Further Analysis of Amazon

Given that they key for Amazon’s growth is expansion of offering while maintaining a competitive price, the question must be addressed as to Amazon’s reach and what cap ex will be required to realize their max potential.

The first thing we need to think about is how many regions (continents) Amazon can legitimately tackle. Part of the convenience that I address in my article would be offset if the shipping time was too long. Meaning that the CapEx Amazon has spent on regional storehouses, mostly in America, to delver goods within one-two days for Prime members pays off in the convenience department. If customers overseas need to wait a week or more then the value of convenience drops, even with a lower price, vs. going to the store and getting what you need.

I have strong doubts that Amazon has any real shot in China. Namely because Jack Ma founder of AliBaba has created a consortium and is investing just over 16 billion dollars to create a service to get any good to any part of China in less than 24 hours. So if China is out, that leaves the rest of the world.

Amazon is obviously highly focused on America. As they should be given the consumer centric nature of American consumers. With the potentially infinite ceiling of the lifetime value of a US customer for Amazon, it makes sense that the US be a “prime” sector for Amazon to focus on. Amazon still has quite a bit of growth ahead in just the US only let alone the rest of the world. Staying on the US, I am confident that at some point in time Amazon will offer either same day or less than 24 hour shipping to US prime customers. This increases the validity of the point of a non-reduction in CapEx as a profit switch strategy.

Other smaller countries in the EU will be interesting for Amazon to focus on as well to deliver similar solutions to the US. But the size of the United States will continue to make it one of the biggest grounds for Amazon.

On thing that is key to address is what happens to physical retail. I don’t believe Amazon will bankrupt every retailer customer but I do believe they stand a chance to bankrupt most of the ones they choose to compete with. Particularly those who offer non-time sensitive items. Electronics retailers will likely fall first. Perhaps clothing retailers go next as the shift to online spending becomes the norm.

That being said, I don’t think physical space goes away. Perhaps retailer figure out how to sustain by capitalizing on showrooming as a business model. Or perhaps retailers can target customers when they are in store to offer more competitive pricing than even Amazon. Either way physical space must evolve if it wants to stay relevant. Competing on price and selection with Amazon is likely not the winning strategy. To compete with Amazon retailers must focus on what they have that Amazon does not. A location in physical space. Furthermore, they need to focus on what they can do with that physical space that is not trying to compete with Amazon on price or selection. Specifically, I feel retailers need to focus on the human element and more specifically community.

For example, Radio Shack is beginning to invest in Arduino products that appeal to the emerging maker community. This community is eager to build things yet the value Radio Shack can offer that Amazon can’t in this example is worships, lessons, networking, and more that specifically appeal to these communities. As this tinkering group learns about new ideas they can then buy new parts or kits right there in Radio Shack and go home and work on them. In this model, there is a value to getting what you need and going home to work on it while the lesson is fresh rather than waiting.

Similarly cooking stores do this now. Many cooking stores offer classes, which are a decent source of revenue, that showcase certain items carried in the store and used to make specific recipes being taught. This pairs the communal experience with the commerce experience and together adds value back to items carried on shelves but is not solely dependent on just the sale of goods as a revenue stream. This is the kind of thinking retailers need to begin engaging in if they want to survive in the future.

The Great Wall of Amazon

I love shopping from Amazon. I always have and as long as they are around–which will be a long time–I always will. There are aspects of this statement I just made that need to be analyzed from a market standpoint as well as from a consumer centric viewpoint. I want to do several things in this column. First, I want to highlight some things about the shopping experience with Amazon that is unique to their differentiated offering. Second, I want to relate that to Amazon’s business model and growth strategy going forward.

Convenience and Delight

Amazon is a retail company plain and simple. Retail is by a nature a services business. When you survey the competitive landscape of retailers you conclude that Amazon’s greatest service is convenience. Without question buying things from Amazon is the most convenient retail experience out there today. I don’t think many would argue this point so I’m not going to spend much time on it. Rather, I’d like to focus on an under analyzed aspect of the Amazon buying experience–delight.

When I first started shopping with Amazon it started because of the convenience factor. This simple value proposition was certainly a critical part of the reason I continued to shop with Amazon. However, something deeper was happening psychologically that I picked up on.

Most of us in the developed world have traditions where on special occasions our culture engages in the act of receiving presents. These dates, like a birthday or a holiday, are marked on the calendar and we wait in anticipation for the special day when we receive gifts.

I would propose that shopping on Amazon, followed by the anticipation of the delivery of the package, and then receiving the “little brown box with a smiley face on it” surfaces the same feelings as receiving presents on special occasions. Thus, delivery day becomes a special occasion. It is the climax of the entire experience. This little psychological effect is the cherry on top of the convenient service Amazon provides.

There is another psychological element to the Amazon shopping experience at play as well. When we buy something from Amazon we are engaging in a principal behavioral scientists call delayed gratification. We are resisting the urge to satisfy our immediate impulses with a purchase and are choosing, for various reasons, to buy online and wait for our package to arrive. Interestingly in many studies, researchers found that those who intentionally delayed gratification of something genuinely enjoyed it more and had fewer instances of buyers remorse than those who satisfied their immediate impulse of the same item.

Trust

Another important foundation to understand is the element of trust which Amazon has built and is continuing to build with its customer base.

I’m actually yet to have a bad buying experience on Amazon. I buy at least a dozen things a month from them, so this is perhaps surprising or perhaps not. I do quite a bit of research before I buy things. For the most part when I order something from Amazon, I know its the product I want. I have heard stories from consumers who have had a few bad experiences with Amazon but all of them confirm that they are rare cases and overwhelmingly they have positive experiences shopping with Amazon. Because of this, Amazon has built a level of consumer trust that few companies have.

This is demonstrated by the number of credit cards and extremely high levels of repeat customers Amazon has. In fact, our own research, as well as data I have seen from other firms, suggests that once people start shopping with Amazon, they continually increase their spending with the retailer. Offering the theory that the lifetime value of an Amazon customer potentially has no ceiling. The limiter, if this is true, is Amazon not the customers willingness to spend with them.

“The Profit Switch”

Much has been said about Amazon’s business model this week. It is the topic of the week and a worthy one at that. There are several well written articles I want to highlight that provide a base for this discussion.

The first is by M.G Seigler, who was once a blogger and is now a venture capitalist at Google Ventures. He still writes for TechCrunch from time to time and recently provided his own analysis of Amazon’s model. The theory which he proposes that I want to highlight is that Amazon has a magic “profit switch” that as soon as they are ready they will flip on and start making massive(my emphasis) profits.

The next article was one by Horace Diedu at his site Asymco. Horace makes many significant points and this one in particular.

“The premise that Amazon can, on a whim, change its business model from selling other people’s products at a razor thin margin while investing in capital-intensive distribution to selling other people’s products at a large margin while not investing in capital-intesive distribution is not credible.”

This is exactly right. If we believe that Amazon does indeed have a profit switch then we need to analyze at what they would do, namely in what way would they change or tweak their business model, in order to suddenly realize such profits. There are really only two fundamental ways. They either raise their prices or all of a sudden change their capital expenditures model. Neither of these proposals seem credible given Amazon’s business model.

If Amazon raises their prices two things happen. First they ruin the trust they have built with their consumers. Knowing I am likely going get the best price on Amazon is the single driving factor for repeat transactions. It is, in fact, the only reason that when I am in the physical presence of a retailer that I scan an item of interest using the Amazon app to see if there is a better price on Amazon. Often there is and I choose to buy it through Amazon even though I could have spent $10 more and walked out the store with it. Clearly this matters more with items that are not time sensitive. The key point is, as Ben Thompson pointed out on his site Stratechery yesterday, that Amazon has chosen to focus on breadth and depth of selection and the best price at the same time. This means keeping prices competitive and maintaining the needed CapEx to maintain and expand selection and guarantee timely delivery.

Another element to this profit switch theory is that Amazon will raise prices at the point in which they have a monopoly. Meaning that they have bankrupted most if not all of their competition. This is a sound theory but not plausible. If Amazon was to all of a sudden raise prices, even if they had a monopoly, it would not just hurt trust as I raised before but it would open the door for their own disruption. Even if we believe that Amazon would bankrupt its retailer competitors, raising prices would open the door for its partners to start competing by offering lower prices on their own website for their own goods. The retailer themselves would favor this model because an Amazon monopoly would have conditioned the market to online spending even more than it is today, and allow them to cut out the middle man and not have to profit share with Amazon.

Amazon has no profit switch in my opinion but there is still the possibility of growth. As Ben Evans pointed out yesterday, and to which I wholeheartedly agree, the key to Amazon’s growth is more of the same. Offering the best price, on the widest selection of items. This means Amazon must invest in new areas, which they do, as loss-leaders at first, but as revenue machines over time. This is the model they have used and its the model I believe they will continue to use. It is also one that is requires more CapEx spending not less. Amazon has this model down and they are exceptionally good at it. The question may not be what will Amazon offer but what won’t Amazon offer. ((This column has gotten long enough so I’m adding additional analysis on topics I didn’t cover related to Amazon for our Tech.pinions Insiders))

[For Tech.Pinions Insiders: A Further Analysis of Amazon]

Leadership Matters More Than Market Share

A leader is one who sees more than others see, who sees farther than others see, and who sees before others see.
– Leroy Eimes

In studying the technology industry, the markets that encapsulate it, and the consumers who drive it, I am less interested in how much money a company is making, or how many devices they sell, or what a platforms market share is. Those are all interesting data points. What matters, in my opinion, is whether or not companies playing in this arena are advancing computing.

Apple’s Demise

It seems as though the popular “Apple is doomed” narrative will never go away. While this is a deeply naive statement filled with flawed pre-conceived notions, it is often thrown around publicly by those with an agenda other than genuine truth.

For some illogical reason, many are just waiting for Apple’s dominant reign to end. This line of thinking forgets that the only market Apple has dominated for a length of time was the MP3 player market. Apple may never secure a decade plus of device or category dominance like they did with iPod again but that does not mean that they do not have a healthy and profitable business that will last decades. Yet all too often ebbs and flows of markets, cyclical innovation patterns, and global adoption cycles, seem to fool people into missing the big picture.

I hear a subtle tone frequently whispered among analyst peers that Apple has had their day and it is time for someone else. That time may certainly come, but it is not today. I hold this view confidently because I am yet to see the emergence of a new leader. I see platforms gaining market share leadership. We may see devices become sales leaders, but without question Apple is still the envy of the industry. ((Being the first with a spec or some technological gimmicks does not qualify as leadership))

The Secret to Growth

“The real act of discovery consists not in finding new lands but in seeing with new eyes.” – Marcel Proust

We can debate until we are blue in the face whether the biggest growth opportunities like smartphones and tablets are saturated. But whether this point is true or not both markets will inevitably become saturated at some point. Growth will someday peak and only disruption can restart the cycle.

The key for a companies growth lies in new opportunities. Sometimes you have to create those opportunities and other times you can capitalize on opportunities others have created. But in either case vision and leadership are key.

Perhaps the next growth area is wearable computing, or the digital home and car. Perhaps it is something we have not thought about yet. This is what makes this industry exciting. The point remains, who leads these new opportunities is the key thing to watch.

Leading also means you often take some arrows in the back. It is hard and not all can handle the scrutiny. As I stated earlier, I am not naive in thinking that Apple will always be in a leadership position. But I’m yet to see another holistic leader in computing emerge.

Nvidia’s Shield Was Built for Folks Like Me

I’m right in the sweet spot of Nvidia’s target demographic for Shield. I’m a hard core gamer, I play mainly console games and not as much PC games. Life and career have taken more time and its been harder to find the time to play video games like I once did. This is why the promise of a true mobile console experience has always interested me.

This is why I was very interested when Nvidia announced Shield. I was skeptical I’ll be honest, and a bit surprised. But I remained optimistic because of what I know about Nvidia and how hopeful I am that someone will actually deliver on the mobile console promise.

I’ve been playing with Shield for a while now and I have to say I am impressed.

Some Thoughts on the Hardware

First off the hardware is excellent. The controller feels very much like an XBOX controller, which I would argue is the best controller around. ((This is subjective of course, but the overall feel in my hand and the “just right” stiffness of the joysticks is perfect for me)). If you have spent many hours gaming with the XBOX controller, you will feel right at home with the Shield controls.

Second, the screen is fantastic. I’ve used all the latest and greatest Android devices and the screen on the Shield and although its resolution and PPI isn’t has high as devices like the Galaxy S4, to the naked eye it feels extremely close. Which means the games and whole visual experience are top notch.

Android Gaming

The biggest question here is games on Android. Nvidia chose the Android operating system to run Shield because of Androids open nature. There is no question in my mind that more immersive games will come to mobile devices, but I’ve felt for some time that a controller experience was necessary for this to fully happen. Now that Nvidia has released Shield and that Shield delivers a truly mobile console experience in my opinion, the ingredients are there for console game developers to start taking mobile more seriously.

There are already a handful of Shield Optimized Android games, and like all new console launches I anticipate this number to grow and because Shield is built on Android, I expect the amount of Shield optimized games to grow faster than any other mobile gaming console to this point.

Interestingly, although there are about two dozen Shield optimized games already there are many more in the Android market that work already given their support for third party game controllers.

One last point. In using Shield, I have had the most positive expereince with Android yet. Not only is it a pure implementation running stock Jelly Bean, but In the many of the entertainment use cases Shield is focused on brings to light some of the best of Android. Android is great on Smartphones and tablets, but in my opinion, its even better on Shield.

A Bit of Nostalgia

Although, there is a fair amount of content already available to play on Shield, being built on Android has its advantages. Namely that given its open nature there are very good Nintendo and Super Nintendo Emulators for Android. I downloaded my favorite, SuperGNES, and loaded up the games I have been using on the Galaxy S4 I have. Namely, Super Punchout, Street Fighter II, Mario Kart, and Super Mario World. Low and behold, right out the gate every one worked with the Shield controller with no modification or customization. So here I am now playing Street Fighter II and Super Punchout with the glory of using a game controller.

Having access to all the Nintendo games I know and love, and grew up with, and being able to use a game controller with them, was perhaps the most eye opening experience for me in using Shield.

Powerful Accessories

Beyond the games, there are other benefits for being built on Android that showcase a device like Shield’s advantage over a more closed mobile console gaming experience. Being built on Android opens the door for other unique hardware accessory expereinces to benefit Shield. One in particular I want to highlight. And that is using Shield to fly my Parott AR Drone.

Yes, I have one of those drones, and it is one of my favorite gadgets / toys. You may not know this but the AR Drone has a number of augmented reality games available for it. Games where you use the camera to shoot digital objects in the air or the ground. Or games where you race through a digital course in the physical world. All of these experiences through a touch screen are possible but made all the better using a physcical game controller. To say that Shield has profoundly impacted my flying ability with my AR Drone would be an understatement.

This brings up a broader point. We are seeing a number of electronics like this, whether RC cars, planes, etc., come with software for smart phones. Being able to use Shield as a game controller with some of hardware expereinces like these may open up some doors that were not possible before.

Things to Consider

For us gaming enthusiasts we are faced with a difficult holiday season. This is the first time in a while when the holiday season will feature simultaneous avaialablity of the two top gaming consoles in their launch year. Most of us can’t afford them all this holiday season.

However, if a mobile console gaming experience is a priority for you then strongly consider Shield. It is the best mobile gaming console experience I have encountered. And as I stated there is a big potential upside being built on Android. I strongly believe it is only a matter of time before console first game developers shift to a mobile first development focus. This does not mean they will only develop for mobile device, only that they will embrace the mobile first strategy. Android will clearly benefit from this move and inevitably so will Shield.

Shield may be the most future proof mobile gaming console to hit the market yet. And as I pointed out, playing Nintendo games, using to fly drones, etc., are all icing on the cake.

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.

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.

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’s Windows 8 Blunder

When I first saw the direction Microsoft and their partners were looking to take Windows 8, I was optimistic. Metro sounded good in concept, as did some of the features and functions built into Windows 8. But then as the time got closer, it became very clear that this version, more so than any other, was going to depend a lot more on hardware than any previous version.

Prior to Windows 8, Vista was a hardware hog. In fact, I would argue that had more companies been more intentional about adding chips with better graphics, either discreet or integrated, that Vista would have performed better on early hardware. But Vista looks like a raging success compared to Windows 8 at this point.

As Patrick noted in his column the other day, it is ironic that we are in a position where the hardware is necessary to save the software. Building touch into notebooks and desktops is now the only way forward for Microsoft and partners. Microsoft has gone down a path of attempting to condition the market to not only be comfortable using touch on their notebooks and desktops but to desire it. I remain doubtful this will happen.

The primary reason is proximity and context. When we use notebooks or desktops we do so at arms length. This is the most comfortable position when the device is on your lap or on a table. Even though our arms are likely slightly bent while resting on the keyboard, the screen in most cases, is a full arms length away. Sometimes quite a bit more with a desktop.

how_to_work_on_pc

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 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.

THE BLUNDER

So what is Microsoft’s blunder? Well, in my opinion, they made the strategic error of believing that what they did in Windows 8 would be the shortcut to help them compete with tablets from competitors. When in reality, to compete with other tablets, what they should have done was bring a version of Windows phone to the tablet form factor. Doing this would have done several things.

First, it would have significantly helped the Windows Phone ecosystem by way of apps. Quality and long tail apps are so dramatically void from the Windows Phone ecosystem that several carriers have specifically told me it is the reason for the abnormally high return rates of Windows Phones to their stores. By bringing Windows Phone to to the tablet form factor, it would have spurred more developer attention for phone apps and most likely tablet apps as well. Apple has lapped Microsoft in this area many times over.

The second thing it would have done was position Microsoft better for small screen tablets. Windows 8 is overkill in my opinion for what consumers want and do with smaller screen tablets. Windows Phone is positioned well for portrait mode use cases, which is the dominant orientation for consumers with small screen tablets.

Microsoft is at least 3 years or more behind in mobile. Windows 8 has and is doing nothing to help catch them up in mobile and realistically is only leading them down the path of being more behind. They have spent the bulk of their resources focused on areas of computing that are declining not growing. Tablets and smartphones are the growth segment and should have been the top priority. I would argue Windows Phone innovation and focus should have been a higher priority than Windows 8. I would even go so far as to make the case that Windows 8 should have been more evolutionary to Windows 7 and the revolutionary attempt should have been with Windows Phone and a specific tablet version of the Phone OS.

It would be hard to argue that an evolutionary version of Windows 7 would not have sold well running on the powerful, all day computing, thin and light hardware we are seeing enter the market this fall. You certainly could not make the case that we would have sold less Windows 7 devices in 2013 that’s for sure. In fact, I’m pretty sure I could make a compelling case that had Windows 7 or an evolutionary flavor of it, been the OS for 2013, that we would have sold more notebooks and desktops than we have and the PC market wouldn’t be off as much as it is.

To be clear, the blunder was thinking they could turn the ship by taking a PC approach instead of a post PC approach by focusing more on smartphones and tablets.

Who knows, maybe Microsoft will prove me wrong and announce some brilliant unification strategy with Windows 9 that solves the problems outlined above. I’d have an easier time believing this possibility if Microsoft had a better track record at getting things right the first time.

On a side note, notice that Apple has NOT introduced a touch based laptop. I believe Apple, who is very picky when it comes to user interfaces, knew that touching a screen on a laptop is completely unnatural and instead made the Magic Trackpad to emulate touch in a way that does not disrupt that natural motion of hands placed on a keyboard. I remain skeptical you will ever see a touchscreen based laptop from Apple.

The Liberating 2013 MacBook Air

A few years back I declared the 13″ MacBook Air the perfect notebook. With the recently released 2013 refresh, Apple just made the perfect notebook even better. They did it with one feature that has taken notebook computers to a new level–true all-day battery life.

Cable Free

There is something wonderfully liberating about not needing to worry about plugging your laptop in. Transformative is another word I’ve heard from those I’ve talked with who also have one of the new Airs. The experience actually reminds me quite a bit like the first time I got a hybrid car. Being able to drive longer and farther without having to think or plan trips around gas stations was wonderfully liberating. This is the same feeling I have now using the new MacBook Air.

It seems like a small thing, but not having to worry about, or even really think about where I sit in meetings, at airports, in airplanes, etc., is wonderfully freeing. No longer do I need to plan my day around a power outlet.

A Typical Day

Often times what will come up in this discussion is what a typical computing day looks like for me. I don’t have a desk job so I am highly mobile on a regular basis. More often than not I am on the road heading to other companies offices for meetings. At these meetings I am usually note taking, or sharing a presentation with our market insights. Obviously, as I go from place to place my notebook is not open and just in sleep mode.

Even when I am stationary or at a desk, I’m mostly checking email, Twitter, working on a column or report, or just browsing the web. Because I am bouncing around Silicon Valley so often, I usually do a lot of these tasks from Starbucks or some other location where I can use Wi-Fi. Doing my normal workflow at home or on the go, I am charging my new MacBook Air about every two days. As an aside point, I started this column after a full nights charge. After working for the past 20 min, I just looked at the estimated time remaining and it says 13 hrs and 08 min.

A Story Tells it All

My first true all day computing test happened this last week when I attended Microsoft’s build conference. The press and media were let into the keynote at 8:30 am, which is about the time I sat down and opened my notebook. They had power outlets available at the tables but I didn’t plug in since I was working on a full charge from the night before. ((I’m also noticing this new Air is charging faster, taking roughly two hours to go from nearly empty to fully charged)) I used the machine non-stop until the keynote ended around 10:45 am when I shut my notebook and walked to the press room to write.

I sat down and opened my Air in the press room a little after 11:00 am. ((When lunch is free in the press room you learn to get there to get in line early.)) Out of habit, I instantly checked how much time I had left on battery power. The battery status indicator estimated I still had 9 hrs 57 min left on battery power. I remained working in the press room until 2:00 pm when I left to meet up with some friends and check out the exhibits.

I got back into the press room to reply to emails and do more writing around 4pm and again checked my battery status out of habit. It estimated I had 6 hrs 23 min remaining. I worked there until 5:45 pm until I moved to the Mariott down the street to work from the bar. I went there to kill time before heading to the Microsoft party that night. Actually, if I’m being honest, I went there to get Pliny the Elder, the best beer (an IPA) in the world. When I got to the Mariott about 6pm I again checked my battery status. After working all day, I still had 5 hrs and 15 min estimated remaining. I worked there for an hour until I left for the event. I didn’t open the notebook the rest of the night. Never once during this day of fairly intensive use at a conference did I ever need to worry about plugging in. I also learned I don’t need to constantly check my battery status either any more. [pullquote]The kind of battery life experiences I am having with this new 13″ MacBook Air are more iPad like than notebook like.[/pullquote]

Compared to my old MacBook Air which I got two years ago, I am getting better than double battery life. The kind of battery life experiences I am having with this new 13″ MacBook Air ((I bought the fully loaded 13″ MacBook Air with the dual-core 1.7 ghz 4th generation Intel core and 512gb solid state drive with 8gb 1600 mhz DDR3 RAM. )) are more iPad like than notebook like. ((I keep the screen brightness set to 50% and I do not have Power Nap or app updates set to install during sleep mode while on battery power. I also keep the keyboard backlight set to auto. Other than that nothing special going on.))

Mavericks Advantage

As I pointed out in my article on OS X Mavericks from Friday, and although it is only a hunch at this point, I have a theory that OS X Mavericks will bring even better battery life improvements to the already stellar MacBook Air.

I’ve talked to several folks who are running the OS X Mavericks developer preview on their 15″ rMBP and are seeing significant battery improvements one even said he was getting better than 10 hours.

I’m looking forward to quantifying this point. With what I know technically about what is happening under the hood with OS X Mavericks advanced technologies, it’s hard to believe that it will not add even better performance to any machine running it.

Non-Retina?

In an age of high definition TVs, PCs, smartphones and tablets, it may be hard to conceive getting a non-retina like display in a notebook. I have many true high-definition PCs to test including a Retina MacBook Pro. Although I love the screens on these devices, the battery life improvements are so important to me due to the nature of my mobility that it is well worth the trade-off for me.

Too Good to Be True?

I’ve told many about these experiences and more over the past week and most have a hard time believing it. I even thought it was too good to be true when I first heard the claims. But after a week and a half with the new MacBook Air I can testify that this notebook more than delivers on its battery life claims. You can also check out these interviews with some other new MacBook Air owners for their battery life testimonials as well.

10 years ago or so, I was one of the few in press rooms and meeting rooms with a Mac. Now I’m one of the few who doesn’t need to worry about where a power outlet is.

It’s Officially Over for RIM

I like to try and remain optimistic about companies because I realize that true innovation can often trump market trends and be a catalyst for growth. But since the the beginning of the year, I have been observing a growing list of evidence showing that RIMs time may be officially up.

The first bit of data came from a dozen or so different CIO interviews where more than 80% of the CIOs interviewed stated they were actively moving away from RIM and their enterprise server solutions. Many didn’t emphasize this point but 2012 was a contract year for more than 60% of RIMs enterprise server accounts. These contracts are generally done in two year increments and a majority came up for renewal in 2012. What many of these CIO interviews I read indicated was that most of those were not renewed.

In fact this downward trend may have been started when Good Technology launched their service which allowed BlackBerry server and the push email solution to go to other devices, namely Windows Mobile and Palm OS at the time. This way if a business was running on BlackBerry Server other non-RIM devices could access the service. In fact one of my business mentors, who was then at Kleiner Perkins, made the point that RIMs days may be numbered using the Good solution as an indicator. Even in those days, before the iPhone, enterprises saw the need to support a number of devices and not just one.

The other data point has been conversations I’ve been having with insiders in the telco space. From those conversations, and from casual conversations I’ve had with telco execs, it became clear that RIMs latest devices were among the lowest selling smartphones, even being surpassed by Windows Phone. The bottom line is the BlackBerry devices are suffering a negative momentum.

Today, in their earnings, RIM stated the following:

RIM said it sold 6.8 million phones overall versus 7.8 million last year. That includes older models. In the conference call, it said about 2.7 million new devices were Blackberry 10 models.

RIMs YoY decline continues and is dropping extremely fast. Given RIMs focus on enterprise sales, the seasonal boosts that come in Q4 has not benefitted RIM in years and I strongly doubt it will this year.

As much as I tried to remain positive for RIM it is time to officially say it is over. BlackBerry like Windows Phone needs time to be successful. There is a dominant duopoly of Android and iOS and I see nothing in the works that will change that anytime soon. RIM does not have the cash or the patience with investors to stick it out until a small, yet doubtful, opening appears to make a go at it. Microsoft does have the cash and the ability to be patient and wait for their market opportunity, should it arise.

An interesting thought exercise for RIM is a question raised by Ben Evans this morning on his blog after the RIM announcement. He stated:

It’s also interesting to ponder what would have happened if both companies had swallowed their pride and gone with Android, or even forked Android. I don’t actually think Blackberry would be in a better position, but Nokia might have been.

This is an interesting question and I agree with him that I don’t think going Android would have saved RIM. Nokia could definitely have faired better but what I think is fascinating about Android is that by committing to Google there is no guarantee of success. With a host of failed Android devices on the market, it proves that simply going Android is not the answer. All of this points out how very difficult it is to compete in the most cut throat business of telecommunications.

It is only a matter of time now for RIM and the real question is who does their exit from the landscape benefit most. I believe it benefits Apple the most and Windows Phone second.

A Week With OS X Mavericks

As I watched Apple announce and demonstrate many of the key new features in OS X Mavericks, I was continually struck with the same thought about the many features being shown. To me, they all seemed very useful.

In fact, the last few years it seems I have had the same feeling with each and every release. Each time its gets better and each time OS X gets even more useful features for desktop and notebook computer users. I’ve been using Mavericks for a week now and here are a few of my stand out experiences.

Surfing On Mavericks

Perhaps it is fitting that with this version of OS X named Mavericks, which is named after the epic big wave surf spot near Half Moon Bay, CA, Apple has released hands down the best web surfing experience on a Mac yet. The new Safari is noticeably faster. Which is saying something in an age of micro-second performance increases. Browsing the web simply feels snappy and quick.

Scrolling however, something we all do many times a day, is now super smooth and more like scrolling on an iPad or iPhone. Scrolling in this new version of Safari simply needs to be seen to be fully appreciated. I compared it to my other Mac running Lion and found that scrolling in Mavericks is noticeably smoother and more fluid. Making reading while scrolling feel like an entirely new experience.

Shared links is also a feature on the new Safari I found myself using more than I thought. I spend a lot of time on Twitter but not everything in my timeline is a link. I found myself using the shared links features to just filter what people I follow on Twitter are linking to.

Multiple Display Features

When I’m stationary at my home or work office, I use several monitors. I have a theory, the more monitors your use, the more productive you can be. It’s true for me at least. So it was no surprise to me, given my workflow, that I appreciate the new multiple display features.

In particular, the menu bars and docks are now available on all monitors, which is extremely handy. It may seem like a little feature but it’s actually a big deal in increasing efficiency of workflow when using multiple monitors. You kind of feel like you are using three actual Macs when in this multi-screen mode.

Another aspect of the new multiple display features I found quite useful was AirPlay display. This new feature lets you turn any TV connected with Apple TV into a secondary display. This has been extremely useful for me because I often work with others on presentations or data gathering in a collaborative environment. We do this through Apple TV connected to a TV in our conference room. Usually I just Airplay my display which will mirror my Mac’s screen to the TV. Now we can use the TV as a separate display to keep specific data on screen while we work collaborate on the other.

Interactive Notifications

When Apple added notifications to OS X, it was one of the features I was looking forward to the most. Yet once I started using them, I immediately felt it would be nice if I could delete an email or respond to one right from the notification.

After having and using interactive notifications on my developer preview of Mavericks, it is hard to imagine living without it. Chalk this up as a feature I hope comes to iOS notifications on iPad.

Overall Performance Increases

Apple lists several new features to Mavericks which they call “advanced features.” These advanced features, like app nap, timer coalescing, compressed memory, and more, are all designed to optimize the performance of your Mac. These optimizations lead to speedy and more responsive experiences with things like apps, the web, etc., but will also lead to better battery life gains.

I’ve been testing OS X Mavericks on a 13″ rMBP which is not my every day machine. I’d have liked to compare exact machines to quantify some battery life gains but I don’t have a second of the exact same machine. Some of these points are hard to quantify but I am including them to make an observation and propose a theory.

I’ve bought and moved to the new MacBook Air 13″ running Intel’s latest low power but high performance 4th generation core processor code named “Haswell” as my everyday machine and I’m running OS X Mountain Lion. Even without running OS X Mavericks the battery life I am getting on this Mac is profound and transformative. It is more than double what I was getting with my MacBook Air of two years ago. I’m planning a full article on my experience with this product but the bottom line is I can work all day in meetings, take notes, browse the web, etc., and I no longer need to worry about plugging in my notebook.

My theory is that OS X Mavericks is going to increase the battery life even more on this new MacBook Air–and all Apple notebooks for that matter–when it launches. The 2013 MacBook Air already has industry leading battery life and my guess is that OS X Mavericks will make it even better.

Overall, Apple is continuing their trend of adding new and useful features on an annual basis. But more importantly, in the grand scheme of things, OS X Mavericks represents Apple’s commitment to innovate uniquely for different form factors. Apple has drawn a line in the sand and stated with their actions that they believe software for the PC is different and should be treated different than software for tablets and smartphones. This does not mean all our screens are islands- quite the contrary. They share experiences and get more tightly integrated relationships in the multi-screen reality we live in. But it does mean that Apple is committed to delivering the best desktop and notebook computing experience possible. Mavericks represents this for Apple. Evolving computing is all about making computing accessible and enabling solutions that makes computing easy, effective, and convenient. Mavericks delivers on this promise.

When Mavericks comes out the experience scrolling with Safari and the advanced features leading to better system optimization and battery life alone will be worth it for me.

On Being Bullish on Apple

I was recently presenting some of our big picture technology trends to a group of venture capitalists. As is so often in these discussions Apple came up. They were asking me questions about the landscape and where Apple fit, and how they can compete, can they keep it up, etc., and after several remarked they were suprised how bullish I was on Apple. I shouldn’t find it suprising but I am continually inrigued when others are suprised I am so bullish on Apple.

To clarify, I am bullish on Apple the company. Apple the stock, is a very different conversation and one where the future is more hazy than clear. With regards to Apple the company I am extremely confident in the health of the company and I have written extensively so. However, with Apple the stock, I really have no idea what happens. Much of this has to do with the fact that I am not a financial analyst so understanding the games in which the stock market is played is not more core area of expertise. I, of course, have my thoeries as to why Apple’s stock is treated as it is, and I will flesh more of those out over time. But the core of the issue is that Wall St. uses a standard template to anlayze Apple when it there is nothing standard about how Apple operates. Perhaps more to the point, it appears Wall St. devalues Apple’s stock because of the competitive landscape the standard template they use influences their thinking. Google and Amazon can only have the ridiculous P/E ratios they have because Wall St. seems to view them as having no real competition.

We will continue to see over time things that Apple is able to do that competitors simply can not. This is what I call the vertical advantage. When you can build hardware, software, and integrate services all tightly together with a singular vision and customer experience in mind, you end up with a highl differentiated product. One that is differentiated both objectively and experientially. I’m yet to be proven wrong in this point by a non-vertical company who uses someone elses software to run on their hardware.

I’ll put out a teaser for our Insiders. I am planning a series for Insiders only, where I plan to make the case that Apple has no actual competition. In that, I will hopefully make some points that can end up being used as a new template to evaluate Apple. I know it sounds ambitious, but I believe it to be true and more importantly I feel I have enough data and support to make the case.

WWDC Nuggets and Observations

The True Post-Steve Era

Even though Steve Jobs direct influence has been absent at Apple for a few years, his signature on specific things was still there. Apple does not plan products in one or even two year cycles but rather plans much farther out. Much of what we have seen over the past few years, Steve would have had at least some insight and influence on. However, I think what we are now seeing are specific things coming from Apple in which Steve has no influence on. Basically we are seeing direction and decisions made by the leadership in a true post Steve Jobs era.

I’ll be honest, even though I believe the culture of Apple to be sound and to be a culture unique with innovation and vision, I still was curious to see key decisions that would be make without past guidance from Steve. The question I get most often from the financial community is whether I believe Apple can truly innovate with Steve’s vision not present. I, of course, have always believed this but I think now we see the evidence as well that the answer is yes.

Whatever the tech media community bubble thinks or opines about iOS 7, I am confident the mass market, the market Apple really cares about, is going to love it. This is a huge step forward for the platform and one that I believe is a new solid foundation to build upon. This is a positive sign for those of us observing Apple in the the post Steve Era.

Game Controllers

Initially, the point of support for third-party game controllers didn’t get much press. Now, more articles are coming to light looking at the importance of this move. This is a big step but Apple is not ready to take on the console business yet and here is why.

Even though I think Apple believes that the gaming angle can be a trojan horse to the living room, and it can at least until an Apple TV SDK comes out, there are two things missing in Apple’s gaming ecosystem that need to get solved if they want a true console experience.

The first is better multi-player. The XBOX 360 just hit its 29th month as the number one selling game console. The primary reason for this is the network effect accumulated by XBOX for its LIVE service for multi-player online gaming. People simply want to get together with a large number of friends and go play online together. Game Center does not support this use case yet, and if a console mentality is to be pushed true multi-player and even massive multiplayer needs to integrated into Apple’s gaming ecosystem.

The other is a technical issue. Connect third party controllers to an iPhone or iPad, and connect to the TV through AirPlay, and you have a close to console experience. Except for the latency of WiFi. I’ve tested this in a number of environments and my conclusion is that WiFi is not the solution for latency free AirPlay mirroring of a game to the TV. Now this may not be a huge deal when playing Angry Birds. But if I am to go play Modern Warfare with friends in a competitive environment, it is a huge deal.

Only one solution has crossed my path that I believe solves this and that is the 60 ghz solution. A number of companies are offering 60 ghz chipsets that are built specifically for solving bringing gaming from smartphones and tablets to the TV. 60 ghz is a shorter range spectrum than WiFi and best in a line-of-sight environment but it solves the problem of managing a real-time gaming solution over WiFi.

On this point, I am a proponent of separating our rich media networks from our data networks and a technology like 60 ghz is easy to implement and brings with it a quality of service for rich media applications.

Intel and Haswell

The close collaboration between Intel and Apple with respect to Intel’s 4th generation core, named Haswell, is very interesting. If you recall the first MacBook Air was released with some special collaboration between Intel and Apple and led to the design of the first MacBook Air to be possible.

This collaboration effort is yielding best of breed battery life and it is more than just slightly significant. If there was any doubt that Apple was committed to Intel in their Mac line, that doubt is now cast aside. While I don’t see Apple switching their iPhones or iPads to Intel architecture any time soon, the tight integration of their chips into Mac products will allow Apple to do things other competitors simply can not.

A Line In the Sand

Lastly, this WWDC was a statement show for Apple. They are they looking to present the image of the company in a new light. This is evidenced the videos they showed during the keynote. But more importantly they drew a line in the sand and re-enforced their commitment to innovate uniquely and differently for both their Mac line and their iOS line of products.

This was made clear with the desktop and notebook specific features that were added to Mac OS X Mavericks. Many things that cater to power users. It is clear that Apple is not trying to “dumb down” OS X and try to make it more like iOS. If anything, Apple is tightly integrating services across the platforms but not looking to merge them. Apple is clearly taking a different path from Microsoft with regards to the operating system and that is now as clear as ever.

When it comes to PCs Apple is headed down a different path than the PC makers who have to run Windows. Apple’s vertical model allows them to do things competitors can’t. I am confident that over time these differences will become more evident and help Apple stand out from the pack even more than they do know.

I Need a PC and I Know It

One of the fundamental characteristics of a mature market, is mature consumers. These consumers are mature in the sense that they know what they want and more importantly they know why they want it. This kind of maturity can only come with a defined sense of needs, wants, and desires.

That defined sense, can only come when you have experience with a product. Owning multiple generations of a product or category is required to fully understand not just what you want but why you want it. For many consumers they know by now whether they value a traditional PC like a desktop or notebook and they know why. These consumers know they need a PC and have a sense of what they want. Interestingly with smartphones and tablets, I don’t believe we have fully mature customers. ((I’ll dive into this in a future column, but some of the experimentation we are seeing in platform switching or experimenting demonstrates this nuance of the consumer market. ))

The Screens That Rule Our Lives

When the iPad joined our world, we knew it was more than a screen to entertain us. We knew it was a profound new kind of computer. At the same time, recognizing that the tablet will not replace the PC is a key understanding. For many, the tablet can and will become a primary computing device, but I doubt the presence of a more powerful computing will cease to exist in most consumers home in some way or another. But as important as the tablet is, there are many hundreds of millions of consumers who depend on the traditional PC to make a living. What is interesting for this class of customer is that they need a PC and they know it.

We are fond of saying we are in the post PC-era. What this term simply means is that the PC is no longer the only computer in which we can perform computing tasks. But the metrics of how a PC is valued has changed. One can make a strong argument that there are many consumer who don’t value the PC and will rather value the tablet and that may be true. But for those who need a PC, and know it, value has shifted from processing power to battery life.

Battery Life is the New MHZ Race

The raging question throughout the PC industry has been “what is going to get consumers to upgrade their PCs?” The answer is iPad like battery life.

At last weeks WWDC Apple released new MacBook Air’s running Intel’s 4th generation core processor. At one point in time when a company released a new PC, they proudly announced how much processing power it had, and the crowd would applaud. At WWDC last week when Apple discussed the MacBook Air, the crowd did not cheer or applaud when they announced the speed of the processor. Instead, the crowd went wild when they announced the new metrics for battery life. The new 11″ MacBook Air now has 9 hours of batter life, and the new 13″ MacBook Air now has 12 hours of battery life. Even now, we learn that after some benchmarking and reviews those battery life claims may even be conservative. No computer on the market comes close to these battery life claims and I will be interested to see if a battery life competitor to the MacBook Air comes to market this year.

Casually read some of the reviews of the new MacBook Airs and you will see how the reviewers are raving about their experience having more than all-day battery life in a notebook.

Without question there is a huge opportunity waiting for the PC industry with regard to notebook upgrades. Many consumers and corporate workers are using PCs that are out dated in nearly every major category. Yet it is not the high-definition screens, the touch screens (or lack there of on Macs), the ultra-thin design, or the overall look that will give their new owners a profound computing experience–It is the battery life.

Apple has set the bar high with these new battery benchmarks. All PC makers are making progress in this area and the new processors from Intel and AMD will help push this needle forward. ((If Windows RT can gain traction, ARM processors can be a solution for even longer battery life)) One thing I will be watching very closely with the fall lineup is the battery life claims from all the new notebooks. I am convinced this is the feature-of-all-features for the PC industry this year.

Apple’s Challenge: Becoming A Services Company

Much has been said about Apple’s challenges in developing into a services company. Services are core to Apple’s future. Becoming more of a services company is a challenge Apple must meet head on.

I’ve read many articles attempting to outline and critique Apple’s services challenge from pundits and journalists. I find some to be insightful but most are extremely shallow. I hope to add some needed perspective to this discussion.

First Party vs. Third Party Services

I was moderating a panel a few years ago at the Berkeley Haas School of Business. On that panel was a good friend of mine named Tim Chang who is a partner at the VC firm Mayfield Ventures. He said something during our session that I thought was insightful. We were having a discussion about platforms and software and he stated:

“Generally, many popular third party services/features eventually get integrated into the operating system.”

He then went on to describe many popular third party software programs that eventually became integrated into Windows or OS X. Of course, he is correct. The question a platform company, in this case Apple, needs to answer is which services are core to the platform and should be owned, and which services should left to third parties. The answer to this is both strategic and philosophical. We can discern many things about a platform’s strategy and overall philosophy by the types of services they decide to own and build into their platform and the ones they choose to leave for third parties.

Integration is Differentiation

In some cases Apple was first in providing a service, iTunes for example, and in others they were later, such as Maps. In either case, whether they are first to offer a service or add services later that were initially offered by third parties, it is important to grasp a fundamental concept.

Apple’s core services challenge comes to the forefront when other third party services do it better. In the case of Maps, Google did it better. Google had more mapping data and expertise since they had been doing it longer. Clearly, the challenge for Apple was, first and foremost, to build a mapping experience that was at least on par with Google Maps. Some may argue they are close while others may argue they are nowhere close. But for the sake of the foundation I am trying to lay out, let’s assume Apple Maps is now on par with Google Maps. Even if this is the case Apple needs to address the question of why I should use their mapping solution over Google’s, especially given that I have been using Google maps for many years and am comfortable with it. The answer is convenience. Apple can more tightly integrate their mapping solution into the core iOS experience thus making using Apple maps more convenient for the user than a competing service. Interestingly, Apple has done just that with Maps.

I’ve completely switched over to Apple’s mapping solution for the primary reason of convenience. ((I have had no problems with the accuracy of Apple Maps)) I commute weekly all over the Bay Area meeting with people, startups, etc., and often I need directions. Apple’s tight Maps integration into the core of iOS makes it feel less like my guided process is isolated to an app and more like it’s a core experience throughout device. Things like how it works when the screen is off and then only turns on when a key turn or instruction is necessary. Or how seamless it is to exit the Maps application and still get key instructions to pop up as a notification when needed. More importantly, I am convinced that Apple’s deep integration of Maps into iOS is yielding better battery life with the location services. ((I have battery benchmarking between the two I am compiling to validate this)) [pullquote]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.[/pullquote]

iTunes Radio has the same initial challenge as Apple Maps. At a surface level one may look at it and question what it will do that is better than Pandora, Spotify, Rdio, or any number of streaming music services. My family and I are heavy Pandora users and Apple has a particular challenge to get us to move to iTunes Radio. But here again the answer may be in levels of integration that lead to a more convenient experience. This can be in discovery, consistency, ease of acquisition of newly discovered music, etc. If iTunes Radio is more convenient to use, it doesn’t necessarily need to be better.

The fallacy most make when critiquing Apple’s service challenge is to believe that Apple needs to out-innovate competing services. The truth is, all they need to do is out-integrate them. Apple’s advantage is unique in this area because they create the software that runs on their hardware. They will always have an unfair advantage with the services they chose to invest in.

Now this doesn’t mean that Apple should not strive to create services better than competing ones. Only that integration will always be their biggest competitive advantage in respect to their services.

Siri’s Bing Moment

There were many interesting nuggets that came out of WWDC 2013. For our insiders, I plan to share the few that I don’t think are getting enough attention but yet are more significant than I believe people realize. But perhaps the most awkward part of the keynote was when Apple announced that the new and updated version of Siri will run on Microsoft’s Bing search engine.

This move is clearly one that is up for interpretation. I’m sure many will speculate that this move is nothing more than Apple doing what they can to eliminate any dependencies for Google on core services. Or that Apple does not want to give Google any more valuable data than they already have.

We have opined and written much on our thoughts that Apple clearly wants to usurp the search experience from Google. Siri is a way that this is happening as it functions as an interface layer, which Apple controls, for a search paradigm. Realistically, for a Siri user, it is irrelevant which search engine it uses so long as the data is accurate.

So I decided to put Bing to the test. Microsoft has a challenge called Bing It On in which they challenge you to submit five search queries then vote on a side-by-screen results screen on which you thought was most relevant to you. You don’t know which engine you are choosing, you simply pick the side that you think presented the best results. So I decided to try this as an experiment.

Here are the search queries I used.

– How to identify a queen bee cell
– How to play bluegrass guitar
– Schedule for Wimbledon 2013
– Omelet recipe ideas
– Grammar resources

The way in which I decided which side-by-side screen shot won was by how close to the top the most relevant answer was to the reason behind my search. Interestingly Bing won 4 out of 5 times. The only query Google won was the Wimbledon schedule.

I was actually surprised at this and it has inspired me to try and change my default search engine from all my devices from Google to Bing as a longer term experiment.

As I pointed out before, Siri running Bing may be up for interpretation in terms of Apple’s intentions. However, what matters is that the results are relevant and actionable.

The last thing I want to point out, and I plan to flesh this out more in the future, is that I will not be surprised if we see Apple and Microsoft become closer partners on things in the future. It appears they both now believe they have a common enemy in Google. ((I’m not sure Apple believed this until the last few years)) What’s more, is that in my opinion Google’s enemy is not Apple but it is Microsoft. I firmly believe that Google prefers Apple in the world but wants to eliminate Microsoft from the face of the planet.

Microsoft knows this and I believe will find ways to strategically partner with Apple in this fight. One could be brining Office to iPad only and never to Android. Bing is just the first of many strategic moves I think Apple and Microsoft will take to make sure the Google dictatorship does not rule the world.

iOS 7: A New Beginning for iOS

It took only a few minutes of seeing the iOS 7 preview for me to sarcastically say to myself “yep, Apple’s done innovating.” Something of course I would never be foolish enough to believe, yet so many people seem to. ((There was certainly more meat in the keynote than iOS 7 to prove to people Apple is not done innovating. Mac Pro anyone?)) I did make a key observation, however, as I watched the video and the demo of iOS 7. I became convinced that iOS 7 marks a new beginning for iOS.

Sophisticated Simplicity

When Apple first launched iOS on the very first iPhone, it took the world by storm. Apple, for arguably many years, had what nearly everyone would consider the most powerful mobile OS. Android has taken great strides to compete for the title, but I think with iOS 7 an incredibly strong argument can be made that iOS 7 is without a doubt the worlds most powerful mobile OS. ((I’m sure many will claim that Android is the most powerful OS, but I have been speaking with developers and gaining data that shows many limitations in sophistication in Android. More to come on that later)) And as I am fond of saying, it accomplishes this with unparalleled levels of sophisticated simplicity.

iOS 7 brings with it many new design, and user-interface elements that add new dimensions of visual appeal to iOS. Things like the depth of feel of the dynamic backgrounds that move with the gyroscope as you move the device. Or the new translucence of many apps allowing you to get greater context within an app. But it is the functionality of the overall experience in which iOS 7 breaks new ground.

Multi-tasking for example has taken a huge leap forward. Android users have argued for years that multi-tasking was better on Android and it was. But now even the most casual observers must admit iOS multi-tasking is on par, if not better. The ability to jump back and forth quickly between applications is a key task of a powerful and efficient mobile OS and iOS 7 does it simply and elegantly. ((The multi-tasking app card view is strikingly similar to webOS. This is a huge compliment to what was briefly one of the best mobile OSes around))

Screen Shot 2013-06-10 at 2.09.20 PM

Multi-tasking itself has not just gotten functionally better but also intelligently more effective. Things like intelligently updating some of the apps you use most often in the background so they are up to date when you open them. Facebook, for example, can stay up to date without the need to constantly refresh to get new data every time you open it. Twitter or news apps will all be able to automatically update while adapting to network conditions. Your most used apps, and the data within them, kept up to date intelligently.

Control Center is another good example that is enabled by swiping up from the bottom. A simple yet efficient difference from competitors who have all notifications and controls swiping from the top down. For many reaching their thumb to the top to swipe down is hard or clumsy, especially on large screen devices. Yet for everyone, swiping up to access some of the most used controls is easily within reach. This is a great example of thoughtful functionality being added to iOS 7. [pullquote]iOS 7 is not just visually more appealing, but also functionally more useful[/pullquote]

The camera app has been redesigned to not just look great but also to be more functional. Siri, Safari, the Music app, Photos are now organized by moments, all have been re-designed from the ground up and are not just visually more appealing but also functionally more useful.

There are more new improvements in both visual appeal and function than I can get into. But all of these and more create such a fresh experience with the iPhone that when you get your hands or eyes on the new iOS and in particular when you get it on your iPhone or iPad, I am confident it will feel like an entirely new iPhone or iPad. iOS 7 is a new direction for the next generation.

Anything But Flat

I’d rather not get into a long debate of design philosophy but many rumors were circling about iOS 7 moving to a flat design look and feel. From what I saw iOS 7 is anything but flat. Rather, it was full of depth and vitality. Particularly the dynamic backgrounds with an image set is something that needs to be seen to be fully appreciated. But flat design is a philosophy and those who debate these things can argue whether some of iOS 7 is flat or not. My opinion, for what its worth, is that the feel and the experience of iOS 7 is anything but flat.

There are layers to iOS 7 that give it such a rich and dynamic feel. After seeing it, it is hard to be content with iOS 6 (as great as iOS 6 is). This again, is part of the conclusion, of why I believe iOS 7 is a new beginning for iOS.

This transition from iOS 6 to iOS 7, is as big for the iPhone and for Apple as the transition was from OS 9 to OS X. OS X marked a new era for the Mac and I am confident that iOS 7 marks a new era for iPhone, iPad, and whatever else Apple lets it run on. ((Like a TV)) iOS 7 is a new foundation to Apple to build upon, reach new consumers, and bring mobile computing into a new era. They have upped the bar in what a mobile computing OS is with iOS 7.

John Gruber wrote a great post yesterday where he stated:

The primary problem Apple faced with the iPhone in 2007 was building familiarity with a new way of using computers. That problem has now been solved. It is time to solve new problems.

The training wheels can now come off. That’s what I think Apple’s going to do tomorrow

The training wheels are certainly off. iOS 7 has set a foundation for Apple to tackle and solve new problems in mobile computing. The software experience is what makes the hardware. I have no doubt iOS 7 will give any hardware it runs a new beginning.

Why is Apple So Polarizing

One of the things I am excited to do with our Tech.pinions Insider content, is dive into subjects that may be more controversial than things we want floating around in the public sphere. So that is what I hope to do with this topic and the question at large in which I raise.

A balanced opinion of anything these days is generally hard to find. So many topics are extremely polarizing, for lack of a better word. Politics are perhaps one of the most universally polarizing topics for the general public. However in tech circles few topics are more currently polarizing than Apple. I recently lobbed the question of why Apple is so polarizing on a new discussion platform called Branch. Thanks for the many who added to the thread with many smart comments as they further helped me flesh out my thoughts on the subject.

We have to acknowledge that the general public does not seem to fall into the crowd with highly polarized opinions of Apple the company and its products. Rather it is centered more around the tech elite (early adopters) and many mainstream technology media and pundits. I see this on a daily basis as I write quite a bit about Apple for Tech.pinions and for TIME. The comments I get from the anti-Apple crowd are simply astonishing. I also follow a great many of pro and anti-Apple folks on Twitter. You can tell who these people are because they either regularly write or tweet extremely negative, Apple is doomed, hooray their reign is over articles, or they write or tweet extremely positive articles point out why Apple is not doomed and their reign is not over. It seems that generally speaking there is very little grey area around the topic of Apple in these circles.

In either case I am fascinated by how this came to be and why it still exists today. I have several theories to share.


Loyalty to my Tribe

There is simply no question humans routinely exhibit tribal behavior. There are elements of this mentality in the polarization of politics but there is no better example than in sports. Extreme loyalty for ones sports team and utter disdain for rival teams is prevalent in many sports fans. Some of this can be engrained by upbringing but it is also learned by time spent in the tribe. I have seen first hand the evolution of fans of local sports who start as a casual fan then evolve into a fanatic. It seems as though it is tradition as a part of that tribe to largely hate for no good reason rival tribes.

This tribal behavior is what I am certain is at the root of most polarizing issues and in particular the on about Apple. But a deeper issue still exists. Why do we end up in certain tribes.

Personal Preference

This is where personal preference comes into play. Those who are the most vocal and either attack or defend (or both) the decisions of others, are doing so because of the highly specific personal reasons they choose one product or another. Mature consumers know what they want and why they want it. Often when you come to make a purchase with such a level of personal preference as something like a personal computer, you don’t make the decision lightly. Each platform whether it be Windows, Android, or Apple’s, appeal to different audiences for very different reasons; all of them extremely personal in nature. When we make decisions at such a deeply personal level we often believe those decisions to be superior to the decisions of others.


This is why we see such heated debate, in my opinion, by the most fervent of consumers. If you followed or chimed in on many of the comments on John Kirks recent series you noted some of this, largely from the Android camp. I’ve seen this as well from the Apple camp but you, our regular readers and commenters, are much more balanced and sane no matter which camp you are in. However, I notice that those most passionate work very hard to justify their decisions and rationalize that others should be making the same decisions as them. Again, I am generalizing, but I think it is a worth while point in the discussion.

A while ago I opened up this topic as a branch. I’ll share a few summaries of key points that folks chimed in on below.

From Jan Dawson:

It taps into lots of larger themes – elitism, gargantuan profits, the power of brand, marketing, design, style etc. vs. substance, closed vs. open. So much of what’s ostensibly about Apple specifically is really about these larger themes and people’s strong feelings about which side of each of those tensions is right. And once you have strong feelings on both side, that just escalates beyond all reason and it’s no longer a rational argument (see also American politics).

From Shawn King:

A certain portion, the majority, of Apple’s customers just used the machines. But a vocal minority felt the need to stand up and defend their platform. Thus began the PC vs Mac Wars. It was the form of that defense – strident, unyielding, dickish at times, that helped to cause the polarization.

The internet “helped” and exacerbated the polarization.

From Walt French:

Apple has always been on a gee-whiz crusade and of course, the infidels hate that. Since 1984, the infidels have been the entire IT establishment, a confederation that needed and still needs benefits of network effects under Microsoft’s hegemony. So each $1 of Apple’s successes might threaten $2 of Establishment. Lots at stake.

From Ryan Buckwalter:

It’s all because of attitude; the attitude of the company, their leaders, their PR, and their overzealous fans. Any Apple product is generally a fine product, usually with good parts in a fairly well design package, but the attitude is that these products some how magically transcend their parts into being something far more, something without flaw and beyond the reach of any other product; thus worth the high asking price. These Apple products aren’t shown “as they are” but instead in a form of “perfection” and “simplicity” as if they really were made of “magic”. This would be great and all… if it were true, but it’s not. Apple products are often flawed, poorly designed, etc. The attitude is to ignore those flaws as they never existed.

Lastly, here is a link to Marco Arment’s post on the subject.

I’d love to open this up to a discussion with our members. So feel free to add and chime in.

The Power of The Internet In Your Pocket

Sent from my pocket computer. That is my signature for any email sent from my iPhone. When most people think of their smartphone they don’t necessarily think of it as a pocket computer. Yet that is exactly what this device is.

In 1949 Popular Mechanics famously stated: “Computers in the future may weigh no more than 1.5 tons.” What once fit in a rather large room, now fits in everyone’s pocket.

Have we yet wrestled with the implications of this reality? I don’t think so.


1 out of 7

Today, approximately 1 out of 7 people on the planet own a smartphone. That comes out to just over a billion smartphones in use in the world. You may think 1 out of 7 sounds like a lot but in the big picture we still have a long way to go.

Bringing a computational device in the form of a smartphone to every person on the planet is a potential reality and the promise of the future. But even more profound and perhaps even more important to future of humanity be these devices to the Internet. I would argue that the Internet is the most valuable feature of any smartphone. By bringing the Internet to every person, by way of a smartphone, will drive it to be the primary computational device for more people than any other piece of hardware. For the masses in the developing world a smartphone is not just a pocket comptuer, it may be their only computer.

Over the last decade, the Internet has already transformed the developed world in ways never imagined. It has transformed how we communicate, how we learn, how we play, how we work, and how we are entertained. All these and more will continue to undergo radical transformation. But most of the innovations we can point to are all coming from first world perspectives and solving first world problems. Often, innovation from a first world perspective is generally more about convenience. From a third world perpsective, innovation will play a key role in survival.

When the developing countries get their hands on the profound power of the Internet in their pocket, it will not transform how they work, play, and learn, it will revolutionize it.

Knowledge is Power

There is simply nothing like the Internet. The collection of knowledge and information on the world wide web is unparalleled. Of course the web contains its share of stupidity but it also contains quite a bit of valuable knowledge which is more readily accessible today than at any point in history.

It is fascinating to look at this by using the analogy of good old fashioned libraries. Once upon a time in history the library (a storage facility of valuable information) was reserved for kings, nobles, and high class citizens. Over time they shifted from private access to public access. The printing press drove this shift and mankind entered into an era where knowledge became accessible in ways it never had before. I believe when the masses have the Internet in their pockets, it will have as profound of an impact as the printing press–perhaps even more.


Think about all the free knowledge we can glean from the Internet. I myself have been amazed at the things I have learned and experiences I have engaged in that came from the web alone. Things I would most likely never have ventured to try or do without the Internet at my fingertips. For example, I learned how to roof an addition on my house all to contractor code. I learned how to milk a goat, play the drums, string a tennis racket, how to tie fly fishing flies, and a plethora of other things.

Today, pocket computers are already transforming key parts of the developing world. In some cases they are providing a new tool in the fight for survival. For others they are transforming how they do business or engage in local commerce and even banking.

Agriculture is another area the mobile web is revolutionizing rural parts of the world. It is fascinating how smartphones are being used in Africa to negotiate prices for certain crops, get seasonal growing advice, and learn how to better manage their crops and grow new ones.

The health industry is being transformed as people can get treated or diagnosed remotely where doctors are scarce via the web and a pocket computer. In some areas doctors are even remotely training and sharing information about how to fight disease and promote better health among villages.

Remember the Arab Spring? A civil uprising by freedom fighters was powered by the mobile web. What kind of activism will pocket computers empower as more and more people get the Internet in their pockets?

A first class education can be brought to any person. Or they can simply glean knowledge as I did on subject matters of interest which is freely accessible online.

On every continent the mobile web is positioned to revolutionize banking, health, activism, disaster management, education, communication, and even entertainment.

Future generations from every part of the globe will grow up drastically different then the generation before them. Some parts of the world have gone from poverty to at least middle class luxury in less than 10 years. Many of them have been in China. Parts of India and Africa are equally undergoing drastic changes and accelerated growth thanks to technology. Many of us will watch as before our very eyes some of the largest populations and societies will be transformed by pocket computers and the Internet which will power them.

The Internet revolution will cause more profound global change than the industrial revolution ever did. And the crazy thing is, we have barely started this quest to bring the Internet to everyone on the planet and give them the power of a PC in a device that fits in their pocket.

How Consumer Electronics Will Swing With the Seasons

One of the more interesting trends we are watching develop is the increased seasonality of specific technology purchases. We have been anticipating this for a while now as more and more consumers are being conditioned to buy and or upgrade their technology in the late half of the year.


With Apple being completely silent the first half of 2013, we believe they are clearly embracing this trend and intend to push all their major product announcements to the second half of the year to be in a strong mindshare position for the holiday season. In many countries, premium smartphones are already seasonal purchases as upgrades often come up later in the year. It seems as though tablets and traditional PCs are also on the path to a seasonal pattern.

This has its advantages and its disadvantages. The advantage is that very targeted and specific promotions can be pushed to consumers with new release hardware for the holiday shopping season. Retailers are highly incentivized to get consumers in stores every way possible this time of year and will do what they can to get shoppers in the doors.

The disadvantage is over-saturation. If everyone launches new smartphones, tablets, PCs, TVs, etc., for the Q4 push then it will become difficult for many to cut above the noise and stand out from the pack.

If you couple these large Q4 product pushes with the low-cost trend we have outlined before, it becomes concerning that consumers may purchase devices not really suitable for enterprise computing and then try to bring them into the work environment. This could cause more pain then it is worth for most workers.

To help with this potential problem, we believe that IT companies will have to increasingly invest in valuable information as a part of their BYOD programs. Some enterprises do this today but many will need to follow suit. The goal is for notebook intenders looking to upgrade or buy a new machine for work, would be able to use an internal resource to see recommended hardware in the categories or notebooks, hybrids, convertibles and tablets.

For many PC OEMs, IT departments could become their best friends and can be used as a vehicle to better inform consumers to get the right hardware for the right job.

How the Tablet is Killing the PC

IDC recently released its forecast of PC sales for the last quarter and said PC shipments were down 13.9%. It laid much of the blame on Windows 8, but I am not sure this analysis is completely correct. While others have also mentioned Windows 8 as a key factor in PCs’ steep decline, there are other layers to this onion and Windows 8 is just one of them.
Windows 8 being a transitional OS certainly played a role, but I think factors such as refresh cycles are also culprits. Even if the tablet had not been invented the PC industry would still face these challenges; these days consumers simply hold on to their PCs as long as they possibly can. It is not just that consumers don’t feel inspired to upgrade, it’s that the notebook they have been using is good enough.

To a degree the same has been true of enterprise accounts, and if Windows 8 is to blame at all, it would be with regard to IT purchasing. Large enterprise buying often leaned toward the first half of the year. With many IT customers not being early adopters of new operating systems, we never saw large quantity buys in this period of time for traditional PC form factors.

The days where we look at the PC as a benchmark for the health of the technology industry is over. Many PC buyers simply don’t value the PC as much as they used to. Instead the value in buyers’ eyes has shifted to mobile by way of smartphones and tablets. This is true of both consumers and enterprises. PCs continue to play a role in many people’s lives, but they are not as central as they once were. Tablets and smartphones have encroached on their place.

If anything, the PC’s future is one of very low cost. We buy them because we need them, but not necessarily because they are highly valued. Of course high-end market segments will still value the traditional PC form factor, but that is a much smaller niche compared to the mass market. This does not mean consumers are ready to toss PCs out of their digital mix altogether. We just see them holding on to current models longer, or if they do need to buy a PC, it will be the cheapest they can find to meet their basic PC needs. Current lower priced PCs are “good enough” to meet any needs unmet by tablets or smart phones.

The Revenge of Steve Jobs

I’ve mentioned Steve Jobs had hoped his Apple II, and then the Mac, would be the market leader in PCs. But IBM clones and Microsoft stole Jobs’ thunder and dominated the PC space for decades.

If you peel back another layer of the onion you see another key reason for PCs’ decline in demand. In one sense, Jobs finally did deliver a PC that gave Apple a weapon against Microsoft and the dominant IBM PC clones: you could argue Jobs finally got the dominant platform of the future with the iPad. With this tablet Apple has reversed the fortunes of PC vendors. All Things D published both the IDC and Gartner numbers for Q1, 2013 and wrote about both companies’ guidance for PC sales for the rest of the year.
“At this time,” wrote Arik Hesseldahl of All Things D, “it has to be said that much of the blame for the damage being done to the PC businesses of all the companies around the world can be laid at Apple’s feet: Sales of the iPad, the world’s leading tablet brand, have a lot to do with the collapse in PC sales.”

When Jobs introduced the iPad he said this product would drive the post-PC era. I think he knew his tablet was the reinvention of the PC he had long sought to bring to market, and that it would actually cause the decline of PCs, even if it meant cannibalizing Mac market share.” and “by the time he introduced the iPad he had in place all of the hardware, software, and services needed to connect the iPad to his ecosystem. Even with a decline in Macs he was insulated from the impact of a Mac sales downturn on his business.
On the other hand, HP, Dell, Acer, and other PC OEMs who were totally PC-driven are feeling the shock of the PC decline; unlike Apple they are not insulated from the impact of these sharp declines in PC demand. Their only hope is that Microsoft can deliver key software and services they can use on tablets and convertibles of their own. It may be too late however, given Apple’s strong lead in tablets, not to mention competitors like Samsung, Amazon and others who are in many ways better insulated through their own ecosystem of products and services.

While Jobs is no longer with us, I think he knew this would happen. Perhaps his last major act was to give us the iPad; final revenge for his years of toil in the PC market where he was always #2, despite being early with many of the innovations that actually took PCs to the masses. If Jobs were with us today I suspect he would not shed a tear to see the decline of the PC market. Rather he would revel in the role the iPad has played in bringing his PC competitors to their knees.
While we could see an uptick in PC demand later this year when low cost touch-based clamshell style laptops come out during the holiday season, I fear the heyday of strong demand for PCs is over. It is about to take a back seat to the tablets and smartphones of the future.

What I Will be Looking For at WWDC

Rather than make some wild predictions about Apple’s upcoming worldwide developer conference, I thought it would be more interesting to share the key things I’ll be looking for that I believe are important strategic themes.

Tighter Integration

Being in the post-PC era, as we are, brings with it interesting challenges. We live in a multi-device world where every computing product we purchase (i.e tablet, smartphone, PC) is not used in isolation from other computing products but rather as a part of a solution. These devices all compliment each other and each plays an important role in a holistic computing solution.

I have laid out the many ways I think iCloud is important at being the glue that ties the Apple centric post-PC era together. At this years WWDC, I am looking for Apple to take another step in deepening the integration and synchronization of all my Apple products AND Apple experiences.

This is incredibly strategic in my opinion. We have seen the data prove time and time again that once consumers get into the Apple ecosystem, they typically stay. They don’t just stay, in fact, often they buy more Apple products and consume more Apple services. Tighter integration and synchronization between Apple’s hardware, software, and services, is key for Apple’s post-PC ecosystem and for the consumers who live within it.

Increased Functionality

At the end of the day, it is what we can do with our smart devices that is pushing computing forward. When I evaluate devices, platforms, software, services, etc., I do so with a focal point of what new and useful functions they enable that I could not do before.

In an industry presentation I have I reference this point with a slide called “enabling the new.” Bringing new use cases, new functions, and more, are central to the evolution of computing. This is why I’ll be looking specifically for things Apple has created, for developers and for consumers, that allow them to do things they could not do before.

Personalization

This is an interesting area of debate and there are two ways to look at this. My personal opinion, is that Apple can stand to bring new levels of personalization to iOS without hampering the user experience they are keen to product, and for good reason. This is particularly true for Apple’s China efforts.

Our China centric research, along with others, continually points to one of the primary reasons many Chinese consumers jailbreak their iPhones is to personalize and customize their phones to a degree unlike any other region. This goes beyond flashy wall papers but to custom icons, and more. This is an area where I keep watching for Apple to address.

If you recall on the first iPhones, you could not do much in the way of personalization. You couldn’t even customize your wall paper for example. Eventually this feature came along and now you would be hard pressed to find a consumer without a customized wall paper and lock screen.

Deeper customization and personalization is a desire that comes with those who are mature users who are familiar and comfortable with a platform. iOS now has hundreds of millions of these consumers and I believe iOS can stand to have some new areas of personalization and customization. This could be in the way of iOS themes for icons, or other simple ways that allow for the OS functionality to stay the same but the look and feel to vary slightly based on consumer preference. The other reason I like this idea is because it could open up an entire new business for graphics designers and professionals to create amazing themes and sell them.

The other area of personalization is in the way of personalized experiences. This is where Siri can come in and bring new levels of automation and personalized assistance to iOS. I’ve long stated that I still believe our smart devices aren’t really all that smart. They know nothing about my needs, wants, and desires. Once they do, and can provide valuable and useful experiences with that data, I may feel comfortable saying our devices are actually smart.

In the case of Google Now, I call these things anticipation engines. Specific to this area of personalization, I’m looking for Apple to increase Siri’s or something else’s ability to anticipate my behaviors, habits, needs, wants, desires, etc., and provide value along side them.

Perhaps not all of this will come this WWDC, but these are the strategic points I am keeping my eye on related to Apple’s ecosystem. Of course developers are key, so within all these things I mentioned, it is important that value is not just created for Apple or for Apple’s customers, but also Apple’s developers.

P.S.

I hope we see an app store for Apple TV. Software developers, creating new software for the TV platform, is how television will be disrupted.