Apple Defines Wearables as Fashionable Computing

Apple pioneered the PC, the mouse-driven PC, the digital music player, the modern laptop, the smartphone, and the tablet. Steve Jobs directed the creation of each of these transformative products, collaborating with Steve Wozniak, Jon Rubinstein, Jony Ive, and others along the way. Apple is now entering Wearables without Steve Jobs at the helm – though Jony Ive’s fingerprints are all over the Apple Watch (literally. The Apple Watch is a fingerprint magnet). Along with several other Techpinions columnists and a few thousand journalists, Apple employees, and Apple guests, I attended the launch and got hands on with several Apple Watches.

A Strange Way To Launch a Product (for Apple)

Apple famously limits the number and type of products it works on. When it enters a new product category, like smartwatches or tablets, it explains what it thinks is wrong with the existing products and what role its device will fill. Apple also often curates use cases for a new product, and opens it up for apps and features later. The original iPod had fewer features than the competition; it took years before FM radio was added. The first iPhone was described as a phone, an iPod, and a web browser – the App Store did not come until a full year later. The context portion of Apple’s launch monologue typically explains why a minimalist approach makes sense. The limited functionality allows consumers to understand precisely what the problems the product is designed to solve – even consumers did not realize they had that problem before Apple pointed it out.

That is not how Apple CEO Tim Cook introduced the Apple Watch. Like Samsung or Google or Asus, Tim Cook simply said Apple is building a watch. He then went on to describe endless features – exceptionally accurate timekeeping, interactive watch faces, fitness tracking, notifications, Siri dictation, GPS directions, Apple Pay, hotel access, BMW integration, watch-to-watch communication, and more. Rather than take the less-is-more approach – with more-is-more over time — Apple jumped straight to the more-is-more stage. This part reminded me of the iPad launch. However, the iPad really was “just” a larger iPod touch – and it was fair to say that consumers understood the value proposition of iOS apps on a larger display. That isn’t the case for apps on watches.

Consumers need concrete reason to buy things, especially new things; Apple may try to rectify this closer to launch. Google has not explained to consumers why they need an Android Wear watch, and mainstream consumers are not buying them. Samsung has not explained why consumers should buy one of its Tizen watches, and they are not selling, either (Samsung stuffed the channel with the first generation Galaxy Gear, but many ended up being given away with purchase of a Samsung TV or smartphone). Note: the reason to buy an Apple Watch is crystal clear for early adopters – get the first Apple Watch! I’ll discuss that below.

In Apple’s conception, a smartwatch does not solve a limited set of problems, it is intended to be a computing platform that combines fashion and a unique user interface. While Apple is prioritizing timekeeping, watch-to-watch communication, and fitness, Apple does not really know which watch apps will appeal to consumers – the apps have not been written yet. The Apple Watch will not be available for at least a few months, and it was announced now to give developers time to write apps. (The fact that it stalls consumers from buying rival smartwatches is a really nice bonus.) This launch was as much an appeal to developers as it was a pitch to consumers.

So What is the Rationale Behind the Apple Watch?

Tim Cook didn’t explain why Apple said “yes” to the watch and “no” to all the other things Apple could have built instead. So I’ll provide three:

  1. 1. Apple SVP Design Jony Ive wanted to wear a watch that he and his staff designed. I’m completely serious. Apple is unlike any other consumer technology company in that its products do not always start as ideas from Engineering or Marketing, they often come from Design. Vendors competing with Apple tend to be organized differently, and their product focus and prioritization of attributes within those products reflect it.
  2. 2. Apple strongly believes in the power of new user interfaces to create new categories. Once the design staff decided to investigate watches as a potential product, they not only did research on horology, but on user interface design. The combination of touch, force touch (pressing down harder invokes secondary options), and using the crown for variable zooming is different from any of the existing smartwatches. Does it work? We’ll see. But Apple believes that this opens up new possibilities for small-scale app design.
  3. 3. Apple is capitulating to demand for larger phones, and that opens up the opportunity for limited computing experiences at times when pulling out a large device from your pocket or purse is unwieldy. For example, Apple Pay is built into the iPhone 6 and the Apple Watch, but it makes a lot more sense on your wrist. Fitness tracking is easier on your wrist. Looking up directions is better on a phone, but following directions on your wrist is fantastic. This is similar to the reason Apple gave for building a tablet, as there are times when a phone is too little and a laptop is overly fixed and complex.

Key Attributes of the Apple Watch

It is a fashion device first. It is expensive – there are three collections (with six watch band options), and they start at $349. The gold version could be priced in the stratosphere: it’s real gold. No other vendor has paid this much attention to the style of the case and especially the straps, which are simply design masterpieces. There are two sizes – small and large 38 mm and 42 mm, and even the larger model is smaller than most competing smartwatches. No other smartwatch even offers a smaller, more female-friendly option. On the wrist, the Apple Watch looks much smaller than it appears in photos. Apple has also put a tremendous amount of effort into making the watch faces beautiful. Some are interactive. No smartwatch competitor has anything like this.

It’s a computing device second. The user interface combines touches, swipes, “force touch” (pressing harder), a side button, and a side scroll wheel/home button. Creating text is simplified with watch-generated short responses or with dictation (I was not able to get a live demo of this, but if it works well, it will significantly enhance usability.) No one thing is central to the Apple Watch – the concept of apps is the central conceit. This is similar to the iPhone (after the App Store was launched) and the iPad. Timekeeping is not central to the Apple Watch any more than phone calls are central to the iPhone. The Apple watch offers fitness tracking, navigation, notifications, NFC for Apple Pay, and much more. Two users with Apple Watches can send each other drawings and a haptic simulation of their heartbeat.

It is a phone companion (for now) requiring an iPhone 5 or better. The Watch does have its own processor and storage, so it can be used untethered for fitness tracking, music, and some apps. However, GPS, messaging, and anything requiring cellular connectivity will not work when out of Bluetooth range from an iPhone. Battery life is clearly an issue, as the screen turns off when you don’t have your wrist raised, and you’re expected to charge it every night using a magnetic cable. The magnetic connection is elegant, and an improvement on most competitors, though it is another unique cable to pack (and lose) while traveling.

Finally, the Apple Watch indicates the company is moving away from the “i” branding that started with the iMac and became a phenomenon with the iPod. It seems that Apple views the “i” mark as old fashioned and limiting, preferring the Apple mark itself for Apple Pay and Apple Watch.

Assessing Apple Watch Potential

Short term, Apple did not provide mainstream consumers a reason to buy the Apple Watch, but it certainly provided plenty of incentive for Apple early adopters: this is a gorgeous timepiece with a new user interface and endless utility. The pool of tech early adopters has increased significantly over the years; Pebble has sold over a quarter million watches. Apple early adopters are a far (far) larger group than that, and Apple should expect to sell millions of first generation Apple Watches.

Long term, two assumptions must be made. First, that Apple’s user interface works well, and second, that app developers show the value of having computing capabilities on your wrist. Given Apple’s track record with user interfaces and its relationship with developers, both of these conditions are probable. If both are proven true, the Apple Watch will have broad appeal to the installed base of iPhone users. This is a finite pool, though it is large, and some consumers may potentially buy more than one Apple Watch. Apple may make the Apple Watch less dependent on an iPhone in a future version, opening up adoption to consumers who use Android (or Windows) phones.

The biggest driver for mainstream adoption in the second and third generations is likely to be a lower entry price point. However, higher end models – potentially extremely high end – will remain in the line for as long as consumers buy them or they lend the line cachet. Apple could also expand its styles, adding a round design and creating special editions. Apple could also expand the connectivity contained in the watch; while it is unlikely that a watch would replace smartphones for most people, it is certainly conceivable that, sometime in the future, Apple might design a watch that could.

This column was adapted from a Current Analysis report. The full report includes key competitive comparisons and recommendations for Apple, Google, Samsung, Pebble, and MetaWatch.

Mac vs. PC All Over Again

The latest round of company quarterly financial results illuminate three trends in the device market:

  1. Apple continues to generate record profits largely due to growing iPhone sales (iPad sales are slowly declining, Macs are growing, iPod sales are mostly gone, and Apple’s services revenues are growing)
  2. Samsung’s profits are steadily declining (though from such a high level they remain quite high)
  3. Nobody else is making money at all ((Not consistently, or in the case of some Chinese companies who don’t break out device profitability, not verifiably))

Jan Dawson from JackDaw Research has a terrific chart illustrating the difference in margins that has made its way around Twitter (and here on Tech.pinions) a few times. To my eye, this looks like the PC market, all over again.

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I’m certainly not the first to point out the mobile market looks a lot like the PC market of 30 years ago; some financial analysts have been using this as part of an argument predicting Apple’s imminent collapse. Just as Apple lost the PC wars to a horizontal solution, Apple will lose the smartphone wars the same way. Apple apologists have responded the phone market is different: there are carrier subsidies, lock-in effects, or what have you.

Financial analysts aren’t dumb. The parallels are real. The phone market is turning into the PC market, only with Google taking Microsoft’s place as the OS provider. The similarities are striking. Apple redefined the market with a proprietary OS, innovative UI, and vertically integrated hardware. While it took a few years to catch up, the competition responded with a similar UI on an OS widely licensed to OEMs. In both PCs and phones, Apple targeted a narrow high end customer and lost the market share battle, while the competition aims wider and controls significantly higher market share. Apple monetizes its software by selling high margin hardware; OEM competitors fight each other to provide low margin commodities.

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There are also two interesting differences in the PC and smartphone eras: due to the way the smartphone market evolved, Google chose not to monetize the OS the way Microsoft did, instead monetizing services through advertising. The phone market is also different in size – it’s a lot larger than the PC market ever was.

The problem with analysts using these comparisons to predict Apple’s decline is they ignore the fact Apple won the PC wars. During the 1980s, Apple grew both revenues and profits. After a near death experience in the 1990s – more on this later – Apple reemerged as the most profitable PC vendor. If you count iPads along with Macs, it is now the largest PC vendor by unit sales, too. That is not to say there were no other winners in the PC market. Steve Jobs was correct when he said, “For Apple to win, Microsoft does not have to lose”. Microsoft also won the PC wars. As did Intel. At various points, IBM, Compaq, Dell, HP, and Lenovo have won battles, too (though some of them clearly lost the war).

What We Can Learn From History

The most crucial lessons from the parallels between the PC and smartphone markets are how 1) Apple should behave to successfully compete with Google, 2) the lessons Apple needs to learn from its near death experience during the PC era, and 3) the lessons today’s hardware OEMs – including Samsung – should take from PC OEMs.

1. Apple vs. Google
This one is really simple:

  1. Google does not have to lose for Apple to win. Steve Jobs’ anger towards Google was counterproductive. For that matter, Samsung does not have to lose for Apple to win. ((I think we’re seeing the application of this principle in Tim Cook’s détente with Samsung. Ironically, Jobs was able to get past his feud with Microsoft, but Samsung’s IP infringement was personal. For its part, Samsung is finally willing to compromise because it is realizing it cannot maintain its margins, and an expensive legal fight it can’t win is not worth pursuing.))

2. Lessons for Apple from the 1990’s
Apple lost its way in the 1990s when Microsoft caught up in user interface and Apple stopped innovating in both software and design. That impacted the Mac’s software ecosystem, ruined its premium value proposition, and forced Apple down market (which it tried to attack with a licensing strategy). Once Apple invested in a narrow range of high-design, premium products with regular software updates, sales and profits returned.

To win the smartphone market, Apple must continually refresh its software so its overall value proposition remains differentiated at the high end. However, software for smartphones goes well beyond the device capabilities and UI. It encompasses services and apps.

    1. Google excels in services; if Apple is to succeed long term, it will need to continually meet the “good enough” threshold on services. Given that requirement, the half-baked launch of Maps was a potentially franchise-destroying disaster. Apple has recovered from the worst of the Maps debacle, but it still has work to do on the services front. Apple next big challenge is creating a response to Google Now.
    1. Apple does not need to beat Google on services as long as Google extends most of its services to iOS. Google monetizes users, not Android. As long as Apple maintains a significant share of premium customers its advertisers want to reach, Google has to work with Apple.
    1. Apple excels in the app ecosystem, but Google is catching up. It is too early to predict whether this will keep Apple ahead, but the need to maintain an edge in the app ecosystem explains why Apple is opening up iOS 8 and giving developers more flexibility. It is also why Apple is investing in a new development language.
  1. Apple must continue to set the standard for design so consumers are willing to pay a premium for its hardware. Larger screen sizes and bezel-free designs are the only real holes in Apple’s approach; otherwise it’s doing a pretty good job.

Even if Apple pulls off this balancing act, it does not guarantee explosive growth, which is what Wall Street is looking for. However, if Apple does follow this path, it will maintain a stable, growing base of customers, apps, and assets it can use to attack new areas. The iPod and iTunes led to the iPhone which led to the iPad.

Lessons for OEMs competing with Apple and each other

There should be a market for premium Android phones, but with lots of OEMs targeting it, even vendors who can differentiate on design and hardware components will have lower margins than Apple. Margins don’t have to decline to zero, provided there is still enough value in differentiated component technologies or design. This is why Samsung’s insistence on sticking with durable, easy to manufacture, cheap plastic construction is so maddening. As the unique value of Samsung’s components has declined over time, Samsung should have been putting more emphasis on premium design and construction.

It may be possible to differentiate on software above Android, but few provide enough positive differentiation that consumers recognize and are willing to pay a premium for. Motorola, Meizu, and Xiaomi are the only ones who come close; LG is adding value by stripping out much of the excess it once had. It is worth noting carrier meddling can mess up even the best laid software plans; it requires a direct-to-consumer channel or extremely strong brand clout to build a singular software experience and get it on carrier shelves.

Below the premium tier, margins trend towards zero. Lenovo makes money in PCs in this environment by managing the supply chain and manufacturing. PC vendors were making money by preloading crapware; some smartphone vendors (and some carriers) are following suit. Another approach is to sell hardware at cost, and make money on ancillary products or services. Digital stickers work for messaging vendors, advertising supports television, and in-app purchases drive mobile game developers. Watch for variants on these approaches from hardware manufacturers. Amazon is trying to do this with its tablets, but not its phones where it tries to have its profits and sell you some cake, too. Xiaomi’s business model seems to be predicated on giving you a phone at cost, then selling you a stuffed animal.

Big Changes at Microsoft: Define “Platform”

Satya Nadella is just the third CEO in Microsoft’s nearly 40 year history. For most of that time, Microsoft followed a fairly simple strategy: license operating system software to OEMs and sell software to consumers, and later, enterprises.

Bill Gates’ Microsoft: Licensed Software
During Bill Gates’ time as CEO, Microsoft did offer a limited line of hardware, but the mice and keyboards were clearly both opportunistic and complementary to Microsoft’s PC OEM partners. Microsoft’s hardware only really competed with Logitech and Belkin, not Dell, Compaq, Gateway, or HP. Licensing OS software was wildly successful and Microsoft accrued the majority of profits to be had in the PC market. (At times, Apple has also been quite profitable making PCs, but that’s the subject of a different column.)

Steve Ballmer’s Microsoft: Reacting to Google and Apple Leads to Devices and Services
When Steve Ballmer took over as Microsoft CEO at the turn of the millennium, his focus was on holding off regulators, consolidating Microsoft’s hold on consumer software, and expanding Microsoft’s enterprise software and developer tools. However, the computing landscape began to change. Apple’s iPod showed an integrated approach in consumer electronics could be wildly successful and began building on a foundation of software and services that turned into the iPhone and the iPad. Google proved cloud services were a huge source of future computing revenue and growth. In response to Google, Microsoft launched the Bing search engine and invested in creating a platform for its own cloud services offerings (Azure, which was run by Satya Nadella).

In response to the iPod, Ballmer killed Microsoft’s PlaysForSure program and launched the vertically integrated Zune, upsetting his MP3 player OEM partners. By the time Zune was introduced in 2006, Apple had such complete control over the market for media players that vendors could be forgiven for thinking the shift to a vertical strategy was an aberration. This was not Microsoft’s first move towards a vertically integrated product – Microsoft launched the Xbox in 2001, building its own hardware and system software, and tightly controlling third party game titles. This was the established business model for game consoles, but it was quite different to Microsoft’s approach to PC gaming.

Even as Microsoft adopted vertically integrated hardware strategies for media players and game consoles, its largest business, Windows, was still fully horizontal, with Microsoft licensing software to OEMs who built PCs, laptops, and tablets. In 2010, Apple launched the iPad and, by 2012, it had redefined tablet computing. The iPad posed such a serious threat to Microsoft’s PC cash cow, Microsoft was willing to compete directly with its hardware licensees by building its own tablet, the Surface. Surface has not helped slow the decline of PCs and Microsoft had to take a billion dollar write-off to get units to sell at steep discounts.

Stephen Elop’s Nokia: Betting Big on Windows Phone (and Losing)
Even as Microsoft started building its own tablets, it kept licensing Windows Phone to OEMs. Microsoft had invested early in smartphone OS platforms, but failed to react quickly to Apple’s iPhone revolution. BlackBerry, Palm, and Nokia all had the same problem; only Google radically shifted its Android user experience and caught up to Apple. When Microsoft belatedly realized a reset was required, it kept its business model. The first generation of Windows Phone 7 devices were flops, and Microsoft’s smartphone market share declined further. When Stephen Elop, an ex-Microsoft executive, was chosen to run Nokia, he (with the blessing of Nokia’s board of directors) chose to throw Nokia’s hat in with Microsoft anyway, hoping Nokia could make the market for Windows Phone rather than competing head-to-head with Samsung on Android.

It didn’t work – Nokia’s sales volumes and profitability shrank further. As a last ditch effort, Nokia launched the X line of Android AOSP phones with ties to Microsoft services on top. Android phones were one possible way out but rather than throw more money into smartphones, Nokia was using all of its cash to invest in the profitable business of network infrastructure. The clear plan: shut down the phone business and focus on infrastructure and IP. Ballmer was not willing to let Windows Phone die without vendor support, and therefore bought Nokia. Stephen Elop moved back to Microsoft as head of the devices business.

Satya Nadella’s Microsoft: Productivity and Platforms
With hardware businesses for game consoles, tablets, and now phones, Steve Ballmer formally declared Microsoft’s strategy was to build devices and services. Even after Ballmer was pushed out and Satya Nadella promoted to CEO, this message was reinforced at Microsoft’s BUILD developer conference. Just three months later, Nadella published an email on Microsoft’s website repudiating devices and services:

“While the devices and services description was helpful in starting our transformation, we now need to hone in on our unique strategy. At our core, Microsoft is the productivity and platform company for the mobile-first and cloud-first world.”

This was followed by a memo from Nadella and an email from Elop – both published on Microsoft’s site – laying out some of the changes.

    1. • Microsoft is cutting its Nokia headcount quick and deep, but even with the productivity and platforms emphasis, Microsoft is unwilling to pull out of phones entirely – the Windows Phone market would collapse.
    2. • Nadella is killing further development on Nokia’s X line of phones. While the X phones sold well and brought users into Microsoft’s services ecosystem, they presented a strategic challenge to Windows Phone. Microsoft is a platforms and productivity company now; killing X is about protecting the Windows Phone platform.
    3. • Microsoft is also winding down development Asha and Series 40 phones. Microsoft is not going to sell hardware for the sake of selling hardware or growing the Nokia brand – a brand it has a time-limited license to in any case.
    4. • The Xbox itself is not strategic to a productivity orientation, but it is not being shuttered for pragmatic reasons: it generates cash flow and serves as an incubator for new technologies like motion control that may be applied elsewhere. However, Microsoft-originated TV shows and documentaries are distractions from the company’s new mission, so those have been killed.

Define “Platforms,” and You Define Your Business Model Going Forward
Despite what some investors have been calling for, Microsoft is not getting out of the consumer business. Microsoft defines “productivity” fairly broadly, including not only corporate productivity but personal productivity as well. Presumably, even this inclusive definition excludes entertainment, and Microsoft has made moves to cut back on original Xbox content, but not much else.

The problem is that even if “productivity” is meaningful, Microsoft has not defined what “platforms” means, and Microsoft’s business model depends on whether “platform” is defined to mean cloud services (Azure, Bing, Office) or software operating systems (Windows, Windows Phone). Nadella comes from the cloud services division, but he is running a company where Windows is both a sacred cow culturally and a cash one financially. The current direction is to apply to both, but these are mutually exclusive paths. If Microsoft wants its cloud services platforms to succeed, it will need to work as broadly as possible on rival devices and operating systems. (This is Google’s business model; Google sells advertising, and while it builds its own platforms to expand its reach, it does its best to bring its apps and services to iOS.) If Microsoft wants its OS platforms to succeed, it should be keeping its software and services tied as closely as possible to those operating system platforms. (This is Apple’s business model, though Apple monetizes it with hardware sales. If Microsoft wants its OS platforms to succeed as licensed software, it should be licensing the OS platforms as widely as possible, not building hardware to compete with other OEMs.)

Can a Market Be Made?
No matter how “platforms” are defined, if Microsoft is a productivity and platforms company, it should not need to be in the hardware business. Microsoft thinks it does need to build its own hardware – but only up to a point. Nadella notes his goal for the Nokia acquisition is to “responsibly make the market for Windows Phone.” Microsoft does not see itself as a competitor to hardware licensees; it is trying to grow the market so that everyone can thrive.

That may be Microsoft’s desire, but that is unlikely to be the result.

Microsoft cannot cut its way to Windows Phone sales growth. Apple and Google are entrenched in the mobile market and Microsoft will not be able to dislodge them. The only question is whether Microsoft can create a niche market for a third OS that is profitable and sustainable. Even that limited goal will be difficult to accomplish and, while Microsoft tries to make the market, its branded hardware will compete with its licensees.

Avi Greengart’s Last Minute Holiday Gift Guide 2013

Every year I try to write my holiday gift guide before the holidays. This year I completely missed Hannukah, but there are still a few days left before Christmas and New Years, so if you’re still looking for a gift or two – or are trying to figure out what to do with cash or gift cards you received – this guide is for you. I have personally tested every product listed here, along with dozens of others that did not make the cut. With the exception of the Chromecast, all products were provided for review at no charge; no consideration was given to Current Analysis clients.


apple-ipad-air-1-634x422I don’t usually recommend tablets in my gift guide because I can’t add much value – it’s not like you didn’t know that there’s this thing called an iPad. However, this year I felt compelled to talk about three devices that are worthy of stronger consideration based on their successful completion of radical weight loss programs. Apple’s iPad Air ($499 – $929) is compatible with over 500,000 iPad-specific apps and the full breadth of iTunes media, making it an incredibly powerful tool for content creation and consumption alike. It is thinner and lighter than before. This is not news to anyone. However, if you haven’t held an iPad Air yourself, you really ought to; the thinner profile and significant weight difference make what was the leading tablet so much more enticing to pick up and use.

kindle1_2Amazon’s Kindle Fire HDX 8.9 ($389 – $594) is even lighter than the iPad Air, and while it does not have the breadth of Apple’s apps, its light weight, gorgeous display, and access to Amazon’s store makes it superb for content consumption. Just be warned – Amazon will let you download full HD content to view on that display, and if you choose the highest resolution, file sizes can be so large that you may only be able to fit a single movie on the 16GB model. As Amazon does not offer expandable storage, it pays to spend more on the higher capacity variants.

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Finally, for book readers, Barnes & Noble’s Nook Glowlight ($119) is so light it feels hollow, making it easier than ever to get lost in a book without arm fatigue. The backlight and battery life have been improved over previous models as well, but the real difference – like with the iPad Air and Kindle Fire HDX 8.9 – is the weight loss.

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The iPad Air’s shape and size is so different from its predecessors that covers and accessories for the old iPads won’t work. I wish Apple would come out with its own keyboard covers for the Air – or better yet, Microsoft, whose TouchType keyboards for the Surface are fantastic – but until then, you should look to Logitech for iPad keyboard accessories. I was a big fan of Logitech’s Ultrathin Keyboard Cover for iPad, and the new version for the iPad Air ($99) is my recommendation for the new model.

However, for those seeking a cover that protects the front and rear of the iPad, Logitech’s Keyboard Fabricskin Folio ($119) is now a good option. The old version was simply too thick once the iPad was included – it felt like holding a notebook, not a tablet. The iPad Air’s new dimensions make the whole package work.

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Screen Shot 2013-12-19 at 7.38.53 AMA year after Apple upended its accessories ecosystem by abandoning the 30 pin connector for the equally proprietary – but completely different – Lightning connector, there still aren’t enough products with Lightning connectors built in. So I was intrigued when iHome announced the iDL100 ($149), a clock/radio/docking station with two Lightning connectors – one for an iPhone, and one for an iPad. iHome also throws in a USB port to power a different phone or tablet, and a 3.5mm input jack to handle anything else you might want to connect. Sound quality is good – it’s loud and clean, with more bass than I was expecting. (The Sonos Play:1 is better still, but that’s a dedicated speaker and it costs $50 more.) The display can be dimmed or turned off entirely. The iDL100’s neatest trick is that it sets the time automatically from your docked iPhone. It also has battery backup for power outages, and FM radio with 6 presets. You’ll want to download the pair of free companion apps to make settings easier, as the buttons are not as intuitive as they could be. But if you’ve got the manual, you won’t need an iPhone – the clock, both alarms and the FM radio work whether you have an iDevice docked or not. There are some limitations to the free companion app – if you want it to control the alarm, it needs to be in the foreground. My biggest wish is an AM radio; AM isn’t relevant in most global markets, but it’s still the premier urban news/weather/talk source in the U.S., where iHome is located, and it would cost next to nothing to add it. For the Apple fan who has upgraded their phone and tablet but not their alarm clock or docking station, the iDL100 is perfect, and given its capabilities and sound quality, it’s not outrageously priced, either.

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You can never have too many charging solutions. There are a million USB car chargers and third party cables, but the ones that stood out for me this year were from Ventev. The Dashport R1200 ($19.99) is small enough to be left in the cigarette lighter all the time, and powerful enough to charge tablets. Chargesync cables ($24.99) come in both microUSB and Apple Lightning connector versions, and the bright colors are ideal for differentiating between the two. The flat and chunky design of the cable itself ensures that it never gets tangled.

Steve Jobs said, “if you see a stylus, they did it wrong,” but that’s really a matter of opinion. Today’s styli add to a tablet’s capabilities, especially for drafting, illustrating, and painting, without forcing the user to navigate everything with the pen. Samsung’s S-Pen uses extremely precise Wacom technology but only works on Samsung’s Note line of phones and tablets.

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Wacom itself came out with the Intuos Creative Stylus ($99) for iPads; I love the thick barrel, pressure sensitivity, and palm rejection (you can lay your hand on the screen without it registering as a brush stroke), but wished the tip was smaller and less rubbery. Still, it beat using a finger or a cheap capacitive stylus.

For one specialized use case – digital painting – I just loved sensu’s brush stylus ($39.99). It’s a capacitive stylus made of fibers that feels just like a horse hair brush. It doesn’t offer pressure sensitivity, palm rejection, or even that much fine control – but that’s the point. It feels like a brush. For an artist accustomed to real world water colors, guache, or oil paints, this could be the tool that gets them to expand their medium to pixels.

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Nobody needs an NVIDIA Shield ($249), a handheld Android game system, which is a lot of fun to play, but is rather bulky and fairly expensive. Likewise, nobody needs a Parrot AR.Drone ($279), which is a quad-rotor helicopter with cameras facing forward and down. However, when you combine the two products, you get something sort of magical. The Shield’s joysticks act as the perfect controller, while its unobstructed display can be switched among either camera live, while it simultaneously records. Sure, you could use this combination for good (checking your gutters), but it is far more fun to dive-bomb your six year old and instantly send the results to YouTube. Is this worth over $500? Only you can decide.

One of the other uses for the Shield by itself is streaming PC games around the house – assuming you have a fairly specific, relatively high end Nvidia graphics card in the PC. I’ve tried this scenario, and it works most of the time, allowing the gamer to sociably ignore everyone while sitting on the couch and playing Borderlands 2 instead of anti-socially retreating to the computer room. Setup can be finicky, however, and you may still need access to the PC at times – so if the PC is in the room with a sleeping baby, this still might not work.


Did someone on your list just buy a PlayStation 4? Sony also has an in-home streaming solution for the PlayStation 4 ($399) using the PlayStation Vita ($199) handheld system. In this case, the Vita essentially becomes the PS4 – the implementation is completely seamless, which makes it perfect for playing endless rounds of Resogun while some else is monopolizing the TV that the PS4 is attached to. There are plenty of good games for the Vita itself, too, so it’s a good time to reconsider portable PlayStation gaming.

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I’ve been using both the Xbox One and PlayStation 4 since before launch and like different aspects of each, but at this point they have tremendous unmet promise than polished perfection. As we get close to Christmas I’ve actually seen it get easier to find these consoles at retail than when they first launched in November, but if you can’t find one easily, don’t despair. Saving money on these now is not a bad strategy; they’ll be much better next year when there is more unique software for them and some of the system limitations have been worked out.

Wireless Bluetooth Speakers

This year was the year of the Bluetooth speaker. I must have had hundreds of public relations people pestering me to test their variant on the theme. Most of them are indistinguishable from each other. Two are worth calling out: if you must buy a cheap Bluetooth speaker, you could do worse – a lot worse – than HDMX Audio’s JAM Classic ($34) speaker. It’s not high fidelity, but it does play louder and cleaner than your smartphone’s puny speakers or anything else in its price range.

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My favorite Bluetooth speaker this year was Logitech’s UE Boom ($179): a waterproof, weatherproof, colorful cylindrical speaker that provides deep, rich audio at the same price point as other good quality options that are not as versatile or nice to look at. The packaging is also a work of art.

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For roughly the same price ($199), if you don’t need portability and weather resistance, Sonos’ Play:1 offers better sound and is still quite compact (it uses its own WiFi-based network, not Bluetooth). However, I must warn you: the Play:1 is a gateway drug to a whole-house Sonos system. Once your giftee has one Sonos speaker, they will feel compelled to add addition speakers in additional rooms, all controlled by iOS or Android devices, with each room coordinated with the others or playing its own tracks.

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Stocking Stuffers

No matter how convenient a tablet or eReader may be, there is still something to be said for printed books, especially when they are filled with photographs and left invitingly for everyone to browse on your coffee table. No Starch Press has a rich line of books chronicling the adult LEGO community, and this year’s Beautiful LEGO ($29.95) has been rightfully highlighted on Wired and other tech and geek culture sites. You can use the book to learn different building techniques or simply marvel at the time, talent, and money that goes into them. This is simply a stunning collection of sculpture built one brick at a time.
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Screen Shot 2013-12-19 at 7.57.07 AMGoogle has made several attempts at taking over your television, and all of them flopped. Rather than try again with another version of Google TV that tries to cram search and apps and overlays and guides and PLAY services, etc. into a $200 box you don’t want to buy and need a PhD to install, Google finally just gave up. Instead, it tried to solve a simple problem: how do you get YouTube or other video from your laptop or Android device onto your TV as simply and inexpensively as possible? The Chromecast ($35) is the answer. While it also streams Netflix and Google PLAY content, if all you ever use it for is the occasional YouTube video, the price and simple setup make it worthwhile.

Understanding Apple Part 2

If you follow Apple in the press and talk to analysts, you’re probably confused. There are three conflicting narratives being presented: Apple is doomed, Apple is disappointing, or Apple is dominating. So many journalists have written about Apple’s lack of innovation without Steve Jobs that, “Apple is doomed,” has almost become a meme. Most financial analysts are in the “Apple is disappointing” camp – the P/E ratio of Apple’s stock price is certainly depressed relative to the competition, yet market analysts – including yours truly – describe Apple as clearly dominant. How can all these be true?

Part 1 of this article covered how Apple is Doomed and Apple is Disappointing.

Apple is Dominant

On the whole, I have found market analysts to be far more positive on Apple’s position than financial analysts. At Current Analysis, Apple garners the highest scores possible in every category except “Partnerships.” Most market analysts focus on the competitive impact of Apple’s products and strategy, not the stock price. Apple is dominating the most profitable segment of the market. If you are a vendor competing with Apple, what matters is whether you can profitably sell products against them. Samsung can. Everybody else is losing money, treading water, or is selling hardware as a loss leader to make money some other way.

Moreover, Apple’s ability to profit in the future seems clear. Apple has a reputation for secrecy, but its product development strategy is transparent. It develops products in markets adjacent to its existing products, and builds on the investments it already has in software and services platforms – OS X/iOS, iTunes, the App Store, and iCloud. Apple often takes advantage of new component technologies to enter new markets, but it designs the product around a specific – and limited – set of use cases rather than building something because the technology enables it to be built.

When it comes to creating new markets or taking an early adopter market and making it mainstream, Apple is in rare company. There are not many companies that can integrate technology and design on top of existing software and services platforms; it helps if you control the ecosystem, and building one from scratch is terribly hard. Apple will certainly have competitors in any market it enters, but the bigger danger is choosing the wrong set of problems to solve. This is the area where Steve Jobs’ absence is the biggest loss – Jobs seemed to have an unerring eye for what could be left out of a product and still be left with a compelling version 1.0 product. Apple is fortunate that its executive staff has had relatively low turnover – many of the people who helped Jobs make those choices are still at the company and are working on new products today. I do not pretend to know what those products are. Wearables and living room devices certainly fit nicely in Apple’s ecosystem, but Apple could be working on something else entirely.

Apple also has more room to grow its phone and tablet business. Global distribution can be expanded further – Apple still has room to appeal to upper income users in China and India. Over time, the iPhone 5C should drop in price somewhat, enabling upper middle class consumers in emerging markets to buy in. In developed markets, there is still plenty of room for late adopters who are still using featurephones today. This group will not be kept away by the high price of the iPhone because carriers distort the true cost of the phones with subsidies. Even after the iOS 7 refresh, the iPhone still has the simplest user interface of any smartphone, which should be appealing to late adopters, especially technophobes.

Apple could also expand the size of the iPhone to appeal to the segment of the market that can afford an expensive phone, but wants a larger display than Apple offers. This product category has more appeal in Asia than in the West, but Samsung has sold 37 million Galaxy Notes, and Apple is certainly paying attention. I expect Apple to address this market eventually, though it is taking a long time doing so. My guess is that the sticking points are finding a form factor that is manageable while still whetting the appetite for a larger display, and picking a display that doesn’t impose screen resolution fragmentation costs on developers.

Pad sales growth is down, but new models could change that. The iPad Air reinvigorates Apple’s full sized offering, and the retina iPad mini takes away a key differentiator of small Android and Windows tablets. Apple has all but telegraphed that Touch ID is coming to an iPad near you – and your IT manager – with the next update.

Three Narratives

That is how we ended up with such divergent narratives in the press and analyst communities. Journalists are reporting on whatever is deemed newsworthy – and launching incremental improvements is not exciting, even if it is wildly successful. Financial analysts are trying to assess Apple’s future profit growth without betting on Apple being successful in markets that don’t exist. Some of them also don’t trust that Apple’s current profit level is sustainable, even if they don’t actually question Apple’s market dominance in the slightest. Market analysts look at Apple’s platform and see possibilities where it could be extended. In the meantime, Apple’s strategy of selling a lot of phones and tablets and making a lot of money on them seems fundamentally sound.

Understanding Apple, Part 1 of 2

If you follow Apple in the press and talk to analysts, you’re probably confused. There are three conflicting narratives being presented: Apple is doomed, Apple is disappointing, or Apple is dominating. So many journalists have written about Apple’s lack of innovation without Steve Jobs that, “Apple is doomed,” has almost become a meme. Most financial analysts are in the “Apple is disappointing” camp – the P/E ratio of Apple’s stock price is certainly depressed relative to the competition, yet market analysts – including yours truly – describe Apple as dominant today and highly dangerous going forward. How can all these be true?

Apple is Doomed

There are certainly media sources overwhelmingly friendly to Apple, and much of the tech press gets accused of being overly cozy with Apple and Google and Microsoft simultaneously. However, the treatment of Apple in the general press is often quite negative.

It has become a cliché that the press enjoys building people and companies up, only to tear them down again (…and sometimes build them up again – which I like to call the full Behind the Music cycle). Some of this is basic human psychology, but there is also an element of cynical capitalism at work – anything controversial that is written about Apple generates healthy page views which generates advertising revenue. The press sees incremental improvements as less newsworthy than entirely new products, even if the upgrades are wildly successful. Mainstream journalists are also wary of being caught in an Apple “reality distortion field,” and are so scared of being perceived as biased towards Apple that they end up highlighting the negative.

Most negative coverage of Apple includes quotes from disappointed financial analysts (more on this below), but the biggest proof point used in anti-Apple coverage is the lack of Steve Jobs. At the time of his death, Apple had absolutely transformed consumer technology, making media players, smartphones, and tablets mainstream objects of desire. It is impossible to refute the fact that Jobs was the catalyst for Apple’s decade of success. So without him, Apple must be doomed. Just keep in mind that if Apple continues to grow and introduce new hit products, the story line will shift to “Apple is Back.”

Apple is Disappointing

There may be some financial analysts who say things to move the stock and profit off the movement – and since Apple is the subject of so much scrutiny in the press, this is easier to do with Apple than probably any other stock. However, even if you discount any ulterior motives, it is clear that financial analysts are not happy with Apple’s strategy. The PE ratio of Apple’s stock price – even after the runup following the record-setting iPhone 5C/5S sales – is significantly lower than other tech firms. In other words, the market is not valuing Apple as highly as other companies. This is hard to reconcile with Apple’s run of incredible profits. What is going on?

Apple has a huge amount of cash on hand and makes enormous profits – financial analysts do not deny this, and they will be the first to point out that Apple is already one of the largest companies in terms of market capitalization. However, financial analysts value companies based on future profit growth. Thus, they don’t believe that Apple can grow profits any further. Apple targets the top end of the market, and they maintain that this segment of the market is saturated. They further point out that Apple now has nearly every major carrier in the world already selling the iPhone. The problem is not that Apple is not successful, the problem is that they believe Apple is too successful to grow any more.

In fact, the consensus among financial analysts seems to be that is that Apple’s profits will almost certainly fall over time, either due to competition (Android phones which provide a “good enough” smartphone experience at a lower price) or by Apple listening to the financial analysts who want Apple to sell lower margin iPhones to expand market share and snag entry level phone buyers. That might also mean Apple would cannibalize its own high end iPhone sales as some of its own customers choose the “good enough” model in Apple’s line instead of the latest and greatest.

Financial analysts are not stupid. There are at least two valid reasons why Apple might need to expand its market share even at the expense of profits.

By focusing on the high end of the market, Apple has left the fastest growing portion of the market to Android in both phones and tablets. Apple’s advantage in apps is a key differentiator; it is possible that Android’s larger aggregate user base will eventually cause developers to focus on Android first and iOS second, eroding Apple’s value proposition.

Apple is aware of this possibility, which is why Tim Cook highlights Apple’s strong usage statistics every chance he gets. Apple argues that as long as iOS users spend more money and time on their iOS devices than Android users do on theirs, Apple should maintain developers’ attention.

By leaving the entry point to mobile unguarded, Apple is allowing other brands to establish themselves. It is possible that as emerging market consumers buying power grows, they will stick with the brands they grew up with. Japanese auto manufacturers followed this strategy when they courted the entry level customer in the 1960’s and 1970’s and launched luxury brand extensions in the late 1980’s.

Apple seems willing to take that bet.

Financial analysts value companies based on future profit growth, and successful companies are constantly investing in new markets to create new revenue sources. Apple is the most successful company to have employed this strategy. In just the past decade it introduced iTunes, the iPod, the iPhone, and the iPad (while also reinvigorating its PC line – another product Apple invented in an earlier era). Journalists discount Apple’s ability to create new products because Steve Jobs is gone. Some financial analysts are likely doing the same, but others simply do not know how to value future innovation until they see it being sold. If you think that Apple cannot possibly grow its profits and you cannot put a price tag on any future products that Apple might introduce, you will find Apple quite disappointing.

To be continued.

The final section of this article will cover how market analysts see Apple, and where future profit growth will come from.

BlackBerry Implosion: A Postmortem

In the past few days, the true extent of BlackBerry’s perilous position in the market has become clear, but the future for the company is cloudier than ever. The company plans to lay off another 40% of its staff, consumer device sales are being halted (or not – “prosumer” sales will continue), and the board of directors said it would consider offers for all or portions of the company. When BlackBerry’s stock cratered at the news, Fairfax Financial Holdings, its largest shareholder – and controlled by a former BlackBerry board member – put in a bid to stop the price from cratering further. We’ll see if other bids are forthcoming or if Fairfax actually buys BlackBerry (it can walk away any time during the next month of due diligence).

I’ve been tracking BlackBerry closely for over a decade as an analyst, and while everyone agrees that BlackBerry didn’t react quickly enough to Apple, there were three main reasons why it reacted so slowly. RIM, Nokia, Microsoft, and Palm all dismissed Apple’s entry in January 2007. This was partly understandable in 2007 when RIM was aimed at business users and the iPhone did not support corporate email. Google was the only player to see the iPhone for what it would become, and Google quickly changed Android’s UI from a variation on BlackBerry and Windows Phone to a touch-driven experience. RIM’s oversight was less forgivable in 2008 when RIM had launched the Pearl targeting consumers, and the iPhone got Exchange support, moved to a subsidized model, and announced the App Store. Verizon Wireless – iPhoneless at the time – handed RIM a prime opportunity to catch up in late 2008, but the BlackBerry Storm grafted a poor touch experience onto an OS designed for a scroll wheel. It was also a buggy mess. RIM only moved to create a modern, touch-first mobile OS in 2012, and phones finally shipped this year. By that time, it was too late – its high end users had moved to iOS, and its Curve sales were being decimated by cheap Android phones running WhatsApp.

What Went Wrong? There were three main factors:

  1. 1. NTP. When BlackBerry could have been designing breakthrough consumer-oriented BlackBerries just before the iPhone launched, RIM management was not focused on creating a browser and app-centric mobile experience – they were consumed with fighting a patent lawsuit from NTP. The fight was clearly personal to RIM management, and it took an enormous amount of time and attention away from running the business. The resulting line of consumer BlackBerries were just BlackBerries with a media player and a camera grafted on. They sold well, but did not position BlackBerry to succeed as the market shifted and expanded.
  2. 2. BBM. Once Apple started decimating RIM’s core prosumer user base in North America, BlackBerry sales and profits did not decline – they rose. RIM had lucked into a BBM frenzy in Europe and emerging markets, where consumers bought BlackBerries to save money on messaging. From 2009 – 2012, BBM’s success masked underlying problems in its business, and RIM further failed to realize that this windfall would soon be under severe margin constraints. Cheap Android phones running free messaging apps were more attractive than (relatively) pricey BlackBerries – and Android had a richer ecosystem of apps and services beyond messaging that BlackBerry couldn’t match.
  3. 3. Management. RIM’s senior management suffered from a truly epic case of founder’s syndrome. For years, people told RIM CEO Mike Lazaridis that what he was trying to do was impossible. RIM was successful anyway, and then financial analysts and the tech press switched to predicting that RIM would be crushed by Microsoft or Nokia. When the real wolf was at the door, Lazaridis and his co-CEO Jim Balsillie ignored it. As late as 2012, RIM actually diverted resources from BlackBerry 10 to push out a new, and not completely compatible, version of its old OS! BlackBerry management did not even prioritize phones for its new OS, launching BlackBerry 10 half-finished on the BlackBerry PlayBook. The PlayBook bombed, and BlackBerry 10 only appeared on a phone a year later (and without a critical mass of high quality apps). When Lazaridis and Balsillie stepped down, they did so unwillingly, and installed an insider to continue their strategy. New CEO Thorsten Heins genuinely did not believe that there was anything wrong at first, showing how out of touch and insular the management team was. Heins did eventually realize that things were dire, but under his watch, BlackBerry produced a horrific Z10 marketing and launch plan, and produced nearly a billion dollars of excess Z10 inventory.

E3 2013: Fighting the Console Wars One More Time

E3 is technically a trade show closed to the general public, but E3 apparently grants industry status to anyone who has ever worked at a Gamestop or Target (Target sells videogames, right?). As such, the show is more like Comicon than CES. Some attendees dress as their favorite video game characters, there are enormous props (World of Tanks had an actual tank parked in front of the convention center), and there are longer lines for free t-shirts than to try new game systems.

Oddly, E3 also does not evenly represent the world of electronic gaming. Exhibitors didn’t highlight the highest revenue platforms and genres or the biggest areas of growth. Instead, they skewed their exhibits towards a very specific audience: 25 year-old U.S. male console gamers. Fighting and role-playing genres were everywhere, while strategy, sports, dance, and puzzle games were not – even though more people play the latter category overall. E3 focuses more on living room consoles than PCs, even though PC gaming brings in more revenue, especially outside the U.S. PopCap was heavily promoting a new iteration of Plants vs. Zombies, but other than that, casual PC and web games were not well represented. A greater emphasis on consoles is to be expected in a year when a new generation of them is launching, but this pattern has held for several years, and the enormous growth in mobile gaming was almost entirely ignored. Last year, several major mobile game vendors from Asia had booths; this year they stayed home.

Finally, there was barely any mention of other forms of electronic entertainment at E3 beyond video games, despite the name of the conference (Electronic Entertainment Expo) and the fact that Microsoft reported consumers spend more time watching streaming media on their Xbox than they do playing games.

Sony and Microsoft both preempted E3 with previews of their next-generation game consoles. Sony held a large press conference in New York back in February, and Microsoft hosted a much smaller event on its Redmond campus in May. Just ahead of E3, Microsoft clarified its incredibly complicated policies on connectivity and used games, which allow consumers to play their games on friends’ Xbox One systems from the cloud, but restrict how games can be transferred. That left a lot less to talk about at E3 beyond pricing and extensive game demos.

The Main Event (Microsoft v. Sony: Fight!)

Sony’s decision to price the PS4 at $399 drew cheers, but mainly in comparison to Microsoft’s $499 Xbox One. Drawing even more positive feedback, Sony lampooned Microsoft’s move to DRM and connectivity mandate. Microsoft’s policies are definitely not consumer friendly – or easily understood – but are likely to be more significant to E3 attendees than average gamers. The E3 crowd was disdainful of the entertainment and motion gaming capabilities that Microsoft highlighted at its preview, and both Sony and Microsoft focused on traditional console gaming genres in their press conferences. Today’s motion games tend to focus on dance, fitness, and sports. However, the technology included in the Xbox One’s Kinect is truly astonishing, and the fact that every Xbox One will come with Kinect could lead to must-have game titles in the future.

The new Kinect is dramatically more sophisticated than the original. It works in low light and is not affected by concentrated light sources (like halogen lamps). It works in smaller rooms, enables a larger number of gamers, detects an incredible amount of detail – including gamers’ heart rates based on skin coloration! – and its microphones are more sensitive for voice commands. Sony does have a new PlayStation Camera (replacing the PlayStation Eye) for the PlayStation 4, but it is a $59 add-on, and Sony discounted its importance at E3. There were apparently Camera-equipped PS4 systems somewhere at the show, but I couldn’t find them. When I asked Sony about this, they were fairly dismissive about the importance of motion gaming. One rep noted, “you can buy the [PlayStation] Camera, and the new controller can be used with that if you want that type of game.” This could prove to be a big mistake over time as the Xbox One price comes down and developers design software that incorporate voice and gestures alongside the controller – even in traditional game genres. Sony is also behind Microsoft in cloud services; Microsoft has more Xbox Live subscribers than Sony has PlayStation Network accounts, and Microsoft is scaling up its servers further in anticipation of moving more gaming information to the cloud.

Console game sales are down ahead of the new hardware from Microsoft and Sony, but it isn’t clear that consumers are clamoring for new boxes that cost $400 – $500 before factoring in software costs and mandatory subscription fees for online play. I played a lot of games at E3, and the graphics on the next-generation consoles are better, but on many titles, that didn’t appreciably affect gameplay. There will be a lot devices fighting over limited consumer budgets this fall. Tablet and smartphone sales are exploding, and gaming titles for iOS and Android are either free-to-play or cost at most a few dollars a game. Some of these games are coming directly to the television. Ouya’s $99 Android game system was funded in record time at Kickstarter, and Apple is rumored to be opening its $99 Apple TV box to developers in the future as well.

Producing a winning living room game console is still a huge prize, but Sony and Microsoft seem focused exclusively on the living room, when gaming is clearly following computing into mobility. Sony execs were understandably proud of their performance at E3. However, Sony did not provide any more details on how the PlayStation will deliver on the larger vision of consumer-centric, location and device -independent gaming that it described back in New York. Microsoft is not doing much better in this regard. While a Halo game was finally announced for the Windows Phone, it will be an arcade-style top-down shooter, making it Halo in name only. The heavily promoted cross-platform game Spark impressed us by allowing consumers to design their own games on an Xbox One controller, an Xbox 360 controller, or a Windows 8 touchscreen, but it also lacks a Windows Phone version.


Microsoft clearly felt the heat from Sony – and gamers – on the Xbox One’s DRM and connectivity policies. A week after the show, Microsoft reversed nearly all of them: the console will not require connectivity to play standalone games, games will not need to “check in” every 24 hours to remain playable, and it will be possible to share or resell Xbox One discs without restrictions. While some damage was done, the updated policies were received well by the online gaming community. Microsoft was forced to change due to its downright consumer unfriendly DRM, incredibly confusing rules for sharing or reselling games, and the fact that Sony didn’t follow Microsoft into cloud gaming. (Sony gleefully turned the knife in Microsoft with YouTube ads ridiculing Microsoft instead.) However, Microsoft’s original plans offered consumer benefits, too. Microsoft failed to articulate them, but the connectivity and DRM enabled sharing games among family members, and playing games locally or remotely without requiring a disc in the drive. Faced with a consumer backlash, Microsoft had to make changes. Microsoft could have made disc-based purchases work DRM-free, and downloaded purchases work with DRM restrictions but with all the cloud benefits. However, this would have been a more difficult message to deliver. Instead, Microsoft simply went back to the old way of doing things, and consumers will lose out.

The iPhone and the Death of the Mid-Tier Smartphone

I’ve been a consumer device analyst for long enough that I’m usually pretty comfortable calling things as I see them, but sometimes there is simply no substitute for hard data. Current Analysis tracks U.S. device pricing for phones and tablets, and if you slice and trend the data, you see some really interesting patterns. It is no secret that smartphones are selling extraordinary well, but in subsidized markets, the gains are highly concentrated by OS platform with sales are split between high-end flagship phones and entry-level models. The data tells the story why this is so.

Apple’s iPhone sets the pricing floor ($0 for the model from two years ago), middle ($99 for last year’s model), and ceiling ($199 for this year’s model). Just two phone families – Apple’s iPhone and Samsung’s Galaxy S – make up the majority of U.S. smartphone sales overall. AT&T is particularly iPhone-centric; 80% of smartphones it sells are iPhones, so even though the carrier prides itself in offering the widest variety of phones, vendors, and operating systems, practically speaking, there is little room for rivals to sell into. This is a residual effect of AT&T’s long exclusivity with the iPhone and its smart policy of locking consumers into family and business contracts. But carrier exclusives overall have been declining on a percentage basis, even as the total number of smartphones on offer has grown:

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Not only are carrier exclusives declining on a percentage basis, but the best phones are increasingly the ones available across carriers – the iPhone, HTC One, Samsung Galaxy S. (At a recent presentation for the Competitive Carrier Association, I pointed out that this means the playing field is now basically level in terms of devices. Smaller operators may need to agree to fairly high minimum orders, but they can get access to the devices that are in the highest demand.)

As exclusives have waned, pricing at the high end has dropped. Samsung’s Galaxy Note straddles the line between a smartphone and a tablet, and it has launched at premium pricing even for a flagship. However, the Note seems to be an exception – LG’s Optimus G Pro, which also sports a 5.5” display with higher resolution and more storage than the Note 2, launched at just $199. (However, the Optimus G Pro is an exception to the previous dataset – it is an AT&T exclusive.) Apple and Motorola have offered versions of their phones with additional memory above $199 for a while, and Samsung and HTC have finally picked up on that strategy, but on average, flagship smartphone pricing has declined over the past three years:

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Here’s where it gets interesting. Not all flagships are created equally, and when a vendor’s high-end phone does not sell well, it drops in price:

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As expected, Apple and Samsung phones have strong price stability, but Apple’s ability to maintain a premium price level for a full year in a hyper-competitive market is simply mindboggling. While it is true that iPhones sell best the first quarter they are available, iPhones continue to outsell rivals in non-launch quarters as well. HTC has enjoyed strong carrier launches which has kept prices stable even as its sales have declined overall. Smartphones from Sony and LG have not fared well, and within 3 – 4 months of launch, they drop into mid-tier pricing territory. Unsurprisingly, this has impacted the number of mid-tier smartphone launches:

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It is awfully hard to sell a phone designed to sell for $99 with subsidy when consumers continue to snap up last year’s iPhone model for the same money a full 18 – 24 months after Apple introduced it, and three-month old flagship Android phones are pushed down to $99 as well.

The trends are quite clear, but there is one wildcard going forward: T-Mobile USA’s installment purchase plans. T-Mobile is asking consumers to buy their phones upfront, but it will split the cost of the phone into monthly installments alongside a no-contract voice plan. If consumers treat this as a direct replacement for subsidized plans – or if T-Mobile is simply too small to impact Verizon and AT&T at this point – then I expect the trends to continue. However, if enough consumers see the real cost of their flagship phones and opt to buy less expensive models, then we may see the return of the mid-tier phone in the U.S. after all. We don’t have data on that – yet.

While analysis can sometimes be a solitary pursuit, I owe a huge debt to my team for tracking, trending, and charting the data presented here. In particular, Peter Han was instrumental in pulling this together, and he co-authored the report that this column is based on.

Anyone But Google

imagesCarriers are understandably unhappy with today’s mobile platform duopoly. Apple and Google generate demand for data services, and carriers can’t live without them (as T-Mobile USA admitted about Apple late last year). However, Apple extracts enormous subsidies, mandates high minimum orders, has complete control over the customer experience, and maintains its own direct billing relationship with the subscriber. In some ways, Google is worse, as it competes directly with carriers. Google bids on spectrum, owns fiber in the U.S., runs a broadband network (currently limited to a single U.S. city), and has this annoying habit of offering services for free that carriers like to charge for. Carriers have long been searching for alternative operating systems that give them more control over the user experience. MeeGo, Maemo, and LiMo have all been promoted by various carriers in the past, and the latest carrier OS hopes center around Tizen, Mozilla’s Firefox, Jolla’s Sailfish, and Canonical’s Ubuntu.
Mozilla and the Tizen Association recently held press conferences that included realistic commitments from hardware vendors and carriers – 17 carriers backing Firefox, if I read the press release correctly. It certainly looks like Tizen and Firefox phones will actually reach the market, but once they do, why will consumers buy them?

“Open” Is Not a Reason a Consumer Buys Anything

None of these devices are all that innovative, none have apps or service ecosystems that are remotely competitive with Apple or Google today, and the vendors kept talking about how “open” they are as if that’s a feature that matters to anyone. Openness does resonate with carriers looking for alternatives to Google and Apple, and I understand why OEMs are building these phones – because carriers say that they’ll sell them. However, the opportunity costs for doing, say, Firefox, instead of trying to deliver a better Android product, are extremely high. And I have yet to see a compelling reason why consumers will give up the Android or iOS ecosystems and buy one of these phones.

Tizen and Jolla basically ignore the question – their presentations have focused on carriers and distributors. Canonical’s execs told me that consumers and enterprises want a system that can span phones to desktops. Do they? And even if they do, since when has Ubuntu been successful on the desktop? Mozilla came closest to describing an actual consumer value proposition, claiming that Firefox smartphones will offer a better user experience than the lowest priced Android 2.3 phones. I’m skeptical. The Firefox mobile user interface is certainly simple enough, resembling a first generation iPhone with a single centered home button and a grid of icons for apps. However, even if consumers prefer a UI without home pages and widgets, Android still has a richer selection of localized apps than Firefox. Google’s services are also a draw, although those are often omitted on low cost Chinese phones. Of course, the whole question of how well Firefox compares to a $100 Android phone in China may be moot: many of the operators signed on to sell Firefox phones are targeting prepaid markets in Europe, where the entry point is slightly higher.

Where Do Google, Microsoft, BlackBerry, and Samsung Fit In?

Google’s launch of the Chromebook Pixel proves that there’s a big faction at the company that views web standards, not native apps, as the future of computing. If Mozilla does have success with Firefox, I would expect to see a ChromeOS phone. Actually, I expect to see a ChromeOS phone regardless.

The focus on Firefox and Tizen seems to indicate that carriers have given up somewhat on Microsoft. Windows Phone has not been terribly successful so far, and Microsoft does not offer operators full control over the services that are eroding their margins. Still, in terms of leverage against Google and Apple, Microsoft is certainly a better bet than any of the alternatives. Microsoft has a real OS in the market today and hardware from Nokia, HTC, ZTE, and Samsung at multiple price points. Microsoft also has the resources and the strategic imperative to keep pouring money into Windows phones and tablets no matter how well (or poorly) they do. Microsoft is a computing software company. Computing is going mobile. Microsoft needs to become a mobile computing company.

Carriers are supporting BlackBerry, at least for now, by helping the company launch the Z10 in over 100 markets. However, few expect it to grow into a real counterweight to Google or Apple, and if the Z10 does not perform well after its initial launch, carrier support will disappear entirely.

Samsung is the largest and most profitable Android vendor, and yet it is also one of the biggest backers of Tizen. Clearly this means [insert hysterical argument here]. The truth is simple: Samsung has always hedged its OS bets. Samsung’s smartphone strategy has always been to bet on every horse (e.g., Symbian, Palm, LiMo, and Windows Phone), and enter its own horse in the race as well (Bada and now TouchWiz). However, when it saw success with Android, it doubled down in that area. For most of Samsung’s competitors, investing in alternate OSs comes with high opportunity costs – allocating time, talent, and management attention to an unproven OS means falling farther behind Samsung in Android. Samsung can afford to follow blind OS alleys just to see if they lead anywhere.

Still, most of Samsung’s device profits come from Android, and Google’s native apps and services add tremendous value to Samsung’s hardware. It would be foolish for Samsung to make any big changes in strategy unless Google forces its hand. Samsung is not foolish. Then again, Google is not entirely predictable – with Motorola, the Nexus program, and the Play Store, Google competes directly with its licensees and carrier partners. Hence the need for Samsung to have a Plan B. Samsung certainly could move away from Android, or create its own Android flavor (the approach taken by Amazon, Barnes & Noble, and many Chinese vendors). However, Samsung mostly wants to use the threat of alternatives to negotiate better mobile ad revenue share with Google, and to keep Google’s Motorola division in check.

BlackBerry’s Super Bowl Ad Was Awful. Is There An Ad That Could Have Worked?

Screen Shot 2013-02-04 at 5.22.01 AMI’m a big Redskins fan, so when people asked who I was rooting for in the Super Bowl, they didn’t know whether I’d choose San Francisco (a city I visit so often I’m practically a resident) or Baltimore (a city not far from where I grew up). Still, I don’t think anyone was expecting my answer: I was rooting for BlackBerry. I knew that the company had a big ad planned for the game, and while I’ve been using the phone since before its launch last week, BlackBerry had not shown me its marketing campaign. I like the Z10. I like the people at BlackBerry. I like competition in the industry – it’s good for consumers and, to be completely honest, it’s good for my client base. I was rooting for BlackBerry to win. But my team lost – and it was a blowout.

If you missed the ad, here’s a link.

Summary: a man walks down the street using a BlackBerry Z10, random wacky things happen, and an announcer intones, “in 30 seconds, it’s quicker to show you what it can’t do. The new BlackBerry Z10.”

This ad is not as bad as Palm’s webOS ads where a vampire uses mind control on people doing tai chi or Sony Ericsson’s 2011 Super Bowl ad with dismembered thumbs; those were not just bad, they were creepy. I’m sure the BlackBerry folks in Waterloo love their ad – how couldn’t they? It says that the Z10 is so awesome that there’s no point in describing how awesome it is! Plus, it has a jackknifed tractor trailer turning into rubber duckies! That’s cool, right?

There are two problems with the ad:
1. The cardinal rule for successful technology marketing is to sell benefits, not features. This ad does not even sell the features! It just promises that there are features in there somewhere. (What are they? Who knows. Why should you care? No idea.)

2. BlackBerry is in serious trouble – it needs great marketing. John Kirk is correct; attacking Apple and Google head on once they have established their platforms is suicide. Running a $3.7 million ad that says, “we do lots of stuff,” is a waste of money. You know which other phones do a lot of things? More things than BlackBerry 10? Apple iPhones and Google Android phones.

Ouch. Is There A Way for BlackBerry To Succeed?

First, let’s define success. BlackBerry 10 does not need to propel the company back to its market share peak; if that is the short term standard for success, there is no hope. The smartphone market is now much larger than when BlackBerry was king; to be successful, the company needs to reverse its subscriber declines, and return to profitable growth. (The same is true for Nokia and Motorola.) If BlackBerry gets that far, its next challenges will be broadening the line to allow its base of BBM-centric Curve users in emerging markets to upgrade, and carving out a unique space with application developers and service providers so that the BlackBerry 10 gets unique apps and experiences first, not after iOS and Android.

However, getting there is an enormous challenge. BlackBerry is not a safe choice for consumers. It cannot compete with the depth and breadth of Apple and Google’s mature ecosystems. It’s not just that BlackBerry’s ad forgot to explain why anyone should buy a BlackBerry; the company seems to assume that as long as it builds a decent product, everyone will flock to it. (That was probably true in 2008, before Android was a juggernaut, but RIM missed that window. The BlackBerry Storm was not a decent product.) Today, building a good product is not good enough, because there is nothing broken in iOS or Android that BlackBerry 10 fixes.

Instead, BlackBerry needs to narrow its focus – and its message – to consumers who share its brand heritage: an obsessive, almost compulsive need for real time information and control. Amazingly, the BlackBerry 10 platform actually does prioritize these brand attributes, with the Hub, the core peek gesture, unique virtual keyboard, and the Reminder app. There are some off-message features, too, but on the whole, BlackBerry 10 was designed with a clear user in mind. The ad wasn’t.

The smartphone market leaders make excellent products and have tremendous supply chain execution, but they really set themselves apart in their marketing. Apple sells beautifully designed products that “just work” to people who believe they deserve just that. Samsung sells phones with the world’s best displays to people who don’t think of themselves as hipsters. Microsoft initially tried selling Windows Phone by focusing on a similar productivity-oriented message, but it botched the execution with ads that showed how much people loved their iPhones and Android phones. Today, Microsoft is mostly trading on celebrity endorsements, distinctive physical design, and remaining positive Nokia brand associations in Europe.

BlackBerry needs to get people who identify with its brand characteristics to buy a Z10 instead of an iPhone or Android phone, whether they owned a BlackBerry in the past or not, and whether they are security-conscious business users or soccer moms. It will not succeed by selling features, either. BlackBerry should not sell what the product does, it should sell why it does it.

The BlackBerry brand is damaged in the U.S., this is a complicated message, and you’ve only got one Super Bowl to do it. So don’t start by handicapping yourself with a 30 second window. Pony up, and give yourself 60 seconds of breathing room. It can be creative or simple, but the ad needs to reintroduce the brand, acknowledge past mistakes, explain the promise of the new platform, and ask like-minded consumers to join the tribe. Here’s my version:

Remember BlackBerry? [Show pictures of movie characters using BlackBerries, celebrities, and President Obama] We made the first smartphones, and empowered people to stay connected wherever they were and to keep on top of what drives them.
[blank screen] But we lost our way. Browsing, apps, and big touchscreens are important, and Apple and Google came and did those things well. Most people think that’s good enough. For most people, it is. But for people like us, there’s something missing.
So we started over.
[show features] The BlackBerry Z10 has a great browser and a beautiful screen. It has a store that sells 70,000 apps, music, and movies. But BlackBerries are created by and for people who believe in always seeing a message the second it arrives. On the Z10, all your email, text, and social network messages are in one place, and you can peek in on them without leaving your game, map, or movie. Our keyboard is amazing – type a few letters, and BlackBerry will suggest the whole word. And that’s just the beginning.
[text reads: BlackBerry Z10. Available soon at AT&T, Verizon Wireless, Sprint, and T-Mobile]
Not everyone needs to be in control like this. But we do. And if you’re like us, it is time to join the BlackBerry tribe.

That’s my BlackBerry ad. What’s yours?

CES 2013: Plenty of Innovation – You Just Needed to Know Where to Look

CES-SignI didn’t expect much in the way of OS, phone, or tablet announcements at CES this year, if only because all the key platform drivers stayed home. Apple never attends trade shows, preferring to host its own events. Amazon follows Apple’s lead. Google takes over Mobile World Congress each year, but does not attend CES. Microsoft used to have a keynote and a large booth at CES, but chose to quit the show after last year – which was a mistake. Many device vendors also skipped the show, and some who were there – I’m looking at you, Samsung and LG – held big press conferences without actually announcing much. RIM is staging its big comeback try in New York on January 30. Nintendo is making a big bet on digital entertainment with the Wii U, but it focuses on E3, not CES.

App-Driven Devices

Nonetheless, CES 2013 was a huge show, and not just in terms of sheer size. The biggest trend I identified at the show was easiest to see at the evening press mega-events, Digital Experience (Pepcom), and Showstoppers. Pepcom usually gets the bigger name vendors, but this time, smaller vendors were showing the most unique products, and Showstoppers was actually the better venue because of it. I counted dozens of innovative devices which depend on app and device infrastructure built by Apple and, in some cases, Google. Several gadgets that seemed silly in pre-CES press releases (ex: a connected fork) were revealed to be worthy concepts when I got to see them live. Some examples:

  • The HAPIfork measures how quickly you eat and vibrates if the intervals are too frequent. The companion app collects the data as part of a medical weight loss program. (No, this isn’t for everyone. But it isn’t ridiculous, either.)
  • The Lark Life is a wearable vibrating alarm clock whose app acts as a sleep coach. There were at least a half dozen variants on this concept on display from various vendors.
  • Parrot’s Flower Power gardening sensor works with an app that not only tells you when to water your plant, but what you ought to be planting in that soil instead.
  • Evado Filip’s ViVoPlay is a combination watch, three-way GPS tracker, and limited phone designed to prevent children from getting lost in public places. The companion app enables you to find your child and call them to reassure them – and tell them to stay put or how to find their way back.
  • The DoorBot is a zero-setup WiFi-enabled smart doorbell which sends video of your front door to your phone or tablet when someone rings the bell.

There were literally dozens more (especially in the personal fitness category). Some have been crowdfunded through Kickstarter or Christie Street – which counts as a microtrend of its own. All of them were designed for iOS, with some offering Android apps or promising them down the road. Apple has long had a lead in apps, but as these app-driven devices become more popular it could push more people to iOS over Android. It will almost certainly make it more difficult for Microsoft and RIM to establish Windows Phone and BlackBerry 10 as strong alternatives.

Other observations:

  • TV vendors are still looking for a way to get consumers to shop on something other than price. 4KTV is the new 3DTV – incredibly cool technology with no content (or clear consumer demand).
  • The connected car is a full-fledged category now.
  • Samsung is the industry’s rock star. People started lining up for Samsung’s 2 PM press conference at 7 AM, and even people with VIP passes ended up being turned away at the door for lack of space.
  • The Americans may have stayed home, but Chinese vendors were everywhere at CES. Huawei, ZTE, and TCL (Alcatel) all showed off new high end phones, Lenovo launched a clever tablet/notebook and an innovative – if silly – $1,700 27” Windows 8 coffee table/tablet. On the other end of the pricing and utility spectrum, we saw literally hundreds of cheap unbranded Android tablets from Chinese vendors on the show floor.
  • The OS vendors all skipped CES, but the silicon platform vendors were out in force. Qualcomm delivered an awkward and entertaining keynote, Intel and NVIDIA held press conferences, and Marvell had a huge booth. NVIDIA’s press conference ground to a halt a few times, but NVIDIA did a good job positioning the Tegra 4 as providing better pictures (not just faster performance), and its Project Shield is an ambitious new gaming hardware platform.
  • Dish gets no respect. Its press conference had real news and the most swag of any vendor at the show, but the room wasn’t full. The new Hopper integrates Sling technology for placeshifting, can transfer content to an iPad for offline viewing, and still records all of prime time TV for 8 days with automatic commercial skipping. As if that weren’t enough, during the show Dish also made moves towards launching a wireless network (or, failing that, at least make Sprint’s executives miserable).


If there was a winner and a loser at CES, Apple won without showing up thanks to companies large and small building apps, accessories, and app-driven devices for iOS. Microsoft lost because it didn’t show up. Microsoft needed to be at CES this year to show off Surface, pitch developers on Windows 8/RT/Phone, and do damage control on Windows 8/RT’s UI quirks and slow PC sales.

This article is adapted from a full CES Wrap-up report for Current Analysis clients which also contains analysis of specific device launches and recommendations.

Avi Greengart’s Last Minute Non-Obvious Holiday Gift Guide 2012

Every year, tech sites put together holiday gift guides recommending the best products on the market. That’s great, but do you really need another gift guide that reinforces what we already know at Tech.pinions, that it’s going to be a very Apple holiday season? Besides, you bought those gifts already. This gift guide is for procrastinators trying to find a tech gift for someone a bit harder to shop for.

To go with that new PC or expandable smartphone
USB memory cards are such commodities that PR agencies hand them out like candy at press conferences. But if you don’t attend press conferences for a living, you may actually need to buy one. Even if you do have plenty of them lying around, sometimes it’s nice to own something that reflects your personal style, and if your personal style includes Star Wars, Batman, or any number of other geek culture franchises, Mimoco’s mimomicro cutesy stylized USB sticks and microSD USB card adapters make wonderful stocking stuffers. A Darth Vader 8 GB and a Millenium Falcon microSD USB adapter are permanent residents in my travel bag.

Mimoco mimobot USB memory sticks $19.99 and up

Mimoco mimomicro microSD adapter $12.99

To go with that Android phone:
Another commodity that benefits from customization is your cellphone charger. Adru has been prominently featured in Skymall, and it’s more than just an adorable Android logo you can plug your phone into – its eyes light up to indicate that the outlet is live (an extremely useful feature in airports), and then change color when your phone is drawing current (again, good information to know). When it’s not charging, a stand gives Adru “legs,” and it becomes a tiny Android action figure, admittedly without much articulation (the arms swing out, and the antennae are a softer rubber so they won’t break off).

Andru charger $25

For the LEGO fan
I originally planned to recommend a book on how to build rubber band –powered LEGO assault weapons that fire LEGO ammunition, but given the recent news, it seems in bad taste. However, No Starch Press has a delightful book for more peaceful-minded LEGO fans as well. (It’s a book. Made of paper.) The LEGO Adventure Book takes the reader on a cartoon-style journey through the portfolios of many different non-professional LEGO builders. There are instructions for building 25 of the models on display, but this is really a book for inspiration and understanding the techniques that different builders use (no pieces are included). Highlights are Katie Walker’s use of single-peg round pieces to simulate swimming pool tiles, and mosaics that are mini artworks.

The LEGO Adventure Book, Megan Rothrock, No Starch Press $24.95

To go on the fridge:
The Boogie Board is a small, portable electronic whiteboard. Nobody actually needs one, but it is delightful to use, making it a good gift for a young child who likes to scribble without wasting paper, or as a message center for the family refrigerator. The newest version, the Jot 8.5 has more modern industrial design, a stylus that doubles as a kickstand, and internal magnets so it sticks to the fridge without any mounting hardware.

Boogie Board Jot 8.5 $39

For the cord cutter
The trend of consumers cancelling their cable and getting all their content from AppleTV or the Xbox is badly overblown – the stats I’ve seen suggest that if this is a trend at all, it’s a glacial trend. However, that doesn’t mean you shouldn’t investigate alternative ways of getting content. The cheapest way to watch high quality broadcast HDTV is to actually watch HDTV broadcasts, which are completely free and typically provide higher resolution than cable or satellite services you have to pay for. All you need is an HDTV with a built-in HDTV tuner (basically every HDTV sold since 2006) and an antenna. I have tested several antennas over the years, and Mohu’s Leaf Plus beats them all. I live at the bottom of a hill which makes reception difficult. With my previous “best” indoor antenna (a chunky amplified model from Newpoint), I got a handful of channels, and some of those had a lot of interference. The Mohu Leaf Plus doesn’t even look remotely like an antenna – it is based on military technology putting antennas on vehicle mudflaps – but it works. I get twice as many channels, and all the blocky ones are now crystal clear.

Mohu Leaf Plus HDTV antenna, $55

To go with that new desktop
If you bought a new PC desktop or all-in-one this holiday season, it probably came with Windows 8. Microsoft’s new OS has a user interface designed for tablets, and when you use it on a desktop with a mouse, it’s… wrong. Logitech has tried to solve this problem with two mice designed to replicate touchscreen gestures; I didn’t like them that much – there isn’t enough real estate on the top of a mouse. But the Logitech t650 touchpad is perfect, allowing you to recreate the touchscreen gestures Windows 8 uses for navigation. In fact, I can’t imagine using a Windows 8 desktop without it, and you may even want to get one for Windows 8 laptops with small touchpads.

Logitech Wireless Rechargeable Touchpad T650, $79.99

For that new (or old) iPad
If you have a full sized iPad and want to enter text, after a while, your fingers are going to start to hurt – typing on glass just isn’t all that comfortable. There are a lot of keyboard attachments for the iPad, and I have tried most of them. The best, bar none, is Logitech’s Ultrathin iPad Keyboard Cover. It provides a fairly spacious keyboard with an exceptionally clever design which effectively turns your iPad into the world’s thinnest, lightest laptop.

Logitech Ultrathin iPad Keyboard Cover, $99.99

For the reader who loves their first or second generation Kindle or Nook
In our converged world, dedicated devices can still make sense. eReaders with e-ink displays offer a distraction-free reading experience, allowing you to truly get lost in a book without email notifications or Angry Bird temptations. Amazon’s new Kindle Paperwhite offers the highest contrast e-ink display and its backlighting stays on to improve readability in all but direct sunlight (where backlighting isn’t needed). The Paperwhite is thin and light enough that it’s worth tossing in your bag even if you’re already toting around a tablet.

Honorable mention: Barnes & Noble Nook SimpleTouch with Glowlight ($119) is thicker than the Paperwhite, but slightly easier to hold. It has physical page turn buttons and there are no ads on the lock screen. The Paperwhite has a noticeably better display, but the SimpleTouch is good enough that Barnes & Noble account holders should stick with the Nook.

Amazon Kindle Paperwhite $119, without ads $139

For those about to make New Year’s resolutions
There are a lot of fitness gadgets out there, and several of them are good gifts – provided you get yourself one, too, and use the social connection to motivate you both. (Otherwise, giving someone a fitness gadget might be interpreted as, “I think you’re fat. Here’s a gadget.”) I love the simplicity of the fitbit – in fact, when I finally lost my review unit for good, I bought another one with cash. However, the fact is that I lost this little clip-on four times, and the original model is mostly a glorified pedometer (fitbit did not follow up with its newer versions, and I have not tested them). The Nike+ Fuelband is also a glorified pedometer, but it is worn securely on your wrist, and ties into a full ecosystem of other Nike+ products. That means that if you just want to motivate yourself to take the stairs instead of the elevator, the Fuelband is perfect, but you can also add Fuelband data to more intense Nike+ exercise using its shoes, GPS running watch, or the personal trainer-style workouts in Microsoft’s Nike+ Kinect Training for the Xbox 360.

Nike+ Fuelband $149

For the home office (or small business)

According to several alarmist articles I’ve read this year, your chair is trying to kill you, and the only thing that will save you is a standing desk. Well, OK, but aren’t there dangers to standing too much, too? A little Googling proved, yup, that can be a problem too. Other than working in bed – an even bigger ergonomic no-no, according to Google – what can you do? How about a sitting and standing desk? Omnimount sent over their Work 15 desk arm, which looks like something out of a Terminator movie. You mount your monitor on the top of the arm, put your keyboard and mouse on the tray, and then raise or lower the contraption to full standing height, or all the way down to your desk. It’s a brilliant design – it moves easily, yet can stop in nearly any position and swings left and right, not just up and down. There are multiple ways to install it, making it appropriate for many different desk configurations, and I put it together in less than an hour. Since it doesn’t have to be stuck in a fixed position, you can ease yourself into working standing up, and you can take sitting breaks when your feet hurt. If your office arrangement permits, you could probably even use it as a treadmill desk (I didn’t try this). According to the standing desk faithful, once you use a standing desk you will have energy and better powers of concentration. In my experience, writing does sometimes feel more natural while standing, but it hardly cures ADD or got me into shape. But there is one other secret benefit to the Work 15: since it lifts your keyboard and monitor off the desk, you can swing it out of the way when you want additional desk space for paperwork. Or to stack gadgets to review. Whatever works for you.

Omnimount Work 15 standing arm $379

For the music lover
Every year Sonos comes out with a new addition to its product line, and every year I put the system in my holiday gift guide. I don’t do this out of habit, I simply find myself using and appreciating the system more each year. Setup is idiot-proof, operation is simple (even for complicated multi-room setups), and sound quality is good. This year, Sonos introduced the SUB, which, as you might infer from its name, is a subwoofer. The SUB is a glossy black squared-off wheel that can be placed out of the way, but is pretty enough to be on display. It adds significant bass to music; when dialed in correctly, the bass is clear without being boomy. There are three problems with the SUB: 1) you may want to independently adjust the volume depending on the tracks you’re listening to: I was somewhat shocked to discover that the SUB needed to be turned up from its calibrated volume for AC/DC’s Thunderstruck, and down for Carly Rae Jepson’s Call Me Maybe. Unfortunately, there are no volume controls on the physical unit, and virtual volume controls for the sub itself are buried in the setup menu. 2) the SUB is not strictly necessary; music on a pair of PLAY:3’s or a single PLAY:5 has adequate mid-bass. 3) At $699, the SUB is quite pricey. So, should you buy the SUB? Yes, if you have a flush gift budget and the giftee already has a fully built-out Sonos system. Otherwise, buy them more PLAY:3’s or PLAY:5’s, because the real beauty of a Sonos system is its multi-room capability.

Sonos SUB $699

Sonos PLAY:3 $299

Sonos PLAY:5 $399

No promotional consideration has been paid for inclusion on this list, however, the products were provided to Avi at no cost for evaluation. All opinions in this guide are his own. Avi tested many more products than appeared here; most just weren’t worthy of recommendation.