Month: April 2012

It’s Not Apple’s Responsibility To Pay More Taxes

Apple logoMost of the response to The New York Times‘ takeout on how Apple avoids billions of dollars in taxes has implied that Apple is doing something wrong and somehow has a moral responsibility to be paying more. Nonsense. As Arik Hesseldahl wrote at All Things Digital, “The implication the story leaves a reader with — that Apple is somehow doing society a disservice by not paying its fair share of corporate taxes — is simply wrong on many levels.”

Apple actually has a duty to its shareholders, its employees, even its customers to run its business in the most efficient, effective, and ultimately profitable way possible. And that responsibility includes not paying more than is required in taxes.

I have written about taxation for many years and closely followed  the Reagan tax cuts of 1981, their partial repeal on toe corporate side in 1984, and the tax reform debate of 1986. Ridiculous tactics like the “double Irish with a Dutch sandwich,” as described by the Times are nothing new. The 1981 tax bill created a way that money-losing companies could effectively sell their losses at a profit.

It’s fun to pick on Apple these days and the company can certainly afford it. But every well run company has mastered the art of tax avoidance. The moves that benefit individual companies create weird distortions and inefficiencies for the economy as a whole. General Electric, which figured out how to make a fortune off the trade in tax losses in the early 80s, is the past master at it.

The real lesson of the Times story is about the tax code, not Apple. It shows both how badly the law needs fixing and how difficult it will be to fix; every loophole is someone’s billion dollar opportunity.

 

Would Hemingway have used an iPad?

For most of the week I have been in Paris, a city that I have traveled to regularly since 1971. Back then, communications to the US was dismal and a letter sent from here could take 2 weeks to get home. In fact, General Charles De Gaulle was still ruling when I first came to Paris and he was not a big fan of telecommunications. Consequently, the French phone systems were antiquated and in need of serious attention.

But about 7 years after his death and with new open minded rulers now in charge, France actually leap frogged much of Europe when they introduced the Minitel systems, which was really the first in home computer terminals that connected to a broad range of services. In fact, from its early days, users could make online purchases, make train reservations, check stock prices, search the telephone directory, have a mailbox, and chat in a similar way to that now made possible by the Internet.

Over the years, communications in France, and much of Europe, has come a long way and today just about everybody here has a cell phone. And interestingly, pretty much every tourist I have run into is snapping pictures on their smartphones. It seems that cell phones and smart phones have almost replaced the local phone and the need for a MiniTel system is long gone thanks to the Internet. A side note to this is the amount of iPhones I have seen in use. On Saturday as I road the Metro or subway to a street market, there were 12 people in the subway car I was on using an iPhone. And while I saw a stray Blackberry or even a Nokia phone once in awhile, iPhones seem to be everywhere.

If you have been to Paris, you know that this is a city with a very rich history and reminders of this are all around. From the Eiffel Tower, to the Arc De Triumph to the century old paintings lining the walls of the Louvre. Next to Rome and Athens, Paris is perhaps the richest city when it comes to historic landmarks. But there is one part of Paris’ history that is of real interest to anyone serious about literature and that is the time when many expats moved to Paris to find inspiration and freedom of expression in the 1920’s. And while there were a lot of artists and sculptors in Paris during this time, it is the writers of this period that interests me the most.

As I write this column, I am in a café called Les Deux Magots at about the same spot Ernest Hemingway use to sit and write during the early 1920’s. I can almost see him leaning over his pad of paper, writing furiously as he sat there day after day for hours at a time writing out his masterpieces in long hand. At that time, Hemingway was in Paris representing a Canadian newspaper and writing on the side, so-to-speak. At this time he was introduced to Gertrude Stein and Ms. Stein referred to Hemingway, James Joyce and Ezra Pound and others such as Pablo Picasso and Joan Miro as the “Lost Generation”.

But in those days, the process of getting any of Hemingway’s works accepted, approved, edited and often rewritten took a great deal of time. There was limited air postal service and the telegraph was only used for short news items. As I sit here writing this column, I can’t help but think of how different it might have been for Hemingway and the great literary minds of those days, who have had so much influence on our literature today, if they had the tools of our modern era.

In fact, I am writing this on an iPad with a Bluetooth keyboard and when I send this off it will go over the Internet and to our editors in mere seconds. This got me to wondering if Hemingway had these tools available to him if he would have used an iPad? Or for that matter, would he have used a laptop or PC? He had a typewriter at his disposal but history reports that a lot of his writing was done in long hand.

Even today, I sometimes run in to writers who still use paper and pen, although they are a rare-breed these days. Most writers now use a laptop or desktop with a good word processor and use the Internet to send their work to editors instantly. Now, getting a response about a writers work could come to them in hours or days instead of the months it took in Hemingway’s era.

Of course, this is an empty exercise since most writers of that day used the modern day tools of their time, which in most cases was with pen and paper and typewriters if they were stationary. But in doing research about that period of time, even with typewriters available, I found that some writers thought them to be too new fangled and stayed with their most comfortable form of writing, which was with pen and paper. Hemingway typed when at his office but used pen and paper when in café’s, parks and anytime he was away from his tiny office.

But I can’t help wondering what other great works of literature Hemingway and his writer colleagues of that time would have given us if they had the tools of today at their disposal. What if Hemingway could have penned more novels during his era if he had the advanced tools of our time? Perhaps we would have the dozens of manuscripts he had written that were in a suitcase that his wife lost at Gare De Lyon when she was coming back to Paris from Geneva to meet him in 1922. If they had been in digital form and backed up, we may today be reading dozens of other works by him to enrich our literary life.

In Woody Allen’s fascinating movie “Midnight in Paris” he examines the idea of people of one age romanticizing about a different age of the past and wanting to go back and discover what it would be like to live during that time. But time travel in reverse is not my cup of tea. Rather, I love the age of technology and instant communications, not to mention the improved healthcare of our time. But if I could go back in time I would like to hand Hemingway an iPad and see if he would use it to create new literary masterpieces. Now that would be a picture worth a thousand words and perhaps we could prevail on Picasso to paint it!

Notebooks are the Past, Tablets are the Future

This may be one of the more controversial columns I have written in sometime, although my goal is not to be controversial but to spur thought- so please hear me out. It is no secret that I am very bullish on the tablet form factor.

I have written extensively about them since the launch of the first iPad about my beliefs in this product’s role in the future of computing. But there are still many in the industry who have long watched, predicted, and benefited from the evolution of the desktop computer to the notebook and its success world wide that disagree with the more bullish thinking about tablets replacing laptops eventually.

At analyst meetings I attend and during many conversations with industry folk, I constantly hear a theme of tablets turning into notebooks. In essence there is a belief that the tablet form factor will evolve in form and function to look more like a notebook rather than less. This device is in essence the convergence of a notebook with a tablet. There is a good chance that with Windows 8 this form factor will appeal to a segment of the market. Even if that happens, and because of Windows 8, I believe that it is inevitable that all major software going forward will be re-imagined for touch interfaces first and foremost.

Notebooks of Old Will Become Relics

Because of the incredible growth of the iPad and smartphones over recent years, nearly all software developers have turned their eyes to touch. I have been one of the foremost proponents of touch computing and I firmly believe it is the foundation of our computing future. With that reality in mind, it seems clear to me clear that the software industry has been reborn around touch computing–R.I.P Computer-Aided Display Control (aka Mouse).

It is because of this new computing paradigm built from the ground up around touch that when I see notebooks I feel like I am looking at the past. Yet when I see how kids, elderly, non-techies, first time computer users in emerging markets, and more, all use the iPad, I am convinced I am looking at the future.

If you read my column on the new era of personal computing, I made the statement that notebooks are not actually mobile computers but are really portable desktops with compromises made on behalf of portability. In fact it was fascinating to hear Apple’s COO Peter Oppenheimer refer to the Mac business as desktops and portables–that’s my kind of industry terminology! Many desktop use cases are the same on notebooks. The only difference between the two is that one is portable and one is not. The iPad is however much more of a personal mobile computer than a notebook ever was or will be and the drastic change in use cases between the iPad and notebooks is significant.

I don’t know anyone who owns an iPad who has stopped using their notebook or desktop entirely. Sometimes there are times when you want a larger screen and a keyboard to accomplish some tasks. This is the best argument for the hybrid tablet / notebook computer. However, acknowledging that for some tasks a larger screen and keyboard are convenient, there is another scenario I can see playing out that may make the notebook form factor irrelevant for many consumers.

The Desktops New Role

Believe it or not, I see desktops making a comeback due to a role change. There is an interesting trend emerging around desktops. Consumer all-in-one Desktops (Like the iMac) are being designed to be showcased prominently in the house rather than stuck in the den or office. These computers will be very elegant, very powerful, and very affordable. So rather than try to converge a notebook and a tablet, I think a better solution is to pair a desktop all-in-one with a tablet. This would especially be interesting in consumer markets.

In this solution, when you want a big screen, keyboard, etc., you get it in a no compromise package with more processing power, graphics, memory, and storage than you would ever get in a converged tablet / notebook or a laptop. Then when you want a mobile computer you get a no compromise mobile computer with a tablet. I think this makes a lot of sense, perhaps even more than a converged notebook / tablet for the mass market.

Without fully testing one of these converged notebook / tablet devices it is hard to say this with absolute confidence but my fear with this converged form factor is that it will be a compromised notebook and a compromised tablet. Even though it is trying to be the best of both worlds, my fear is that it fails at both, or at the very least is heavily compromised on both fronts. Plus, if you buy my logic that a notebook is just a portable desktop, then the notebook becomes irrelevant in a desktop / tablet solution.

Of course the cloud and specifically the relationship between a desktop and a tablet would need to evolve quite a bit more than it is today for this to work. That is why I refer to it as a solution because it would need to have solution based thinking for this particular scenario to be done right.

This even works in a family setting where each person of the house has their own tablet screen and the desktop remains the communal screen for more “heavy lifting.” Each person’s cloud would have to work harmoniously on a personal level and also at a family level.

I have in fact been trying this experiment for myself at my house. Using a desktop as my primary big screen computer and a tablet for all my other mobile use cases. It is surprisingly sufficient already even without being built with this specific use case in mind.

Now realistically the notebook form factor will always exist for a certain segment. This model may not work for business users or mobile professionals. But I am beginning to wonder whether this desktop paired with a tablet solution may be a very attractive proposition for the mass consumer market. In this scenario everyone in the home has their own personal tablet rather than everyone having their own personal notebook. This scenario is not tomorrow, next year, or even a few years away but I would not be shocked if this solution gains traction at some point in time in the future.

This topic again is meant more of a thought exercise around a scenario that I could see playing out. Rarely am I struck with such a feeling that when I look at the excitement from many vendors around notebooks that I am sensing they are investing in the past, not in the future. But that is exactly the feeling I am having of late.

Reports of Apple’s Demise are Greatly Exaggerated

The past few weeks have brought out some interesting commentary around the imminent decline of Apple. Yesterday perhaps the most forceful view yet came from Forrester’s CEO, George Colony.

George and others root their argument on the absence of Steve Jobs to influence vision, leadership, and charisma. There is absolutely no doubt that Steve Jobs is irreplaceable and that his vision and overall product decision making helped make Apple what it is today. That being said, he didn’t do it alone and more importantly, the culture of innovation he created internally at Apple is what is unique to Apple and the central part of Steve Jobs legacy. Management theories backing up George’s and others claims are just that theories, and they may be generally true but they are not universally true.

I have written quite extensively about why Apple is poised to remain dominant for quite some time so I won’t go over all those points again. Quickly, however, Apple’s fundamentals as a vertically oriented organization, retail strategy, brand, marketing, ecosystem, and more, are fundamentals that don’t go away just because Steve Jobs is no longer with us. For my thoughts on that specifically, I welcome you to these columns. For this topic I’d rather focus on Apple’s culture as I think it is a point that is broadly missed.

Related Reading:
Do Apple Competitors Make Bad Products?
Why Competing With Apple is So Difficult
Apple Will Still be Apple, Even Without Steve Jobs
Apple Turns Technology Into Art

A Culture of Innovation

I have a number of good friends at Apple in positions up and down the organization. There is a culture internally at Apple that I don’t see anywhere else inside large organizations. The only way to explain it is to use the analogy that the energy, excitement, and passion with employees inside Apple is like that of a startup. Steve Jobs has even used this analogy himself. The conventional wisdom is that once a company reaches a certain size that startup energy goes away and generally that is true, however, this is not the case internally at Apple.

Even in a recent interview with Apple’s SR VP of Industrial Design, Sir Jonathan some very telling differences about Apple’s unique culture came to light. He made a specific statement:

“Our goals are very simple – to design and make better products. If we can’t make something that is better, we won’t do it.”

That may seem entirely obvious and of course this is not a goal unique to Apple. However, Apple’s definition of “better” is different from their competition. Their definition of better is based on their drive to make better products that “they” want in their life. Apple employees are not content with just “OK” products. Steve Jobs was the ultimate end user with a keen eye for user experiences but I would argue that there are thousands of people at Apple who think the same way because that is the culture Steve Jobs created. For Apple employees, to make things better, and make products they enjoy is the only real competition Apple needs. What’s more, Apple’s three-businesses-in-one orientation around hardware, software, and services is what enables Apple’s definition of “better” to become reality.

Can that Culture be Sustainable?

If there was an argument against this thinking it would be that because Steve Jobs is no longer there driving that culture and passion through his charisma, it cannot be sustainable. This is in essence the root of the inevitable Apple demise argument. I agree there are plenty of examples where a charismatic leader is no longer in the picture and the culture is not sustained. But, there is another Steve Jobs company in which he was the CEO, set the culture, and then departed where this culture has also been preserved and it is still intact and flourishing today and that company is Pixar. Pixar thrives because Steve Jobs’ vision was instilled in John Lassiter and his team and he left them a rich framework in which to continue to innovate and grow.

It is interesting to me that those who use the post Steve Jobs argument about Apple’s demise never mention Pixar. I read one of the most fascinating case studies of Pixar in the Harvard Business Review several years ago. It contained many interviews with employees and countless examples of the pains they went through to make a consistently better product and maintain a consistent high quality bar of everything with the Pixar name on it. Pixar employees were not content with just “OK” movies and nothing went out that door that didn’t meet a certain bar. This is a culture that was driven by Steve Jobs internally at Pixar. Although Steve Jobs may have not had the same kind of product impact since movies are different than computers, it is that culture he specifically drove in both Pixar and Apple and they remain intact.

That culture attracts a certain type of person. Again some may balk at comparing a company like Apple to Pixar due to the creative and artistic work of Pixar; however, I think Apple attracts equally creative and artistic employees.

Disney at large is another interesting case study. I have heard this company used in these examples but with a missed perspective. It is true that since Walt Disney left that the successive management teams have had their ups and downs. However, there is a philosophy, outlined nicely in a book called “The Disney Way”, which maintains a consistent experience with Disney products. This is why the experience at Disney theme parks, cruises, etc., has no equivalent. That philosophy and culture created by Walt Disney still remains intact today and is still evident in the Disney experience. Even with that in mind there are still huge differences between Disney and Apple. Disney had lost its drive to innovate around animation and they fixed that by buying Pixar.

Apple is a company is filled with thousands of people who aren’t content with the status quo and drive to push the bar higher making every successive product better. That is something I don’t see elsewhere in the industry. That culture is one that runs extremely deep inside Apple and is likely to keep them growing well into the future.

I could see George’s and others point if Apple was just another company. I simply don’t believe Apple is like any other company. Apple is different because they think different and that is not going away any time soon.

East Coast, West Coast: The Startup Difference

Last week I watched several dozen launch demos at the DEMO 2012 conference in Santa Clara. Yesterday, I watched 10  startup pitches at  the New York Entrepreneurs Roundtable Accelerator’s Demo Day, and was struck by a dramatic difference in style and substance.

Photo of Jenny Wu
Founder Jenny Wu demos Stylyt in New York

It’s risky to generalize from a sample this limited. some of the difference certainly resulted from the different rules and expectations of the sponsors. But I think reflected a real difference in thinking between New York and Silicon Valley.

The Valley loves technological cleverness and the coder is king. Many of the things shown at DEMO look less like products than features waiting to be incorporated into something else. The exit is often more important than the business plans.

By contrast,  there was little about the New York offerings to excite the technologist. But they all looked like a lot of thought had gone into the business end of things. Most seemed to be using well known technologies to fill niches in existing markets. They won’t all make it–they’re early stage startups, after all–but they all look like they have a shot.

Consider Appy Couple. You’d think that weddings would not provide much room for on-line innovation. But it turns out that there is really no service that lets couples build sites that cover all aspects of their wedding plans.  Its sites start at $49 and it also gets a revenue stream  from leader generation and commissions from sales. “We’re disrupting an industry that hasn’t seen innovation since the advent of digital photography,” says founder Sharmeen Mitha-Sehgal. “We make money first from the couples then from the guests.”

Stray Boots seems like another idea someone should have had a long time ago–the gamification of travel. Instead of a mobilized version of the traditional guidebook, Stray Boots turns a city visit into a scavenger hunt, collecting points that can be turned into real goods. Again, there’s a dual revenue model, selling the tours and partnering with local businesses.

Stylyt is an online retailer with a difference.  It lets users creates variations, such as new color schemes, on the offerings of designers. Site visitors vote on the the designs and the winners get produced as limited editions sold through the Generation Y-targeted site. The company also offers its on-line design tools as a software-as-a-service product for established retailers.

Triple Lift sees a big opportunity in Pinterest and it’s not in pinning cool web pages. Instead it plans to help businesses profit from Pinterest by selling them analytics, promoting user engagement and managing display advertising buys. Although it looks like a viable business on its own,  Triple Lift was one of the few ERA demonstrators that looks more like a buyout candidate because of its obvious appeal to Pinterest itself.

Overall, I was very impressed by the quality of the companies coming out of the ER Accelerator and especially their very polished, complete, and informative presentations. The New York startup scene is alive and seemingly very well.

 

 

 

 

 

 

 

 

An Act of Folly: Smartphones in Five Years


BlackBerry Curve 8300
2007's hot smartphone

Let’s take a quick trip in our time machine to survey the smartphone market in the spring of 2007, five years ago. The iPhone had been announced but not yet shipped, and many were skeptical about its success. Android was still mostly a gleam in Andy Rubin’s eye. The hot smartphones of the day included the consumer-oriented BlackBerry Curve and the Windows Mobile-based Samsung BlackJack. The general expectation of forecasters was that Symbian’s dominant market share would shrink, but stay strong, Windows Phone would at least hold its own, while BlackBerry surged and Palm shriveled.

Fast forward to the present. Smartphone unit sales have nearly quadrupled, but the market has become jumbled in ways that few expected. Apple sells nearly one in five of all smartphones, but is the standard against all else is judged. Symbian is disappearing and BlackBerry is hanging on for dear life, especially in developed markets. Android has gone from nothing to a nearly 40% share, while Microsoft, having replaced Windows Mobile with the snazzier Windows Phone continues to bleed market share.

Smartphone Market Share
Operating system 2007 2011
Symbian 63.5 19.2
BlackBerry 9.6 13.4
Microsoft Windows Mobile/ Windows Phone 12.0 10.8
Apple iOS 2.7 18.9
Linux 9.6 —
PalmOS 1.4 —
Android — 38.5
Other 1.1 3.4
Data: Gartner

Given this background, talking about what the smartphone market might look like in 2017 seems like a fool’s errand, but I’m going to take my chances. To some extent, smartphones are beginning to look like a mature market, at least in North America, Europe, and Japan. One characteristic of mature markets is consolidation of producers. And in the case of smartphones, this trend is complicated by the delicate interplay of handset makers and operating system providers.

The hot issue of the moment is the pressure toward combining hardware and software into vertically integrated producers. This thinking has been inspired by the staggering success of Apple, though it requires overlooking the struggles of vertically integrated Research In Motion and the implosion of Hewlett-Packard/webOS.

Ingtegration and consolidation. The industry seems well on its way to more integration and more consolidation. My colleague Tim Bajarin thinks that despite its demurrals, Google will make an integrated Motorola the prime producer of Android products. There’s a lot of reason to believe that if Microsoft doesn’t buy Nokia outright, it will formalize an arrangement in which Nokia becomes its official premier Windows Phone partner. I think both Nokia and Motorola will end up as the official flagships of their operating systems.

Apple should be able to fly above this storm. As demonstrated by its latest blowout quarter, there is every sign that it will be able to hold on to the high end of the business for some years to come. The iPhone has lost some market share, and this trend will continue because much of the growth over the next few years will come as low-end smartphones displace feature phones in markets and geographies that are not Apple’s métier. But Apple doesn’t much care about market share; it will dominate the much more important categories of mind share and profit share.

The company most threatened by MicroNokia and MotoGoogle is Samsung, which has just displaced Nokia as the leading phone maker by worldwide unit volume. Samsung is highly integrated on the hardware side. It makes its own processors, displays, and flash memory, among other components. But it has never been a leader in software. It has its own operating system, but Badu has gotten little traction and for its high-end phones, Samsung depends on Android and Windows Phone. Samsung is not going to be happy as a second-class manufacturer for either Microsoft or Google.

Samsung’s tough choices. Samsung’s options, however, are limited. It could buy RIM, which seems destined to fade away unless it can team up with someone. But given RIM’s struggles trying to bring a new BlackBerry operating system to market, this might not offer Samsung much of a solution. A more promising course might be for Samsung to claim an open-source operating system as its own. It’s partnering with Intel on a mobile OS called Tizen, but this seems headed for the same ash heap as Intel’s other OS efforts. (Meego, anyone?)

webOS offers a more intriguing possibility. HP owns it, but has open-sourced the code and made it freely available. It’s a sophisticated modern OS that needs work, but one that Samsung might be able to use as its own platform for phones and tablets. Another possibility would be simply to grab Android and definitively strike out with its own fork without regard to Google’s development path. Either course would require Samsung to get deeply into software development, developer relations, and everything else that goes along with being a full-service provider. This has not been a Samsung strength, but the alternatives may be far worse.

One way or another, I expect Samsung to be a significant player in the 2017 phone market. I’m much less sure about the smaller Android and Windows Phone manufacturers. HTC, with a foot in each camp, has stumbled of late and could have difficulty getting its mojo back. I would not be at all surprised to see Sony, which recently became the sole owner of what had been Sony Ericsson, exit the phone business after struggling, successively, with Symbian, Windows Mobile, and Android. LG, which has never quite gotten the hang of smartphones, could also leave the market. ZTE, Huawei, and Lenovo can trade on their strength in the Chinese market, but may make little impact elsewhere.

The market in 2017. In unit volumes, the 2017 smartphone market will be dominated by low-end phones sold in emerging markets. If Nokia can survive the stormy present, either in partnership with Microsoft or as part of it, the combination of Nokia’s strength in these markets and Windows Phone’s ability to perform well on modest hardware , could again make it a formidable player. Android may be a big force in two flavors, the official one and a Samsung variant. Many of the smaller phone makers will be out of the market. RIM will hang on in some form, perhaps as a supplier of back-end enterprise services and specialized secure phones. And Apple will be Apple.

The biggest question mark is MotoGoogle. Left as it is, it seems doomed to become a second-tier Android handset maker, some thing of little use to Google. Integrated and turned into an Android flagship, it puts Google head to head with Apple and possibly Microsoft. It would probably forsake the current Android licensing model, which is not working very well anyway, and would have to develop new talents such as supply chain manage, channel strategy, and carrier relations. Google has the money and the brains to do all this, but I’m not sure it has the desire, patience, and discipline to pull it off.

 

 

 

The Curious Case of Microsoft Marketing

Is it just me or am I missing or not seeing much marketing effort by Microsoft these days? Generally I am very observant to marketing campaigns within our industry due to my conviction of its importance. Because of that I try to pay close attention to tech companies consumer marketing efforts on every medium. This is why it is surprising to me to not see the kind of marketing I would expect for a company with an critical strategic asset in the market with Windows Phone and one that is coming up on the most important Windows launch in over a decade.

When it comes to Windows Phone, most of the marketing efforts I am seeing is either driven by the carriers or by Nokia at this point. Perhaps Microsoft is playing a role in those as well but to be honest even what I am seeing marketing wise around Windows Phone is not enough in my opinion. Windows Phone is incredibly strategic to Microsoft from a Windows brand and platform standpoint. Because of its importance I would have expected Microsoft to saturate the market with branding, messaging, and positioning.

Marketing Like a Record Label

Perhaps Microsoft is taking the approach record labels do when one of their artists is launching a new album. The music industry is so incredibly saturated with artists all competing for consumer mind share. It is nearly impossible, although becoming more possible with Twitter, to keep artists top of mind share all year. Because of this, labels store up marketing budget until the months prior to an artist’s album release in order to raise the artist back into the publics mind. As much as I disagree with this approach in the tech industry perhaps this is the approach Microsoft is taking.

Whatever approach Microsoft is taking they need to take immediate action to elevate their brand and Windows / Windows Phone mind share. This would prime the pump for when Windows 8 finally launches and hopefully make their partners lives easier driving mind share of new Windows products for this fall. I hope Microsoft has a massive marketing campaign planned because I believe it is one of many things critical to the success of Windows 8.

Interestingly, Apple has cracked the code when it comes to branding. I would argue that Apple, more so than any company in this industry, maintains a consistently elevated mindshare. This is due to the tech media’s fascination with all things Apple, their marketing strategy, their event and product release strategy, their retail stores, and host of other well-executed strategies. Due to those strategies employed by Apple it is not surprising that the results of a Nikkei Brand Asia 2012 results show Apple as the number 1 consumer brand in China, Japan, and Taiwan and No. 2 in South Korea ahead of Samsung.

Marketing is best done strategically spread out over time rather than in bulk bursts. The goal should be to maintain share of consumer mind not spike the interest then let them get interested in the next shiny thing to catch their attention.

Yahoo!: Tactics Masquerading as Strategy

Last week on Yahoo!’s earnings call, CEO Scott Thompson outlined six points the company would pursue to return the company to a proper focus. When I looked at the list, they all made sense as operational principles or even action items. The big problem is that unfortunately, operating principles or action items aren’t a strategy, and this does not bode well for employees, stockholders, advertisers and even end users. The best strategies are set in the context of a strong mission and vision, neither which Yahoo! has communicated to anyone.

My Personal Yahoo! History

I remember telling a colleague that I invested my entire life into Yahoo!. I had Yahoo! Mail, had all my contacts, my calendar, read all my news through My Yahoo, all my notes in Notepad, and even got weather and movie times from them. I would even start at My Yahoo! for search as My Yahoo! was the first place I started in the morning. Now, I start my day at Pulse News on a tablet or phone over coffee, listen to podcasts while taking my kids to school then then go to Twitter and Facebook for “cultivated” news. I rarely go to a Yahoo! property with the exception to check out stock prices on Yahoo Finance. I’m not alone as Yahoo users have fled to Google for search and mail, Facebook and Twitter for social media, and vertical, specialized sites like Instagram, Pinterest, Foodspotting, and Goba. It all makes sense, though, the story of a big company’s downfall.

Being the 800 lb Gorilla Difficult

Being the largest kid on the block is great at times. I know; I worked for AT&T and Compaq at their peaks. I worked for companies who created and took markets. It was fun as I worked for the more entrepreneurial divisions. I saw IBM in the late 80’s and early 90’s almost left for dead before they became untouchable as they appear at least today. Then there’s AOL who keeps fading farther into the background, buying content brands that are full of conflict. The jury is out on Microsoft and Google if they have already peaked or can move to where they are perceived as the leader. Net-net, being the 800 lb gorilla isn’t an easy thing because of three primary reasons. First, large, successful companies when they get large, become slower and bureaucratic. The inventors are replaced by people who are great at process and but light on vision. Secondly, these companies are concerned more with playing defense and protecting their ground and less out about winning in new markets. Third, these companies face the innovator’s dilemma, where they incrementally improve their services as opposed to investing in disruptive exploration. It’s hard being the 800 lb gorilla. So how does Yahoo! intend to deal with this?

Yahoo!’s Six Points of “Strategy”

On the Q1 2012 earnings call, Yahoo! CEO outlined six “essential elements of [the] plan.” This was after layoffs and after a reorganization. Most companies let strategy dictate organization, but I don’t believe that’s not the case here. Here are the six strategy elements verbatim:

  1. consolidating technology platforms and shutting down on transitioning roughly 50 properties that don’t contribute meaningfully to engagement of revenue
  2. defining our core media connections and commerce businesses, including News, Finance, Sports, Entertainment, Mail and a handful of others. Those properties that generate the majority of our engagement and revenue.
  3. moving engineers into our commerce businesses to put them closer to our user and dedicating some of our best and brightest Yahoo!s to meaningful innovation in those core businesses.
  4. accelerating the deployment of the platforms and technologies we’ve built to make each of our properties more scalable, nimble and flexible, and therefore, less costly and time consuming to run.
  5. making better use of Yahoo!’s vast data to personalize user experiences and dramatically improve advertiser ROI.
  6. refocusing our R&D on Owned and Operated properties and stopping development of a number of initiatives, including platforms for outside publishers and theoretical science that were outside of our core.
These are great tactics and action items but don’t provide any insights into what matter first and foremost.

Where Does Yahoo! Intend to Win?

The tactics above are great in the context of a solid mission, vision and objectives, but Yahoo!’s says nothing about where it wants to win. You see, getting every Yahoo! employee working in a single direction is the right thing to do, but what if it’s the wrong direction? This would be catastrophic and at least what I see communicated this is exactly where Yahoo! is headed. The first question is, “where does Yahoo! want to win that is uniquely valuable to consumers and to advertisers?” That piece is a mystery for Yahoo!. Yahoo! needs to lean into something, and they have a lot of choices as they are still in the large growth segment:

  • local
  • deals
  • mobile
  • social
  • photos
  • living room
  • specialized verticals

I’m not advocating for any one of these at this moment, but Yahoo! needs to choose something, anything, to get the remaining 12,000 employees focused on. I won’t be enough presumptive to say Yahoo! doesn’t have a strategy floating around on the Executive Staff’s desks, but it certainly isn’t being communicated to stakeholders who need it.

Yahoo! Next Steps

Yahoo! needs to regroup after the last few weeks and in the next few months, decide where they want to win,communicate this broadly, then create a supporting strategy, then organize to deliver on that strategy. The last month has been nothing but triage, and if they need to quickly reorganize again to support a real strategy, most of the few weeks will have been a waste of time for the employees. Yahoo! has two paths they can go as a former 800 lb gorilla; the Apple/IBM way or the Excite/DEC way. I’d like to see Yahoo! make a comeback for more than the nostalgia; I’d like to see a Yahoo! comeback to inspire everyone in the industry that comebacks can happen and employees and key leaders can make it happen. That’s good for everyone. Who doesn’t love a comeback?

Why Google Will Use Motorola To Become Vertically Integrated

If you look closely at the most successful company in tech today, it is Apple. And they are in this position for a major reason. They are completely vertically integrated. They own the OS, the hardware and the ecosystem. And although they don’t manufacture their own chips, the IP in their chips are homegrown and designed to meet the needs of their advancements in OS and hardware designs. The result of this vertical integration is that they have complete control of their future.

Another company that is pretty much vertically integrated is Samsung. They do their own design, their own chips, and in their case they even do their own screens and manufacture their own products. Their only weak link is with the OS since they are licensing Android for their smartphones and tablets. However, they are about to launch their own cloud services and take even more control of their destiny by tying all of their products together to cloud based applications and servers. And as you know, they have gained great ground in smartphones and while still struggling against Apple in tablets, they have become more aggressive in looking at alternative operating systems to Android and could soon deemphasize their use of Android in favor of their own OS solution to guarantee even tighter vertical integration in the future.

But there are two companies today that at the moment have very little control of their future because of their lack of vertical integration and that is Google and Microsoft. And without out being vertically integrated, their prospects of wide spread success in the future in my viewpoint is highly questionable.

The Vertical-ization Trend

Ironically, at the moment, Google is actually in a better place than Microsoft to develop a vertically integrated strategy but Google is in denial about how important this is to their future at the moment. In their case, they own the software OS and a lot of the services layer but have little control of the hardware and the marketing needed to guarantee that Android will be successful in the future. In fact, if you read a lot of the recent posts about Android, you see numerous reports that suggest that Android is in trouble and losing ground, especially in tablets.

Today, Google has to completely rely on their Android hardware partners to drive Androids success. While this has been OK with smartphones, their partner’s performance in advancing Android in tablets has been dismal. Now to be fair, a lot of this is Google’s fault in the way they have handled the various versions of Android and the uneven, if not disastrous way they handle upgrades and OEM relationships.

But Google is about to have an even bigger problem on their hand when it comes to partners. To date, Android has been the only game in town when it comes to alternative operating systems for smartphones and tablets. But that is about to change. With Microsoft now entering the market with Windows based operating systems for smartphones and tablets, these vendors now have a solid alternative to Android. And pretty much every one of them will be doing a Windows Tablet. And with doing a Windows Tablet comes major marketing dollars from Microsoft as well as huge industry interest for this tablet platform since it includes backward compatibility with existing Windows Apps.

This means that Google has even less control of their partners push for any Android tablets and this probably translates into Android tablets in general losing steam. Sure, Amazon will continue to use Android and in a sense advance Android in tablets. But their version of Android is their own amalgamation of the Android OS and their own special tweaks and in no way really advances Android itself in the market.

Now, when Google is asked about their Motorola purchase, they say it was for the patents and they plan to treat Motorola just as if it is another Android vendor and not give them any preferential treatment. Well, if you buy that, then I have bridge in NYC that I want to sell you very cheap! I believe Google knew full well that at some point Android could become really challenged and that their vendors could desert them. So the Motorola purchase was insurance. At first they could just gleam value from the patents and hope that this alone was worth the price. However, having Motorola in their backpocket that would let them become vertically integrated at the turn of a switch was the real goal of this acquisition.

Now, in my opinion, it is not a question of “if” they make Motorola their hardware arm. It is a matter of when and I believe that this will happen this summer. Put yourself in their position. By the fall, all of their key Android vendors will also be backing Windows 8 and you can be sure that this will be the beginning of these vendors de-emphasizing their Android products. Google better be ready to pick up the ball with Motorola by then or their ability to control their own destiny will take a real hit given the momentum that will come in Windows 8 tablets this fall.

More Acquisitions Will Happen to Go Vertical

A week before Google bought Motorola, my son Ben wrote an article in Tech.pinions arguing that Google should buy Motorola if they wanted to control their destiny. Although Google continues to deny that it will make Motorola its hardware ARM, both us believe that Google has no choice if they want to see Android succeed for their own purposes.

Related Column: Why Google Should Buy Motorola

So what about Microsoft and this issue of vertical integration? Aren’t they also completely beholden to their OEM partner’s to carry out their OS dreams and must trust them to be successful in hardware if Windows 8 on tablets and Windows Phone are to be big winners? Absolutely. Their model of using vendors for Windows 8 on desktop and laptops is intact and will succeed on its own. And perhaps even with tablets this will be the case since Windows 8 backward compatibility will be a big driver for these products and all PC OEMs will use this to extend their reach in tablets. But where Microsoft is very vulnerable is in smartphones since they pretty much are relying on Nokia to make Windows Phone–and beyond–succeed in these devices. Early this year, I wrote an article in Tech.pinions saying that Microsoft “will” buy Nokia and reasoned that in the end, when it comes to smartphones, Microsoft is so late in the game that ultimately they need to control its hardware destiny.

Related Column: Why Microsoft Will Buy Nokia

With the news last week that Nokia lost $1.9 billion last quarter and rumors of bankruptcy swirling around them, I am more convinced then ever that Microsoft will buy at least Nokia’s handset business. Although Nokia officials have denounced reports of bankruptcy, if they have another bad quarter their long-term position in the market could be even more questionable. In the end, Microsoft will have to be at least vertically integrated when it comes to smartphones if they want to guarantee the ultimate success of Windows phones.

Take a close look at why Apple is successful and you will see that their vertical integration allows them control their entire ecosystem and as a result, be master of their destiny. I don’t see any way for Google or Microsoft to ultimately control the success of Android in tablets and Windows Phone/8/9 on smartphones and tablets without becoming vertically integrated in these areas. If they do not do this, Apple will continue to eat their lunch and leave them in the dust.

A Cloud Computing Primer

Photo of cloudsThe DEMO conference may not be the stellar event it with once was, but its still a good indicator of the computing zeitgeist. At least week’s edition in Santa Clara, CA, it was pretty clear that the tech world is still buzzing about clouds. As a result, anything with online components–and that is pretty much everything–is being billed as a service in the cloud. It’s time to take a look at what the cloud is, and isn’t.

Even if we try to be fairly rigorous about the meaning, its clear that the term “cloud computing” refers to two very different things. One, which I will call the personal cloud, refers to services provide both online storage and allow you to sync content to local storage on multiple, diverse devices. And What I’ll call the infrastructure cloud provides flexible, remote computing capability as a service to companies.

The personal cloud has been around for a long time in various forms. Email has functioned as a cloud service since the development of the POP3 and IMAP protocols. But lately we have seen enormous growth in generalized clouds  that provide storage and syncing with various degrees of integration into desktop and mobile apps: DropBox, SugarSync, Apple MobileMe/iCloud, Microsoft SkyDrive, and the imminent Google Drive are all examples of such services.

The services are going to become increasingly important as personal computing shifts from PCs with abundant local storage and often limited connectivity to tablets and other mobile devices with very limited storage  and no real file system but ubiquitous connections. And the limited processing power of mobile devices argues for greater apps in which much of the computational load is carried by a server. These apps are sometimes called cloud computing, too, though the more traditional “web services” is probably a better description.

The infrastructure cloud is a very different beast. It’s what allows organizations,from startups to large enterprises, to do their processing on someone else’s computers,adding and shedding capacity as needed and paying only for what you use. It has been particularly revolutionary for startups, since it lets them both provide services without any capital investment and to scale very rapidly if their offering takes off.

The infrastructure cloud exists in three forms, though the divisions between them are not always very sharp. Infrastructure-as-a-Service (IaaS) offers basic servers, set up with your choice of operating system, storage, and connectivity. Amazon Web Servicesi s the best-known purveyor of IaaS, especially with its Elastic Cloud Computing (EC2) and Simple Storage Service (S3). You pay Amazon for the number of virtual servers you use (with different charges for varying  amounts of processing capacity), your storage, and the amount of data you move in and out of the system, with additional charges for added services, such as load-balancing.

Platform-as-a-Service (PaaS) moves a step up the software stack. Instead of a bare server, you get a system provisioned for a specific platform. well known examples are Microsoft’s .NET-based Azure, Google’s App Engine, and Safesforce.com’s Force.com.

At the top of the stack is Software-as-a-Service (SaaS), which offers specific applications or clusters of applications. SaaS is not conceptually very different from familiar Web apps such as Gmail, but on an enterprise scale. Leading examples include Google Apps for Business and Salesforce.com’s cloud-based customer relations management software.

Cloud services are hot right now, but they aren’t the solution to all business technology problems. They are terrific for startups, which typically are cash-poor and need to minimize capital expenditures. They  also have great advantages for companies that need to meet highly variable demand or need to scale rapidly. Investing in a server infrastructure designed to meet peak demand but then sits idle much of the time is generally a bad way to allocate your resources.

On the other hand, many companies are not comfortable trusting all of their data to third-party hosts, or may face legal or regulatory restrictions in doing so. Some folks just want to have control over their own systems. and at some point of scale, the economics often tip in favor of running your own servers.

 

 

Apple TV and the Trojan Horse Strategy

Apple TV is one of the things I get asked quite a bit about during my industry analysis presentations. It seems that everyone out there wants to know what Apple has planned for the big screen. Although no one knows, and there is much speculation, my key thoughts about this all along have been that Apple will in some way turn the TV screen into a platform to deliver rich content and services. If you think about it, the TV screen is the last of major screens in consumers lives to truly become a smart. Many vendors have tried, but the technology in many ways is still not here to really make TV’s smart.

I believe there is a tremendous amount of interest in Apple’s moves in this area because of the massive opportunity to re-invent what we experience through our TV. But the opportunity is much larger than simply consuming video content in new ways.

A Platform Unlike Any Other

The untapped opportunity for the large piece of dumb glass sitting in hundreds of millions of consumers living rooms and bedrooms is to create the ultimate entertainment platform. This is a big deal if you think about it. Today most platforms are computing platforms where things like entertainment are secondary to things like productivity, communication, etc. This is what has always intrigued me about game consoles. I have felt from very early on in my digital home research that game consoles were the ultimate entertainment platforms which would evolve into trojan horse entertainment gateways for more than just video gaming. With many of the updates brought to both the Playstation and the XBOX, it is clear that this is exactly what is happening. In fact, I believe that the value of game consoles for today’s and perhaps even future consumers, will be less about gaming and more about other entertainment services.

That being said, gaming is an important part of living room entertainment. That is why I believe Apple is betting seriously on gaming across all of the screens in which they compete. Game Center for Apple becomes the glue tying consumer gaming experiences together and the foundation of a gaming service akin to XBOX Live. A holistic video game strategy both immersive and casual is key to the future of Apple TV as an entertainment platform.

A Set Top Box is a Trojan Horse not a Large Piece of Glass

I will believe that Apple is making a large piece of glass when I see it. In my opinion the current strategy with Apple TV is that it is a small, yet powerful, set top box and is their best plan of action. Mainly because there is absolutely nothing that can be built into a large piece of glass that can not also be accomplished with a small, yet powerful, set top box. If Apple wants to sell hundreds of millions of Apple TV’s it will accomplish this with a set top box not a large, and expensive, piece of glass. Even if Apple does decide to sell a large piece of glass in the shape of a TV, they would still have to employ the Apple TV set top box strategy in order to provide an identical experience to the hundreds of millions of consumers who already have large pieces of glass and don’t intend on buying a new one any time soon.

Interestingly, Microsoft is in a position to compete when it comes to entertainment platforms. The XBOX 360 is much more than a gaming console and is evolving into a fairly mature entertainment gateway. The XBOX 360 has been called a trojan horse before and I believe it is but Microsoft can not sit still.

We may analyze and probe from every angle Apple TV in its current implementation and yet I don’t believe Apple or Microsoft has yet implemented the key growth features for this category–namely apps. The next frontier of the TV platform is to let developers begin to invent new applications and software designed specifically for the large screen. This does not mean a repurposing of existing apps and blowing them up to fit on a larger screen. It means re-inventing the way we think about software and entertainment experiences for the big screen Similarly, touch computing required a new software development paradigm built from the ground up to work with touch; so I believe the TV needs software purposely built for that screen and its role in consumers lives.

What makes the TV fascinating is how different of a relationship consumers have with it versus other screens, or platforms, in their lives. For example, the TV is not a personal screen like a notebook, tablet, or smartphone. The TV is a communal screen where in a family environment it is enjoyed by multiple people simultaneously. In this scenario it doesn’t make a ton of sense for me to run Twitter or Facebook, or at the very least those aren’t the most interesting applications for the TV. What gets me excited is that when the TV becomes a platform for software developers to take advantage of, I believe we will see an entirely new set of applications developed with more communal experiences in mind.

The family or communal cloud will become an important ingredient in this scenario. I wrote about the need for more family and communal clouds last week and the more I think about it the more I am convinced it is an unmet need in the market. Communal screens will require communal content and that is when the family’s digital media becomes an important part of the experience. The experience of seeing up to date photos of loved ones and family members (of my choosing) on my TV is one I feel would be of great value.

Lastly, I would add that although I believe Apple TV is a trojan horse, I am not convinced Apple has yet employed the strategy fully. I think this is where gaming and apps will come in to round out the platform. I know we want to kick our cable providers to the curb but I don’t think that is the entry point. I believe games and apps will deliver the value propositions that get the Apple TV trojan horse strategy going. Then once in the door in masses, hopefully the Hollywood industry will begin to invest in business models that will keep them from extinction in the future.

The Fallacies of How To Compete with the iPad

I take articles like this claiming the iPad will drop below 50% market share by as early as next year with a grain of salt. I don’t want this article to be about all the reasons why we believe the iPad will maintain significant market share, we have written quite extensively about those reasons. I’d rather examine a few flaws in competitors thinking about how to compete with the iPad and to do that I’d like to start off by making a point. I genuinely believe that it is possible to compete with the iPad. I don’t think it’s easy. I don’t think many companies can; but I don’t think it is impossible.

There is always room to innovate. The problem is simply that the companies attempting to create competing touch computers don’t understand touch computing or the market dynamics for tablets. It seems as though many vendors and software platform providers believe that by simply slapping a touch screen on a piece of hardware, regardless of what that hardware looks like, that it will hit the market and instantly be competitive. This is the fallacy number one.

Touch computing requires a touch based ecosystem. This is everything from carefully designed hardware, software, and to a degree services, all around touch (not mouse and keyboard) as a computing paradigm. This is no trivial task. Android is a weak touch computing ecosystem in my opinion. Mostly due to Android being an advertising strategy not a software strategy to Google. Time will tell with Windows 8 what kind of touch computing platform it truly becomes. Windows 8’s success rests largely on the hardware manufacturers and software developers ability to understand touch computing and develop a truly competitive ecosystem.

Fallacy number two is that the number of designs in the market on a particular platform is a competitive advantage. When I ask why a particular platform release may be competitive, often number of designs is the answer. “There will be over xx designs in the market,” is a phrase I hear often. I don’t believe that number of designs alone makes a particular platform competitive. In fact, it is perhaps quite the opposite. There is a book I like to reference called The Paradox of Choice by Barry Schwartz. The overall premise of this great book is that too much choice or too much variation in choice can overwhelm the purchaser to the point of frustration and lead to the inability to make a decision. My concern with too many products on a particular platform is that consumers may find the decision making process painful and confusing. This is why I believe there is a lot of merit to the argument for very limited product offerings per vendor and per platform to a degree.

Fallacy number three is that low cost always wins. I don’t believe that today’s consumers in mature markets want things that are cheap. I believe they want things that are valuable to them at a personal level. A key point to understand is that in mature markets what is valuable varies quite a bit. This is because in mature markets consumers make specific purchases for specific reasons. Often in mature markets consumers know roughly what they want, why they want it, and they are shopping with a pre-set of conditions. What one segment finds valuable may not be the same as another group. This is why product segmentation is important. The key is to create products in a segment–hopefully a large one– that consumers in said segment find valuable. In the automotive industry, for example, minivans target a segment, trucks target a segment, motorcycles target a segment, economy cars target a segment, and so on and so forth. In this case, the automotive manufacturer understands the segment a product is being created for and then innovates and delivers solutions to meet that segments needs on an annual basis. This understanding of the market dynamics for tablets is what I think is largely being missed by those desiring to create competitive tablets.

The question anyone who desires to create a tablet to compete with the iPad needs to answer is “What will my tablet do better than the iPad.” And what can they do with it that they can’t do with an iPad?

If there is not a well reasoned answer to this question then get back to the drawing board and innovate. The answer may not be obvious or easy to figure out but just trying to be me too is a recipe for disaster. Perhaps if these new Windows tablet vendors can create a product that is unique, does specific things the iPad doesn’t, and meets additional needs that the iPad can’t (or Apple isn’t interested in), then they might have a chance to truly deliver a competitive product that gains market traction.

Why My Next Tablet Will Run Windows 8


I’ve been using Windows-based tablet computers for almost a decade. I was hooked the moment Bill Gates trotted out Microsoft’s first prototype tablets at a developer event in mid-2001. I got my first tablet, a Fujitsu Stylistic, in 2003 and I’ve carried it or its successors to meetings ever since, migrating along the way from Windows XP Tablet Edition to Vista to Windows 7. Nothing beats a Tablet PC for capturing notes during meetings and presentations, especially if the material contains diagrams, graphs or mathematical equations. When I’m not using my tablet to take notes, I use it to get my mail via Outlook, or to work on documents and spreadsheets with Word and Excel. It’s usually the only mobile system, other than my phone, that accompanies me when I travel.

Some suggest that the structure of the tablet market has already been settled. Apple rules, Android-based suppliers challenge; no other platforms need apply. The failures of HP’s Touchpad and RIM’s Playbook prove there’s no room for another software platform. I beg to differ. Android and iOS tablets do a yeoman’s job when it comes to consuming content, but lack the software tools and hardware features needed to create content. Windows-based tablets, which have been around since 2002, have always included the features needed for content creation, but lacked the easy to use interfaces needed for content consumption. The Metro User Interface in Windows 8 supplies these missing elements, and thus positions Win 8-based tablets as the only ones suitable for those who want to both create and consume content on a single device.

“Content Creation” as I use the term applies to a broad range of activities that includes tasks as varied as a student taking notes, a worker recording and distributing meeting notes, a club secretary assembling and distributing newsletters, a teenager spiffing up the audio from a band performance, a webmaster updating a website, and a mother preparing her annual Christmas letter. Contemporary PCs and MacBooks handle such work effortlessly. But, have you tried to accomplish tasks like these on an iPad or Android tablet? The process is at best arcane, and often impossible. Printing from a tablet? Most of the people I know e-mail the files they want to print to their PCs, and print from there. Manage a mail list? Forget about it. iPads and Android tablets work best as “companion devices,” and assume you have access to a PC or MacBook to handle everyday computing tasks. In fact, when I took my new iPad2 out of its box, it insisted that I connect it to iTunes running on a PC or Mac before it would let me do anything. Fortunately, there’s no shortage of those systems around my office, but what if I purchased it in the airport store, and tried to use it for the first time on a flight to China?

Windows 8 provides a more complete environment. Unless you’ve spent the last six months on the International Space Station, you’ve probably seen its vaunted Start screen, which replaces the Start menu used in earlier versions of Windows. The various colored blocks, referred to as “tiles,” contain live content updated by applications running in the background. Touch a tile and its associated program fills the screen. Switch from one app to the next by dragging your finger from left to right. Drag your finger up from the bottom of the screen to call up menus for the app. Drag your finger from the right edge of the screen to call up system menus, or to get back to the Start screen. Multi-finger gestures for pinching and zooming work intuitively, just as you’d expect. All-in-all, a well architected, contemporary user interface, great for leaning back and reading web content, watching videos, or whatever. But Windows 8 also supports more serious endeavors. Tap on the Desktop tile, and you are instantly transported to the familiar Windows 7 desktop. The applications you invested years learning to use are there in all their glory; not striped down versions that some guy in a marketing department thought were “good enough” for tablet users. Although the touchscreen interface works with these packages, odds are you will want to use a traditional keyboard and pointing device (mouse or track pad) arrangement, whether built into a dock or case, or freestanding. They may be old fashioned, but after 30 years of development, the industry has refined these input devices to the point where they’re hard to beat for content creation.

Digital Ink: Microsoft’s Unsung Advantage

Microsoft’s Tablet PC software includes a feature it calls “digital ink” that allows users to write on the surface of the display the same way one writes on a sheet of paper. The system makes no attempt to convert pen strokes entered this way into machine-readable text in real time, a la Apple’s failed Newton (although the option remains to convert information entered this way into a more conventional format if needed). Digital ink documents can be filed and searched in the same manner as conventional text documents. My tablet contains inked notes I’ve entered over the last eight years; I back them up, transfer them from one machine to another, and read them on my desktop when needed. Almost nobody knows this feature exists. Often, when I’m scribbling notes on my tablet at a conference, people sitting nearby will ask me what magical device I’m using. They’re amazed when I tell them it’s a five-year old tablet PC that runs Windows 7 and Office. I view Micro0soft’s failure to capitalize on this feature to be one of its biggest marketing disasters ever, almost as bad as Vista or Bob.

I don’t doubt the claims of a few of my colleagues that they can type faster than they can write. But can they capture graphic information as well? Here’s a snippet from the notes I took at a recent event where Intel’s Mark Bohr discussed the company’s new 22 nanometer technology. I captured the charts Bohr flashed on the screen on my tablet as he touted the advantages of Intel’s approach. I doubt any of my colleagues could key this in on their PCs.

Digital ink has always struck me as one of the most natural ways (other than pen on paper) for students to take notes in class or attendees to take notes in meetings. Yet Windows Tablets with this feature never gained much market share. Some of this resistance can be attributed to the premium (typically $300 or more) that suppliers charged for Windows Tablets, compared with conventional laptops. Some of this premium stems from the specialized hardware needed to implement digital ink (see below), which adds to the cost of Windows-based tablets. Suppliers like MSI omit such hardware in the interest of lowering the system’s cost. I’m confident the cost premium will shrink over time. I’m less confident that Microsoft will figure out how to market this capability successfully.

Since there will likely be a range of Windows 8 Tablets on the market, some with and some without the hardware needed to handle digital ink correctly, buyers who care about this feature should evaluate the specs of the devices they are considering with regard to the digitizer technology they use.

All told, Windows 8 melds a modern multi-touch user interface that’s great for consuming content with Microsoft’s successful Windows 7 environment that excels at creating content. No other tablet OS can deliver this one-two punch.

Ultrabooks, MacBook Air, and the Need for Inspiration

Inspired by Intel stickerIs the laptop business doomed to slowly ebb away as tablets capture more and more of the mobile market? It’s not hard to see a future where the world is divided into tablets and smartphones for the overwhelming majority of uses and workstations for heavy-duty computing, with very little in between.

This is not a very pleasant world for Intel to contemplate. Its efforts to date to win a share of the phone and tablet market have been unavailing and the success of a new generation of low-power Intel chips is far from assured.

Photo of Dell XPS 13 Ultrabook
Dell XPS 13 Ultrabook

This explains the marketing logic behind Intel’s $300 million campaign to promote Ultrabooks, its trademarked name for very thin and light laptops. If the past is any guide, a fair chunk of that $300 million is flowing straight to computer manufacturers who produce laptops that follow Intel’s specifications and display an “Inspired by Intel” slogan on their products and in their ads.

Whose inspiration? The problem is that a sticker is a poor substitute for actual inspiration, which has been in painfully short supply for years in laptops designed to run Windows. And it’s painfully obvious that the inspiration for Ultrabooks can not from Intel but from the Apple MacBook Air. Comparing the specifications of the Dell XPS 13 Ultrabook and the MacBook Air 13″ make it hard avoid the conclusion that the Dell was intended as a sincere form of flattery:

Dell XPS 13 Ultrabook Apple MacBook Air 13”
Display 13.3” , 1366×768 13.3”, 1440×900 *
Processor 1.6 GHz Intel i5 1.7 GHz Intel i5 *
Memory 4 GB 4 GB
Storage 128 GB SSD 128 GB SSD
Dimensions 12.4”x8.1”x.24-.71” 12.8”x8.94”x.11-.68”
Weight 2.99 lb. 2.96 lb.
Price $999 $1,299
MacBook Air photo
MacBook Air 13"

A few Ultrabooks, like the $1,399 Hewlett-Packard Envy Spectre with a striking all-glass lid, avoid being Air lookalikes, but even HP admits the Spectre is intended more as a design statement than a mass-market product. By and large, PC makers seem determined to make their products look as much like MacBooks as possible.

Inspired by Microsoft? The introduction of Windows 8 at the end of this year could prove a major turning point for laptops. The problem is that it is difficult at this point to tell in which direction.

One thing that is clear is that Win 8 will cause a major fragmentation in the Windows hardware/software platform next year. There will be:

  • Traditional Windows notebooks, including Ultrabooks, and desktops powered by an assortment of Intel and AMD processors.
  • Intel-powered tablets that, like traditional systems, will be capable of running both new applications designed to Microsoft’s touch-centric Metro user interface and traditional Windows Desktop programs.
  • Tablets that, like the iPad and Android tablets, are based on ARM processors. These will run a separate version of the operating system, called Windows RT, that only supports Metro apps, plus Metro-ish versions of the Windows file manager and Microsoft Office.

Windows hardware will be competing with the iPad, a refreshed line of MacBooks that will probably include an Air-like 15” model, and Android tablets that can only get better. Is there some real innovation that computer makers can bring to the game.

One obvious point of differentiation for notebooks would be touch screens. Apple has made clear its distaste for touch on laptops and desktops, opting instead for sophisticated touchpads that support many of the gestures used on the iPad and iPhone. The latest version of  OS X, Mountain Lion, retains the windows-icons-menus-pointing device design that works best with a hardware keyboard and a mouse or touchpad.

Microsoft, by contrast, is reportedly encouraging OEMs to go for touchscreen laptops. Metro, of course, works with a mouse and keyboard but it screams for touch. I am not convinced that the ergonomics of a touch laptop will ever be very happy (and using an iPad with a keyboard presents the same sort of not entirely satisfactory compromise.)

Touch may or may not be the right answer. But Windows laptops need something –yes, some inspiration–to stay relevant. Just chasing Apple isn’t going to do it.

*–The processor speed and display resolutions were incorrect in the original post. These are the corrected values.

 

 

 

 

 

The Case Against a 4-Inch iPhone

As a regular part of my job I evaluate many different devices. I don’t always publish this analysis publicly but nearly every new device passes through our “labs.” When it comes to smartphones, or pocket computers as I like to call them, I get to test and review and analyze all the new android devices, Windows phone, and Apple products. In case you haven’t noticed the trend, smartphones are getting larger screen sizes all the time.

For me, to do the kind of analysis I want, I always use the device as my primary phone. The current device I have been using is the HTC One X, which I like a lot. As I review these devices one very interesting thing stands out. As much as I love using a larger screen smartphone, you notice very quickly that it is very difficult to operate with just one hand. What I mean by that is that my thumb cannot reach all four corners of the screen without having to shift the phone a bit and adjust my hand somewhat awkwardly. This is less of a big deal on Android devices home screen because generally app icons don’t fill the entire home screen. However, during the using of applications, all of the screen real estate is used and with many apps this is when the difficulty of one handed operation becomes noticeable. This is something that does not become glaringly noticeable until you use a smartphone with a larger screen as your everyday phone in everyday situations.

I’m roughly the average height for a US male and I have to imagine that my hands are roughly an average if not slightly smaller than average size. The iPhone’s 3.5 inch display is exactly perfect for me to hold the device in one hand and reach all the active areas of the devices screen. This is not the case with every phone that I use where the screen size is larger than 4-inches. I can only imagine the pains humans with smaller hands go through in using such large screen smartphones.

Yesterday I came across an article pointing out roughly the same thing but making a bigger deal about some of the developer issues around a 4 inch screen and particularly apps being used in landscape mode. There’s a lot of merit to that argument but I would emphasize that the lack of being able to operate with one hand easily could be the strongest case against a 4 inch iPhone. On that point Dustin Curtis makes the same point about screen size issues and one handed navigation on this post and has a nice chart between the iPhone 4s and the Galaxy S II.

I genuinely like using smartphones with larger screens but they certainly come with tradeoffs. I firmly believe that a 4.3-4.7-inch screen is probably the largest possible screen size for the mass market with 4.7 perhaps pushing it. Many of these larger screen smartphones sell well and I do believe there are segments of the market that desire 4-inch and larger smartphones.

So the debate really comes down to how important is an uncompromising one handed operation to the overall smartphone experience. One of the things I have found in my own personal analysis is that because I use an iPad regularly I find less of a desire for a larger smartphone. This is why a strong case may be made for larger smartphone screen sizes in other parts of the world where the smartphone is the primary computing device–for the time being. I believe this is why the 5-inch Galaxy Note is selling well in Korea.

Of course, should Apple decide that a 4-inch screen should become the new normal or as a part of a larger iPhone lineup, I would have to imagine that they would take this issue into consideration. Perhaps one way to solve this problem could be adding more device operation support into Siri. This way voice would become a more fundamental way to operate your iPhone. This would eliminate to some degree any issue with one handed device operation and make voice operation a more prominent feature.

Speaking of lineups, Apple clearly now has a strategy to have an iPhone portfolio of products in the market. Currently it is a good, better, best, strategy with the 3GS, 4, and 4S. The question will be in the longterm about how different form factors may play into this good, better, best, product lineup. The same can be said with the iPad, which is why I think the iPad Mini is such a hot rumor.

Ultimately, variety in a product portfolio is a good idea. Apple is yet to vary the screen size offering in the iPhone and iPad–yet they do with other computing products. I do believe it is logical that this trend would continue in all the screens in which they choose to compete in hardware. My personal use case may be that 3.5″ is the right screen size given how I use the device but for others their use cases may demand a larger screen. That being said, understanding the tradeoffs and use cases for different size screens is key for both the device experience and the problems that need to be solved in order to maintain a consistent quality experience.

I’d love to hear more opinions on this topic.

[thumbsup group_id=”6501″ display=”both” orderby=”date” order=”ASC” show_group_title=”0″ show_group_desc=”0″ show_item_desc=”0″ show_item_title=”1″ ]

Two Sides of the Consumer Coin to Windows RT

Yesterday, Microsoft unveiled via a blog the different Windows 8 editions and comparing the different features and functionalities.  There are three versions, Windows 8, Windows 8 Pro, and Windows RT.  One of the biggest changes in Windows 8 versus previous editions is the support for the ARM architecture with NVIDIA, Qualcomm, and Texas Instruments, and the new naming reflects it.  The Windows 8 on ARM, or WOA for short, gets its own name, called “Windows RT”.  I believe that this naming cuts both ways, some positive and some challenging for the ARM camp, but can be mitigated with marketing spend and education.

Windows RT (ARM) versus Windows 8 (X86)

Windows RT and Windows 8 are very similar but in other ways very different, and in some ways reflect Windows RT’s shedding of legacy…. but not completely.  The Microsoft blog had a lengthy line listing of differences, but here are the ones I feel are the most significant to the general, non-geeky consumer.

The following reflects relevant typical features Windows 8 provides over Windows RT:

  • Installation of X86 desktop software
  • Windows Media Player

The following reflects relevant typical consumer features Windows RT provides over Windows 8:

  • Pre-installed Word, Excel, PowerPoint, OneNote
  • Device encryption

Again, this isn’t the complete list and I urge you to check out the long listing, but these are the features most relevant to the non-geeky consumer.

What isn’t Addressed

What I would have like to seen discussed at length and in detail was support for hardware peripherals.   I will use a personal example to illustrate this.   Last week, I bought for $149 a new HP Photosmart 7510 printer, scanner and fax machine.  Will I am confident I will be able to do a basic print with a Windows RT machine, will I be able to use the advanced printer features and be able to scan and fax?  We won’t know these details until closer to launch, but this needs to be addressed sooner rather than later.

Next, I would have also liked to see some specifics on battery life and any specific height restrictions for Windows RT tablets.  If these devices are intended to be better than an iPad, they will need some experiential consistency to provide consumers with confidence, unlike Android.  As I address below, this wasn’t overt, but a little covert.

The Plusses with what Microsoft Disclosed with Windows RT

There are some positive items for the ARM camp that came from Microsoft’s blog post that covered Windows RT.  Windows RT does support the primary secondary tablet-based needs a general consumer would desire.  In the detailed blog posts, Windows RT supports many features.   This comes to light specifically when you put yourself in the shoes of the general consumer, who doesn’t need features like Group Policy, Domain Join, and Remote Desktop Host.  Also,  I don’t see the absence of Storage Spaces or Windows Media Player as major issues for different reasons.  Storage Spaces is very geeky and I do not believe the typical consumer would do much with it.  I believe Windows RT will have many, many methods of playing video as we see on the iPad and Android tablets, so the absence of Windows media Player isn’t a killer, specifically for tablets.

Windows RT also contains Office, specifically Word, Excel, PowerPoint and OneNote which sells for $99 today. Finally, while details are sketchy, Windows RT supports complete device encryption.  I can only speculate that all data, storage and memory operations are encrypted.  This can potentially leveraged with the consumer, but it’s not something that has kept the iPad from selling.

A final,  important note, is the consistent experience I expect Windows RT to deliver.  By definition, all Windows RT systems will be lightweight with impressive battery life. While this doesn’t come out as clearly in the blog post, I do read between the lines and see where this is headed.  I believe Microsoft wants to deliver the most consistency with Windows RT and leave the experience variability to Windows 8.

There will be challenges, though.

The Risks with what Microsoft Disclosed with Windows RT

While there are positives in what Microsoft disclosed on Windows RT, there are risks and potential downsides, too.  First of all and primarily is the absence of the “8”.  Regardless of how much Microsoft may attempt to downplay the “8”, consumers fixate on generational modifiers to add value to something.  Consumers do this because it makes it easy for them.  When a consumer walks into a store and sees Windows 8 and Windows RT, I expect them to ask about the difference.  What will the answer be from the Best Buy “blue shirt”?  Without a tremendous amount of training on “RT” I would expect them to say, “RT has MS Office, but won’t run older programs.  8 runs all your old programs but doesn’t come with Office.” With that said, the street price adder for Office isn’t public knowledge, but I know that it does add at least $50 to the street price.  This is a discount to $99, but then again, I don’t miss not having Office on my iPad.

As I discussed above, Microsoft needs to disclose more on backward hardware compatibility.  Every day that ensues without a more definitive statement, Microsoft draws in the skeptics.  What wasn’t discussed in the industry 6 months ago is being discussed now.  Finally, how can the lack of X86 desktop software be turned into a positive?  The basic consumer, if offered something more in their minds for the same price, will always choose more, unless they see a corresponding behavior to give up something.  Apple has done a fine job with this on the iPad.  When the iPad first launched, many focused on what it didn’t have, namely USB ports, SD cards, or the ability to print.  The iPad can print in limited fashion, still has no USB or SD card slot and is still selling great.  Windows RT needs a distinct value proposition related to Windows 8 but different too.

What Needs to Be Done Next

If I were in the ARM camp, I would plead with Microsoft to reconsider the naming.  Even adding an “8” to the naming to render “Windows 8 RT” would at least recognize it’s in the same family.  Without it, Windows RT looks like part of the Windows family, but not “new Windows” table. This can be overcome by spend on a unique value proposition.  This distinct value proposition may be that all RT units are thin and light weight and provide a consistent experience, something that Windows 8 cannot guarantee.  The ecosystem then would need to fill “RT” with value and meaning which will be expensive. Finally, the Windows RT ecosystem needs to start better communicating about peripheral compatibility, as every day passes, the broader ecosystem gets more nervous.  With six months to go, there’s a whole lot of work to do, and a lot more in the Windows RT camp than the Windows 8 camp.

 

Windows on ARM May Get Its Own Brand

The Wall Street Journal‘s Don Clark is reporting that Microsoft is considering calling the version of Windows that will run on ARM chips something other than Windows 8, the  name expected to be used for the Intel/AMD version. But I can only hope that his belief that the Windows-on-ARM operating system may be called Windows RT is wrong.


First, it’s a lousy name. It does not fall trippingly off the tongue. The best you can say is that it is better than WOA, hard-core tech-speak for Windows-on-ARM. Windows Tablets are going to need all the marketing help they can get and something with a little more pizzazz would be  helpful.

Second and more important, Windows RT would be a really confusing name, because of its extreme similarity to WinRT, which is how developers usually refer to the programming model for Windows 8 Metro apps. Among developers, programs written for Metro as usually referred to as WinRT apps. In theory, at least, all WinRT apps should run on both Windows 8 and Windows RT, if those are the names Microsoft chooses. But the whole thing seems unnecessarily confusing.
 

Should Apple Create an iWatch?

Last fall, I wrote an article on our site here suggesting four industries Apple could disrupt and one of the industries I mentioned was the watch industry. When Steve Jobs introduced the iPad Nano, he mentioned that one of his board members said he was going to find a way to strap it on to his wrist and use it also as a watch. And shortly after the Nano was released, a cottage industry of Nano watchband makers started to emerge and today you can find over 100 colorful watchbands that turn the Nano into a watch.

But in this article I stated that for the Nano to be disruptive, it would need a Bluetooth connection to the iPhone and serve as kind of a visual companion by showing on the Nano who might be calling, iMessages, news alerts, etc that would come through the iPhone and not make me take it out of my pocket to see these alerts or key bits of information unless I needed to act on them.

To date, Apple has not added any of these features to the Nano but even if they do, they will now not be the first to take this idea and concept and run with it. Last week there were two announcements of watches that would work as companions to smartphones and both show a lot of promise. One is coming from Sony and the other is coming from a small start up called Pebble Technology.

Sony’s Watch is basically like the Nano but with Android’s OS inside and works in a similar manner. It uses a color OLED and connects and serves as a companion screen to Android smartphones. It sells for $149 and is on the market now. But the Pebble Smartwatch is the one that is the most interesting to me since it can be used with Android or the iPhone. And while it’s screen is not a color OLED like Sony’s, its eInk screen means this product has a very long battery life and can be even thinner then Sony’s version. Both connect to smartphones and deliver info on calls from a phones caller ID system, messages and other alerts that can be programmed into the watch and tied to a smartphone.

While Sony’s smart watch is coming from a major company, Pebble Technology’s approach to creating their smart watch is quite unique. Instead of raising funds to build this from friends and family as many start-ups do, they appealed to the public for pledge funds that will be turned into actual shipping orders of their smart watch when it ships in September. They are not the first to try this approach but their pitch seems to have struck a nerve, especially with the early adopters. They had hoped to raise $100,000 from these pledges but in their first week, they actually got order/pledges worth over $2.6 million.

With all of this interest in the Nano being used as a pseudo smart watch and these new entries from Sony and Pebble, as well as earlier models from Motorola and others, is it time for Apple to create their own iWatch with iOS on it and tied directly to the iPhone? Given this competitive pressure, you would think the answer should be yes. But if history is our guide, doing something just to counter the competition at this early stage of smart watch interest is not their style.

We have solid examples of how Apple actually looks at these market opportunities and eventually responds. For example, Apple did not invent the MP3 player. But once these devices had become established as a product with major potential, Apple then brought out the iPod and today it owns 75% of the MP3 market. Now consider the iPhone. Apple did not invent the smart phone. But once these took off, they brought out the iPhone and today their smart phone owns a major position in this market. And Apple did not invent the tablet. But their model with this, as well as with the iPod and iPhone, is to look at the fundamentals surrounding each of these products and then apply their genius of design, eco system and marketing to any category of devices they feel that they can make better.

While they may not be first in a new product category, their approach to making them better and then using their design and marketing prowess to take very strong positions in these markets is at the heart of the way Apple works. Today, Smart watches tied to smart phones are in their very early stages and show promise. But don’t expect Apple to respond in kind just because the competition in this space is heating up. Instead, look for Apple to glean from these early smart watch trail blazer’s and once they believe they can create something that is very sleek, elegant and innovative, then, and only then would they bring out an iWatch.

One side note to this is that watches on a whole have been on a decline since cell phones have come out. This is especially true with Gen Y users who rely mostly on their cell or smartphone to find out what time it is. But if the watch is tied to their smartphone, this could actually reverse some of this decline in watches and even Gen Y and those younger than them just might start wearing watches again.

Why I Wouldn’t Invest in Facebook

First let me clarify that due to my line of work I do not invest personal money into any public tech stock. That being said, even if I did, I would not put my own money into Facebook when they go public.

This has been an interesting week for Facebook. They acquired an extremely popular piece of software for iOS and Android called Instragram for roughly $1 billion dollars. Instagram had an extremely loyal, engaged, and opinionated customer base (judging by their harsh reaction to the acquisition). In fact, fellow Tech.pinions columnist Patrick Moorhead wrote in his Tuesday column about the conversation he had, via text message, with his daughter after the deal was announced. If you haven’t read it already I encourage you to read it as she very deliberately called Facebook stupid and for old people, which is in fact the title of his column.

Column: Facebook is For Old People

Along those same lines I wrote a column for TIME in December entitled “The Beginning of the End of Facebook?” This column led to a raging debate in the comment section as some folks disagreed with me and others felt that Facebook may not be the king of social networks forever.

Facebook Becomes Routine

My premise was simple. I interviewed approximately 100 high school students in Silicon Valley, all who have been on Facebook at least two years and many had been on for four years or more. In every case with every interview the results were the same. They found themselves using Facebook less and less and were generally using it to simply get quick updates of friends and family. Since that column (and if you read the comments) I have gathered over 100 more responses all indicating the same thing. Those who have been on Facebook for a significant period of time see their time spent with the service decline.

Yet comScore tells an opposite story. The year over year increase of individuals average monthly minutes on Facebook is increasing at almost 50% each year. Now, comScore is looking at the total number of minutes not the number of minutes an specific individual averages. I am not sure if it is possible to track this but I would be 99% certain that the average number of minutes per month spent on Facebook actually declines the longer you have been on the service.

In my own experience and in many of the high schoolers I spoke with, the first year or so on Facebook was the most intense. Discovering and keeping up with new or old friends. The lure to share socially and show off all the things you are doing, eating, etc. All of it becomes very addicting, but after a while that drive goes away. This is at the heart where I think the problem with Facebook lies. It commands a high average of a persons time for a short while but then Facebook becomes more of a routine rather than a passion.

The numbers that ComScore is observing is because much of the globe is still having its first year on Facebook. There is also no doubt in my mind that even for those for whom Facebook becomes routine go through a season of more intense usage. Like when a friend or loved one goes on a trip or moves to a different location.

However, even with my theory of average time spent declining and the longer a consumer has used the service is correct, it is only one small part of why I wouldn’t put money into Facebook. Ultimately, however, I don’t believe the time spent on Facebook averages we are seeing today is sustainable in the long term.

The Economics of Pleasing Everyone

The problem I see with Facebook’s business in the long term is that it is trying to be all things to all people. Within that vein of thinking it is also trying to develop an advertising / revenue strategy that is also all things to all people. Generally speaking, when a service tries to be all things to all people, it is not actually good for anything.

In 2008 I was on a panel at the OnMedia summit in NY talking about this very thing. I highlighted a few networks of interest at the time. One was called Dogster.com which still exists today and is simply a social network for those passionate about Dogs. It links people up by region or just by type of dog in order to link up people of like minded interest in dogs or even certain types of dogs.

Similarly a few years prior I was spending quite a bit of time with the folks of LaLa.com and its founder Bill Nguyen. As you may know Apple has since acquired LaLa and used its technology to build Ping into iTunes. The premise of LaLa.com was simple in the beginning. Link people together who had similar tastes in music and let them help each other discover new music. The results were as expected as for quite a length of time LaLa.com’s average time on site per customer exceeded two hours per day. The allure in the case of LaLa.com was like minded people and the discovery of new music. Lala’s customer base continued to spend significant time on the service until LaLa changed their strategy.

This is the power of vertical social networks and where I believe the best advertising strategies will lie in the future. In the case of Dogster.com the community is an extremely interested one in all things related to dogs. If I was the head of marketing at Purina, would it make more sense for me to advertise on Facebook or Dogster? Similarly, how about social networks for car lovers / aficionado’s, mothers, fitness fanatics, artist lovers, etc. The total size of one of these vertical networks may not be nearly as big as Facebook’s but the target audience would more engaged, more targeted, and more passionate about the interest and thus more valuable to advertise to in my opinion.

We are already seeing these vertical networks creep up and I assume we will see many more in the future and this reality isat the root of my concern over Facebook’s long term sustainability as a profitable business. My concern is that these vertical social networks will become more valuable to brands and advertisers and command more of their ad spends than does Facebook.

The bottom line is that if I am a brand looking to advertise to a certain type of consumer, I am going to want to go where those consumers are in big numbers. My belief is that brands will find more success marketing with vertical social networks that are oriented around special interests rather than a network like Facebook which is trying to be all things to all people and not doing a good job of it.

iCloud: The Center of the Universe

Over the past year Apple has given us a glimpse of what iCloud can do, but it’s the service’s potential that has me excited. Even with the small changes we’ve seen, there can be little doubt that the service will be at the center of future Apple products.

iCloud took over from MobileMe, doing the mundane but important task of syncing our calendars, contacts, bookmarks and other personal data between devices. This means that all changes will be synced between our Macs, iPhones and iPads, instantly and seamlessly.

It was with a release of a new version of iOS that we first saw how useful iCloud could be outside of a syncing service. The ability to see all of the apps that we already purchased and downloaded in one place and re-download them. I’ve used this quite often as I’ve switched devices, deleted apps and wanted to re-install. Easy and convenient — it’s what Apple is all about.

With the addition of iTunes in the Cloud allowing users to access songs in the cloud from any device, and an Apple TV update that stored purchased movies and TV shows in the cloud, we started to see how iCloud could be used in the home.

The home entertainment system is an area that companies have tried, and failed, to control for years. Like most things these days, it’s about the content. We fully expect devices like TVs to have a sleek, modern design, and look good in our entertainment center, but without the content they are just TVs.

Some TVs come with services like Netflix built-in, giving us easy access to that content. I love the Netflix service and use it all the time, however, it’s limited in a lot of ways. The most important being that it’s not the place where I get most of my digital content — that is iTunes.

In the future, if I’m going to pay for a device or television, I want to know that I have access to all of my content. That means movies, TV shows, music, podcasts, and anything else I’ve purchased. I also want the ability to seamlessly purchase new content and have that available on any other device that I want to consume it.

Apple is the only company in the industry that could provide this at the moment. Clearly we don’t have a television from them yet, but they do have the infrastructure to deliver the content. In that respect, Apple is a decade ahead of its competition.

With iCloud’s ability to deliver content to connected devices, it’s not unreasonable to envision a time when Apple could deliver all of your purchased content, as well as subscription-based content from television networks and other specialty media companies, to any or all of your devices.

iCloud is not just a syncing service — it’s a content delivery mechanism that will play an increasingly important role in future products.

Antitrust: Apple Could Lose by Winning

A Cnet analysis by Declan McCullagh and Greg Sandoval of the antitrust suit against Apple and several book publishers concludes that the case against Apple seems particularly weak. But it rather curiously begins by citing the ultimate failure of previous antitrust suits against IBM and Microsoft.

iSooks screen shotI am hardly an antitrust expert and have no real feelings for the ins and outs of this peculiar case (in which Amazon.com is the elephant in the room.) But the IBM and Microsoft cases should serve as cautionary tales because both had profound effects on the companies that had little to do with the legal outcomes.

The IBM case, which involved the bundling of software with mainframe computers, was brought by the Johnson Administration three days before Richard Nixon took office. It dragged on until Ronald Reagan has been in the White House for a year, by which time conditions in the industry were radically different from when the case was filed. In the end, the government made a total botch of the trial and facing almost certain defeat, decided to drop the case (this is greatly oversimplified, but the detailed history isn’t important here.) But the victory was devastating for IBM. Twelve years of  litigation were an enormous distraction in a time of rapid technological and business change. IBM management because cautious and over-lawyered, constantly looking over its shoulder–a condition that persisted for years after the case ended. The antitrust case  was almost certainly a major cause of the serious decline of IBM in the late 1980s and early 90s.

The Microsoft history is similar, though the case only lasted four years. Unlike IBM, Microsoft lost big in the trial phase, but had the proposed remedy–a breakup of the company–rejected on appeal. Before a new judge could come up with an alternative remedy, the year-old George W. Bush administration settled on terms very favorable to Microsoft. Arguably, the settlement itself has had almost no effect on Microsoft. But the  suit had a major impact on the company. As in the IBM case, legal concerns distracted the company’s management at a time of critical change in the industry. There is also some evidence that unhappiness with the legal proceedings hastend Bill Gates’ departure as CEO. Microsoft  escaped from the suit on favorable terms, but the prosecution caused Microsoft lasting damage.

There’s one piece of good news  for Apple in the current case. Both the IBM and Microsoft suits cut to the heart of their business–how IBM sold mainframes and associated software, how Microsoft licensed Windows. Selling books is not central to Apple’s business and the company probably views the case as more of an annoyance than an existential threat. Still, apple might do well to do what it can to make the problem go away as quickly as possible. Spending time wrestling with the government is not the best way to stay on top of an always fluid industry.

 

 

Word Should Live–But We Need Something Else

Deadspin editor Tom Scocca has written a rant for Slate calling for the death of Microsoft Word. Many of his complaints are well grounded, but miss the point. what we really need is not to get rid of word, which remains an indispensable tool in many contexts, but a much simple application for people who just want to write with a minimum of fuss.

Word iconReuters’ Jack Shafer got close to the heart of the problem when he tweeted “Word isn’t for writing. It’s for document design.” The enterprise product that Word has evolved into is designed for the production of documents far more complex than most people will ever work with.

In one of my many lives, I work as a technical writer creating and editing contract proposals in response to very detailed Requests for Proposals. These documents have to meet precise formatting requirements, are long and complex, are worked on by large teams, and are subject to complex, multi-tiered review. I find myself regularly using a great many Word functions that I never thought about as a journalist. Word–or something like it–is necessary for this sort of work, which is very common in corporations, government, and other large enterprises.

Most people could use a tool that just lets them write and handle relatively simply formatting. In the Apple world, Pages is not a bad solution, but I don’t know of anything quite like it for Windows. Google Docs is OK, provided you can always be online when you want to write. Microsoft didn’t have much incentive to fix this as long as it could sell consumers copies of Office for $150 of more, but I suspect those days are over.

That said, a lot of Scocca’s specifics are off-base. One of the beauties of Word is that in compensation for all that complexity, you get the opportunity to customize pretty much everything about how it works. He complains bitterly about Word’s auto-correct feature (while I, rotten typist that I am, miss desperately when typing in the WordPress editor) but doesn’t seem to realize that it can be turned off with exactly three mouse clicks (Tools–>Auto Correct–>uncheck Automatically correct spelling and formatting as you type.) Even better, a little work will create an auto correct list that automatically fixes the typing mistakes you make frequently while leaving everything else alone.

 

 

 

Where in the App Store is Carmen Sandiego?

One of the goals we have in my household is to develop and maintain an inquisitive culture and the desire to learn. Being immersed in the technology industry as I am, I naturally add technology as a part of that process. One of my favorite examples of how we have done this was with an app called iBird Explorer Western.

My family and I live just outside San Jose in an agricultural / rural part of the area and because of that we see quite a wide variety of birds we never encountered in the city. My oldest daughter (age 9) and I both have the app on our iDevices, mine on my iPhone and hers on the iPod Touch. It has been remarkable to see how quickly she can spot a new bird in the wild and quickly use the app to identify the bird and learn interesting facts.

Even more recently in this process she has begun playing a game called Stack the States fairly regularly. This game teaches her facts about US states as well as how to identify them and place them on a map. It does so in a way that makes learning fun and technology at its best should accomplish that goal when it comes to education.

Because of my desire to integrate technology into the learning process and inquisitive nature of my kids, I began thinking of games I appreciated as a kid that did the same. The first one that came to mind, for my wife and I, was Where in the World is Carmen Sandiego?

This game did a great job, in my opinion, of integrating game play with lessons on geography and other facts that was fun and educational. I had been watching for a while, and still to no avail, the arrival of this game in the iTunes App Store. This game seems like an ideal game for iOS devices and I am still surprised it is not there. The company that owns the rights called The Learning Company also owns the rights to The Oregon Trail, a game that is available for iOS and quite popular.

Game developers are smart to be using legacy franchises to bring games into the touch computing era. As devices like the iPad get integrated more into the learning process at different age levels, these games can provide a solid base to build upon and bring to tablets and more.

Apple’s re-invigoration of the software community is creating new possibilities with game software on computing devices and especially those that are touch based.

Where in the World is Carmen Sandiego is one of many legacy franchises that I hope make it to touch devices. Such software and the software development communities focus on creating games that are fun and educational are positive trends that I would like to see continue.

Why Siri Won’t Go Beyond the iPhone–For Now

Siri screenshotSince Apple launched the Siri app on the iPhone 4S last fall, there has been a widespread assumption that Siri’s voice-driven semantic search might soon find its way to other Apple products. At the top of everyone’s list was the still notional Apple television, bolstered by the belief that Steve Jobs’s deathbed claim to have “cracked” TV was based on the development of a voice interface.

Don’t get too excited. I think Siri will continue to improve on the iPhone and might well migrate to the iPad, but its not likely to go anywhere beyond these handheld devices for some time to come. Both the technology and the psychology have to be right, and both are far from ready.

Siri on the iPhone is a big step forward, but it is very far from perfect. Mostly it understands me, sometimes it doesn’t. sometimes it has a useful answer to a question, sometimes it doesn’t. It’s a lot better than any previous voice/natural language  effort, but I still rely on the keyboard or other touch interface elements most of the time. Actually, the iPhone makes a natural Siri development platform for Apple because even iPhone users are inured to mobile phones that fall well short of perfection. For example, calls drop, voice quality is often awful, messages arrive hours after they were sent. So we’re prepared to put up with a personal assistant who doesn’t always understand us. Apple, with its sharp focus on user experience, will be  reluctant to push Siri into territory where customers may be disappointed by the performance.

Our expectations for television and cars, the logical targets for voice control, are much higher than for mobile phones. At the same time making voice control work is much harder for engineering reasons. Cars are actually the easier challenge. Apple has avoided the automotive market, but others are in the game and Microsoft is the clear leader, especially with its partnership with Ford.

Natural language understanding is a big computer science challenge for voice systems, but there are also a considerable audio engineering issues to solve. Speech recognition requires  a high quality audio signal, and the more free-form the speech, the better the audio has to be. An airline reservation system can understand me over a poor cellphone connection (most of the time) largely because the vocabulary and syntax of airline reservations is very constrained. But a Siri-like system is supposed to understand anything.

Siri on the iPhone works as well as it does because the phone starts with a decent microphone system that is close to the speaker and filters out extraneous noise. Cars are a pretty good environment as well. Voice systems usually are activated by pressing a button on the steering wheel that can also mute the audio system. There are lots of good places to put microphone arrays close to the driver. And while the sounds of driving create a lot of ambient noise, it is of the predictable sort that noise-cancellation systems handle well. I expect to see car systems get a lot better, but I don’t see Apple becoming a player. Apple likes to be top dog, and that would not be the case in a relationship with auto makers, who are quite insistent that car buyers are their customers, not those of third-party vendors. (Microsoft may do the software and Nuance the speech recognition, but Sync is a Ford product through and through.)

The living room is far tougher, but here to Microsoft may well have the edge, this time because of Kinect sensor technology. Pure voice control of a television is extremely difficult. Unlike a car, you don’t know where the speaker is going to be, so you need a sophisticated speaker microphone array that can find and focus on the speaker, who might be 10 feet away. Such systems  exist, but they are mostly still in the lab and, at least initially, are likely to be quite expensive.

You also need the equivalent of a push-to-talk button, or the voice recognition system is going to be saddled with the near impossible task of hearing anything over the sound of its own audio. Here’s where Kinect might come in very handy. It’s ability to recognize gestures and to combine gestures with speech might yield a much better interface, much faster than voice alone. This plus an enormous research investment in speech and natural language understanding, which admittedly have yet to yiled much in the way of products, might give Microsoft a considerable edge in the battle of the living room.

Of course, the  big TV challenge for Apple, Microsoft, or anyone else is striking the deals needs with content owners that will permit a viewing experience that unifies internet video with cable and broadcast TV. Difficult as the technical issues are, this business challenge may prove tougher to crack.

 

 

 

Apple Will Sell Exactly 169,652,000 iPads in 2016

Need a lesson in the difference between precision and accuracy? Head over to the Gartner web site for the latest predictions of tablet sales over the next four years. With precision down to the nearest thousand–and I suspect that only space requirements kept the last three digits out of the forecast–Gartner purports to tell us how the market will grown and how it will be divided (table below).

Table 1
Worldwide Sales of Media Tablets to End Users by OS (Thousands of Units)

 OS

2011

2012

2013

2016

iOS

39,998

72,988

99,553

169,652

Android

17,292

37,878

61,684

137,657

Microsoft

0

4,863

14,547

43,648

QNX

807

2,643

6,036

17,836

Other Operating Systems

1,919

510

637

464

Total Market

60,017

118,883

182,457

369,258

Source: Gartner (April 2012)

Many years ago when I was an editor, I needed an estimate of the GDP of the People’s Republic of China. I called the CIA–the best source for such information in those days–and  was given an estimate of something like 8,546,789,000. I asked the analyst how many of those digits were significant. “Maybe the first,” he said.

These Gartner numbers, and similar ones put out by IDC, are ridiculous, made more so by phony precision. A year ago, Gartner forecast the industry would sell 69,780,000 tablets in 2011, an estimate that proved 15% too high based on the new numbers. Last year’s sales were supposed to include 3.9 million BlackBerry PlayBooks; 807,000 were sold (listed as QNX in the table) and even that estimate strikes me as high. Missing from this year’s table are the 4.2 million TouchPads that HP was supposed to sell this year.

Fish gotta swim and analysts gotta publish estimates. But it’s really time for this embarrassing silliness to stop.