM executive and one-time CEO of Symantec who headed the search committee. Gates will become a part-time, but potentially highly influential technology adviser to Nardella. There has been much speculation of where Gates thinks Microsoft should move but he, typically, has kept his own counsel. Ballmer also surprised many observers by keeping his seat on the board, though he will have no management role.

As an analyst I have covered Microsoft close up and personal since 1981. When I first went to visit Microsoft in 1982 they were in their red brick buildings in Bellevue, WA and had less than 100 employees if my memory serves me right. I remember being able to walk down the halls and see Gates, Microsoft co-founder Paul Allen and other top executives in their offices as I was shown the operations. If it weren’t for Microsoft, I don’t think we would have had the kind of PC business that exists today and its overall role in driving our industry has been enormous. Over the years, I have watched them grow to become one of the most important and profitable businesses in the world. I have seen Gates become a billionaire 55 times over and see friends I got to know in the early days become billionaires or multimillionaires as they steered Microsoft to software dominancy.

However, as they grew and diversified their business, they have had many challenges over the years. In this day and age when computing is going mobile and their past cash cow of Windows and Office suite software is under attack, it became clear to many that the company should to change its leadership from the top down. More importantly they needed to re-architect themselves for a world of computing that is much different than the one they have known over the past 30+ years. 2014 will become the pivotal year for Microsoft and how the new CEO guides them will determine their success and relevance in the future.

The choice of Satya Nadella as the new CEO of Microsoft is very important to redesigning this pioneering software company. I believe it underscores that Microsoft’s board understands the core of their future lies in business and enterprise. They looked for a leader who could keep them moving forward in this growing segment of their business and Nadella was their choice. In fact, servers, Cloud and IT software represent an area that Microsoft already has a powerful position in. They must innovate within this segment if they are to stay relevant. On the other hand, the PC business is now in stability mode and will never again be a growth market for them or anyone in the PC industry again.

Demand for PCs declined by 10% last year and although we do see some increased demands for PCs in the next 1-2 years due to IT refresh rates starting this year, the fact remains that demand for PCs will stay steady at about 280-300 million a year going forward and most likely will continue to decline in importance over the next 5 years. In fact, even with refresh rates in play over the next two years we believe that overall demand for PCs will still be down by 2-4% over last year’s unit shipments. Also, most IT refresh OS demands will be Windows 7 related, while Windows 8.1 will continue to be slow to garner any serious market share within the enterprise as well as consumer PC markets. Although we know very little about Windows 9, if it pushes a touch based UI to IT and Enterprise accounts, it too will get a poor reception as touched based systems are really not suited for the precision like functions you need with spreadsheets, databases and even word processing where a keyboard and mouse are a key part of the user interface. Also touch screens just add to the cost of the PC or laptop and that serves as a deterrent for upgrading to Windows 8.1 or even a touch based Windows 9.

Where Microsoft is really challenged is in mobile where the growth of smartphones and tablets continues to be strong. Competition by Apple’s iOS and Google’s Android, which together dominate 95% of this mobile market, makes it hard for Microsoft/Nokia to gain the kind of software and channel support they need to grow real strong demand for their mobile offerings. Although smartphones and tablets do cross over to business via BYOD, the role of mobile devices and especially its growth will be driven by consumers and Microsoft’s position in mobile for consumers is falling farther behind their competitors today.

With this in mind, here is my blueprint of how I believe Microsoft should deal with these challenges over the next two years.

Microsoft’s Trinity

Within 18 months I believe the company needs to be broken out into three distinct divisions or possibly separate companies. One division should be focused on IT, Enterprise and Business, Cloud Software, business focused OS and services. The second division or company should be focused primarily on mobile, which includes smartphones and consumer tablets. The third company should be focused on entertainment and games and includes the Xbox, smart TV and the living room.

As for the IT company, this group would have the charter of moving all of Microsoft’s software to the cloud, stabilizing their Windows OS PC business, innovating within server software and establish a set of software as a service solutions primarily for enterprise and SMB. I could see them even acquiring a dedicated services organization to enhance their current software services and consulting practice. This group would be responsible for evolving their Windows OS for enterprise, consumers and education but with full knowledge that the PC as an OS vehicle will never be a growth market again. This group would also oversee the Surface Pro business although if they were smart they would get out of the PC hardware business altogether and let their remaining PC customers handle that part of the business. Bing should also be run out of this group since it is cloud service.

The mobile division or company would be solely responsible for smartphones and consumer tablets. However, this group would have to understand that the Windows PC OS does not serve their mobile agenda going forward. Like Google with Chrome/Android and Apple with iOS, which have distinct operating systems for PC and Mobile, this group should scale Windows Mobile OS up for use on tablets and optimize this OS for various size tablet screens instead of trying to push a PC OS down for use on smaller mobile screens. However, even if they do this they need to fix a huge problem Windows has when it comes to software apps. Windows Mobile OS and Windows 8.1 will never have the long tail software apps that IOS and Android have today and in the future. This puts them at a huge competitive disadvantage. I believe that this group has to bite the bullet and find a way to bring Android apps into Windows mobile, thus giving them a fighting chance to compete with Apple and Google and their partners.

There are various ways to do this although Bluestacks Android on Windows solution is the best of breed that I have tested to date. Of course, the Nokia acquisition would be critical to this division and their hardware which could run Windows mobile as well as Android on smartphones and tablets could help this division gain serious ground against Apple and Google and their Android partners. This group could also become involved in wearable devices and any other mobile based hardware and software that shows market promise.

The Entertainment division or company would be highly consumer focused and take aim squarely at the living room. The new Xbox ONE already serves as a set top for OTT streaming services like Hulu or Netflix as well as delivering games, but they could and should expand its role as a set top box in the living room and tie it closer to their various consumer online services such as Bing and future consumer cloud apps. They could really kick this into high gear if they bought Roku and integrated it not only into Xbox one but push to get the Roku box and technology into actual TV sets like Roku is doing today and make an even broader play to get Microsoft software, apps and services into the home. This group could also oversee future work on the connected home and other IOE consumer related hardware, software and services.

I suppose this is a rather simplistic view of how I think Microsoft should proceed in insuring their future, but to try and do all of this under a single Microsoft umbrella I just don’t think will work. By creating three distinct divisions or setting them up as separate companies each would have a clear set of goals, charters and roles with a tighter focus, thus giving them more of a fighting chance to compete especially against Apple, Google and Samsung that today are dominating the world of consumer technology and have strong desires and goals to become powerful players in IT and enterprise over time. I have no idea if this new CEO will go down this path but I do believe that if they don’t do something drastic along these lines, Microsoft’s overall business will continue to decline and their relevance in the future will be seriously in doubt.

The market for smart connected devices is changing and it’s doing so at a rate that’s even faster than most people realize. In the process, the whole conception of what computing is, where it happens and even what means is changing and evolving.

Let me put it another way. This year, my firm TECHnalysis Research predicts that the 2014 shipments of large smartphones (those with screens 5” and larger—commonly called “phablets” but perhaps better coined “mobile connected devices”) will far outsell both small tablets (those with under 8” screens) and even notebook PCs. Specifically, we are forecasting that worldwide phablet unit shipments will reach approximately 240 million in 2014 versus 173 million notebooks and 158 million small tablets. That’s a seismic shift that will have profound implications on branded device vendors, component suppliers, ecosystems, applications and app development, and even regional influence. We’re going to see an increasing influence on mobile operating systems, developing markets and computing devices that fit into your pants pocket or small purse.

In the US, the story isn’t quite as dramatic, as large smartphones have been a little bit slower to reach mass appeal, but even by 2015 we expect large smartphones to outship notebooks in the US by a margin of 37.5 million to 35.9 million and by 2017 we expect them these mobile connected devices to outsell small tablets in the US (41.9 million versus 41.5 million).

The charts below show our view of the entire smart connected devices market (the combination of PCs, tablets and smartphones—it’s a term I coined while at IDC), split by the six key subcategories: notebook PCs, desktop PCs, small tablets (under 8”), large tablets (8”+), small smartphones (under 5”) and large smartphones (5”+). The top graph shows the WW numbers and the second one shows the US numbers.

In addition to the major transitions in device influence show by these graphs, one of the other key takeaways is that the total smart connected devices market is starting to stabilize and show much more modest growth, especially in the US. The fact is the market for these device categories are all starting to saturate, as people hold onto their devices longer and the need to upgrade is reduced. PCs were the first to suffer this fate, but we believe it will move over to tablets and even smartphones by the end of the 5-year forecast period—again, especially in the US.

As a result, the only way vendors can continue to grow within these categories is to steal share from one another. We believe this is one of the many reasons Apple is likely to enter the large smartphone market later this year. Demand for these devices is particularly strong in the regions where the company wants to grow and even in the US, it will be necessary to help them maintain their share.

The device industry has been on a treadmill of seemingly never-ending growth for decades, but we believe that era of unimpeded growth will be coming to an end by the end of this decade. Of course, many device vendors, ecosystem providers and supply chain partners will transition over to wearable technology and other yet-to-be-discovered product categories in the interim in order to compensate for this change. However, this maturation of core computing devices into a more mature, slower growth industry is bound to bring with it some other unexpected changes that promised to keep this space an exciting and interesting one to watch.

If you’re interested in seeing the highlights of the new TECHnalysis Research forecast document (which covers significantly more than I could cover in a single column), you can download a free copy at www.technalysisresearch.com/sample_research.html.

You may not know it yet but Lenovo has grand ambitions to become one of the most powerful tech companies on the planet. Their original move to buy IBM’s PC business set this goal in motion and has become the cornerstone of their tech reach into enterprise and consumer computing markets world wide. With that move they have achieved one of the most difficult tasks in business by successfully integrating two very different companies and cultures under a new set of owners and done it quite well. Within weeks of Lenovo buying IBM’s PC business I was privileged to be invited to Beijing to meet with Lenovo’s top management and get their ideas about merging these two companies and try and understand their long term goals.

Personally I was highly skeptical about this marriage as I was very close to the IBM PC group from its birth. In fact, my first major project for Creative Strategies in 1982 was to work with IBM’s new PC division on market research projects and channel development. One of my most interesting projects was to actually review the strategy and designs of their original laptop that debuted in 1986 and have continued to follow their developments in laptops ever since. During that time I watched IBM become a powerhouse in PCs and perhaps more importantly, develop a world class sales and service team and become one of the most trusted computing brands in the enterprise. This is where I had most of my doubts about the merger. How could a Chinese company gain the trust of IBM’s IT customers and be assured that Lenovo would continue to advance products and provide great service and support. While in Beijing I was assured that Lenovo would be careful with this issue and work hard to keep IBM’s PC customers happy.

To the credit of Lenovo’s Sr. management they took a hands off approach with IBM’s PC division and let them do what they did best. They were slow to integrate Lenovo’s own corporate strategy into this US business and let the former IBM PC management team run things from their Raleigh, NC headquarters. While their were some big Justice Department hurdles to get through initially, once the US governing agencies cleared the deal, the merger of IBM’s PC group and Lenovo was in full swing. Since the purchase of IBM’s PC division in 2005, Lenovo has leveraged both their own business agenda with the skill set and operational excellence that they got with the IBM PC group and have become one of the most important tech companies in the world.

When they recently became the #1 PC vendor in the world Lenovo really got the attention of the business and consumer public and are now considered a powerful brand in computing throughout the world. The market also took note when they got into the smartphone market in China and went from zero market share to being the third major handset vendor in about 18 months. This is a company on a mission and it seems to me that they have grand ideas of becoming one of the most dominate tech companies in the world. After watching the progress over the last 9 years I have a sense that they may eventually achieve this goal.

The reason I feel this way is the based on a couple of observations over this time period of following them closely.

The first is thing is the management team in place both in China and the US. This is one of the best group of PC executives I have dealt with and they all are highly committed to the overall Lenovo vision. They also have one of the smartest marketing minds in David Roman in any tech company. David is their CMO and came to them from HP where he was integral to HP’s “The PC IS Personal” campaign. Over the years I have met many of their executives from China and North Carolina and am pretty confident with their ability to execute this grand vision.

Second is their robust R&D and Design groups. While Dell, HP, Acer, Asus and Samsung have solid R&D divisions my personal exposure to Lenovo’s design and R & D teams have me convinced they have the best group of this nature among these companies. Also they have a very large budget for these divisions and I continue to be impressed with the way they create and innovative with their PC’s of all shapes and sizes these days. This is a real competitive advantage for them and only Apple has a team in this area that I consider better than the Lenovo teams.

Third thing that impresses me is that they have a very clear vision of what they want to do and how they will get there. Adding IBM’s Server group to their portfolio expands their business opportunities significantly and the Motorola purchase gives them a foot hold in the US cell phone market. Late last year I was talking to some Lenovo execs out of Raleigh and they confirmed that Lenovo wanted to bring their smartphones to the US. When I heard that I silently whispered to myself “good luck.” But by using Motorola as their US arm and more importantly leveraging Motorola’s R&D and carrier relationships, I no longer doubt that Lenovo could become a powerful force in smartphones even in the US. This was a win-win for Motorola and Lenovo even if Google had to take a huge loss on the deal.

In an interview with Fortune, Lenovo CEO Yuanqing Yang says that his company seeks to replicate its ThinkPad success with Motorola. The Fortune reporter asked “ With Motorola, Lenovo will be the No. 3 smartphone maker worldwide. Do you think your company can catch up with Apple or Samsung, who are still far ahead of you? And how long will it take?”

Yuanquin Yang replied “Definitely, over time. Our mission is to surpass them.”

Achieving that goal will not be an easy task given Samsung and Apple’s powerful position in the market today. Yet, given their track record and the goal to become the top tech company in the world, I have to give YY as he is called by the Lenovo team, the benefit of the doubt. Lenovo is on a mission and they have achieved much in 9 short years. With a few other acquisitions and a committed team of executives it seems to me that at the very least Lenovo is on a path to becoming a power house in smartphones and tablets along with having continued success with PC’s and it will be interesting to see how much more they can accomplish over the next decade.

As part of my Photo 365 project, in which I take a photo every day of the year, I snapped this the other day:

I won’t mention the expletive I used in the photo’s caption, but suffice it to say that seeing this ad immediately struck a nerve with me. The snarky “just a toy” line is, of course, an allusion to the iPad. The insinuation being that a Surface is more capable of doing “real work” than an iPad, presumably because a Surface can run full versions of Windows and Office.

Honestly, what a crock.

Besides being pejorative, Microsoft’s “just a toy” sentiment strikes me as woefully out of touch. The iPad is fast approaching its fourth birthday — have we not by now seen what the iPad is about? Customers sure seem to, judging by iPad’s holiday sales numbers. Moreover, these kinds of ads reek of desparation — Microsoft is so in need of some semblance of traction in the tablet market that it continues to perpetuate the old and tired “consumption versus creation” cliche. As Ben Bajarin tweeted, Microsoft just doesn’t get it.

On a personal level, though, Microsoft’s “just a toy” jab offends me for two reasons.

First, as I’ve written previously, the iPad has become so good at productivity that I gave my old 11-inch MacBook Air — which I originally bought with the intent of using it as a writing machine — to my sister. As a writer, the iPad is fully capable of helping me get my work done. As I mostly work with Markdown files stored in Dropbox and iCloud, Editorial has become my go-to text editor, while Poster helps me post to my blog from the iPad. If I want or need to make HTML and/or CSS changes to my site, I can use Panic’s Diet Coda. In a broader sense, iOS’s one-app-at-a-time concept is refreshing, allowing me to better focus at whatever task is at hand, and it’s satisfying to me knowing that iOS is capable of real work. All of this to say that the iPad is, for all intents and purposes, my “laptop”. It is my mobile computer — I carry it with me everywhere I go — and I don’t forsee myself going back to a traditional Mac laptop.

Secondly, I find the iPad Air to be the best iPad I’ve ever used from an accessibility perspective. Before upgrading to my Air a couple of months ago, I used an iPad 3 for about 18 months. It was a great device, to be sure, but I grew weary of the thicker, heavier body and the way the A5X chip would make the iPad uncomfortably warm after extended periods of use. Thus, upgrading to the iPad Air was not only a huge step in terms of internals — the 64-bit A7 being the prime reason — but, more importantly, the dramatically thinner and lighter chassis makes the Air much easier for me to hold for longer times. As I have cerebral palsy, my condition is such that I suffer from reduced strength in my arms and hands. What this means is that it’s more difficult for me to comfortably hold objects, especially for extended periods. The iPad Air, then, is so thin and so light compared to my iPad 3 that I can comfortably hold it for reading in Instapaper or The New York Times without worrying so much about fatigue setting in. Being able to use the iPad longer means I can enjoy it more. Without question, I feel the iPad Air is the quintessential iPad (for now, anyway). It is the iPad, I think, Steve Jobs probably always envisioned. Its combination of power, thinness, and lightness is simply fantastic. I can’t speak of it highly enough.

It’s so upsetting to see Microsoft denigrate the iPad because I know from personal experience just how capable and powerful it truly is. Extrapolating this point even further, look at what it does for children with special needs, as well as for iOS automation. More to the point, look at how Apple is promoting the iPad. These are not fluke events nor are they pie-in-the-sky concepts. These stories are real — depictions of real people using them in real life. Marine biologists are using iPads in the ocean. What other evidence does Microsoft need to fully realize that the iPad is convincingly and deservingly winning the hearts of millions of customers? Surely Microsoft can’t be so oblivious to the ways in which the iPad is transforming personal computing. And yet, their marketing dollars go toward an asinine campaign in which they stupidly belittle the iPad as “just a toy”. Compare and contrast Microsoft’s campaign to Apple’s, and consider their respective tablet’s place with consumers. The disparity is staggering, in accuracy and in resonance. If the ultimate goal of advertising is to sway consumers into buying product, Apple is Secretariat at the Belmont.

TechCrunch’s Matthew Panzarino gets it, offering this bit of great insight:

In many ways this is the realization of the dream for the original ‘tablet computers’ of Microsoft — something you can view with more or less irony depending on what chances you give the company of succeeding in a crowded space.

It’s Apple who’s fulfilling Microsoft’s vision, a fact that must not go over well in Redmond.

It seems to me that Microsoft is doing anything they can to try to stay relevant in the mobile space — unfortunately, if these Surface ads are any indicator, they’re failing miserably. I don’t mean to imply that the Surface in and of itself is a bad product; in fact, I actually rather like the keyboard cover idea, especially that of the Surface Pro. What’s bad is the way in which Microsoft is hoping to woo customers. Instead of touting the Surface on its own merits, Microsoft has misguidingly decided to degrade the iPad. Furthermore, the implicit notion that you must have Windows and Office to be productive is a sign that Microsoft is unable (unwilling?) to distance itself from its desktop-dominating past. But mobile is where the technology industry is now, and Microsoft is light years behind Apple and Google. These ads make Microsof look as if they’re in denial, as though they’re still who they once were. What does it say about a company’s faith in their product when they resort to baseless name-calling? The bottom line is these Surface ads reflect a serious cultural problem within Microsoft. Either they’re so full of themselves so as to believe their way is markedly better while being completely dismissive of the iPad’s success (i.e., “just a toy”), or they just plain can’t see the writing on the tablet market wall. (And lest we forget the disaster that is Windows 8.) Whatever the reason, it’s sad.

Microsoft just doesn’t get it, and probably never will.

On the surface, the television business seems to be sailing through stormy seas on a relatively even keel. Viewership is holding up even in the face of ever-growing alternatives. Comcast, in the course of reporting a strong quarter, said that subscribers rose in the fourth calendar quarter. It was an increase of just 43,000, not much more than rounding error, but it came after seven years of steady declines. Intel had grand plans for a disruptive internet-based TV service, but fled with its tail between its legs, selling the aborted project to Verizon.

But the weather could be getting rougher for the incumbent powers of the TV business. The threats are disparate and affect different players in very different ways. Power is moving slowly but inexorable from distributors to content owners and producers, and distribution itself is moving from traditional cable, satellite, and over-the-air channels to the over-the-top internet.

Over-the-top wrestling. One of the more intriguing developments was the CES announcement by World Wrestling Entertainment that it will launch an over-the-top channel,  including what had been pay-per-view events, for a $10 monthly subscription. In the style that has become typical of over-the-top providers, WWE will make the channel available on just about every device capable of displaying the video: PCs, iOS, Adroid, Kindle Fire, Sony PS/3 and PS/4. Mirosoft Xbox 360, and Roku will be supported at launch.  Xbox One and smart TVs will be aded this summer.

This is a clear threat to cable’s pay-per-view business, but the bigger and more imminent threat may be to over-the-air broadcasters. The U.S. Supreme Court has agreed to hear a case on the legality of Aereo, a rather odd technology that uses banks of tiny TV antennas, one per subscriber, to deliver broadcast TV over the internet. Broadcasters claim that Aereo, which is backed by Barry Diller’s IAC/InterActive, is violating their copyrights and appeals courts have divided on the question, opening the way to a Supreme Court hearing.

The real issue in the case is that Aereo (and competitors using similar technology) do not pay broadcasters to retransmit over-the-air content. These rapidly growing fees, estimated at $3.3 billion this year by SNL Kagan, are negotiated between broadcasters and cable operators and have become a a major source of revenue to broadcasters.

A Supreme Court ruling in favor of Aereo will certainly bring dramatic changes to the broadcasting business. A legal way to circumvent retransmission fees could give content owners, particularly sports leagues, a powerful incentive to switch their content from over-the-air broadcasts to cable and over-the-top internet. Fox Network has already threatened that it may do just that.

(A secondary effect, with important implications for mobile data, is that a threat to retransmission fees may make broadcast licenses less attractive and make station owners more willing to surrender their licenses and participate in the incentive auction of TV spectrum, now scheduled for next year.)

Easier delivery. Another threat to the traditional TV model is that the delivery of over-the-top content to TV sets is getting a lot easier. One impediment has been the requirement for multiple set top boxes to receive all the content and my ideal remains a single box that integrates cable and internet content with a unified interface. There is not technical barrier to this, but it will happen when cable operators are ready for it and not before.

TV makers have tried to simplify things by handling over-the-top content directly on internet-connected smart TVs, but these have been hobbled by generally horrible user interfaces. LG has achieved something of a breakthrough by taking the ex-Palm webOS assets it bought from Hewlett-Packard and turning the software into a surprisingly good user interfaces for the new TVs it showed at CES. Also at CES, Chinese TV makers Hisense and TCL showed sets featuring built-in Roku services, which include the broadest assortment of over-the-top offerings.

Of course, content owners still hold the real keys, and here the trends are somewhat contradictory. Netflix, and to a lesser extent Amazon Instant Video, have found some success getting original content produced for over-the-top distribution. Netflix’s House of Cards and Orange Is the New Black are the first authentic internet hits.

A tough nut. Live sports continue to be the toughest nut to crack, for the good and sufficient reason that sports leagues have not found a path to internet distribution that comes close to the gold mine of  cable and broadcast distribution. ESPN, the richest property in cable land, offers a lot of content online, but only to viewers who are already ESPN subscribers via their cable systems.

ESPN has considered a standalone over-the-top service sold directly to subscribers, but President John Skipper told The Wall Street Journal “it’s not close yet.” Like other content owners and distributors, ESPN finds the current cable-based business model very lucrative and plans to stick with it for as long as it can. Says Skipper: “Our calculation right now is we’re going to ride this. We’re going to ride it as long as it makes sense.”

The one potential disruptor you did not see me mention was Apple and the mythical Apple television set. Maybe this will happen some day, but 2014 doesn’t seem any more likely than the last several years. For now, Apple TV is just another player in the crowded over-the-top set top box field with a nice, but not terribly compelling project.

Apple’s most recent quarterly earnings, as usual, have generated an enormous amount of press, a staggering amount of pontificating and lots of interesting questions. On the one hand, the initial after hours market reaction has been swift and to the point: pushing the shares down over 8% at one point last evening—the equivalent of a staggering $40 billion in market value. Apple apologists, on the other hand, are equally quick to point out the incredibly important role that the company and its products continue to play by highlighting lifetime sales, device usage, ecosystem health and other interesting, if not always particularly relevant, factoids. The company itself points out that the underlying health of the business is better than the numbers might first suggest.

Of course, the numbers themselves are, by any objective measure, not bad at all. The highest iPhone and iPad sales ever, a 19% increase in both Mac sales and iTunes store revenue is something that most companies would be incredibly happy to have. But, this is Apple and when it comes to Apple, all bets are off—whether you’re on the side trying to push them up or the one trying to bring them down (interestingly, there don’t seem to be a lot of people in the middle on this one…). I’ve argued for a while that, as far as the market goes, Apple got treated unfairly on its wild ride up and equally unfairly on its big slide down a year or so back.

The real issue here—as it often is with Wall Street—is about expectations. Apple was expected to do better on iPhone sales and was certainly expected to give higher guidance for next quarter, especially after the potentially ground-breaking deal with China Mobile. (Remember: with stock prices it’s virtually never about the absolute numbers, it’s about how things do against what “the street” wanted to see.)  [pullquote]From the time I first saw them at the launch event in Cupertino, the Easter Egg-like pastel colors of the 5C struck me as something that would have limited appeal.”[/pullquote]

But beyond these expectations, there clearly were some challenges with Apple’s iPhone numbers—specifically, one problem: the 5C. Though no details were given, it’s clear that the company had more 5Cs than they needed and not enough 5Ss. As I watched my Twitter feed during the earnings call I saw lots of people offering their own views as to why this may be the case—including the lack of new functionality, pricing too close to the 5S and so on—but no one even mentioned what seems to me, at least, to be blatantly obvious: it was the colors of the phones themselves. From the time I first saw them at the launch event in Cupertino, the Easter Egg-like pastel colors of the 5C struck me as something that would have limited appeal. I don’t claim to be a color expert of any sort, but heck, I would’ve even preferred to see a return of Bondi Blue.

But the challenges that Apple faces go well beyond colors. Though Apple loyalists like to point out that market share doesn’t matter or isn’t relevant anymore (I guess it only matters when you’re winning—interesting how things get turned around over time…), the truth is, market share does matter. It may not matter from a global total smartphone or tablet perspective, but it certainly does when you start to break things down by countries by demographics or by other important metrics. In this regards, several critical trends are conspiring to create some strong headwinds for Apple. First, most of the growth in both the tablet and smartphone markets over the next few years is going to be in developing regions where incomes are lower, subsidies from telcos are much less common, smartphone lifetimes are expected to be longer and local domestic brands still have a lot more influence than large multinational brands. (High-end smartphones are saturated here in the US and Western Europe, so it wasn’t terribly surprising to hear Apple say that North American sales were down in the quarter.) The critical test here will be how the iPhone fares with even the upper middle class in Tier 2 and Tier 3 cities in China. Given the strong preference for local brands like Huawei, ZTE, Lenovo and CoolPad, as well as the strong in interest in “phablet”-size phones over there, this could be a serious challenge. Presuming the iPhone 6 will have a larger screen, this challenge could be somewhat offset later in the year, but the company’s limited expectations for their fiscal Q2 could reflect this concern in the short term. Second, the overall tablet market is starting to slow and it’s not inconceivable that within 5 years, tablets will face some of the same sales challenges that PCs have had to deal with over the last few years. The cannibalization of tablets by “phablets” may even exacerbate this problem. After a tough drop over the last several years Apple’s share has begun to stabilize in tablets, but the company can’t count on the high-growth curve for the overall category that it may have in the past.

Of course, most of these challenges are going to also impact Apple’s competitors in the higher-end device space—they aren’t unique to Apple. Plus, Apple has proven over and over again that they’re able to innovate in way that its competitors can only dream about. So, don’t get me wrong, I’m not worried about Apple’s long-term fate in the least. However, that doesn’t mean we won’t see a bumpy road over the next few quarters and that’s an Apple problem that has to be given serious thought.

Today marks the 30th anniversary of the Mac. My father was one of the few industry analysts there to witness the the birth of the Mac and wrote a great piece reflecting on the Mac’s role in computing over the past 30 years. But rather than look back I would rather look forward.

The Mac has played an important role in paving the way for computing in many areas. I believe the iPad is playing an equally important role in the future of computing. It is interesting to think that in the future we may be celebrating the 30 year anniversary of the iPad while some manifestation of the product is still in the hands of many.

About 10 years ago, pent up with frustration and nearly throwing my Windows desktop out the second story window of the house I was living at, I switched to a Mac and never looked back. How many consumers today are not upgrading their Windows PCs and instead are switching to an iPad as their primary personal computing device? How many people across the globe who never owned a PC will get an iPad as their first PC?

Apple’s vision for the Mac was all about making computing simple and accessible. The vision centered on bringing computing to everyone not just those with a degree in computer literacy. This remains Apple’s vision holistically today and it is further manifested in the iPad. While the Mac’s reach has remained limited (about 6% of the total PC install base today) the iPad has the potential to reach the masses in way the Mac cannot but with the same original vision in mind.

Many keep pounding the narrative that the PC is dead. While there is some truth to this statement computing is alive and well it simply has shifted to new form factors. Even though I believe there is still a growth story for the Mac there is no question the iPad has the greatest potential reach with its computing form and function.

The iPad may not acquire the vast majority of the global personal computing market share but it will not matter. Competitors will still study it and learn from it because it will lead the way with simplified mass market computing. Which is something many companies struggle to execute on. While the iPad itself will continue to play a role in the future of computing its influence will be visible industry wide for decades to come. The iPad is as important today to the future of computing as the Mac was 30 years ago.

Steve Jobs shipped the first Mac 30 years ago today. The first portable Mac debut in September of 1989. And while I’m not sure Steve Jobs knew all that he had at the time, I believe he shipped the first truly mass market “Mac” on April 3rd 2010.

Ever since Marissa Mayer took hold of Yahoo, she and her team have been updgrading the company’s online offerings to better compete in a rapidly changing arena. First came Flickr and the Yahoo Weather App, and now the former search giant is upping its news presence.

Yahoo recently partnered with former New York Times tech columnist David Pogue to launch a less-“gearheded” technology site. One that speaks to a wider swath of readers than most. Enter Yahoo Tech.

In an introductory column, Pogue describes what readers can expect from the new site:

I’m not interested in knowing which processor model is in a phone. I want to know if the phone is _fast. _Which may or may not have anything to do with what processor is in a phone.

So in my columns, you’ll find an emphasis on the human side of tech. On the _context _of a new product. How it feels, how it works, how it’s designed, whether it’s worth the money, of course—but also how it changes the game, changes society, changes us.

This declaration of independence from the nerdier side of tech blogging, combined with a less-than-flattering slide during his CES presentation, certainly rankled several prominent writers on Twitter, like The Verge’s Nilay Patel:

Tech sites for real America, guys.

— nilay patel (@reckless) January 7, 2014

David Pogue just cashed in a year's worth of Marissa Mayer's goodwill with the tech press.

— nilay patel (@reckless) January 7, 2014

and Om Malik:

and the hilariously self-unaware John Herrman of Buzzfeed:

iMore’s Peter Cohen, however, stands up for Yahoo Tech in a reflective piece on the knee-jerk reactions of he and his fellow tech writers who didn’t take kindly to being mocked onstage:

To my colleagues in the tech press: Stop taking yourselves so seriously. Really. Lighten up. Whether you believe it or not, the vast majority of people out there don’t care about what you’re talking about (and yes, I’m talking to myself a bit here too).

Trying to make tech accessible and more human is a _good_ thing. It’s something we in the tech press should _all_ aspire to do more often.

With Yahoo’s purchase of Aviate, the developers of an Android app launcher, as well as its launch of a new News Digest app and the aforementioned Yahoo Tech, it’s clear Yahoo is gunning for the position it once held for millions of people during the mid-to-late ‘90s—as the center of an internet user’s daily life.

TechCrunch’s Matt Panzarino expands on Yahoo’s acquisition of Aviate, which plays into Yahoo’s “hub” mentality:

Yahoo SVP of Mobile and Emerging Products Adam Cahan says that the company isn’t interested in turning Aviate into some sort of ‘all Yahoo apps’ portal. For now, it will expand the beta program and get more users checking it out. “Think of this as an extension of [Yahoo] Search,” Cahan says.

The extension of search metaphor is an apt one, as contextually aware home screens will be all about using anticipatory ‘searching’ through our apps, habits and use cases to provide us with better experiences. Aviate will now be able to tap deeply into Yahoo data like search, weather, maps and more to inform contextual experiences.

When Yahoo still had the exclamation point at the end and those yodeling TV ads on every channel, it was the king of search. There was Yahoo! and everybody else. Your email address ended in @yahoo.com (and for many, it still does). Your homepage was yahoo.com. It’s where you got your news, your weather, your horoscope, and the winning lotto numbers. Yahoo! was the information dashboard for several years. Then came Google.

Marissa Mayer seems to be steering Yahoo back in that direction—as a center for news and information for mainstream readers. The company even hired Katie Couric as its Global News Anchor. If anything, Yahoo is competing with The Huffington Post, the stew pot of online publications.

Yahoo Tech won’t attract the gadget-freaks who read sites like The Verge, or Engadget, or even Tech.pinions, but that’s because it’s not trying to. Instead, Yahoo is focusing on providing readers with a central hub for the important news of the day devoid of jargon and inside baseball. Tech bloggers hate it because they feel threatened, but Yahoo Tech isn’t competing with them. Rather, it’s catering to a crowd long ignored by gadget nerds.

Some consider it “dumbing down” tech news and reviews, but it takes smart people to make difficult topics approachable by the masses and if it means more people reading and understanding the gadgets entering their lives, then more power to Yahoo.

Hewlett-Packard created a bit of a stir this week it promoted its PCs by announcing that it was bringing back Windows 7, the operating system that Microsoft replaced nearly a year and a half ago. Despite claims such as “HP really wants people to buy a Windows 7 PC instead of a Windows 8 machine” by The Verge‘s Tom Warren, the promotion was more of a marketing stunt than a retreat from Microsoft’s flagship operating system by one of its most important partners.

Still, HP’s willingness to trade on the perceived unpopularity of Windows 8 is an indication of the steep challenge facing Microsoft as it considers the design the the next versions of windows, which may or may not be called Windows 9 but which is expected to be introduced, in at least preliminary form, at Microsoft’s Build developers’ conference in April.

The Vista challenge. The last time Microsoft faced a somewhat similar challenge was in 2007, after Microsoft released Vista as an overdue replacement for Windows XP. Vista opened to less-than-enthusiastic reviews, made worse by the fact that the launch, the first major update of Windows in more than five years, was heavily hyped by Microsoft.

Vista was not as bad in reality as it is in memory, but it did have some very serious problems. First, Microsoft, as it usually did, grossly understated the hardware requirements. Customers who upgraded older systems faced serious performance issues and even some new machines weren’t up to the job, even though Vista automatically disabled some processor-intense graphics features on slow systems. A lot of user interface features were changed for no apparent reason. And Windows XP’s notoriously promiscuous willingness to install any software it was offered was replaced with a nagging feature called User Account Control that required an administrative password for the simplest of configuration changes. Bottom line: People hated it.

But there were two saving graces for Microsoft in the situation. First, computer users saw no real alternative to Windows. Mac market share was growing, but not so much as to be threatening. The dislike for Vista might cause people to delay PC purchases or to demand machines that could be downgraded to Windows XP (sound familiar?), but the customers weren’t going anywhere.

Superficial problems. The problems of Vista were mainly superficial. Some tuning and upgrades to faster systems, whose prices were falling quickly, took care of performance. The more objectionable user interface issues were fixed and UAC was tamed. Windows 7, released in mid-2009, was a fairly minor reworking of Vista, a fact revealed by its Windows 6.1 internal version number. It was a relatively easy fix and was an immediate critical and popular success.

There is no easy fix for Windows 8. The Windows 8.1 update dealt with some of the most obvious issues: The UI formerly known as Metro is now somewhat more flexible and less space-wasting on big displays, Metro users have less need to run the Desktop, and users of traditional desktop apps on traditional desktops or laptops now get to spend more of their time in the legacy Desktop environment without bouncing out to Metro.

But the vexatious reality is that Windows 8 remains a two-headed operating system that does everything, but nothing well. Apple has wisely understood that the worlds of touch devices and of keyboard-and-pointer devices are separate and irreconcilable. The iPad can’t do everything a Mac and do, the Mac can’t do everything an iPad can do, and Apple and its mostly very happy customers are just fine with that.

Fundamental duality. It would be a major shock if Microsoft announces that Windows 9 will change the fundamental dual nature of Windows. I think Microsoft really should pull the two halves of Windows 8 apart and come out with two operating systems (or at least two user interfaces, not quite the same thing), each optimized for its own usage. Tablets should get a touch interface–son of Metro. Traditional PCs, likely to be the smaller market in the future, need a UI designed to work primarily with a keyboard and a pointing device, and that would probably look more like legacy Windows than Metro.[pullquote]It would be a major shock if Microsoft announces that Windows 9 will change the fundamental dual nature of Windows.[/pullquote]

I’m not convinced there is much of a future for touchscreen notebooks. I have used Windows 8 and 8.1 on both conventional clamshell touch notebooks and convertibles of varied design and I am not convinced that any of them come close to a MacBook. In fact, running Windows on a MacBook is a superior experience to most Windows notebooks because of the superiority of Apple’s touchpad.

The big question is just what will make a Windows 9 tablet an attractive proposition? The answer has to be what Microsoft has always thought it was: Office. Though consumers have learned to live without Office, the productivity suite remains extremely important to business and professional users. Unfortunately, Office 2013, Microsoft’s companion to Windows 8, changed just enough to be annoying to Desktop users while being all but unusable with a purely touch interface. If Office is the big selling point for the Surface (Pro or otherwise), it is also the reason you never see a Surface without a keyboard attached.

Office is the key. The mystery Office for Metro, about which Microsoft has been very, very quiet, is the key to the whole project. If Microsoft can come up with versions of Word, Excel, Outlook, and PowerPoint that provide the features users demands while working well on a touch device, it has a chance for a dramatic revival of the franchise. Of course, this is a very difficult thing to do and Microsoft, working in Apple-like secrecy has thus far provided almost no clue about where it is headed.

The Build conference, to be held in enemy territory in San Francisco April 2-4, is looking to be the most important milestone for Microsoft in a long time.

With the PC industry in the doldrums, there’s been a lot of attention focused on new ideas designed to reinvigorate customers’ interest as well as bring some excitement and new sales to the market. One of the most talked-about examples has been 2-in-1s, sometimes referred to as hybrids or convertibles. The basic idea behind these devices is to combine the capabilities of a notebook PC and a tablet into a single unit at an attractive price.

The argument goes that these devices give you the “best of both worlds” because they offer the productivity and familiarity of a notebook PC in conjunction with the flexibility and mobility of a tablet. To their credit, many PC OEMs have created some very intriguing new form factors based on this concept, including Lenovo’s Yoga line and Dell’s XPS12 “carousel” convertible notebook, among others. Unfortunately, with few exceptions, most of these devices have not been huge sellers—certainly not duds, but not enough to reignite PC sales on a wide scale basis. Part of the reason has been that price points for some of the more innovative 2-in-1s have been relatively high—in some cases more than the cost of a separate notebook and a tablet, which makes the value equation around 2-in-1s difficult for many consumers to accept. In addition, there are some challenges with finding the right size—getting a screen large enough for notebook use but small enough for mobility-focused tablet use has been tough. Many vendors are ending up with 11.6” screens but again, that tends to be pretty small for a notebook and pretty big for a tablet—a compromise that, for many, is far from ideal. [pullquote]…combining 2-in-1s with dual boot and adding the Windows 7 twist, you end up with something that really could stand out”[/pullquote]

Another challenge has been around the operating system. Windows 8.1 is starting to get a little traction on the PC side, but it’s still just not a great choice for a tablet. The choice of touch-focused Metro-style apps is still very limited, making tablet use on Windows-based 2-in-1s an unpopular option.

Given these challenges, it’s easy (and tempting) to write off the category as nothing more than a niche. However, I believe there is an option that I’ve yet to hear anyone discuss that could have some potential: a 2-in-1 that runs Windows 7 in notebook mode and Android in tablet mode.

Generally speaking, dual boot options have had even less success in the PC market than 2-in-1s, so some might argue that this combination just puts two questionable ideas together, but I would argue that the new form factor makes a critical difference. Think about it, a 2-in-1 that literally functions like two different devices—either a Windows PC or an Android tablet—offers a more compelling value to consumers than something that just gives you two versions of Windows 8.

A number of device vendors, as well as Intel, have been publicly discussing dual-booting Windows/Android devices lately, but they’ve all been focused on Windows 8 and Android and often on standard notebook or desktop form factors. I believe by combining 2-in-1s with dual boot and adding the Windows 7 twist, you end up with something that really could stand out. (Of course, this is all dependent on getting both Microsoft and Google to agree to this—which won’t be easy, particularly in Google’s case.)

It seems clear at this point that there is no single silver bullet to fix all that currently ails the PC industry, but if a number of smaller elements—like this idea and others—can sum together to at least turn the industry’s momentum around, then it could be a positive step forward.

If you have been reading my columns over the last few years you know that I have had some serious health problems. In June of 2012 I had a triple bypass and have spent the last 18 months recovering and trying to stay healthy and fit. One of the things I started doing once I had the strength was to start walking. For the first month I could hardly get to the end of my street. But over time as I gained strength I started walking longer distances and even started to do some serious hiking. I credit my walking exercise with helping to build strength and endurance and it has clearly impacted my overall recovery.

I also credit my Nike Fuelband and its technology to help me monitor my progress and it became a very helpful motivational tool. I was told by my doctors that I needed to walk at least 10,000 steps each day as part of my recovery process. Although I had initially used a basic pedometer, I found that Nike’s Fuelband points system as well as its tracking of steps and calories burned gave me more data points and as a result this data become part of my motivational focus. I especially used it to try and beat my points scores or at least equal them on a daily basis. I also bought a watch that could monitor heart beats, which turned out to be important since I knew that even with walking I needed to increase my heart rate to get more benefit from this exercise.

At CES there were dozens of new health monitoring devices introduced and most of the existing ones, such as the Jawbone UP, Fibit health bands and others got updated. We researchers put these devices in the wearables category as well as the iHealth sector and I see them as the first wearable technology to gain mass market acceptance. It will be many years before smart watches, smart glasses and other wearables go mainstream but for now health related wearables will be the biggest segment of devices sold in the wearables category.

When I met Cisco’s CEO John Chambers at CES he told me that the IoE will have a big impact on healthcare. He was referring to big issues like larger networks and more data related infrastructure since that is Cisco’s sweet spot, but he also referred to the role of “end point” devices such as wearable health monitors and out patient testing devices connected to a Dr’s office or clinic too. The back end has to be able to support the potential of millions of these devices connected to the internet and medical facilities in real time in some cases.

However, I see the IoE’s impact on healthcare being much more personalized and interactive in the future. In the iHealth section of CES, United Healthcare actually had the largest booth in this section. They had 6 stations showing off things like Web sites with nutritional info and other sites for preventative healthcare as well as backing two or three wearable health monitoring devices. I have had discussions with some healthcare providers over the last six months that helps me understand why United Healthcare was at the show. All of the major healthcare insurers and providers know that if people stay healthy they stay out of Dr’s offices and the hospital and their costs are reduced. So they are making a major effort to push illness prevention and are very big on keeping people well.

This is where their backing of things like the Fitbit, Fuelband and other wearable health monitors come in. They know that if a person stays active the chances of getting ill is minimized. They suggest taking walking at least 10,000 steps daily, burning more calories, keeping pulse rate up during exercise, etc. They know that these wearable devices can help monitor and motivate and can use these data points to help people stay active. But one person suggested that they could use these to also help keep their costs down. The idea would be for a person to use these wearable devices daily to track activity and opt into sending that data to their insurers. This could be done a number of ways weekly, daily or monthly but it would allow the health insurers to know if they are keeping active, thus minimizing future health problems. To get people to opt in they could tie it to their actual insurance costs. Let’s say that a person is healthy and uses these devices to monitor that activity which goes a long way towards keeping them healthy. If the insurers can monitor that they could tie it to lowering their health insure premiums. Or even you have been ill and are recovering, being active

Although this idea is in its early stages and is frought with a lot of security, privacy and fraud issues, if they can solve these problems or at least minimize the threat, I personally would be glad to send my monitored activity data to them if they reduce my health costs. Health insurance premiums are going up and any way that I can reduce them is interesting to me and suspect it would be interesting to many people also. The people in the health industry I talked to about this are looking at the cost benefit analysis of these type of wearable devices impacting their bottom line but if they can show major health cost reductions by a program like this they will be aggressive with it. Either way, they are highly committed to helping people stay healthy and their current online programs and other digitally driven IOE solutions that help people stay healthy is now a real priority for them.

For many years, Microsoft set the tone for CES with a keynote the evening before the annual consumer electronics extravaganza opened. It was always heavily attended and heavily covered, and there was usually at least one piece of significant news. On the show floor, Microsoft  had a huge, prominent booth, conveniently located at the point where attendees were most likely to enter the sprawling Central Hall of the Las Vegas Convention Center.

At its 2012 appearance, CEO Steve Ballmer (above)  announced Microsoft would not be coming back. But last year, even with its keynote slot taken up by Qualcom’s Paul Jacobs and its floor space occupied by Chinese TV maker Hisense, Microsoft managed to be a presence at CES. There was considerable interest in the newly released Windows 8  and Windows RT, and in the Surface and Surface Pro tablets and Ultrabooks.

This year: Nothing. Microsoft, of course, had a presence in Las Vegas, a suite of meeting rooms at one of the hotels. But far more notable than the lack of official participation in CES is the near-zero mindshare Microsoft had on both participants and its erstwhile partners. After all, Apple has managed to be a looming presence at CES for years without ever taking an official role. In 2007, it notoriously drew a huge chunk of CES media from Las Vegas to San Francisco to cover the mid-CES launch of the original iPhone. In an astonishingly short time, Microsoft has gone from being the great, feared bully of the tech world to being a company that most people rarely think about.[pullquote] To the extent that CES is a reflection of the viability of Microsoft’s consumer offerings, the company has some big decisions to make. [/pullquote]

The fact that Microsoft was neither seen nor talked about at CES is probably a reasonable reflection of the company’s current place in the consumer world. The new Xbox One is selling fairly well, though not as well as the Sony PlayStation 4, but it doesn’t seem to be generating a great deal of excitement. I saw Xbox Ones here and there around CES, along with a larger number of Xbox 360s, but without Microsoft’s sponsorship, there was no one to generate Xbox buzz. By contrast, Sony dedicated a substantial part of its exhibit to PS/4 and the display included a stunning video wall on which a PS/4 FIFA World Cup game was being played (photo below).

For Microsoft, the Intel exhibit may have been the low point of the show. Intel and Microsoft long were  neighbors on the show floor and effectively promoted each other’s products. There were a fair number of systems, mostly Ultrabooks, running Windows in the Intel booth. But Intel grabbed a lot of attention by announcing that it would be promoting laptops running both Windows and Google’s Android software. And the center of interest of its display was a section promoting its new ultra-small, ultra-low-power Edison system on chip and particular, its entry into the Internet of babies: The Mimo baby monitor from Rest Devices, a tiny plastic turtle that slips into a specially designed onesie and beams data on your baby’s motions and vital signs–to your iOS or Android device. Edison is based an on x86 processor, but devices based on in are going to run Android or Linux, not Windows.

Among leading leading laptop makers, only Lenovo was present on the floor.  ((The original version erroneously said Lenovo was among the absent.))  HP and Dell skipped the show floor altogether. And while companies such as Toshiba, Samsung, Sony, and Panasonic showed laptops, they did not get very prominent placement.

Microsoft, of course, still has a healthy enterprise business, and you would not expect that to be reflected at CES. But to the extent that CES is a reflection of the viability of Microsoft’s consumer offerings, the company has some big decisions to make. Its acquisition of Nokia seemed to represent a decision to stick with and rebuild the consumer market, but so far it is not helping. As Microsoft goes through its protracted selection of a new CEO, it has to decide whether it really wants to be in consumer markets–and just what sort of investment it will take to become relevant again.

Coming off what will undoubtedly be the best quarter that tablet sales have ever seen, you might wonder if I’m a bit crazy calling 2014 the potential start of the post-tablet era, but hear me out. In truth, 2014 could be the start of the post-device era. [pullquote]the number of total smart connected devices being sold continues to grow at a faster rate than the population[/pullquote]

As the ongoing record attendance figures for last week’s International Consumer Electronics Show (CES to the rest of us) demonstrate, people’s love affair with gadgets continues to grow. So, how, you must be thinking, could I possibly make such a ridiculous assertion? Ironically, in abundance, there is often indifference. Or, to put it another way, the more devices we all “collect” and use, the less each one actually matters. No matter which brand, operating system or device type you prefer and no matter how you choose to draw the boundaries between all of these different things, there’s one fact that no one can ignore: the number of total smart connected devices being sold continues to grow at a faster rate than the population. That means the total number of devices owned (and presumably used) per person is growing—and rapidly.

Plus, even a quick glance at the market share—either by brand, by operating system or any other metric you prefer—will show you that the numbers are not growing equally across these different breaks. This implies a wider variety of combinations that people end up owning. Now, admittedly, this last point is a bit tougher to prove, but common sense will tell you that as more devices from more brands become available, the likelihood that people will end up with a diversity of different brands and operating systems grows. But, it’s more than just common sense. Research projects I have worked on over the years show definitively that while there are certainly strong correlations between the brand and/or OS of your smartphone and your tablet, for example, the two are not always identical—even among iPhone or iPad owners.

Another factor to consider is that the number of hours in a day is not increasing (despite our often intense desire for it to be so), so it’s not difficult to imagine that people are spreading their available time across their various devices. Again, research backs up this intuition and shows that while there certainly has been shifting of time between devices—from TVs to PCs and from PCs to tablets, for example—there is no uniformity amongst time spent with devices. Some people spend more time with PCs, for example, some with tablets, some with smartphones and so on. What everyone is still doing is, however, is using those devices—whatever particular combination they may own—to get things done, whether that be pure entertainment, pure productivity, pure information or, more likely, an interesting combination of them all.

This focus on activities—as opposed to the devices upon which you do them—brings me back to my original assertion. While there is absolutely no question that tablets have had (and will continue to have) a monumental impact on the device market, I would argue they have had an even more profound impact on how certain types of “computing” are done. The simple, touch-based interface has enabled the creation of an entirely new set of application genres and allowed smart intelligence to be brought into situations and environments that would never have allowed “traditional” computing devices to enter.

However, I would argue that this new form of computing isn’t directly tied to the tablet form factor and screen size and therefore the tablet device, as it’s commonly defined. Instead, it has more to do with the resolution of the screen and the connectivity of the device. In this regard, the new kid in town—“the phablet”—has some clear advantages over many tablets. First, the smaller screen sizes of phablets (5’’-7” in my view) actually make the devices more portable than tablets, without sacrificing resolution. Plus, by definition, a phablet is a phone—meaning it has a built-in 3G/4G modem. At best, a third of tablets ship with these radios built-in, but given the enormous amount of connectivity-dependent applications, this 100% radio attach for phablets is a huge advantage, especially when you are not within an available WiFi hotspot. Finally, in most cases (at least in the US), phablets are subsidized by the telco carriers, meaning the actual out-of-pocket purchase cost for the phablet is almost always lower than a tablet.

As I’ve discussed before, too many people get caught up with the notion that the phablet is a ridiculously large smartphone to hold up to your ear—this completely misses the point. As with a tablet (or for that matter, almost any size smart phone), a phablet is a mobile, portable computing device being used to achieve what it is that people want to get done. And for a lot of people—it’s just a better value than a tablet. So, while I’m not certainly not going to predict the demise of tablets, I do think that a lot more “tablet computing” will get done on phablets this year and that will have a profound impact on how the device market evolves in 2014.