Tablets, Seasonality, and Adoption Cycles

There is an interesting shift happening in the hardware release cycle of the computing industry. When the PC was the only game in town bi-annual release schedules were the norm. Now with the increased growth in smartphone and tablets, it looks as though the industry may be shifting to a much more seasonal release schedule. In consumer markets seasonal purchasing has always been the norm. But in enterprise markets the bi-annual release schedules allowed flexibility to purchase new hardware to meet demands throughout the calendar year.

The entire industry appears to be shifting away from that bi-annual schedule and to a more consumer friendly seasonal emphasis. This is evidenced by the slowing growth of both smartphones and tablets on a quarter-over-quarter basis according to some of the latest device shipment data. My conviction is not that we are seeing saturation but seasonality. There are other factors at play which I will get into.

This does not necessarily mean that the tablet category is slowing. Rather, what it suggests is that the buying cycles for tablets are shifting to be more seasonal at large. This was always the case for smartphones at large, but it appears the end of the year is now also the hot cycle for tablets and traditional PCs.

What this means is that we are lining up to have a very loaded holiday quarter with new smartphones, tablets, and PCs competing for consumer dollars. This by itself brings with it ramifications for consumers and enterprises alike.

For the consumer market the challenge is going to be for OEMs to cut above the noise in what is going to be an extremely competitive holiday season. Retail placement, promotions, and online / offline marketing are going to be keys to success.

Market Experimentation

Earlier this week I wrote for my TIME column a piece titled “Why I’m Not Switching from the iPhone.” My overall point of the column was to paint the picture of a mature smartphone consumer. Someone who, through experience, has vetted the options and defined specifically needs, and wants.


This has always been at the base of our adoption cycle market methodology. When we research consumer markets and try to get the pulse of the consumer in our interview and observational research, much of our goal is in understanding how mature they are in understanding what they want and why. This was also why I wrote the article on our site here called “I need a PC and I know it.” Again emphasizing a self-awareness of technological needs.

We do not have this with tablets. Where I point out in my TIME column that most mass market consumers at a global level are only on their first or second smartphones, tablet owners are largely on their first tablet and the market for non-tablet owners, or tablet intenders is massive. [pullquote]When we are in a position to get our first car we will take it any way we can acquire it.[/pullquote]

We have gathered quite a bit of research suggesting a high level of buyers remorse for low-cost tablets. This backs up our points of where we are at with adoption cycles of these devices. I liken what is happening with low-cost devices for places like emerging markets or first time owners to our first cars. When we are in a position to get our first car we will take it any way we can acquire it. Then after time, generally speaking, more options will emerge and the choice and preference will become more refined.

For many first time tablet owners who just wanted to get in on the hype they wanted to see what the tablet buzz was all about. So they got one any way they could and for a portion of the market they went with cheaper devices. What our research is suggesting is that they learned their lesson, liked the form factor and the upside, weren’t happy with their choice and are looking to spend up on the next one. This data comes from all markets including emerging (like China) as well.

This point about buyers remorse feeds nicely into the data we see about why iPad usage remains so dominant compared to the competition.

So What Does it All Mean

It means that competing for the mind of the consumer is becoming harder and harder. Consumers are going to be faced with an overwhelming plethora of choices. For the masses who still may be defining and refining their needs and wants, as they look to spend up it will favor certain brands they trust or perceive as the market leader. This is why I have no doubt the iPad will sell marvelously this holiday season and why both the iPhone and Samsung phones are still the dominant global players.

Seasonality is going to change things in my opinion. Marketing for one is going to get much more tricky when we have the kind of loaded and confusing holiday quarter I think we are in for the next few years at least. How companies market and position their products to cut above the noise and gain consumer mindshare will be key.

One thing that our data and even the recent research we have compiled continually emphasizes is that as the adoption cycle moves from immature to mature, cheap goes off the table and the masses begin looking for value. This is why I’ll argue until I am blue in the face that a race to the bottom is not actually what consumers want. It may be necessary in some regions, but over time, even in emerging markets, I believe value is what we will be demanded.

The iPhone is My Midwife

I wrote this article for The Magazine which is available on iPad. I’m releasing it for our insiders and I intend to write more short stories like this on tech that are hopefully enjoyable reads. Enjoy the quick glimpse into my analog life.

———————–

It’s the first time for both Betsy and me: she’s never given birth before and I’ve never helped a goat produce a kid. My heart races as I pace her pen, reviewing what I need to know to make sure she has a safe delivery. She seems as content in her element as if she were an experienced mother.

My days are mostly spent in a windowless office. I meet with clients, analyze data, and wear fancy clothes. Now I’m out in the bright sun in a slightly smelly goat pen wearing overalls and galoshes and about to assist with a birth. Betsy’s instincts kick in as delivery becomes imminent. Mine did as well. I was not altogether unprepared: I had my iPhone.

Overgrown

My wife, Jennifer, and I began our journey the first year we planted tomatoes, zucchini, onions, lettuce, and strawberries. Each year the garden got bigger, and we experimented with new seeds and starters. The garden started to overflow our tiny backyard. Our front lawn was doing us no good, so we pulled it out and planted more crops in its place. In the very traditional suburban neighborhood in which we lived, our micro-farm became increasingly out of place. Our neighbors had nicely manicured green lawns and we had nicely manicured rows of vegetables.

Neighbors and passers-by thought either that what we were doing was inspirational or that we had gone crazy. To make peace with the latter group, we built some planter boxes next to the curb and planted vegetables for the neighborhood to pick from freely. We enjoyed giving fresh, homegrown goods to neighbors, friends, and family out of our abundance. We even started our own FSA (friend and family supported agriculture) to help others learn the benefits of growing your own food.

The more we “farmed,” the more we joked with friends and family that our next move should be to the country. It was appealing to think about sitting in our yard and looking out at an expanse of land rather than a solid wood fence 20 feet away, but it also seemed unrealistic. Our dreams had outgrown our boundaries.

It took a chance meeting to break through the fence. I ran into a friend with whom I’d started a company in the late 1990s, and we wound up talking about hobby farming. He mentioned that his father had looked at a house with lots of usable pastureland. We decided to check it out.

The farm was a 30-minute drive south of San Jose (add 15 in rush hour), where the sprawl of the Bay Area has dropped away and one enters something approaching real country. We took a look at the house and its fields, and we were sunk: we agreed that this was the place. The house was simple and came with three acres that already included a pool and two different playgrounds for our kids. We could see nearby hills from the house and hear and sense the quiet. We didn’t hesitate. We packed up and headed south.

It took just a few weeks until we settled into the calm and peace of our newly christened Bajarin Farm. Sitting and relaxing in the yard was like going on vacation. Everyone around us, and many we met in town, had similar gardening and farming interests. I knew we had made the right choice, though, the first time I saw two guys riding horses down our street, each with a beer in hand.

We rapidly expanded our gardening into farming and planting a greater variety of crops, and then we progressed into ranching — my idea. My wife resisted. “You do have a day job, you know,” she reminded me. I sold her on the chickens easily enough, as they don’t require much work and plenty of city slickers have them now. The taste of a fresh, free-range egg is the capper.

I agreed to take on all the animal duties, even if it meant getting up at the crack of dawn. We brought in two dozen chickens and shortly thereafter added three goats, two female and one male. Our goats quickly became family favorites. We knew it was likely that they would have babies, and we even fancied the idea of their kids running and jumping around our property. It simply happened much faster than I thought nature needed to take her course.

Push technology

As I pace Betsy’s pen wearing overalls and galoshes, I picture a rancher sitting on the back of an old pickup truck watching me. He has a face weathered from seasons of working outdoors, his cowboy hat is pulled low, and a long strand of hay hangs from his mouth. He shakes his head and has a good deep laugh at the city-boy office worker.

But so far the Internet has delivered — figuratively to date and soon literally. Jennifer and I relied on the Web to supplement our suburban farming knowledge. For today’s work, there’s a bucket of warm water and some clean towels nearby, and an iPhone in my hand with a Web page loaded that contains step-by-step directions on assisting with a goat delivery.

Birth went quickly. In moments, the first two kids are on the ground breathing and starting to move around. I let out a sigh of relief, wipe the sweat from my brow, and sit down on the ground near the newborns, taking a minute to admire them. I imagine the faces of my daughters when they arrive home from school that afternoon and see the newborns.

I pat myself on the back that my digital assistant and I managed everything so neatly. That was premature, of course. Betsy begins to push again. I expected twins but she was carrying triplets, which I later learned is uncommon. I roll up my sleeves for the next delivery, but an hour passes and she’s not progressing. Something is wrong.

Betsy is pacing, and she is trying on her own every position that she can to get the baby out. I start searching for delivery position complications. It takes minutes, but I find a forum that helps me diagnose the situation: the third kid was positioned poorly and Betsy can’t get it out on her own.

The reality of what I have to do next hits me along with a jolt of adrenaline. I’m about to get my soft, uncallused expert-typist hands dirty. I have to work up the courage, and it takes a few minutes of deep breathing to get there. Betsy looks exhausted. She’s been through an hour of hard labor, and if she could talk she would say, “Are going to sit there and play on your phone or are you going to help me, you idiot?!”

Reluctantly and cautiously, I reposition the kid and give a gentle tug to get the process started. I watch and wait impatiently. At last the kid emerges and breathes on its own. If I was the goat’s midwife, then the iPhone was mine.

No kidding

That was years ago, and while I’m not yet grizzled, I ride a tractor, wear cowboy boots, and occasionally snack on the wheat berries that grow in my pasture. Often new neighbors or friends from San Jose and beyond come over to see what we are up to and ask how to do it themselves. When people visit the first time, I usually have one rule: they have to try to catch a chicken. Purely for my entertainment purposes, of course.

I think back to Betsy’s first delivery at times, and remember my reaction when it became complicated. I didn’t call a vet; the thought never entered my mind. I’m a problem solver, and it seemed natural to turn to the same repository of information that serves my career to serve Betsy.

I probably should have had a vet’s number on hand, but being new to the community I didn’t yet know who to call. To save Betsy and the baby, I knew I had to act fast. That was where the Web came in, and it’s turned out that every fundamental bit of information we’ve needed to run the farm we’ve been able to find on the Internet, often from far-flung pocket farmers like ourselves, who share information that our grandparents and great-grandparents would have learned firsthand. The scale of a hobby farm has let us more recently connect in person, too, with local 4-H clubs, rather than the resources that family and larger farms rely on.

Every year around delivery time, I reflect on how a process that once seemed so foreign has now become second nature. Since that time, we have birthed 14 happy and healthy baby goats and I’m now the old hand. Neighbors come to consult me in similar situations, where I gladly offer any knowledge I have or teach them how to effectively use the Web for their needs.

Betsy is doing well to this day, and we have added more goats (and a sheep) in the years since and have helped them deliver happy, healthy newborns. Since moving we have also added ducks, geese, turkeys, and bees. But unquestionably, the highlight of our year is when baby goats arrive on the farm. Now, on to cows.

Why We Welcome Commentary on Our Columns

One of the most important parts of our TechPinions columns is the comment section at the end of each column.
As editors, we highly vet each column as we are extremely committed to writing and posting pieces that are insightful, informative and sometimes provocative. Each of our writers are seasoned thought leaders and we highly appreciate the comments and even constructive criticism that is often offered in these comment sections.

I want to also make note that we encourage insightful and thoughtful feedback from our readers. When Techpinions started, there was a person who often commented on our columns and we marveled at his insight and the thought provoking feedback he would make on the columns he commented on. Although he was a retired lawyer and not even from our industry, his understanding of the economics of the PC market and how business works really got our attention. So we invited him to do a column or two and they were so well received that we decided to give him a weekly spot on Techpinions. John Kirk now regales us with his thoughts each Thursday.

We know through our feedback from many Techpinion readers that they are a highly educated bunch, prone to strong opinion and full of great feedback about the content and/or logical reasoning stated in many of our columns. We truly appreciate it and welcome these comments that extend the spirit of the column and make it multi-dimensional in a good way. We are also pleased that in most cases, the comments are thoughtful and very seldom stray from the topic or become personal attacks on the author as we see in a lot of other sites where comments are all over the map. As our readers know, personal attacks make no sense when instructive and sometimes constructive dialog should be at the center of the overall discourse.

As one of the co-founders of Techpinions I truly appreciate the great feedback we get from our readers and look forward to hearing more of you share your thoughts and analysis on the columns we post each week.

We Took Grandpa’s Keys Away. Now We Have To Take His iPhone.

Is there any more magical device than the iPhone? With this amazingly light, utterly beautiful device, we can call and text, email, video chat, play games, watch television, read the great books of history.

We tweet and Facebook. We buy and sell stocks. We set our home alarm, monitor our blood pressure, pay our bills – all with a few swipes of our fingers.

Perhaps this is simply too much power to possess by someone on the verge of senility.

Some of us have already had the discussion over taking away a parent’s car keys. Soon, we may all need to decide if we should take away their iPhones, iPads, Kindles and Androids.

The very technology that connects them with the world, with their grandchildren, that entertains and enlightens them, may – regrettably – become more than they can properly control.

Forget Nigerian email scams, what of FaceTime video scams? Will your aging mom or dad accept calls from anyone? Might they give away – to that friendly man on the screen – their banking information? Their Social Security number?

Will your father or grandmother, say, in their current mental state, tweet pictures of themselves – to Facebook or Twitter – that are entirely inappropriate?

Who will they text? Will your daughter in high school be troubled by the increasingly irrational emails her grandmother is sending her?

Will grandpa leave the device open, allowing hackers complete, unfettered access?

That Zynga game that your dad spends so much time with – will he spend hundreds or thousands of dollars on in-app upgrades?

Your mother has repeatedly posted embarrassing information about her adult children on Facebook. How do we make her stop?

How will we take away our dad’s iPhone, or our mother’s iPad?

How do we initiate this conversation?

How do we cut off our loved ones from connectivity and all the joy it offers? These are difficult questions but we may have to face them.

Tech companies are designing smartphones and tablets to make it increasingly easier to connect with search, the web, friends and family. Should we demand tech companies also build devices that are harder to use – at least for some?

Is it right – or necessary – to require Apple, for example, to build in a set of “anti-accessible” controls such that we can limit the functionality, use and time our parents and grandparents spend on their devices? Will Silicon Valley create a start-up that uses biometrics, for examples, or other identity tools to ensure a device is “locked down” when we are not around, or that only the “good” gets through, and no bad can get out?

It seems that tech companies, from Samsung and Apple, Google, Amazon and Facebook, ought to bear some responsibility to ensure that the powerless elderly aren’t handed a truly powerful device without any consideration as to the potential harm it may cause.

With smartphone or tablet in hand, everyone and everything becomes instantly accessible, all over the world. The frightening corollary: Everyone and everything now has instant access to your parent’s (virtual) front door. At some point, you may be forced to take away the keys – for their own good.

You should not have to undertake this rather depressing familial obligation all on your own.

Image courtesy of ThinkProgress

Why Netflix Already Won at the Emmys

I had the opportunity of going to the first Cable Show that HBO showed their product at many years ago. In those days, the big networks were ABC, CBS and NBC. While cable was gaining as a TV delivery medium, most of the channels available were also available over the air. However, some channels were beginning to be created just for cable, such as the Food Network and HBO was proposing something very interesting at this time in what they called premium programming. This meant that along with paying for the cable feed, a user would need to subscribe to get their special HBO services, which in those days was just movies.

HBO popularized the premium channel concept and literally laid the groundwork for other premium programming. Now there are dozens of premium channels to subscribe to and well over 75% of the US households are cable subscribers today. In fact, in these passing years, cable companies have become the most powerful medium for video and TV content distribution and have become a big player in Hollywood and the movie industry.

At this cable show I got to meet with HBO execs that shared their vision of being the go to service to watch movies. While their early offerings were minimal they already had their sights on acquiring movie content from all over the world and establish themselves as the primary premium channel in the US. I remember distinctly them telling me that what they had was groundbreaking and could change the way people view TV content in the future. However, I am pretty sure that even in their dreams they did not envision a day when they would actually create original programming and become an actual television production company as well.

Industry Firsts

As the Emmy nominations approached last week, there was buzz in Hollywood and Silicon Valley that Netflix’s two shows that are now originally produced for them, Arrested Development and House of Cards, could become the first shows designed specifically for on-demand and over-the-air content distribution to receive an Emmy nomination. Up to now this has been the purview of dedicated production companies who created content just for the networks or the cable networks and an upstart like Netflix, with its OTA approach to content delivery was not supposed to have the skills or wherewithal to do anything other then just be a medium for OTA content delivery.

You have to give Netflix CEO Reed Hastings a lot of credit for the kind of visionary thinking that drove him to create original programming just for Netflix. It is ironic that less than two years ago he was considered evil because he split the subscription prices for mailed DVD’s and Online content into to separate services and industry execs and users alike complained to high heaven that this move was bad and unfair to their subscribers. But clearly Reed knew what a lot of us insiders knew that the days of DVD’s being mailed for viewing were numbered and delivering the same content OTA and on demand was the future of this type of content delivery. 

With House of Cards and Arrested Development, Reed and Netflix has raised the stakes and as many insiders understand, OTA on demand services like Netflix, Hulu and others are really the future of many types of content delivery and with this move Netflix in essence has become the HBO of this new age. Of course, HBO has their own version of OTA services called HBO Go and more and more dedicated content providers are following suit with similar services since they all understand that OTA on demand on any device is the true future of content delivery. But Netflix’s leadership position at this time in history cannot be underestimated since Hasting’s has emerged as the elder statesman of OTA services and Netflix has to be perceived as a direct threat to the cable companies as the primary provider of TV and video content someday. 

The Clear Future

With the Academy of Television Arts and Sciences Emmy nominations for House of Cards and Arrested Development, Netflix is now officially recognized by the TV industry and it confirms that they are a legitimate medium, capable of delivering original content through a brand new delivery system. I also believe it signals that the folks behind the Emmys actually understand that with these nominations they are actually giving their blessings to this new era where broadband delivery of Internet content and OTA services will be the norm and expect services like Netflix to be a part of the TV and movie industry framework from now on.

Regardless of whether House of Cards or Arrested Development actually win any Emmys, Netflix has already become a winner at this years show by nature of this giant endorsement of their labors and vindication that Netflix’s bet on creating original programming was on the money. This nod from Hollywood allows them to play with the big guns in the cable world and more importantly cements their position as the industry leader in providing OTA services that will eventually change the way most of us will receive our TV and video content in the future. 

A side note: Over the weekend I got a chance to watch the first two episodes of House of Cards and now see why it received various Emmy nomination. Well scripted and acted, the story of Washington insiders is addictive and gives people a fascinating look at the inner workings in our nation’s capital. If you enjoyed West Wing, you will really love House of Cards.

Why Windows RT Will Survive $900M Later

Yesterday, Microsoft announced that they were writing off $900M in Surface RT inventory.  This is based on price reductions on Surface RT to clear inventory.  If we assume that Microsoft factored in $150 per unit and we do some simple math, we can then estimate that Microsoft is sitting on 6M Surface RTs.  This is an absolute abomination, and I don’t think this is a surprise to many that Surface RT didn’t sell well, but what is a surprise is the magnitude of the write-down.  Even with nearly $1B in write-downs, I don’t think Microsoft will cancel Windows RT and I want to share my thinking.

I would be remiss if I didn’t first give my opinion on why Windows RT didn’t sell well.  First, I disagree with the notion that it has to do with the dual tablet-PC nature of Windows 8, and for that matter, RT.  Research I have conducted and research I have seen shows that once users actually use a use a touch-Windows device, they like it.  It’s that trial that is the tough part.  What doomed Surface RT, plain and simple, was the lack of premier apps and because the tablet market shifted to the 7-8″ form factor.  This isn’t the main topic of this post but I needed to weigh in.

To better understand why Microsoft will keep investing in Windows RT, we have to know why they invested in it in the first place.  When Microsoft would have had to make the decision to support an ARM-based Windows RT, Intel did not have a competitive mobile part and had just come off of some very public mobile failures, Menlow and Moorestown.  The CloverTrail schedule was risky, too, and Microsoft felt that they needed lower power ARM-based SOCs to meet the battery life bar set by the iPad and the Motorola Xoom.  The other factor is that in the minds of both Microsoft and Intel, any dollar invested by an OEM into each others products, is a dollar that they lose.  Microsoft is interested in cheap hardware so they can charge more for software.  Intel is interested in cheap software so they can charge more for hardware.  Makes sense, right?

The first reason Microsoft will keep investing in Windows RT is to keep Intel competitive on tablets.  Microsoft thinks that if they don’t hold something over Intel’s head, they won’t see solutions in the future as competitive as Bay Trail which, at least on paper, looks very competitive for holiday 2013 Windows 8-based tablets.  Microsoft is also seeking to lower prices on 7-8″ tablets, and they see ARM-based SOCs from someone like Rockchip or Huawei providing that cost reduction necessary to enable Microsoft to charge more for software or lower the product street price. We also need to factor in phones.  Windows Phone 9 will most likely share the same kernel as Windows RT (9) and therefore it would make sense to cease development now for ARM to revive it a few years later.  Finally, Microsoft is thinking wearables and IoT devices based on this shared Windows RT (9) kernel, and so far, Intel doesn’t have a roadmap that would provide this level of performance/watt necessary to last weeks on a single charge.

So even with nearly $1B in “losses” racked up so far, Microsoft will trudge on, because they believe that they need ARM-based silicon to cover all their product segment bases and increase the price of their software to OEMs.

Silicon Valley Is For Winners Only

Though I live in the richest area of the country – and during the richest epoch in humanity – whenever I spot a Powerball billboard and the number is over $100 million, I nonetheless fantasize about winning the jackpot.

This sets my mind to wondering. Even in my daydreams, I’ll assume there may be other winners. I know that taxes will take a mighty toll. I suspect that taking a lump sum will also bring the total amount I receive to something more Earth-bound. Say, $50 million.

From there, I quickly start divvying up the pot.

$10 million to parents, siblings, and in-laws.

$20 million to my children – in a trust, obviously: say, $200,000 every year forever.

$10 million goes to charity. I am a good and magnanimous winner, after all.

That leaves $10 million for my wife and I. Which breaks down like this:

  • $4 million for 2 houses – one of which will be a lovely $3 million Victorian in San Francisco
  • The remaining $6 million is doled out in monthly increments of $10,000 – each – till we die.

Pretty damn good.

Silicon Valley is like that. This is the land of the Powerball – and we are all winners here.

Yes, as with the taxman, we must pay the tolls. Our commutes are the stuff of dark comedy. Home prices are so high as to be literally inexplicable to our parents. There is a rather shocking and joyfully overt intolerance for diversity of thought: we gloriously present to the world our progressive, hard-driving, world-changing values like as if it’s that baby cub in The Lion King, yet anyone even dare suggest that, just perhaps, Marissa Mayer should not  be on so many boards, or maybe, just maybe, Obamacare should be shuttered, and they are quickly cut off from the innermost of the in crowd.

A rather small price to pay, really.

After all, here we live better than, say, 99.3% of the entire planet. Ever. We are the ultimate winners of a culture that has done more to transform the world than any other over the past millennia. Ok, over the last 100 years. But, hell, it’s not even close: Silicon Valley >> California >> USA >> The West.

The rest of the world lags far, far behind.

This place did not happen by mistake. So why are so many in Silicon Valley not positively reveling in their success? We created – and sustain – something that the rest of the world has failed to achieve, repeatedly.

Our choices won. We have been proven right, over and over. Celebrate!

Have you  given one second’s thought lately as to how unbelievably thin the new iPod Touch is – that thing you recently bought for your youngest daughter? It’s actually better than that “illustrated primer” tablet contraption in the popular sci-fi novel, The Diamond Age. Oh, and there’s not only two of these in all the world, as there was in that fictional tale. No, at least hundreds of millions. Because they only cost $200.

Read nearly any book, watch nearly any show, listen to any song, visit any site, connect with the world, video chat, all on this amazing, affordable device that nearly anyone on the planet can have. Oh, and it’s super-small and light as a feather.

It is right that we have more, eat better, live longer, can travel farther. The reason we spend so much time focusing on ourselves, on our work, our region, is because we continue to do it right. Why be afraid to admit this?

Is the marked hesitance to utterly bask in our blessings some perverted penance? Some odd notion of guilt yet to be disrupted by our collective big brains?

We stand at the top of the mountain. Think big and enjoy the view!

Let the world see that we have done it right, done it better, and that they are doing it wrong. Yes, we work much longer hours. We abhor unions. We demand super-intelligence. We glorify technology. We bask in disruption as much as creation. We swim in real-time. Because it’s right. Don’t like it, you’re wrong. The results are proof positive.

For our views, our choices, we have risen to the top. Party like it’s 1999. The rest of the world will eventually come to their senses.

But, should you think your success is undeserved, that the sacrifices of your parents, the brains you were born with, the luck of the time and place of your birth, the serendipitous confluence of money, talent and microprocessors are all more responsible for your good fortune, such that the largesse you have is little different than winning the lottery, then you are probably in the wrong place.

You can’t disrupt if you believe yourself unworthy. A master of the universe may suffer the slings and arrows of self-doubt, but never doubt their superiority.

This is your home now – the home of Apple and Google,  Genentech and Twitter, Facebook and Paypal; the land of crowd funding, kick starting, globe-spanning, market destroying transformation. These are no accidents.

Embrace it. If you cannot, you should probably just leave. It will reduce the commutes for the rest of us.

Why Apple Should Not Create a Low-End iPhone

For a while now Wall Street backers of Apple have wanted them to create a low priced iPhone and use it to gain more marketshare. They seem to think that market share will drive up profits and expand their reach. A Tech.pinions colleague has done a great jobs dealing with the issue of marketshare vs profits so I won’t go into that here and suggest you read his series on this since it lays out a very good argument that profits are much more important than marketshare.

But if Wall Streeter’s really want to understand why this is a bad idea, all they have to do is look back at Apple’s history and see that Apple tried that once before and it nearly destroyed them. Not long after John Sculley was pushed out of Apple, Michael Spindler was brought in as CEO to try and make Apple more competitive. At the time the Mac had become a niche product, mostly used for desktop publishing, graphics, and engineering. On the other hand, the PC was outselling Macs at least 20 to 1 and pressure from Wall Street pushed Spindler to try and do things to help the Mac gain market share.

So what did he do? First, he made the Mac Look like a PC in design. Second, breaking major tradition, he licensed the OS to a special group with the idea that if there were more companies offering the Mac, it would sell more. And, Apple and the licensee lowered the prices and tried to compete with the PC head on. There was only one problem. The PC clones had access to tens of thousands more apps then was available for the Mac and IT and consumers took the safe route and stayed with PCs. Even the lower prices could not help Apple gain any ground in the PC market.

During this side trip to try and be all things to all people, Apple lost a lot of money and was in the red to the tune of almost a billion dollars when Spindler was forced out. They then brought in Gil Amelio who tried to stem the losses but by that time, it was too late to save Apple. That is when Jobs came back and took it back to its roots of selling the best product they could to their core customers. As he told me in a meeting with him the second day he had come back to Apple, he would lean on industrial design and innovation to try and grow the company again.

If you look at the low-end of the smartphone market, it is becoming a wasteland. First, as long as a smartphone has an OS, some memory and access to apps it is called a smartphone. However, low-end smartphones are now around $99 in China and well over 50% of the smartphones selling in China are white box phones that are sold off the street, in cell phone flea markets and through channels we as market researchers can’t even track. But nobody in that price range is making any money.

The same goes for other markets where these phones cost $99-$139. BOM costs alone make it very difficult for them to have any margins when they sell these products and at these price ranges, profits are slim or next to none. For Apple to try and do a low-end phone for the emerging market might help market share but at the cost of any serious profit. I trust they have learned the lessons from the last time they low balled products for the market and never go after this side of the business.

On the other hand, there is precedence from the past for mid-range priced smartphones. While the Mac for the graphics, DTO and engineering worlds became premium products in their line, Steve Jobs introduced the innovative, candy colored iMacs at prices well below their upper-end Macs. To this day Apple still sells a lot of premium priced Macs but the bulk of their sales comes from mid range priced iMacs and MacBook’s selling well under their premium lines. But what they have not done is chase the low-end of the PC market and with the is strategy they still have solid profits in their Mac Line.

There are rumors that Apple will soon introduce lower priced iPhones, but don’t expect them to priced to compete at the really low-end of the market or be aggressive with pricing in emerging markets. From History, Apple knows that they can still make some good profits with mid ranged priced products and if these rumors are true, Apple new iPhones would be following a proven formula that has continued to help them stay one of the most profitable companies in the world today.

Beating The Dead Horse That Is Microsoft Windows (Part 1)

Few people enjoy beating a dead horse more than I do, but man, beating up on Microsoft Windows is simply no fun anymore…because everybody’s doing it.

The defining company of the PC era — which for the purposes of this discussion we’ll consider the 25 years from 1981 to 2006 — has not articulated a unique and compelling vision for the future of computing since the iPhone rocked it to its core in 2007. ~ Tom Krazit, Gigaom

Yup, that about sums it up.

The first part of this two-part series will focus on what’s gone wrong with Microsoft Windows. Next week, I’ll conclude the series by focusing on why Microsoft is in this position and what, if anything, they can do to resuscitate the dead horse that is Windows.

Let Me Count The Ways

So, exactly how badly is Microsoft losing in the personal computing space? Let me count the ways:

1) PCs are in decline;
2) Mobile is ascendant;
3) Windows Phone 8 sales have been disappointing;
4) Windows RT sales have been disappointing;
5) Microsoft Surface sales have been disappointing;
6) Third-party Windows 8 tablet sales have been disappointing;
7) Ultrabook sales have been disappointing;
8) Windows 8 adoption has been disappointing;
9) Microsoft App Store growth has been disappointing;
10) Business and Enterprise is moving on without Microsoft’s products or services;
11) Microsoft has lost its monopoly and its monopoly powers; and
12) Microsoft is dependent upon legacy products – Windows and Office – for the bulk of its profits.

No reasonable person is arguing that Microsoft is going away. What rational people ARE contending is that Microsoft is becoming irrelevant in the front end – the consumer facing portion – of the personal computing space.

How did it come to this?

1) PCs Are In Decline

If you don’t cannibalize yourself, someone else will. ~ Steve Jobs

Evidence of the PCs decline is indisputable and, frankly, no one is trying to dispute it.

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Dropoff in PC Sales Is Accelerating and Tablets Are the Culprit, Says IDC

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In mature markets, the PC is saturated. And that’s where tablets are secondary devices. Shim says in emerging markets tablets are going to be primary devices. If the tablet takes off there, that kills the traditional PC’s chances of ever growing again.

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…for the 4th quarter PC sales declined by almost 5% according to Gartner research, and by almost 6.5% according to IDC. Both groups no longer expect a rebound in PC shipments, as they believe homes will no longer have more than 1 PC due to mobile device penetration, a market where Surface and Win8 phones have failed to make a significant impact or move beyond a tiny market share.

In the model IDC used to forecast the 7.8% decline, the second quarter — which ended June 30 — was to be down 11.7%, a smaller drop than the first quarter’s historic 13.9% plunge. Shipments in the third and fourth quarters, meanwhile, would decline 4.7% and 1.6%, respectively, from the same periods in 2012.

2) Mobile is ascendant

“The best way to predict the future is to invent it.” ~ Alan Kay

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Half of U.S. adults now own a tablet or smartphone, Pew study finds

…mobile devices — in particular iOS and Android — will continue to cannibalize PC sales throughout the year. Put simply, consumers and enterprise buyers prefer to spend their money on post-PC devices rather than on PCs.

Next year, tablet sales will beat notebook sales for the first time ever, says NPD’s DisplaySearch. It is projecting tablet shipments of 240 million units versus notebook shipments of 203 million units. That’s 64 percent growth for tablet versus a 5 percent decline for notebooks.

IDC: Tablets to outsell notebooks in 2013, all PCs in 2015

The latest prediction from NPD DisplaySearch shows just how quickly the market has changed. It was six months ago, in July 2012, that the same organization predicted that it would take until 2016 for tablets to surpass notebook shipments.

3) Windows Phone 8 sales have been disappointing

I wish developing great products was as easy as writing a check. If that was the case, Microsoft would have great products. ~ Steve Jobs

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Source: Ben Evans

iOS and Android comprised 92.3% of Q1 2013 smartphone shipments

According to Murtazin, Microsoft’s royalty fees from licensing the Windows Phone OS to manufacturers like Nokia, HTC (2498) and Samsung (005930) are being given back to these companies in the form of marketing dollars. In Nokia’s case, an arrangement similar to the one Murtazin describes is a matter of public record, as per the company’s 2011 annual report

Windows Phone gets no traction despite the Nokia deal and RIM’s collapse

Manufacturers reportedly ignoring Windows Phone due to OS fees… and Nokia

Rumor: Microsoft paying $100,000 to some Windows Phone app makers?

You won’t help shoots grow by pulling them up higher. ~ Chinese proverb

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4) Windows RT sales have been disappointing

It is perfectly monstrous the way people go about nowadays saying things against one behind one’s back that are absolutely and entirely true. ~ Oscar Wilde

…Gottheil dubbed the RT tablets a “meta-tweener,” a “tweener between a tweener (Windows 8 x86) and a pure tablet like iPad,” he said. … “I don’t think Windows 8 RT can be successful unless and until its price is much lower.”

Microsoft slashes Surface RT prices by $150 as it flounders against Apple’s iPad

Lenovo released one of the few PCs that ran Microsoft’s ARM-based Windows RT operating system last fall with the 11 inch Yoga 11 notebook-tablet hybrid. Now it looks like Lenovo is phasing out its lone Windows RT product, as it no longer sells the Yoga 11 on its own website.

5) Microsoft Surface sales have been disappointing

To change and to improve are two different things. – German proverb

Microsoft’s Surface Experiment Has Fallen Flat

“Perfection is the goal we’re going for, and that perfection comes with trade-offs,” said Panos Panay, general manager of Surface.

The above statement is “perfectly” ridiculous.

Someone at Microsoft needs to invest in a dictionary.

6) Third-party Windows 8 tablet sales have been disappointing

Bad engineering is solving a problem that you didn’t have in a way that you don’t understand.

…(A)t a time when buyers seems price-sensitive, Wu finds the $500 to $1200 price tags slapped on Windows 8 hardware to be “uncompetitive” when compared to Android with prices as low as $99, and the iPad mini which starts at $329.

Windows 8 tablet sales have been almost non-existent, with unit sales representing less than 1% of all Windows 8 device sales to date, NPD said, excluding sales of the Windows Surface tablet.

Windows 8 device sales have not met Redmond’s internal projections, and the company is blaming it on lackluster hardware from OEMs.

7) Ultrabook sales have been disappointing

Imitation is a good servant, but a bad master.

In October, IHS iSuppli downgraded its estimate of 2012’s ultrabook sales, cutting its projections by more than half from 22 million to 10.3 million, citing too-high prices. iSuppli argued that sales won’t take off until prices fall toward the $600 bar, perhaps in 2013. … The problem for Microsoft is that the outlook for ultrabooks, which the Surface Pro emulates, is dim. Windows ultrabook sales have been disappointing this year, and show little sign of improving sans dramatic price cuts.

NPD: Apple’s MacBook Air dominates with 56% of U.S. thin-and-light notebook market

8) Windows 8 adoption has been disappointing

I heard that if you play a Windows 8 CD backwards, you’ll get a satanic message. But the most frightening thing is that if you play it forward, it installs Windows 8.

The Windows 8 Sales Data Is In, And It’s Bad News For Microsoft

Windows 8 continues to fail

Windows 8 Is Failing to Beat Windows 7… And XP… And Even Vista!

Worse still, Windows 8’s month-over-month growth rate is lagging further and further behind Vista’s dreadful 2007 adoption numbers. When comparing the operating systems when they were first launched, Windows 8’s adoption rate in its first month trailed Vista by just over half-a-percent among PC buyers. Now, in their 8th month out, Vista’s market-share numbers now lead Windows 8 by 3.64 percent. Needless to say, both lag far behind XP and Windows 7’s numbers at similar points in their product life-cycle.

How bad are Windows 8 sales? In April 2013’s Net Applications numbers, Windows 8 barely crept up to 3.82-percent. That still leaves Windows 8 behind Microsoft’s last operating system flop, Vista, after seven months in the market. Windows on tablets fared even worse with touch-screen-based Windows 8 devices and Windows RT devices coming in at 0.02-percent and 0.00-percent each. The last was not a typo. The Surface RT is now in the running for worst Microsoft launch ever.

StatCounter’s findings follow a similarly worrying report from NPD this week, which found that Windows 8 had captured just 58% of all Windows device sales since its launch, while Windows 7 captured 83% during the same period.

9) Microsoft App Store growth has been disappointing

“There comes a time in the affairs of man when he’s got to take the bull by the tail and face the situation.” – W.C. Fields

App-Growth-by-Platform

In a classic chicken-and-the-egg conundrum, the Windows Store needs more Windows 8 customers and Windows 8 customers need more worthwhile apps from the store. Microsoft has failed miserably at attracting compelling content, a painful fact for any developer — or software company — thinking about committing the resources to bring a Metro app to market. How bad is it? … In short, it’s a wasteland.

Microsoft expected 100,000 Windows 8 apps in 90 days. It took 248

Sources: Microsoft Is Paying Developers Up To $100,000 To Write Windows Phone 8 Apps

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Source

Windows 8 users are turning to apps, on average, 1.52 times a day. Breaking this down by type indicates that tablet users are the heaviest app users, launching them 2.71 times per day, while touch-screen notebook users launch 47 percent more apps than those on a standard notebook. … Desktop users make the least use of Modern apps. … Soluto crunched the data further, and took a closer look at those who launch fewer than one Modern app a day. Here, the company noticed that a staggering 60 percent of users launch an app less than once a day. Even when it comes to tablet users, the heaviest users of Windows 8 apps according to Soluto, 44 percent of those sometimes go a day without launching an app.

10) Business and Enterprise are moving on without Microsoft’s products or services

If you’re in a card game and you don’t know who the sucker is, you’re it. ~ Anonymous

Gartner: By 2014, Apple will be as accepted by enterprise IT as Microsoft is today

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Thanks To BYOD, Apple Invades The Enterprise

More Data Showing iOS, Especially The iPhone, Still Killing It In The Enterprise

Why companies are still deploying iOS apps first

Fortune 500 Companies Moving to iPad Hits 94%

Apple’s iOS still dominated the enterprise mobile circuit with 75 percent of total device activations last quarter.

11) Microsoft has lost its monopoly and its monopoly powers

That which has been believed by everyone, always and everywhere, has every chance of being false. ~ Paul Valery

Forrester Report: Microsoft’s Windows Dominance Is Over

…and Windows is no longer the dominant end-user operating system when PCs, smartphones and tablets are considered.

In the greater end-user market, as Mary Meeker, the well-regarded analyst and venture capitalist, pointed out in her May 2013 Kleiner Perkins Caufield & Byers’ 2013 Internet Trends report, Windows is on the decline no matter how you measure it. Apple iOS and Android now have the lion’s share of computing devices, including PCs, smartphones and tablets, with 65-percent share over Windows’ 35-percent.

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Source

Microsoft’s mobile operating system share is actually worse than it appears. None of its most recent smartphone/tablet operating systems, Windows 8, Windows Phone 8 or RT. even breaks the 0.01-percent mark on NetMarketShare’s mobile/tablet operating system market share chart. How bad it is that? Android 1.6, with 0.01-percent, does make the chart.

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While Microsoft apologists focus on Windows continuing to be the dominant desktop operating system, they keep missing the two elephants in the room: Windows 8 continues to fall behind Microsoft’s previous top operating system failure, Vista, and Windows is no longer the dominant end-user operating system when PCs, smartphones and tablets are considered.

Men occasionally stumble over the truth, but most of them pick themselves up and hurry on as if nothing had happened. ~ Sir Winston Churchill

“We had a little bit different expectations for Windows 8 than previous OS launches,” Jeff Barney, VP and general manager of Toshiba America’s PC and TV business, said. “In the past Windows was the only game in town, when it was Windows 7 or Vista it was the big event of the year. These days it’s a different environment.”

The erstwhile truism You Won’t Get Fired For Buying From Microsoft has lost its luster.

In the consumer market, we expect to Apple to gain share as the younger generation has grown up on Apples at school. … Pretty soon it could be that the ‘rebels’ will be the Windows users rather than the Mac users.

12) Microsoft is dependent upon legacy products – Windows and Office – for the bulk of its profits

There is only one boss: the customer. And he can fire everybody in the company, from the chairman on down, simply by spending his money somewhere else. ~ Sam Walton

Microsoft makes more than 75% of its profits from Windows and Office. Less than 25% comes from its vaunted servers and tools. And Microsoft makes nothing from its xBox/Kinect entertainment division, while losing vast sums in its on-line division (negative $350M-$750M/quarter).

Microsoft uses a licensing model. A licensing model only takes a portion of the total profits from a sale. In a licensing model, volume matters.

If Microsoft can’t move its Windows and Office products and services onto mobile phones and tablets, well…

Next Week

The first part of this two-part series focused on what’s gone wrong with Microsoft Windows. Next week, I’ll conclude the series by focusing on why Microsoft is in this position and what, if anything, they can do to resuscitate the dead horse that is Windows.

To Touch or Not to Touch, That is the Question

This is an excerpt from an analysis on the strategic errors of Windows 8 and the philosophy behind the product that was written for our Tech.pinions Insiders Members. To learn more about Tech.pinions Insiders click here or to see all Insider topics and articles click here.

Adopting a New Posture

While I was at Microsoft’s build conference last week, I decided to make a point to keenly observe those attendees who have embraced touch on notebooks and watch how they use them. The plus to being at a Microsoft conference was that I saw more touch notebooks, and Surfaces for that matter, in one location than I have ever seen out in one place.

What I observed was interesting. Those who had adopted touch on their notebook would type with the device at arms length, but then move their body and face closer to the screen as they sought to use touch input. In essence to use touch they actually leaned in, performed the action and either stayed or leaned in to scroll a web site for example, and then leaned back to start typing again.

Interestingly, Surface owners had adopted an entire experience built around leaning in. I can only speculate that this is because the screen is so small that staying leaned in closer to the screen makes it easier to read the text, etc. Surface owners would even type with arms bent significantly more because of how close they were to the screen.

Alleged-Microsoft-Surface-Phone-Emerges-in-Official-Photos-2

My key takeaways from these observations were that to use a Windows 8 notebook, or an aspiring hybrid like Surface, adopting touch as a paradigm is one necessary component, but so is adopting new body language to operate it in a useful and efficient way.

So the question we need to ask ourselves is this: Is this better? Does touch bring so much to the notebook and desktop form factor that we should consider this new, somewhat un-natural required body posture worth the effort?

Let’s look at it this way. Is adding touch as a UI mechanism to something like a desktop or notebook a more efficient input mechanism? In notebook and some desktop form factors, I would argue that it is not.

I absolutely condone touch on smartphones and tablets. In these devices touch is natural, and the best and most efficient input mechanism for the use cases they are best at. This is because they are truly mobile and you use natural motions to touch the screen to navigate. But notebooks and desktop are different beasts that succeed at very different use cases for very different reasons.

WHY TOUCH?

What I’ve tried to bring out, both in public and in private, is this: does using touch as an input mechanism on a notebook or desktop make me more efficient in my workflow? I’m yet to find that it does.

When you sit behind a notebook or a desktop you are prepared to get work done. In this context speed, efficiency, and ease of use are keys to make these devices the best tools for the job. So for touch to be compelling, it must be better at the above experiences than a solid trackpad or external mouse. Does it do this? The answer is no.

Take the trackpad for example. My hands have less distance to travel for me to reach the trackpad on all installations. To use a trackpad I bring my hands closer to me a very short distance (maybe 2-3 inches). Contrast that with using touch as an input mechanism and rather than bring my hands in a short distance I must reach for the screen (approximately 5-6 inches). This requires more effort and more time than using the trackpad and is more tiring to the arm, by keeping it fully extended to operate. Unless you hunch over or lean in, which is also uncomfortable for any length of time. I concede that for some the amount of time and effort may not be considered much difference by some, but it is still a key point.

When I discuss this with those who advocate touch screens on notebooks, they propose that touching the device for input is a preferred mechanism to the trackpad. My counter point is that this is because most trackpads put on Windows PCs are downright terrible. Sometimes I wonder if Microsoft pushed OEMs to do this on purpose to make touching the screen seem like a better experience, simply because the trackpad is so bad, that it makes touching the device appear to feel like a better alternative.

I’d like to quantify this sometime by having a race with a Windows user and challenge them to a similar task, like creating a few slides and graphs in Power Point. Them on their touch notebook and me on my MacBook Air. We will see who can finish the task the quickest.

When Microsoft Ruled Tech: An Elegy

Almost 20 years ago, when Microsoft was king, I became a full time tech writer after many years of writing about economics and politics and working as an editor. As I watch Microsft struggling to get its mojo back, especially in consumer markets, I realize that I really miss the swashbuckling Microsoft of the mid–1990s.

There’s never been anything quite like it, and may never be again. This was a Microsoft that its competitors industry feared and that many regarded as downright evil. It was at the start of a run of domination that would lead to it being found guilty of civil violations of antitrust laws in the U.S. and Europe. And it was an exciting and dynamic company. (Probably the closest thing to it today is Google. But despite Microsoft’s many sins, it lacked two of Google’s most significant traits, a lack of focus and an annoying streak of self-righteousness.)

What was this Microsoft really like? By 1994, Microsoft was on its way to ruling the PC world with Windows and it was developing a never-realized vision in which Windows code would run on everything, from PCs to copiers to coffeemakers. But Windows 3.1, despite its success, was a thin, kludgy layer of code on top of the rickety foundation of MS-DOS. Within Microsoft, two groups were racing to replace it, the Windows 95 team headed by Brad Silverberg and the Windows NT group skippered by Jim Allchin. In the best Microsoft tradittion, these groups competed hotly with each other. Windows NT was the more ambitious effort, built on a solid operating system kernel architected by Dave Cutler, who had created VMS for Digital Equipment. Windows 95 was a huge user interface improvement, but still a kludge dependent on a DOS core. Windows 95 was an instant hit, while NT provided Microsoft with its OS of the future: the NT kernel powers all current Windows versions.

Microsoft was a fierce competitor. But until recently, it has had phenomenal luck in the incompetence of its competitors. Apple slowly crumbled through the 90s, turning out lousy Mac hardware running outdated software, and steadily lost market share. The Newton, years ahead of its time, sapped scarce resources. IBM’s attempt to challenge Windows, OS/2, was just the consumer product you would expect from a mainframe maker. The dominant DOS applications software makers, WordPerfect and Lotus, both missed the rise of Windows, leaving the field open. Microsoft Office was born more or less by accident. Microsoft had developed Excel for the Mac, which lacked a good spreadsheet, but was having a hard time getting customers to trade MacWrite for Word. The company created Office by throwing in a copy of Word with Excel, a product that former Offcie marketing chief Laura Jennings once described to me as “crap in a box.”[pullquote]Microsoft was a fierce competitor. But until recently, it has had phenomenal luck in the incompetance of its competitors.[/pullquote]

That the internet and Internet Explorer would be central to the government’s antitrust case is the great irony of Microsoft history. Bill Gates and other executives of Microsoft were late to recognize the importance of the internet. Windows 95 originally shipped without a browser or any real internet support. This mistake, probably the biggest in the company’s history, helps explain why it came to regard Netscape as an existential threat that had to be destroyed. During the development of Windows 98, there was a fierce battle between Silverberg, who wanted a more net-centric approach for the future, and Allchin. Allchin won, and Silverberg and much of his team left the company. It’s impossible to say whether Microsoft would have done better had the fight gone the other way, but it definitely would have been much different.

Microsoft in the mid–90s was a fun company to cover. It believed in Bill Gates’ mission of putting a PC in every home and on devery desktop. Its executives were open and frank and it dreamed big dreams. It’s aggressiveness made it interesting. I used to look forward to my regular trips to Redmond. The antitrust case, a disaster from which Microsoft has never really recovered, sucked most of the fun and a lot of the life out of the company.

Microsoft was going to change anyway: It had become a big company and many of the executives who had led the phenomenal growth period and had grown rich beyond imagination in the process, were starting to move on. In nearly every case, their replacements were more managerial and less adventurous. The prosecution added to the growing sense of caution, and Gates, much of whose time was absorbed by the case, seemed to lose his fire and, gradually, his interest.

The dominant companies of today, Apple and Google, are nowhere near as much fun to write about as Microsoft in its prime. Both are secretive, Apple obssessively so, and neither makes its senior executives available except in very tightly controlled situations. For a writer fresh to the tech business, the Microsoft of 1994 was a dream. In an industry that has grown up a lot in the last 20 years, I doubt we will se its like again.

Pebble: The Nerd’s Watch

Ben Bajarin wrote a nice piece last week entitled “The Challenge of Wearable Computing”, where he talks about the challenges of wearables and offers some suggestions to developers to improve their chances for success. In this column, I want to share with you my early, personal and specific Pebble watch experience and extrapolate some of thoughts to the general consumer market.  Let’s start with a little background on Pebble.

The Pebble watch started as a Kickstarter project  that exceeded their $100K funding goal by over $10M over a year ago in May, 2012.  The watch is currently shipping directly from Pebble and you can also buy it at Best Buy for $149.99.  Pebble supports basic peer-to-peer functionality for Android and iOS phones and sports a low res e-ink style display. Built into the core Pebble OS, it supports notifications for calls, texts, calendar events, email, Google Talk, and Facebook notifications.  So basically, whenever your phone gets a notification, Pebble gets one.  Through 3rd party apps I installed, I could control my phone’s music player, extend RunKeeper, see Twitter and Facebook feeds, see the weather, view photos, view calendar, page my phone, and respond to texts.  Sounds robust and valuable, right? Well, not really.  The best way to go through the experience is discuss highs and lows.

Pebble Highs

  • Battery life: I have had Pebble for over a week, use every notification and the backlight but only have had to charge once.
  • Reliability when connected: When the watch is connected to a phone, the apps are super-consistent.  This must be partly because they do one single task, like alert you of an email or text.
  • Notifications with phone tucked away: There are times when having a phone out isn’t socially accepted or inconvenient, like during dinner or when in the airport line.   With Pebble, I can get nearly all my notifications and it was sometimes reassuring that I wouldn’t miss something.
  • Display: When you hear of a 144×168 black and white resolution in a world of Retina displays, most would laugh it off as a joke.  I was very surprised just how quickly I got accustomed to the backlit, e-ink like display.  I rarely had an issue in full sunlight and literally a flick of the wrist, the backlight turns on.
  • Exercise: While the RunKeeper integration is extremely limited, it does provide the basic information like pace, distance, and time run eliminating the need to look at my phone.

Pebble Lows

  • Limited utility via limited apps: Pebble is severely limited by a very low number of apps that support the platform.  Does “mobile device lacking apps therefore delivering low value” sound familiar?  It’s the issue for Windows RT, Windows Phone, BB10 and was one of the death blows for HP’s webOS. Sure it’s early, only a year into development, but getting notifications, having a second screen for a few apps, and controlling a few things on the smartphone just isn’t enough.
  • No App Store: There currently isn’t an official app store for Pebble, making finding apps a chore.  Users can either search the Android store for “Pebble” or go to the many non-Pebble supported websites via Google search.
  • Unreliable BT connection: Bluetooth inherently is unreliable, as we have all experienced at one time or another.  This is a real back breaker because Pebble is limited without the phone connection.  To make matters worse, Pebble doesn’t have a visual indicator that it is successfully connected, so you are left wondering if you were missing notifications. To add insult to injury, my phone often said Pebble was connected when it really wasn’t
  • Nerdy: My wife nailed it when she saw me with Pebble and asked, “so is that the nerd watch”?  As I recovered from the “nerd slap”, I thought about it, and the watch really isn’t very stylish. In fact, it’s nerdy.  It is shiny and feels cheap and plasticky, like a watch you can win as a prize in a machine in an arcade.  At the end of the week, I missed some of my watches.  I’m no watch collector, but I have some that are a few hundred bucks and a few that are a few thousand dollars.

Pebble right now is a classic “tweener”.  Let’s look at fitness devices as an example.  Pebble is not like a FitBit One, FitBit Flex or Jawbone UP that tracks sleep, movement, calories yet inexpensive, stylish or easy to hide. Nor is it like the $249 MotoActv that has a color display, heart rate monitor, embedded GPS tracker and built-in music player.  Pebble is smack dab in the middle of the devices while trying to get developers to do more. A tweener is never a good place to stay for long as it usually ends in death.

Pebble needs to be more “general purpose” like a phone, tablet, PC or more “focused” like a sports watch or game console.  To do this, I believe Pebble will need to change dramatically. To go more “general purpose”, Pebble needs a complete overhaul in UI that would enable a lot more input functionality via, let’s say, voice.  Even with added features, it would take a lot to get over the “nerd factor”.  I could see non-nerds getting comfortable with Pebble functionality if it somehow embedded into their favorite Omega, Breitling, TAG Heuer, Citizen, or Burberry watches.

To get more “focused” Pebble needs to identify a unique problem for a unique audience that only it can solve…. and then go solve it.  I could see a customized “Pebble-like” device solving some very unique living room gaming challenges with a multi-axis (more than 3) accelerometer.  I could see specialty watches for firefighters and policemen, too.  The list goes on and on, but unfortunately, this is just not what Pebble is.

Until Pebble and other devices like Pebble are semi-concealable or get more focused on solving focused problems, it will remain the nerd’s watch.  The world needs and loves nerds, but I don’t think it’s a very large market in the near future.

Text Me, Don’t Call Me

I find it interesting to look at how communication has evolved. In particular to where we are today where with certain generations non-verbal real-time communication has become the majority of interactions. I come across this frequently when I tell people the fastest way to get a response from me is to text me not to call me. I’m not always in a setting where I can answer my phone but I am generally always in a setting where I can answer a text message.

Technology has enabled this new tier of communication. I first started thinking about this new tier when I was studying how millennial’s were using technology in the 2007 timeframe. It was around this time we saw the shift happen with this generation to texting more than they were talking on the phone.

At the time this was a profound observation. This young demographic’s preferred method of communication was text messaging and in many contents it trumped other forms of communication.

Prior to text messaging, instant messaging was the closest thing we had to real-time non-verbal communication but it required you be logged in and at a computing. ((of course morse code was a form of real-time non verbal communication)) Texting delivered on the value of instant messaging but made it possible any-time any where, for a fee of course.

I bring this up because it begs an interesting question. Have we finished innovating on how we communicate? This is essentially one of the primary ways man has used technology. We have used it to our advantage to increase the manner and method in which we communicate. Communicating is a basic human need and nearly every example we have of communication evolving has been directly empowered by technological innovation.

Tiers of Communication

To look deeper at the question of future communication evolution it is helpful to look at the ways in which we communicate. I call these the tiers of communication and I believe there are three of them. Below is a chart I made for a presentation on the subject.

Screen Shot 2013-07-09 at 4.11.37 PM

The first tier or communication is a basic verbal conversation, either in person, on the phone, over video conference, etc.

The second tier of communication is like a text message, instant message, or some other form of conversation that takes place non-verbally but is in real-time or near real-time.

The third tier is made up of conversations we have that are non-verbal and not in real time. Email, and snail mail are examples of this form of communication.

What’s fascinating about having different options for communicating is that we can use the medium that best dictates the context of the conversation. For example in an emergency a verbal conversation is necessary. But for a question about a grocery store item a text message would probably suffice.

Text messaging is perhaps one of the most fascinating ways in which our communication styles have advanced. Texting is obviously good for short conversations, but many millennials, for example, will have very long conversations and multiples of them simultaneously in real-time. We have all heard the horror stories of parents finding unusually high cell phone bills due to kids texting more than 10,000 texts in a month. That’s some dedication to this new form of communication.

Interestingly social media like Facebook and Twitter contain multiple elements of these tiers. On Facebook I can post something with no real time sensitive purpose or even something requiring no response at all. I can also have a real-time conversation with someone via Facebook chat. I can send a message and even have a voice conversation.

Similarly Twitter gives me many ways of using the tiers of communication, minus verbal for now. Twitter is actually interesting to me and many in my close circle. Since many of us are bearish on Facebook, we have made time investments in Twitter. Because of how I use Twitter, it is nearly as good as text messaging if one wants to communicate with me.

My guess is that technology is not done advancing how we communicate. My conviction is that the tiers I outline above will stay the same, however, technology may enable new ways of engaging in them not possible today.

Maybe it will be the TV, or wearable devices which will enable new ways to communicate. One thing, however, is highly likely. The millennial generation that embraced new technologies and adopted them into their communication methods, will be the generation that brings us the next major innovation in communication.

The Challenge of Wearable Computing

I’d like to start out with a question I have been asking myself. Why does Google Glass need to be on my face? More importantly, to get the benefits of Google Glass (whatever one deems that to be) why does it need to come in a form factor that goes on my face? The answer is that it likely does not.

The same question will need to be answered by any potential existence of Apple’s iWatch or any smart watch. My favorite line of critics of the iWatch, or smart watches in general for that matter, is that no one wears watches these days. My standard response is: and those that do don’t wear them to keep time.

I absolutely agree that the wrist is prime real estate, but I’d add that it is also highly valuable real estate. Therefore for a consumer to put something on their wrist, their face, or any other part of their person, there must be a clear value proposition.

In Search of a Value Proposition

This is why to date the only real wearable success stories we have are devices like the Fitbit, Nike Fuelband, Jawbone Up, and others in the wearable health segment. The industry term for this segment is “Quantified Self.” These devices track our activity and give us insight into how many steps we have taken, calories, burned, quality and quantity of sleep, etc.

For many this is a clear value proposition and a compelling reason to place an additional object on their body. The value proposition is also a simple one: wear this object and it will give you details about your activity and general health which for many is valuable information. When a segment like wearable computing is in the early stages of adoption, as we are in now, simple value propositions are key to getting initial consumer adoption.

Google’s Glasses challenge lies both in the value proposition and the form factor. Google hopes to flesh out the value proposition with the public research and developing happening with its early adopters. The form factor however, is a larger question. While its true that many people wear sunglasses, or eyeglasses, most would tell you they do not always want to or even enjoying having glasses on their face. There is eye surgery for those who need glasses so that they no longer have to wear glasses. Given behavioral observations around glasses, one would need to conclude that to keep an object on ones face, there must be a good reason.

Whatever the longer term benefits of something like Google Glass turn out to be, it is likely that they will show up in other objects not necessarily glasses. Like displays in our cars, or more intelligent screens on our person like our phones, or perhaps even a smart watch.

Similarly, any smart watch will also have to make its case for existence beyond the techno-geek crowd. Here we come back to my earlier point that those who wear a watch don’t do so to keep time. I wear a watch. I like my watch and besides my wedding ring it’s the only piece of jewelry I wear. I intentionally selected this watch for a variety of reasons. It is not on my wrist because I need it to keep time. It is a fashion accessory for me. I’d argue that for most watch wearers this is the case as well. This is exactly my point on why the wrist is valuable real estate. It is valuable because those who place it there do so for more than just its functionality.

Why Should I Wear This?

Objects we choose to put on our person and go out in public with are highly personal and intentionally selected. The personal and intentional reasons that we wear objects are the things that wearable computing devices don’t just need to overcome they need to add to as well.

A smart watch needs to add to the reasons I wear a watch. Smart glasses need to add to the reasons I put glasses on my face. Addressing these things are the challenges of those who aspire to create wearable computers that are worn by the masses. I am also confident it is where much innovation will happen over the next 10 years.

We have ideas on how this shakes out. Things like relevant, contextual information at a glance, or notifications for example. All the exact value propositions of wearable computing are not yet fully known. Even with so much ambiguity around wearable computing, I am optimistic and looking forward to the innovations that will take place to create wearable computers that add value to our lives.

Microsoft Reorganization and the Future of Xbox

Microsoft today announced a long-awaited reorganization that is aimed at eliminating the company’s often warring business units in favor of a more unified, collaborative organization. Kara Swisher at All Things D had the details first and has reported them in great depth, so I’m not going to go over that ground. But I do want to speculate a bit on what the new arrangement means for the Xbox, the one product that has generated any real excitement out of Redmond in the past few years.

On the one hand, putting Xbox in a consolidated hardware unit, under former Windows engineering chief Julie Larsen-Green, shows how mainstream and central to Microsoft’s ambitions the Xbox has become. On the other, it marks the formal end of Xbox as a rebel within the Microsoft camp.

Xbox was the product of a Microsoft skunkworks run by J. Allard and Robbie Bach. It was based in Redmond, Wash., like the rest of the company, but was physically located in offices and labs a few miles away fromt the main Microsoft campus. At least in its early days, it felt very different, and much less corporate, than other Microsoft operations. The team produced the original Xbox, the Xbox 360, and the revolutionary Kinect sensor.

To be sure, a lot of what made the Xbox unit special ended when Allard and Bach left the company in 2010 and Xbox got reeled in closer to the mother ship. Don Mattrick, who took over for Bach as head of the unit,  announced recently he was leaving Microsoft to become CEO of game maker Zynga. After today’s reorganization, it’s official that Xbox is just another product in the Microsoft family.

 

This Is It. This Is Apple. This Is Their Design.

On June 10, 2013, during the Apple World Wide Developer Conference (WWDC) keynote, Apple unveiled two new videos: “Intention” and “Our Signature

Two videos, but only one message.

Author’s note: All of the quotes from Apple’s videos are: “in bold text”.

“This is it.”

In those videos, Apple revealed its mission, its purpose, its essence, its raison d’etre and – perhaps – a bit of its soul.

This is the post-Steve Jobs manifesto. This is Tim Cook’s Apple. This is Apple’s new brand. This is Apple.

Something happens to companies when they get to be a few million dollars — their souls go away. And that’s the biggest thing I’ll be measured on: Were we able to grow a $10 billion company that didn’t lose its soul? ~ Steve Jobs

“This is what matters.”

“Listen up,” Apple is virtually saying to its customers, its employees, its investors, the analysts, the media, the pundits, and even to its competitors. “Listen up,” Apple is saying, “we’re telling you who we are and how we roll. This is our plan. This is our design. This is our intention. You should be paying attention.”

The Questions One Asks Inform The Answers One Receives

“The greatest challenge to any thinker is stating the problem in a way that will allow a solution.” ~ Bertrand Russell

“The first thing we ask is:

How it makes someone feel.

The experience of a product.

Who will this help?

Will it make life better?

Does this deserve to exist?”

Wow. Just wow.

Look at the types of extraordinary questions that Apple is asking itself. Talk about Thinking Different. It takes one’s breath away.

— Do you think that Microsoft asked such questions before it foisted Windows 8 on its customers?
— Do you think that Google asked such questions before it announced the Nexus Q?
— Do you think that Dell asked such questions — about anything, ever?
— Do you think that Apple asked such questions before they announced their mapping solution last year? ((Maps was a strategic move, a business move, perhaps even a mandatory move. But Apple has paid a terrible public relations price for prioritizing their needs over the needs of their customers.))
— Does your organization – or any organization you know – ask such piercing questions?

Judge a man by his questions rather than his answers.
—Voltaire

Let’s pause and take a moment to parse these questions a bit further.

“How it makes someone feel. The experience of a product.”

Ultimately, of course, design defines so much of our experience. ~ Jony Ive

This is huge. Apple doesn’t start with the specs or the features. They don’t start with corporate budgets or corporate agendas. They don’t start with what it should look like or how it fits into their current product lineup.

You’ve got to start with the customer experience and work back toward the technology — not the other way around. ~ Steve Jobs

Apple starts with how the product or service makes someone FEEL. That person’s EXPERIENCE with the product.

It’s not just a people first approach, it’s an emotion first approach too.

Apple doesn’t define the “job to be done” in technological terms. They define the job to be done in emotional terms — by whether their devices make their customers feel:

“Delight, surprise, love, connection”

This is the ecosystem argument. That devices are superior when they are less centered around technology and features and more centered around cohesiveness and experience.

The fallacy most make when critiquing Apple’s services is to believe that Apple needs to out-innovate competing services. The truth is, all they need to do is out-integrate them. ~ Ben Bajarin

Bill Gates once said that Steve Jobs “never really understood much about technology.” But that’s because Bill Gates wanted to believe that superior technology alway wins. He actually had it backwards. It’s not about making technology that works. It’s about making technology that works the way we do.

“The main thing in our design is that we have to make things intuitively obvious.” ~ Steve Jobs

“(T)he opportunity is not in designing a better “user interface” but designing a better “user experience.” ~ Damir Perge

“… we think that our job is to take responsibility for the complete user experience. And if it’s not up to par, it’s our fault, plain and simple. ~ Steve Jobs

“Who will this help? Will it make life better?”

They say that Apple understands what makes people tick; that Apple is a human-focused technology company. If Apple starts their product design by asking great questions like these, is it any wonder that this is so?

Apple’s magic is in the way it evaluates a product in order to answer the question “How would average humans like to use this?”—without actually asking average humans. … (W)hen you rely on focus groups and checklists of features, you end up with a projector phone. Or, like HP, you end up with computers that look exactly like Apple’s but lack the ease of use and thoughtful design. ~ John Moltz

Much of the difference between Microsoft and Apple — or between Apple and just about everyone else — is not the technology, but the usability. The real killer appeal of the iPod or the iPhone or the iPad is how easy they are to use, and how integral that ease of use and design is to the product itself.

I’m sure when Bill Gates looks at the iPad or the iPhone, he thinks about all the features it doesn’t have, or all the things that it can’t do. But no one else thinks about those things — all they are interested in is what they can do, and how much fun it is doing them, and how appealing those devices are. And that is one of Steve Jobs’ biggest gifts to the world of technology and design. ~ Mathew Ingram, Gigaom

Customers can’t tell you what they want, but they can most certainly tell you what dissatisfies them. It’s in the customers’ unmet needs that the real opportunities for technology lie.

“Good design makes a product understandable. It clarifies the product’s structure. Better still, it can make the product talk. At best, it is self-explanatory.” ~ Dieter Rams ((“Jobs was a famous admirer of Dieter Rams, a designer for Braun who had a number of mottos and aphorisms about design — one of which was that “good design will make a product understandable.” That applies to a lot of Apple’s most famous products, which were so painstakingly designed to be usable, even when (like the original iPod shuffle) they didn’t even have a screen to tell you what was going on inside them.))

“Does this deserve to exist?”

Talk about bringing things into focus. What a brutal filter to use in order to curate what does and does not get made at Apple.

“(W)hy are we doing this in the first place?” ~ Steve Jobs

Most companies are so busy asking whether something “could” be done that they never stop to ask themselves whether something “should” be done. ((Take the Microsoft Kin, for example. (Please!) ))

“We figure out what we want. And I think we’re pretty good at having the right discipline to think through whether a lot of other people are going to want it, too.” ~ Steve Jobs

Remember the quote, above, the next time you think about the rumored low-cost iPhone (or a myriad of other rumored Apple products.) Apple doesn’t cripple their products just to achieve lower price points because Apple only makes products that they, themselves, want to use. And they don’t want to use the equivalent of a Kin, Google TV or Nook. ((To be perfectly fair, no one else wants to use a Kin, Google TV or Nook, either.))

He who wants to keep his garden tidy doesn’t reserve a plot for weeds. ~ Dag Hammarskjöld

This Is Our Design

Where does Apple start? Do they start where they are? Do they start with their current design?

No.

“We start over”

“…Jobs was willing to completely start over with a product or service if it missed the mark. This requirement for perfection is highlighted numerous times in his biography and is rarely, if ever, followed by traditional companies when they are headed down the path of launching a new product, service or experience. ~ Eric V. Holtzclaw, Inc.

Starting over changes everything.

“When you start by imagining
What that might be like,
You step back.
You think.”

It allows one to see, not what can be added to what already exists, but what can be created from all of existence. It allows one to contemplate, not just the conceivable but what was once thought to be inconceivable too. It allows one to untether from what is, and to explore what might be.

It allows one to imagine. It allows one to dream.

“One’s destination is never a place, but a new way of seeing things.” ~ Henry Miller

When you or I buy a sofa, we move around the contents of the room in order to make the new sofa fit in. If Apple buys a sofa – and they think that it is perfect – they are willing to re-design and re-build the entire house in order to make the house fit in with the sofa.

“Logic will get you from A to Z; imagination will get you everywhere.” ~ Albert Einstein

Starting over allows one to paint with a fresh palette.

“I dream my painting and paint my dream.” ~ Vincent van Gogh

White. A blank page or canvas. So many possibilities. ~ Stephen Sondheim

Starting over allows one to dream, and to dream big.

Always dream and shoot higher than you know you can reach. Don’t bother just to be better than your contemporaries and predecessors; try to be better than yourself.

“We’re gambling on our vision, and we would rather do that than make ‘me too’ products. Let some other companies do that. For us, it’s always the next dream.” ~ Steve Jobs

The future belongs to those who believe in the beauty of their dreams. ~ Eleanor Roosevelt

“Designing something requires focus.”

“We tend to focus much more. People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of many of the things we haven’t done as the things we have done.” ~ Steve Jobs

Divide the fire and you will soon put it out. ~ Greek Proverb

“There are a thousand ‘no’s’ for every ‘yes'”

Does Samsung ask the hard questions, make the hard decisions, or do they let their customers do the work? Do they ever say “no”, so their customers don’t have to? ((Samsung has 26 different screen sizes for its smartphones and tablets. Apple, by contrast, has four different screen sizes. Throw spaghetti against a wall model may be good for some, but it is not Apple’s model.

“Samsung has a history of confusing customers with an outpouring of phone models … (Samsung) revealed a bunch of new features for the phone like S Health, hovering over the phone, new security features, eye-tracking, two-way photography, and much more. Most, if not all, of these features were pointless.”

MOSSBERG: The Samsung Galaxy S4 Has ‘Especially Weak,’ ‘Gimmicky’ Software))

Does Microsoft say no? Or do they tell you that their tablet is really a notebook and their notebook is really a tablet. Does Windows 8 give you one operating system optimized for the form factor or do they give you two operating systems and let you sort it out? Or do they give you three separate operating systems in the Xbox One and actually brag about it?

Does Google say no with Android? Or do they give their users feature after feature after feature without thought to how each feature works with one another and whether the net benefit is outweighed by the cognitive cost?

Good design is honest. It does not make a product more innovative, powerful or valuable than it really is. It does not attempt to manipulate the consumer with promises that cannot be kept. ~ Dieter Rams

“We simplify”

“Simplicity is the ultimate sophistication.” ~ Leonardo DaVinci

When people talk about Apple’s design principles and philosophy, they often mention the unrelenting focus on simplicity (based in part on Rams’ motto: “Less, but better”). Jobs said that among the most important decisions in product design were what not to include and that this process involved “saying no to 1,000 things.” That’s a very difficult principle to adhere to at the best of times — but it’s especially hard if you are a technology geek and obsessed with all the ways in which your product is going to beat your competitors because of the cool features it has. That’s what causes the classic “feature creep” phenomenon, which often occurs when professional engineers get hold of a device. ~ Mathew Ingram, Gigaom

I think there is a profound and enduring beauty in simplicity, in clarity, in efficiency… True simplicity is derived from so much more than just the absence of clutter and ornamentation. It’s about bringing order to complexity. ~ Jony Ive

“Look at the design of a lot of consumer products — they’re really complicated surfaces. We tried to make something much more holistic and simple. When you first start off trying to solve a problem, the first solutions you come up with are very complex, and most people stop there. But if you keep going, and live with the problem and peel more layers of the onion off, you can often times arrive at some very elegant and simple solutions. Most people just don’t put in the time or energy to get there. We believe that customers are smart, and want objects which are well thought through.” ~ Steve Jobs

Any fool can make things bigger, more complex, and more violent. It takes a touch of genius—and a lot of courage—to move in the opposite direction. ~ Albert Einstein

“It’s been one of my mantras — focus and simplicity. Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.” ~ Steve Jobs

Good design is as little design as possible. ~ Dieter Rams

“We perfect”

“Good design is thorough down to the last detail. Nothing must be arbitrary or left to chance. Care and accuracy in the design process show respect towards the user.” ~ Dieter Rams

Perfection is achieved, not when there is nothing left to add, but when there is nothing left to take away. ~ Antoine de Saint-Exupéry

“For you to sleep well at night, the aesthetic, the quality, has to be carried all the way through.” ~ Steve Jobs

Trifles make perfections, but perfection is itself no trifle. ~ Shaker proverb

I don’t think it’s good that Apple’s perceived as different. I think it’s important that Apple’s perceived as much better. If being different is essential to doing that, then we have to do that, but if we can be much better without being different, that’d be fine with me. I want to be much better. ~ Steve Jobs

There is hardly anything in the world that some man can’t make a little worse and sell a little cheaper, and the people who consider price only are this man’s lawful prey. ~ John Ruskin

Design Is How It Works

“Then we begin to craft around our intention”

“We are stuck with technology when what we really want is just stuff that works.” ~ Douglas Adams

“Until every idea we touch Enhances each life it touches.”

“Good design makes a product useful. A product is bought to be used. It has to satisfy certain criteria, not only functional, but also psychological and aesthetic. Good design emphasizes the usefulness of a product whilst disregarding anything that could possibly detract from it.” ~ Dieter Rams

“We have always thought of design as being so much more than the way something looks. It’s the whole thing, the way something works on so many different levels.” ~ Jony Ive

“(Apple’s) ideology is design. It is a shared belief system that ‘No’ is more important than ‘Yes,’ that focus is essential to making great products, and that no one individual (not even Steve Jobs) is essential.” ~ Ben Thompson, Stratechery

Design is not just what it looks like and feels like. Design is how it works. ~ Steve Jobs

If the question is: “What job is this being asked to do?”, then Design is the guide and the pathway to the answer.

Design is the fundamental soul of a man-made creation… ~ Steve Jobs

What Makes Apple Different?

Do you want to know what makes Apple different? What sets them apart? How they attract the types of fans that Microsoft, Google and Samsung mock and denigrate but secretly envy and aspire to attain?

“What makes Apple come up with these great ideas while other computer makers stand around waiting for Jonathan Ive to tell them what to do next? ~ Don Reisinger

Is it Steve Jobs, Jony Ive, corporate culture, focus on quality, superior marketing, how they touch our emotions or some combination of all those things?

Is it because Apple is great at editing what’s possible, selecting options, saying no to things, and making something great by making it less, but better? ((These ideas were culled from Marco Arment, Accidental Tech Podcast, #14: Pouring Champagne onto Rap stars.))

If there was ever a product that catalyzed what’s Apple’s reason for being, it’s (the iPod). Because it combines Apple’s incredible technology base with Apple’s legendary ease of use with Apple’s awesome design… it’s like, this is what we do. So if anybody was ever wondering why is Apple on the earth, I would hold this up as a good example. ~ Steve Jobs

No. What makes Apple great is their passionate pursuit of perfection.

“Our goal is to make the best devices in the world, not to be the biggest.” ~ Steve Jobs

“For us, winning has never been about making the most. Arguably we make the best….” ~ Tim Cook

Does Apple always hit their target? Not hardly. They quite often miss their mark.

But as hard as it is to achieve perfection when one is trying, it’s virtually impossible to achieve perfection when that is not even one’s aim.

“The odds of hitting your target go up dramatically when you aim at it.” ~ Mal Pancoast

At least Apple is trying. And they are passionately trying.

Perfection is not attainable. But if we chase perfection, we can catch excellence.” ~ Vince Lombardi

“I think back to Detroit in the seventies, when cars were so bad. Why? The people running the companies then didn’t love cars. One of the things wrong with the PC industry today is that most of the people running the companies don’t love PCs. Does Steve Ballmer love PCs? Does Craig Barrett love PCs? Does Michael Dell love PCs? If Michael Dell wasn’t selling PCs he’d be selling something else. These people don’t love what they create. And people here do.” ~ Steve Jobs

Nothing great was ever achieved without enthusiasm. ~ Ralph Waldo Emerson

We’re just enthusiastic about what we do. ~ Steve Jobs

Apple relishes the challenge. And they love the chase.

“You cannot kindle a fire in any other heart until it is burning in your own.”

Apple is the standard bearer of excellence. And that is why people love Apple – why they actively root for them – despite Apple’s many imperfections. People are not just rooting for Apple, they’re rooting for an ideal. They’re rooting, not just for what Apple is but, for what Apple aspires to become.

“Ideals are like stars: you will not succeed in touching them with your hands, but like the seafaring man on the ocean desert of waters, you choose them as your guides, and following them, you reach your destiny. ~ Carl Schurz

Appendix

http://www.youtube.com/watch?v=VpZmIiIXuZ0

http://www.youtube.com/watch?v=Zr1s_B0zqX0

Why Softbank buying Sprint is a big deal

Last week, the FCC gave their blessing on the Softbank purchase of Sprint. I consider this a very big deal and one that could have dramatic ramifications for the Wireless industry in the future. The leader of Softbank is a brilliant thinker and is never lacking in vision.

I have had the privilege of interacting with their founder and CEO, Masayoshi Son on numerous occasions and in fact did Fireside chats with him at two conferences in the late 1990’s. At that time, he became prominent because he bought Comdex, the largest PC show in the world in those days, and for his statement that he had a 300 year business plan for Softbank.

I got a chance to understand a bit about his business acumen and tenacity during one of our fireside chats. It took place at the Phoenix Technologies Conference at Spanish Bay in Monterey. Mr Son explained that in Japan, the telecom industry, which was basically controlled by the Japanese Govt. needed shaking up. It was controlled by NTT and the Japanese Govt dragged their feet when it came to open competition. This led to very low bandwidth Internet connections as well as a wireless infrastructure that, in his mind, was going nowhere.

So he approached the telecom Minister of the Japanese Govt, which regulated the telecom industry, and kept pushing him to present a plan that would open up the their telecom laws for more competition. He went to see this person at least 4 times and each time he was either rebuffed or was told he would look into it but nothing happened. So, on his 5th visit, he barged into this telecom Minister’s office with a full can of gasoline in tow. He told the Minister that if he did not agree to take his proposal to their ruling body that he would pour the gasoline over himself and light it on fire.The telecom Minister got the message and agreed to start the process of discussing opening up their telecom industry to competition. Because of that push by Mr. Son, Japan’s broadband and wireless industry began to explode. Softbank was the first to give users 50+ megs of download speed and I hear his goal is to get them to 1 gbps in the very near future. Softbank is now the #2 wireless company in Japan.

When I first heard that Mr. Son and Softbank had bid for Sprint, I had a vision of him walking into the offices of the FCC with his gas can in hand. However, given his success in Japan, everyone I talked to about this took his bid for Sprint very serious and knew that he would be tenacious in his desire to own this American Wireless company. However, his ownership of Sprint has to be watched very closely. He is not content with the status quo. One thing he could do is try and bump Sprint to 5G sooner than later and leapfrog ATT and Verizon. He could also utilize these assists, which includes Clearwire’s wireless spectrum, to create some type of mesh networks that blend wired and wireless in some areas to boost speeds for their customers.

Bottom line is that Mr. Son will not be a conventional wireless CEO. He is likely to be a firebrand within the wireless industry and do things that will irk and frustrate the competition. He wants to win, not just be a bit player in the US wireless market. Look for him to shake things up at the govt and industry level and perhaps surpass the competition and delight his customers along the way.

Terrestrial Broadcast Courts the Cable Guy

Each month, Ross Rubin writes for Tech.pinions on the development and evolution of technology industry standards.

It is an act of short-term pessimism and long-term optimism to kill a fledgling technology and replace it with something that has a higher barrier to adoption. But that’s what happened with digital terrestrial broadcast in the U.S. With coverage barely rolling out, News Corp. and NBC banded together to form Mobile Content Ventures, which would restrict reception of digital broadcast to those who had registered via the Internet. The few products on the market that could receive the few channels become paperweights.

It seemed to be the last thing that the technology needed in light of its competition against IP. There have been a number of companies over the years that have tried and failed to deliver digital OTA broadcasting or datacasting. These have included ones that didn’t get far off the ground (such as Geocast), ones that sputtered along the ground (MovieBeam and Sezmi) and ones that crashed hard into the ground (MediaFLO). The latter best approximated the use case for Dyle and, like the emergent mobile broadcasting, required special support in smartphones in order to work. (Even HD radio, rather than being built into handsets, has largley been enveloped by radio apps such as TuneIn. Like satellite radio, it stands ready to bear the brunt of in-vehicle competition as 4G proliferates.)

However, what’s bad for the carrier can be good for the consumer. Like Netflix and Hulu Plus, MediaFLO required a subscription. Dyle, on the other hand, is free, and doesn’t consume any data from your cellular plan. Also, since the launch of MediaFLO back in 2007, smartphones have increased their penetration many times over and the iPad has ushered in a major new platform for portable video consumption.

One doesn’t have to host a daytime court show to pass judgement on the limited appeal of over-the-air fare. But live access to cable channels anywhere without a cellular plan for no incremental fee could be compelling enough to warrant the inclusion of tuners and antennas in a range of devices.

The good news for mobile broadcasters supporting Dyle is that the utility of these devices, unlike the original “Watchman,” have made them far more popular than handheld TVs ever were, but today’s mobile video devices are convergence battlegrounds where all media duke it out for consumers’ attention. Even among video, a host of potential options stand toc compete for viewers. These include not only long-form oriented Netflix, Hulu Plus and Amazon Prime, but increasingly, pay TV providers and broadcasters launching their own live streams for free. This is mobile digital TVs first major challenge.

The second is whether broadcasters can convince handset makers and carriers to build tuners into devices. These not only add cost, but require extra room for old-school antennae. Samsung, the world’s highest-volume smartphone-maker and a top vendor in the U.S., has long been a backer of digital terrestrial broadcast. It offers the Galaxy S Lightray on MetroPCS. However, carriers have little incentive to promote Dyle. Not only does it avoid tapping into consumers’ data plans, it substitutes for data-consuming services that might incentivize consumers to purchase bigger buckets of gigabytes per month.

What would be offered? Given the heavy competition of on-demand programming and the strength of digital terrestrial broadcasts, there would likely be an emphasis on live programming such as news, weather and sports. We’ve seen the results of some of this multicasting with fixed over-the-air digital television, where broadcasters have put on programming such as news and weather channels alongside their main local feed.

There are two rabbits that Dyle’s backers hope to pull out of its hat. First, since Dyle broadcasters know where the consumer is, they can insert commercials that are more contextually relevant. But the more interesting play is that, while the service today delivers only the same broadcasts one would see watching at home, it has the potential to include pay TV channels offered by those broadcasts. So, for example, an NBC affiliate could potentially offer Bravo while an ABC affiliate could potentially offer ESPN.

Such premium channels would likely be cable-authenticated. And as such, their broadcast transmission would be added on to the retransmission fees that cable companies pay; the twist is that it broadcasters would collect additional fees for carriage on spectrum that they own rather than on pipes owned by multiple video programming distributors (MVPDs) such as cable companies, DBS satellite companies and fiber-spinning telcos .

Yes, broadcasters — which expanded their portfolio of offerings with the bandwidth of MVPDs — now hold the keys to help those companies spread “cable” TV channels wirelessly. Of course, bandwidth would be constrained; one wouldn’t be able to receive the full breadth of a modern digital cable lineup via Dyle. But it’s clear that Dyle’s backers are thinking big; over time, as compression standards improve, more channels could be offered.

Of course, making that more palatable will require having Dyle on a wide range of devices. While unpalatable to carriers on smartphones, the tablet may represent the best vehicle (at least outside the vehicle) for Dyle to catch on. Belkin, for one, has released a small adapter powered by a coin battery that connects to previous-generation iPhones and iPads that use the 30-pin connector. Elgato has created a Mac-compatible dongle using USB. And a company called Tvizen offers a Wi-Fi hotspot that redistributes mobile DTV using other standards to a number of connected devices without having to be directly connected to them. It had shown off prototypes of a version for the U.S. market at CES a few years back. And the idea that consumers will return to the idea of extending a retractable antenna seems like a quaint one, at best. But if Dyle can fulfill its potential to move beyond simulcast to leverage popular cable channels such as ESPN and Bravo, it could at least provide an option for those who don’t want to tempt fate on their allocated data plan.

Apple, Microsoft, and Listening to Customers

iOS 7 beta 3 screenshotEarlier this week, Apple released iOS 7 Beta 3, the third test version of the upcoming software for iPhone and iPad released in a month. Users, by definition registered Apple developers, who installed it made a remarkable discovery: The Helvetica iOS system font, widely denounced as too light by earlier users, had been replaced by a slightly heavier version, producing a big improvement in readability. Apple, to the amazement of many who view the company as a design dictatorship, had listened and changed in response to what it heard.

Oddly, it’s Microsoft, once the paragon of listening to customers, that seems to have lost the knack. The preview version of Windows 8.1 addresses some of the most serious problems with the touch-centric Metro, it does very little to improve the legacy Desktop side of Windows 8. As a result, it does nothing to assuage traditional Windows users’ deep unhappiness with Windows 8. From developers to OEMs to ordinary users, I keep hearing complaints that Microsoft just doesn’t listen.

Apple and Microsoft are treating their previews very differently. Although calling Windows 8.1 a preview, Microsoft seems to think of it as a nearly finished product. In fact, the Windows App Store practically begs you to install the preview.

Windows app store screenshotBy contrast, iOS 7 is a true beta. It is only available to registered iOS developers (though anyone can become one by paying Apple $99 a year, it does require skin ion the game.) The download and installation process seems to be deliberately obscure to discourage the casual. And to download the software, you must agree to a confidentially agreement the prohibits publication of details that have not yet been made public. All of this is typical of serious software testing.

With Microsoft planning to release Windows 8.1 to OEMs by the end of August, I don’t expect that we will see more than minor tweaks to the software. The legacy Desktop will remain a jarring experience, ill-suited to either touch or non-touch use with Metro screen and apps that pop up seemingly unbidden at inconvenient moments. The changes from the version released last October are depressingly minor. There is more real change on the Metro side; in particular, Microsoft has drastically reduced the circumstances under which you have to drop back into Desktop. But the Metro apps, especially Mail, are still seriously under-featured and the app store remains a wasteland.

Microsoft seems to be following a similar course for the new Metro-fied versions of Office applications. Office 2013, released last year along with Windows 8, offered only minor concessions to touch and the applications were largely useless on the surface or other tablets unless there was a keyboard attached. In response to a strong negative reaction, Microsoft accelerated development of real touch versions. These are supposed to ship before the end of the year, but so far Microsoft is keeping them close to the vest. This is especially concerning because making applications such as Word and Outlook touch-friendly will require a radical simplification of the interface and, as a result, a lot of familiar features will have to be removed or hidden. You would think Microsoft would be seeking as much user input on these decisions as possible, but that does not appear to be the case. The result is likely to be another disappointment, though I really hope I am wrong.

iOS 7, by contrast, seems to be evolving quickly. I don’t think Apple will maintain the pace of a new release every couple of weeks, but many subtle design changes in the two updates we have seen suggest that Apple is heeding the concerns of testers. As Marco Arment, developer of Tumblr and Instapaper, put it in his blog:

Since Apple is just people, they’re usually trying to figure out the best answer to the same decisions and trade-offs we argue about on the outside: what’s best for the user, what’s best for battery life, what apps should be allowed to do, how multitasking should work, how far sandboxing should go, and so on. Almost any decision that causes controversy on the outside has almost certainly caused just as much on the inside, it’s probably still being argued, and the decision probably isn’t set in stone.

We can’t participate directly in those debates, but we can provide ammo to the side we agree with.

 

 

 

 

 

 

The Dell-Icahn Debacle Exemplifies what’s Wrong with Wall Street

There have been a lot of industry and financial discussions lately about Dell’s privatization efforts.  So far, I have stayed out of the fray, but I think it is now time for me to weigh in on what I consider a total debacle…. a total lack of understanding of strategy, the technology industry, and Dell.  The current institutional investors who are mulling which way to vote on the Dell-Silver Lake offer appear clueless as they risk their current investments in search of a few pennies more from Icahn and Southeastern.  This is a good example of what’s wrong with Wall Street.  Let me start with the basic Icahn-Southeastern hypothesis.

Icahn and partner’s basic premise is that a newly appointed board can run Dell better than it’s running Dell today, and therefore they must think that Dell’s current board is mismanaging the company.  Many in the industry would like to know who those proposed board members are, their backgrounds, and exactly how their strategy would be different.  Are the proposed board members smarter, more experienced than the Dell’s current board?  So far, no details from the Icahn camp so it’s impossible to assess.

Given the massive wealth Icahn has amassed, he obviously has some brilliant folks, but would the new board have technology backgrounds or would they come from areas where Icahn has amassed wealth?  Icahn Enterprises web site states that“Icahn Enterprises L.P. (NASDAQ: IEP), a master limited partnership, is a diversified holding company engaged in nine primary business segments: Investment, Automotive, Energy, Gaming, Railcar, Food Packaging, Metals, Real Estate and Home Fashion.” Outside of investments and energy, each one of these markets is dominated by slow rate of change in terms of market dynamics, competitive shifts and growth.

Take high tech smartphones as an example. Five years ago, the leaders in smartphones were Nokia (40% share), RIM (16% share), and then Apple (9% share).  Android, hadn’t even shipped a phone five years ago and now it is the leading smartphone operating system today.  Nokia and RIM are almost out of the smartphone market and now Samsung (33% share) and Apple (17% share) lead the pack.  Five years ago, Facebook had 100M users and Twitter had around 1M tweets a day.  Now, Facebook has 1.1B users and Twitter now has 400M tweets per day. Technology isn’t railcars.

To give investors a better sense of comparing boards, Icahn and partners should divulge exactly who would be on the newly proposed board of directors.

Appointing a new board of directors would mean a new strategy, but what strategy? To offer nearly $25B to buy something, you must have some theory on what can be improved that the other guys missed or mis-executed.  There must be some low hanging fruit that no one else sees, right?  So far, there have been no specific proposed strategy changes floated by the Icahn camp.

I have been researching Dell’s strategy for close to 20 years. I was their competitor at AT&T and Compaq for nearly a decade, was a supplier for over a decade at AMD, and my firm researches them and their competitors today.  As PC growth declined, Dell had to pick a direction: stay bottled up in the consumer client-computing market or grow into an end-to-end enterprise player in data center infrastructure, software and services. Looking what it took for Samsung and Apple to rise to a duopoly in consumer phones and tablets, Dell chose the right direction.  Dell, who was very strong in servers and business PCs, went on a $13B acquisition tear for five years in services, software, storage, and security to pull together those pieces to become that end to end player.  It is a strategy that will take at least five more years to bear full fruit, as Dell needs time to pull those disparate parts into one holistic offering.

So what is the Icahn and partner’s strategy?  No one knows, but if that camp views previous Dell acquisitions as a bad choice, one must assume that divestitures is in the cards, selling off many of the businesses that Dell just acquired.  To an end-to-end enterprise player, this is like amputating a foot on a runner.  You need all limbs in good condition to finish the five year race.  I would view the selling of assets as a pre-cursor to Dell’s demise as a company, but this is what I view as a high probability with an Icahn acquisition.

To remove any ambiguity, I think it would help clarify for everyone for the Icahn camp to reveal some parts of the new strategy. Imagine what happens to the company value if, when the smoke clears with an Icahn win, there isn’t a new and amazing strategy or one that’s rejected by the employees.

There is a scenario where Michael Dell could still hold around 40% of the shares and could wage a proxy battle if Icahn won.  There could also be a split board of directors, a total mess. So what if Michael Dell just sells his stake and walks?  Michael Dell is worth billions, there are a lot of other interesting investments to make, and I’m sure his wife and kids would love to see him home more often.

While I think the possibility is low that Michael would walk with an Icahn takeover, investors should consider the “what-if”.  At this stage in Dell’s turnaround, if Michael Dell, left, Dell Corp. would die.  It’s as plain as simple as that.  Dell has great lieutenants, but if you’ve ever worked in a large, high-tech company, you know that the CEO choice drives the “operating system” of the company. The CEO drives the way decisions are made, the operating cadence, and is the cheerleader to the employee base.  This is particularly important when you have a founder-CEO.  You don’t want your founder-CEO leaving during a time of chaos, you want years of transition to a new one.  I can just imagine what happens to the stock price if Michael left.

Investors have a big vote on July 18 to accept or reject the Dell-Silver Lake offer.  The ISS, or Institutional Shareholder Services, has cleared the Dell-Silver Lake deal, which means institutional investors have “cover” to proceed.  Even with that, Icahn has vowed to keep the deal in the courts for years.

If the Icahn deal goes through, Michael Dell could wage his own proxy battle and there could even be a split board of directors.  This sounds like a complete mess and chaos would ensue.  What do you think that does to the turnaround momentum, employee and customer sentiment….. and the stock price?  If $13.65 a share sounds low, how about the pre-buyout price of around $9 or lower?  That is what the current institutional investors are risking here, based on their lack of understanding of high tech and what it takes to position Dell for growth.  Sure Apple valuation is a bigger “crime”, but the Dell-Icahn debacle demonstrates what’s wrong with Wall Street.

A Requiem for WebTV

It’s not too often that I am reminded of something I wrote 17 years ago and am able to read it without cringing, at least not too much. This happened over the weekend, after Microsoft quietly announced that it was shutting down its MSN TV service at the end of September. The Verge linked to a 1996 BusinessWeek  column in which I said that the brand-new WebTV might be the “product that could turn the World Wide Web into a mass-entertainment medium.”

That call was premature by about a decade, but the folks who created WebTV–Steve Perlman, Bruce Leak, and the late Phil Goldman–and soon sold it to Microsoft for $425 million were onto something important. WebTV was the first of a long line of set top boxes designed to merge standard television with what we now call over-the-top internet video, and effort that continues today with Apple TV, Google TV, Roku, Xbox, and many others.

WebTV and its successor MSN TV never found much success. It turned out that not very many people wanted to see a mostly text internet on their TV sets, nearly all of which were then CRTs. The WebTV engineers did a brilliant job of making text readable on displays never designed for it, but there were limits to what they could accomplish. Content was a huge challenge, especially with the standard connectivity coming through a 28 kilobit per second dial-up modem (later versions supported broadband.) As I wrote:

WebTV also requires a Web that is much more visual than today’s. This is an entertainment appliance, not a research tool. You can’t save or print pages. On the other hand, an online tour of an art gallery was beautiful on WebTV. Support for a number of multimedia technologies, including Java programs, RealAudio sound, and QuickTime movies, was missing from my prototype, but they should be ready soon.

It’s easy to imagine what’s needed to make TV-based browsing take off: shopping, with click-to-order multimedia catalogs. (WebTV comes with a slot for the “smart” credit card of the future.) Movie guides with previews on demand. Travel information, with on-screen booking services. Online games.

Perhaps most important, setting up WebTV was drop-dead simple to set up and use at a time when most people  were still struggling with recording on VCRs.

We are still a long way from the perfect, do-everything set top box. But WebTV was an important first step on the path that is getting us there.

I Owe Bill Gates An Apology

I have changed my view of no person, whether living or dead, more so than I have changed my view of Bill Gates. Where once I hoped he failed, hoped his company would fail, believed him responsible for stifling competition, innovation, cheered when my very own government was working against him, now I accept him for what he really is: the man who has most transformed the world during my lifetime.

I owe Gates an apology.

No one, not Steve Jobs, not Mark Zuckerberg, not Hewlett nor Packard, has had a more profound global impact on people and business, on the spread of technology or the continued pre-eminence of America’s globe-spanning computing innovation, than has Bill Gates. Despite innumerable obstacles, Gates succeeded with his once-mad vision of placing a PC on every desktop.

Now, he has a new mission, one far more audacious, far more transformative. It is plainly stated through his well-funded
foundation:

“We believe every person deserves the chance to live a healthy, productive life.”

POLIO_OralVaccineNigeria_1000x380_revised

Sadly, we are far from realizing this vision. Yet, with Gates bringing his skills to bear on this rather base human failing, I honestly believe we will move radically closer to turning the hope that every person deserves a healthy, productive life, into actual reality.

Think how computing changed and improved and spread from 1980 – 2000, only now, those changes applied to people and medicine and learning and access and work.

If, as Steve Jobs said, Bill Gates “just shamelessly ripped off other people’s ideas,” then perhaps in trying to solve the world’s biggest problems, this is a good thing. Gate’s tactics may have found their logical pursuit.

Gates – still the world’s richest man – no doubt understands how profoundly billions of lives can be changed for the better by radically improving the code that now now dominates our world. In public classrooms, where our nation’s children are not realizing their fullest potential, and in villages thousands of miles away, where their children are dying, the tools to alter this reality are either at hand or very soon will be. We have an amazing opportunity to remake the world.

Think Gates can’t change the world a second time? Maybe. Although, if it was 1975 again – nearly 40 years in our past, before most of the people on this planet were even born – and by some odd coincidence you actually saw this machine, a Altair 8800, could you have divined how it foretold the future? Gates could.

664px-Altair_8800_Computer

Embrace, extend, extinguish – the modus operandi of Microsoft under Gates, and now eagerly adopted by today’s Google – laid everything to waste, it seemed. Netscape, Lotus, Apple (nearly), Wordstar – and all the many companies and products and people we no longer can even recall.

Yet it’s this same mental prowess, this same hyper-competitive drive, likely tempered by age, that could allow Gates to show us how to extend computing power, applied data, and a ruthless fealty to results, to extinguish some of the planet’s most chronic, life-limiting maladies.

If the world can be radically improved, it will take a fundamental re-working of the existing algorithms of modern life – all the nasty realities we presently tolerate or ignore, or simply fail to see. Gates was as good at crafting an algorithm, as good at writing code, as he was a unrelenting business tycoon. The world needs him.

This time, I am on Gates’ side, without apology.

Why ICAHN is a Bad Fit for Dell

I have had the privilege of following Dell from its inception. I became a PC industry analyst in 1981 and have tracked the PC industry from its beginning. In the process I have had the privilege of interacting with every one of the PC and CE companies at the highest levels for 32 years. Those who have followed my current writings in TIME’s online Tech section, PC Magazine and our own publication called here as well as my commentary on all of the major TV and radio networks and business publications know that I have been chronicling the tech market for decades.

I have watched PC companies come and go and understand well how the industry developed and what it will take to compete in the future. I have seen the market for PCs grow exponentially and become the heart of Information Age. Although the role of PCs has changed over these decades, it is still a key component of any business and consumer’s life, even if some of those computers are now called tablets and smartphones.

I have been watching closely the competing bids to take Dell private and am quite concerned about any outside plan that would not guarantee that Dell remain whole and execute as a single company with all divisions contributing to its success. While I have respect for Mr. Icahn, I am not convinced he really understands the dynamics of the tech market and what it takes to compete in this fast changing marketplace. The tech industry is not like the oil and gas industry where things change slowly. I believe that for Dell to compete and grow it must be run as a single unified company where all divisions work together to achieve their vision and goals. But if history is our guide, keeping Dell intact is probably not in the plans of Mr. Icahn and his team.

One Company, One Vision

A few months back, Dell held its annual industry analyst days in Austin. Like all of my colleagues at the event, we went to the conference to see first hand how Dell saw the market, what role it would continue to play in a technology world that is rapidly changing and how they planned to grow as a company in light of the increased competition and shifting demands from business users and consumers alike.

I sat through two days of speeches and dedicated divisional information sessions and in the end, came away with a picture of a company that was much more in control of its future than I had suspected. I found that they had diligently laid out the necessary building blocks that, when tied together, could give them the ability to weather the changing dynamics of the tech market today and had a solid vision that can drive it forward in the future. One that includes being a hardware, software, and services company offering the whole package for many key growth segments.

One very important thing that I came to understand from these meetings is that in order for Dell to navigate these choppy industry waters, it needs to be able to execute this vision in a measured and strategic way, which will take time. It is clear to me now that this is the main reason Michael Dell wants to take the company private. Trying to rush these things would be difficult given the need to make these changes to Dell’s future business models so that it can be done properly and executed without the pressure of always having to keep the investor community happy each quarter.

The building blocks of powerful server hardware, software and services, world class security, expanded IT services and even their PC business that, as we were told, drove 50% of all of their enterprise sales, are key components that when woven together as a single unit gives Dell the opportunity to remain a major player in the world of technology. We were also told about new tablets and other mobile products in the works that, when they come to market later this year, will make Dell very competitive with Lenovo and HP as well as other PC and CE vendors that are all targeting the same business and consumer customers.

I have one key observation that is quite important to this discussion. When I look at Dell, its building blocks and its competitive challenge ahead, I am convinced that they can only remain a powerful player in the tech market if the company competes as a whole, with all of these building blocks they have put into place working in harmony. Every one of their divisions needs to be connected and walking in lock step if Dell is going to succeed.

Servers, PCs and mobile devices need security. IT needs servers, software and mobile device management tools all working together to meet the needs of their mobile users. The future of software distribution is in the cloud and all of Dell’s divisions deliver key parts of a cloud solution that can work together seamlessly if executed properly. Consumers want a company that delivers solid products that they stand by and look to as PCs, tablets and smartphones become more engrained into their digital lifestyles. From what I saw while at the analysts meeting, Dell finally has all of the pieces in place that, when working together, will sustain the company and help it grow if executed well in the face of a tech marketplace that is constantly changing.

I cannot stress how important I feel that Dell operate as a unified entity in order to compete and grow. I have spent many years understanding the machinations of a successful tech company and monitored the shifting winds of business and consumers whose needs and wants constantly change. I can tell you without a doubt that for a company like Dell, HP and Lenovo, all of their divisions and executives have to be on the same page, working and collaborating closely together to provide all of the key components of hardware, software and services if they are to succeed given the current and future market conditions I see ahead.

For the record, I don’t own any Dell stock. I am an independent market researcher with 32 years of experience examining the tech market and this perspective comes from decades of studying how this industry works. In my opinion, if there was ever a time when a company needs to operate as a unified force, it is now.

Providing powerful technologies across hardware, software and services that are all interrelated and interconnected is the key to success in this globalized tech market where vision, order and collaborative leadership is vital to a PC company’s ability to remain competitive and thrive. Any attempt to break up that kind of synergy will only lead to failure.

Apple Can’t Innovate Anymore, My A$$

I am sick to death of pundits proclaiming that Apple can no longer innovate. Apparently, the less one knows about a subject, the more strident one’s opinion on that subject becomes. Nevertheless, this nonsensical posturing has simply got to stop, for it is easier to believe a lie that you have heard a thousand times, than the truth that you have heard only once.

Can’t innovate anymore, my ass. ~ Phil Schiller

The critic’s arguments seem to break into two categories, which are really two sides of the same coin:
— Apple desperately needs to enter a new product category;
— (But it’s already too late because) Apple can’t innovate anymore.

Apple Desperately Needs To Enter A New Product Category

Apple again seen losing steam, new products needed desperately
Apple managed to earn $9.5 billion in profit on $43.6 billion in sales last quarter without launching any exciting new devices, but the long wait for new launches is expected to begin taking its toll this quarter.

Apple’s business model forces it to constantly come up with groundbreaking new products
“At most companies, a year without a major new product release isn’t cause for panic. But Apple isn’t most companies. The problem with that business model is that it forces Apple to constantly come up with a groundbreaking new product.”

Apple needs new hardware
“There’s two reasons Apple needs new hardware: To prove it can still create killer new product categories post-Steve Jobs and because that’s how it makes its money.”

Find a new category to go innovate
“I keep trying to tell Apple…” Misek says, “Find a new category to go innovate.”

Any man who thinks he knows all the answers most likely misunderstood the questions.

Apple, a once-great innovator
“With Apple wrapping up its developer conference this week, the contrast between the once-great innovator that brought the world into the smartphone and tablet era and current Silicon Valley revolutionary Google couldn’t have been more stark … innovation is ideas like Google Glass, which represent new paradigms of human interaction with technology.”

Apple’s trailblazing days are over
“Google’s gaming console: The latest sign that Apple’s trailblazing days are over?”

Apple hasn’t been able to enter any major new product categories in years
“Apple’s stock hasn’t slid because it’s been putting out uninspired hardware — it’s slid because the company hasn’t been able to enter any major new product categories in years….”

If it can’t reinvent a category again soon, Apple could be in big trouble “(Apple) transformed itself from a niche company in the computer world to one that created entirely new categories of gadgets. If it can’t do that again soon, Apple could be in big trouble.”

The list of areas where Apple can repeat its act is dwindling
“In the past, Apple snuck up on people. It entered markets filled with clunky, overly-geeky products, released groundbreaking consumer-friendly versions, and established its dominance before rivals had the chance to respond … But today, we have huge companies investing millions of dollars in products that Apple “may release in the future.” … If there’s any area in which Apple can innovate, chances are, someone has already imagined it, written a blog post about it, Photoshopped it, and created a ready-made blueprint for any company that wants to gamble on it. … The list of areas where Apple can repeat its swoop-in-and-turn-the-industry-upside-down act is dwindling. ((The list of areas where Apple’s opportunities are supposedly dwindling: “TV? Microsoft beat Apple to the punch with futuristic voice and gesture control, and Hollywood doesn’t appear willing to let anyone innovate on the content distribution front. Wearables? Everyone and their mother is making a smartwatch, and Google has Glass locked, loaded, and almost ready to fire. Mobile/desktop PC convergence? Microsoft has already put its chips in that basket. … and then there’s gaming. The established players Sony and Microsoft are continuing to innovate, and now that Google is reportedly making this Android-based gaming console, that’s one less way that Apple can sneak in the backdoor and set the house on fire”.))

By the time Apple does it, it will have already been done
“(L)ike just about every other possible area of innovation, it’s becoming less and less likely that we’ll see more Apple “trailblazing.” … By the time Apple does it (no matter what it is), it will have already been done … and probably much more elegantly than the pre-iPod MP3 players, pre-iPhone smartphones, or pre-iPad tablet PCs.”

iWatch will be another hobby
“Just Like Apple TV, The Apple iWatch Will Be Another Hobby For Tim Cook”

Apple outfoxed: Foxconn first
“Apple outfoxed: Foxconn first to debut iPhone-compatible smartwatch”

Samsung is already working on a watch
“…Samsung …is already working on a watch of its own.”
Samsung unveiled games console first
“Sorry Google And Apple: Samsung Unveiled Games Console First”

Google to beat Apple to products Apple is reportedly developing
“WSJ: Google working on an Android-powered game system, smart watch and new Nexus Q … its reason for jumping into all these categories is to beat products Apple is reportedly developing in the same categories….”

(But It’s Already Too Late Because) Apple Can’t Innovate Anymore

It’s harder to innovate once you’re the incumbent
“Apple’s problem is that it becomes harder to innovate once you’re the incumbent rather than the challenger”.

Apple is not innovative
“Quite frankly, Apple is not innovative…”

Apple aren’t innovating any more
“(Apple) have a right to be proud of their accomplishments, but it’s not surprising that pundits claim they aren’t innovating any more.”

Apple is no longer a leader
“Apple is no longer a leader. Apple has become a challenger that now needs to look up to other leaders across the multiple categories it competes in and figure out what to do next.”

Apple is just another product company
“(T)herein lies the rub and the real tragedy: Apple is quickly becoming just another product company….”

Another company out-innovating Apple
“Cramer: Another Company Out-Innovating Apple?”

Apple has become a design follower
“Apple has become a design follower instead of a leader — and it may be just fine with that”

Apple is a lagging brand
“Apple’s Fall From Leading To Lagging Brand”

Stunning nine month gap between product events
“Apple will hold its first major product event in nine months on Monday, a stunning gap for a company that relies on regularly impressing customers with new innovations.”

A bear walks into a bar and says, “Bartender, I’d like a gin . . . . . . . . . . . . . . . . and tonic.” And the bartender says, “Sure, but what’s with the big pause?”

Jony Ive is meddling in software
“Sir Jony has been trapped in a monochromatic hardware world of his own making for so long that now that he’s allowed to meddle in software, he’s pulled out that box of Crayolas he’s kept locked in the bottom drawer and let loose his inner Wonderland.”

The end for Apple exceptionalism
“iOS 7 redesign: the beginning of the end for Apple”

Apple plays catch up
“Apple’s primary motivation (with iOS 7) was to play catch up with… no, not Android but with Microsoft.”

All been done before “…Apple has not only failed to truly innovate in its own right, the changes and additions it has introduced (in iOS 7) have all been done before.”

Nothing new
“Is iOS 7 Apple’s admission that it has nothing new to bring to the table?”

I miss John Dvorak and Rob Enderle…but my aim is improving. ~ John Kirk

The Wide Lens

“The farther back you can look, the farther forward you are likely to see.” ~ Winston Churchill

I mean, honestly, could Apple’s critics be any more wrong? Could they have it any more backwards? Do they know nothing at all about Apple or the Tech industry? The very people who seem most certain of Apple’s future (or lack thereof) are also the very people who seem most ignorant of Apple’s past. The following lengthy excerpts are quoted from Ron Adner’s: “The Wide Lens: What Successful Innovators See That Others Miss.”

[pullquote]Jobs tended to be late for everything because he wanted everything to be ready for him[/pullquote]

“(Steve) Jobs tended to be late for everything because he wanted everything to be ready for him. Jobs understood that the natural trajectory of challenges is toward the (smart mover, not the) first mover. (When the co-innovation of an ecosystem is required), the pioneer has no advantage. In fact, the pioneer is at a slight market share disadvantage relative to laggards. The “system” works to resolve co-innovation challenges, while industry rivals figure out execution.” “Reflecting on catching technology waves in 2008, (Steve Jobs) said:

“Things happen fairly slowly, you know. They do. Those waves of technology, you can see them way before they happen, and you just have to choose wisely which ones you’re going to surf. If you choose unwisely, then you can waste a lot of energy, but if you choose wisely, it actually unfolds fairly slowly. It takes years.”

“His insight was to ‘surf’ the co-innovation wave, knowing that its challenges would be resolved over time. His brilliance was to wait to expend his energy on the execution challenge.”

Waiting To Catch The MP3 Wave “Steve Job’s iPod journey is an exemplary illustration. Jobs knew that, on its own, an MP3 player was useless. He understood that, in order for the device to have value, other co-innovators in the MP3 player ecosystem first needed to be aligned.” “Jobs constructed the iPod ecosystem. (Then) Apple waited, and then waited some more…. As the iPod’s co-innovation risks faded away — when (the) pieces were solidly in place — both MP3s and broadband were finally widely available — (Apple) finally made its move, putting the last two pieces in place to create a winning innovation: an attractive, simple device supported by smart software.” “With its proprietary hardware-software combination, (Jobs) didn’t just put down the last piece, he put down the last two pieces. And he made sure they interlocked. Apple didn’t launch the iPod as a product. In combination with its iTunes music management software, the iPod was a solution.” “By shifting to offering solutions, Apple increased the execution challenge for itself as well as for everyone else, effectively lowering the value of competitor’s previous efforts and increasing the barrier for rivals to achieve future success.”

Waiting To Catch The Smart Phone Wave

[pullquote]Once again, Jobs was late – five years late[/pullquote]

“Once again (with the iPhone), Jobs was late – five years late.” “And rivals didn’t seem to care.” “Reacting to Apple’s January 2007 announcement of the iPhone (six months before its launch), Jim Balsillie, co-CEO of BlackBerry shrugged, “It’s kind of one more entrant into an already very busy space with lots of choice for consumers.” “Asked to react to the announcement of the iPhone, Microsoft CEO Steve Ballmer literally laughed out loud.” “Steve Jobs could smile because he knew what (his) ecosystem carryover meant. Of the 22 million iPods sold during the 2007 holiday season, 60 percent went to buyers who already owned at least one iPod. The iPhone was not going to be a new entrant fighting to capture attention in a crowded mobile phone market. It was the next generation iPod. By carrying over the key elements of the iPod ecosystem, he would carry over his buyers too.”

The Critics Have Gotten It All Wrong

Apple’s critics seem to be diagonally parked in a parallel universe

After reading the excerpts from Ron Adner’s book, you can see just how wrong the critics have been.

A bartender walks into a church, a temple and a mosque. He has no idea how jokes work.

Some technology pundits appear to have no idea how tech works, either.

“Some people get lost in thought because it’s such unfamiliar territory.” ~ G. Behn

Not only have the critics gotten it wrong, but they have gotten it exactly backwards. Their advice constitutes the worst possible course of action for Apple, not the best.

Listening to free advice of a certain kind costs you nothing…unless you act upon it.

The critics don’t remember Apple’s history or tech history or the history of innovation.

Why don’t Apple’s innovation critics make ice-cubes? They can’t remember the recipe.

[pullquote]Stop telling us that you can predict the future when you can’t even recall the past[/pullquote]

Apple’s critics need to stop telling us that they can predict Apple’s future when they’ve already proven that they are not even capable of accomplishing the far simpler task of recalling Apple’s past.

The past, the present and the future walked into a bar. Then things got tense.

The facts can always be ignored, but one does so at one’s peril.

A drunk walks into a bar. “Ouch!” he says.

Nor does ignoring the facts change the facts or make them go away.

“Facts do not cease to exist because they are ignored.” ~ Aldous Huxley

When you’ve got your facts wrong, the second thing you need to do is more research.

I went to a bookstore and asked the saleswomen, “Where’s the self-help section?” she said if she told me, it would defeat the purpose.

When you’ve got your facts wrong, the first thing you need to do is just shut up.

First law on holes – when you’re in one, stop digging. ~ Denis Healey

Categories

What is this nonsense about there not being any more tech categories to conquer? The best way to evaluate whether Apple could enter a market is to ask whether people are satisfied with their current user experience. Where there is dissatisfaction, there is opportunity.

First

What is this obsession with being first to market?

[pullquote]It is better to be a smart mover than a first mover[/pullquote]

— Did being first help MP3 Man in MP3 Players, Palm, Nokia or Rim in smart phones, Microsoft in tablets, Microsoft or Google in TVs?
— Did not being first hurt Apple in iPods, iPhones or iPads?

No, in an ecosystem that demands co-innovation, it is better to be a smart mover than a first mover. Arguing that Apple has missed the streaming music or the console or the TV or the wearables market is like arguing that Apple has missed the train when the tracks have yet to be laid.

Apple Is Surfing The Innovation Wave (Like Mavericks)

Apple is doing what it has always done – and what it has always done successfully. They are surfing the innovation wave, just waiting for the complementary ecosystem parts to catch up. Apple isn’t late, the co-innovation wave is late. And when that co-innovation wave finally arrives, history tells us that Apple will be ready.

Rainbows & Innovations

images-70Rainbow

Rainbows don’t appear when it isn’t raining or in the darkness of the night or after every rain shower, but that doesn’t mean that there will never be a rainbow ever again. Rainbows only occur when all the conditions are right.

Significant tech innovation doesn’t appear every day, or every month, or every year, and new tech categories are rarer than hen’s teeth, but that doesn’t mean that there will never be innovation ever again.

Innovations only occur when the conditions are right.

Study the industry. Wait for the conditions to be right. And while you’re waiting for the next tech innovation, the next tech category, or even the next rainbow…

…don’t be an a$$.