Author: Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

The Case for 7-inch Tablets

Last week the rumor mills and tech blogs were bustling last week about the possibility of a 7-inch iPad, potentially called the iPad Mini. Rather than focus this entire column on why it makes sense for Apple to make a smaller version of the iPad, I figured I would point out why I think there is a market for 7″ tablets and how such a product may fit in Apple’s and others portfolio.

The Evolution of Portable Entertainment

In my view the 7″ tablet represents the evolution of portable entertainment. In many of the same ways that the iPad itself represents the evolution of portable computing, so would a smaller iPad represent the evolution of portable entertainment. I spoke about this and was quoted on the subject last week with many press, and my overall point was that the right way to think about a smaller iPad is that it represents more the evolution of the iPod than the evolution of the iPad.

7″ tablets may very well be the ideal size for an ultra-portable entertainment focused tablet. The form factor itself makes it highly portable. It can fit in purses, coat pockets, and many other places easily. The screen size is more enjoyable for entertainment than the most pocketable computer (the smart phone) but still small enough to be more portable than a 9.7-10.1 inch tablet.

The larger tablets like the iPad are more mobile than notebooks but still capable of being used for productivity. In my view the iPad is a general purpose tablet where a 7″ tablet is more specialized and its value will be centered around entertainment.

For the iPad customer I don’t see the value of owning an iPad and an iPad mini. The iPad in my opinion is capable of fulfilling the task of personal computing for the vast majority of mass market, non power user consumers. In our talks with this specific group of consumers were are finding that their iPads are slowly replacing their traditional PCs and we expect this trend to continue.

However, there will still be plenty of consumers who still desire, want, need, a new notebook. This market may very well benefit from a more portable media companion like a 7″ tablet. The notebook plus a 7″ tablet combo will be an ideal solution for a certain segment of the market. And the sufficiency of the iPad as a portable media companion and personal computer will meet the needs of other segments of the market.

An iPad mini strengthens Apple’s ecosystem plain and simple.

For Google, and Amazon, a 7″ tablet is not an ecosystem strengthener it is an ecosystem extender. Amazon’s strategy is to drive commerce and they desire their screen to be consumers personal window to spend money in the Amazon commerce engine and consume Amazon services.

Google’s desire is to extend all of the Google services to a market broader than smart phones. The Nexus 7 is the first solid step in this direction and has all of Google’s services tightly integrated.

For all the above companies a pure media tablet play makes sense. All the above companies have more ways to make money on these devices than just the hardware. So where does that leave everyone else?

There was no MP3 Market

I recall the saying that there was not an MP3 market there was only an iPod market. The same case can be made for the iPad to date. The question in my mind is whether or not this 7-inch tablet market is sustainable for many or just a few. More specifically can anyone but Apple, Google, and Amazon make any money from this form factor?

I use the MP3 market illustration because I am willing to bet that the fundamentals of the 7″ tablet market will function very similar to the iPod market. Namely because the 7″ form factor represents the evolution of portable entertainment, which the iPod was an evolution of as well. These devices will also likely not see subsidization from a carrier any time soon or heavily discounted from a retailer. They are also highly dependent on a rich media ecosystem of services like music stores, video and TV show stores, digital books and magazines, etc. In many ways these devices represent to consumers a larger version of what they knew and loved about the iPod.

The devices being positioned primarily as entertainment devices, and their subsequent dependence of rich media services, only strengthens the case that this market favors the few over the many. I am in no way saying others can’t compete only that it will be very difficult and they may need to turn over new stones in order to find partners who own all or parts of a rich media ecosystems.

Where is Microsoft?

This discussion about the 7-inch tablet segment begs a fascinating question. Can Microsoft play in it? Microsoft has fundamentally built their next generation operating systems as the purest blend between a full desktop and full tablet software platform. This philosophy is not going to work on a segment that is focused purely on media. Metro may all by itself but not Windows 8. So is the answer Windows Phone? Is Windows Phone the solution Microsoft can offer any potential customers looking at the 7″ segment? Microsoft has Nook assets at their disposal but the Nook platform was built on Android. Do they need to revamp Windows Phone or create something new around Nook assets? Or does Microsoft let Android have the 7″ market as the platform of choice for any company not named Apple?

Microsoft is on the eve of simply trying to gain a foothold in tablet computing at large, while on that same eve a new category is dawning that I don’t believe the are even remotely prepared for. Microsoft’s reaction to the 7″ tablet market will be one of the more interesting story lines to watch.

All in all the tablet category is still the fastest growing segment in personal computing. Even though 7″ tablets will be focused on entertainment and media they will continue to ignite this new growth phase of personal computing. I think we can again confidently predict that tablets will be hot again this holiday.

Do Investors Truly Believe in Apple?

Image: Fool.com
I am not a financial analyst and I don’t do the kind of analysis solely to be used for making short or long term investment calls. I have provided analysis for some financial institutions as a part of their internal analysis but my role as an industry analyst is to study markets, trends, and the industry at large. So I plan on tackling this issue of Apple’s stock fluctuations, and most importantly Wall Streets somewhat hesitant stance toward Apple, from an industry analyst perspective not a financial analyst perspective–since I am not the latter.

Apple’s stock is where it is today because Apple has continued to post quarter after quarter revenue and profit growth. Apple has done this primarily on the back of key fundamentals like vertical integration, their ecosystem, attention to design and user experience, solutions based thinking, and a focus on satisfying customers rather than Wall St. just to name a few. Although Apple’s stock has been relatively consistent on its upward trend there are still interesting fluctuations despite their unchallenged dominance in many product segments over the past 10 years. I know many firms who are bullish on Apple. Yet there seem to always be folks who are hesitant to embrace Apple as a long term growth stock and the question is why?

Too Good to Be True

There is a theory I have heard a number of times that there is a belief that Apple’s growth trend is too good to be true. I suspect that there is some truth to this and that there are investment firms out there with this belief. I believe this is an incorrect perspective, but if the too good to true belief is out there we must be aware of it.

Financial investment firms are in the business of not just predicting what the long term stock potential is but also what other firms may do. If investors, regardless of their long term trust in Apple’s stock, know there are those who may sell shares if there is a hint of bad news, then they have to be ready for a potential sell off. Investors often have to bet with or against the market and the key is to know which and when.

So if the too good to be true theory is partially to blame then it has to be taken into consideration by a firm if they are to make an educated guess on when to bet with or against the market.

Even though the too good to be true theory is wrong in my view, there are bound to be some who cling to it regardless of the facts. However, I feel the root of some hesitancy about Apple’s long term stock is rooted in something deeper.

History is Not on Apple’s Side

I tend to believe that the main thinking affecting investors with a negative sentiment in Apple’s long term future is one of historical perspective. Apple with their closed and vertical model lost to the more open model of Microsoft long ago. So the conventional thinking would be that both Google or Microsoft with their more open platform approach will again rise to dominance if history does repeat itself. There are, however, several things I believe are wrong with the thinking that history will repeat itself.

To see the first error all we need to do is observe many recent events. If the conventional wisdom is that open always wins then those open platform players just committed suicide. Microsoft with Surface and to some degree Google with the Nexus program, but more specifically what they may do with Motorola, are both a step in the vertical direction. In fact if you read between the lines from statements from both Microsoft and Google around the importance of tightly integrated hardware with software, then you will observe that those statements are in fact a validation that Apple’s vertical model is not only the right way forward but the superior way forward.

The other flaw in focusing only on historical perspective is that it does not take into account that the market has changed drastically. Specifically, the market for personal computers has matured. To use historical perspective to compare an immature market with a mature market is nearly impossible. The buying psychology of customers in a mature market vs an immature market are fundamentally different.

In fact I would argue that for most of the time when Microsoft dominated the industry, the mass market consumers were not the main purchasers of computers but rather corporations and institutions were. Therefore in the 90s specifically, corporate IT were the customers where in todays markets end consumers are the customers and they buy fundamentally differently than IT historically has.

The market is also significantly larger than when Microsoft was dominant. Nearly every person on the planet will someday be a candidate for a personal computer of some kind. Which means that there is still a tremendous amount of growth ahead of us and my conviction is that Apple is in this for the long haul.

For these reasons, it is impossible to use historical perspective or the argument that history is not on Apple’s side as a reason to be bearish.

Where Do We Go From Here?

The biggest question in my mind, which needs further analysis and thought is whether or not there can be more than one leader in the industry at a time. It is clear that right now Apple is setting the trends and to a degree dictating where we are headed with personal computing.

When a market is maturing or even in the process of becoming post mature there tends to be a leader responsible for standardizing a solution. But in mature markets of other industries like packaged goods, consumer electronics, automobiles, etc., we don’t typically identify a clear leader, rather each company charts out a course and stays with it.

Of course the market for personal computers may be very difficult to compare with other mature markets but if we were to find one that is closest I would say it is automobiles. I don’t have an answer, or a fully formed opinion as to whether the personal computing industry can have multiple leaders but I am sure that topic will make for good discussion.

If we can make the case that there can only be one, or at the least very few, leading a segment then I believe we can confidently make a strong case that two decades of leadership–or more– is not out of Apple’s grasp. This and the fact that there is so much headroom for growth in personal computers globally.

When you add market growth potential, with Apple’s fundamentals, the vertical trend, and their constant success in customer satisfaction, it is my opinion that it is hard to bet against them.

Android’s 7-Inch Tablet Future

It wasn’t a secret that Google was going to announce a 7-inch Nexus tablet made by Asus and running Nvidia’s Tegra 3 chipset. And announce it Google did yesterday to much applause and fan fare. As we and a great many anticipated the tablet is designed as pure media tablet rather than a general purpose tablet like the iPad. As we watched the demo it became clear the Nexus 7 is targeted right at the Kindle Fire and nothing else.

I have been thinking a lot about what Android’s future in tablets may hold and I believe we now have the answer. Android’s sweet spot for tablets may be 7-inch pure media and entertainment slates. These devices will be built and optimized specifically with entertainment not productivity in mind. They will also be very low cost and derive a significant amount of value from cloud services. This also fits right in line with Google branding their store “Play.”

This makes sense if you think about the fact that the most successful Android tablet to date, the Kindle Fire, is a 7-inch pure media tablet. With the iPad, and now on the eve of Windows 8 tablets all targeting the 9.7 to 10.1 tablet screen sizes with more general purpose tablet strategies, I anticipate the larger screen Android tablets to struggle.

Android has struggled as a tablet solution in the general purpose segment due to the immature nature of Google’s tablet ecosystem. Apple remains dominant in this area and it seems like many firms strategies are to avoid competing with Apple entirely. This is clearly the direction Google is taking with the Nexus 7.

With that context I want to point out two areas important for this segment. One that favors Amazon and one that favors the Nexus 7.

Cloud Services and Consumer Trust
The Kindle Fire commerce ecosystem both in terms of digital media and consumers trust in Amazon as a commerce vendor are key areas where Amazon has an advantage of the Google right now. Amazon has over 100 million credit cards of consumers on file who all trust Amazon as a vendor. I don’t believe Google has released how many accounts they hold but I guarantee you it isn’t nearly as many as Amazon, or Apple for that matter.

Amazon has a more mature ecosystem when it comes to digital media and consumer trust for commerce. This is an area Google is attempting to strengthen with the Nexus 7. During the announcement of the Nexus 7 the statement kept being made that the device was built for the Google Play store. Google is clearly hoping that this device will generate more trust for their commerce platform and strengthen their commerce ecosystem.

Retail
This is an area where Google 7″ tablets may have an advantage over the Kindle Fire. Google has not yet stated when or if the Nexus 7 will ever appear in retail but you know other OEM will come out with 7″ media tablets who will get them in retail.

Retailers have been understandably conscience of Amazon’s commerce strategy with the Fire being potentially disruptive to their own brick and mortar store strategy. If that trend continues you can imagine more retailers not carrying the Kindle Fire and filling that hole with other OEMs Android 7″ media tablets.

To the extent that retail will be important for this segment the advantage goes to Google in this area.

I am not sure the extent the tablet market is ready to segment into specialty tablets but if they keep their prices low and overall time investment low then I think they have a chance to become companion media devices.

Of course if Apple jumps into this segment with a 7″ tablet I will have to re-consider some positions I am taking currently. However, if Apple does this it will only validate the 7″ media tablet segment at which point I would expect OEM investments in the category to ramp extremely quickly.

Surface vs. UltraBooks

Last week I pointed out the competitive dilemma for OEMs when it comes to Surface. A key point in my mind is how tablets are becoming the next generation computers for the mass market. What I pointed out in my column about notebooks becoming history is that the notebook will remain relevant but it will do so for only a segment of the market rather than the market as a whole, which has historically been the case.

When we started doing consumer research with the late adopters (anyone not an early adopter) we started realizing that for a large majority of consumers a notebook was overkill with respect to what they did with the product on a daily basis. We discovered that many consumers purchased notebooks due to their convenience around portability more than anything else. It is this fundamental point which leads me to be convinced of the tablet form factor. This is also why the tablet + desktop solution becomes even more interesting.

Further Reading: Notebooks are the Past, Tablets are the Future

With that context in mind, I am beginning to wonder if Microsoft launching their own line of tablets hurts the OEMs in a much more important area than just competing with them –namely with their notebook products. If this industry is headed in the direction I think then more interest may be given to Surface like products, by the masses, than notebooks in 2013 particularly. I am wondering if by launching Surface Microsoft has not just potentially hurt interest in their partners notebooks over the short term.

If what we write here on our site as well as feedback I have received from many media outlets is an indication of market interest, then what I am proposing would be on track. Our content on tablets and recently Surface far exceeds the amount of reads than we write about notebooks and UltraBooks in particular. I have heard similar things from other media that tablet content does better than notebook content in terms of interest.

Intel is trying to inject life into the notebook category with their UltraBook campaign and Microsoft has just injected life into tablets built for Windows 8. Surface’s form factor is different enough from what most consumers are used to with a notebook that I believe there will be serious consideration for it by anyone who is in the market for Windows notebook. Time will tell how many will buy surface but I believe it matches up with enough trends we are seeing to at least generate interest.

However, if there is enough interest, Surface may very well impact notebook sales for Microsoft partners which will hurt OEMs more in the short term than Microsoft competing with them in a segment. In this case Surface is more disruptive to OEMs notebook strategy than their tablet strategy.

Of course another scenario could be that Surface plays the spoiler for both Win 8 tablets and Windows notebook. It may be that the wide array of differences in the Windows 8 ecosystem may be confusing for customers who then turn and consider the Apple ecosystem. In fact 2013 will be a very interesting year because the feedback we are getting from both tablet and notebook intenders will heavily evaluate both ecosystems before making a decision. Consumers will choose with their wallet and perhaps more importantly with their loyalty and it will make 2013 and fascinating year.

Why I Love Twitter

I don’t expect everyone to love twitter. In fact I anticipate that many have mixed feelings about the service. Twitter is one of those things that I believe works great for some people but not everyone. And in a world of consumer choice that is perfectly fine. I would not expect a piece of technology, service, product, etc., to become universal.

I, however, particularly love the service. It works for me within the context of my career as well as how I prefer to consume information. I don’t think my appreciation of the service hit me until it went down for nearly two hours this past week. Twitter has become my source for real time information about a range of different things. I follow sports writers of my favorite teams for real time updates about games. I follow certain news outlets for updates on the news in real time. I follow a range of technology industry colleagues and journalists for real time updates on the technology landscape.

This point of real time information became clear when Twitter went down. Since Twitter is where I get all my real time information, my first instinct when I couldn’t access Twitter was to try and go to my Twitter feed to see if it was down. I eventually had to actually go visit a technology blog in order to confirm if Twitter was down. Twitter is my source for information to as close to real time as I can imagine.

Before I was a heavy Twitter user, which only happened in the last year, I used to frequent the home pages of all the big tech blogs several times a day at a minimum. This process for me was how I tried to stay up to date with the most recent pulse of the tech industry and other related news. But most technology blogs and news websites contain way more information than I am interested in and I found that I wasted quite a bit of time trying to find information that was useful to me. This is where Twitter comes in.

Twitter has become for me my curated information filter between me and the world wide web. I have carefully selected who I follow and built specific lists in order to make sure I am only presented with information from sources I trust or find the most beneficial. Twitter is acting as my aggregator for the information I have chosen is the most important for me. When I end up going to a website it is always the individual article promoted by a source I trust from Twitter. I rarely go to news sites home pages any more and I am quite pleased by this. In fact I have learned most of the major breaking news from the past six month’s via Twitter.

Of course I still use the web for a range of different things but when it comes to news, especially related to tech, Twitter is the door between me and their websites. I am sure this is true for a wide variety of folks and perhaps even readers of this article. Maybe you were referred to from a tweet or a retweet of a trusted source. Perhaps you came from another source of curated content. Either way it is more likely you got to our site and this article from another means than the homepage.

When Twitter is used this way it can be quite a useful tool for saving time. I don’t find myself needing to frequent blogs or news sites home pages in order to get caught up with what is happening in my industry. As long as I have checked Twitter in the past few hours I am completely caught up. Checking Twitter takes a matter of minutes to catch up where going to four or more blogs or news sites could take upwards of ten minutes to accomplish the same thing.

I am not sure what this means long term for the news media websites if Twitter is one of many useful aggregators to come. On this point we came across an internal research report that had caught wind of groups of Twitter users only using the service to consume useful media not to actually tweet anything. I don’t have enough data to proclaim that a trend yet but in light of my point it is an interesting development.

All of this brings up an interesting question to Twitter’s long term business model. After the outage I become convinced that I would pay a fee to use Twitter due to the value it brings to me in my daily work flow. Maybe I would pay just to keep it ad free but if it was a matter of not having it or paying to have it, I would choose to pay for it every time.

Maybe Twitter will add more value to their service for people like me and charge for premium features. Maybe they won’t and will keep the whole service free but allow ads, however, I hope this is not the route they choose.

Whatever the case of a business model, Twitter has become embedded into my work flow. I find Twitter as a valuable resource for curated information. Twitter may not be for everyone but it definitely is for me.

Usefulness Is the Greatest Feature of All

“The simplest way to achieve simplicity is through thoughtful reduction.”

“Simplicity is about subtracting the obvious and adding the meaningful.”

– John Maeda from his book The Laws of Simplicity: Design, Technology, Business, Life

Years back Palm had a slogan I liked quite a bit. It was a slogan but also a vision statement for the kinds of products they wanted to make. The slogan was simple, elegant, and truly useful. A few months back I wrote a column on how Apple turns technology into art. I dove into some of the psychology behind creating objects of desire and how things that are beautiful are more often than not useful.

On Wednesday our latest team member John Kirk, wrote a terrific column contrasting the philosophically different approaches that both Apple and Microsoft are taking with tablets. The key message from John’s column was that simplicity is king. I tend to agree but I would add that what we perceive as simple is actually being perceived as useful.

I remember the first time I got my wife to switch to the iPhone. She is the first to tell you that she is not tech savvy, in fact she hates most technology especially printers. She has never been much interested in computers mostly because she wasn’t comfortable on them–yes even Macs. But the first time she used the iPhone, and started really using it, I remember vividly that she never said it was simple, rather she kept proclaiming how useful it was.

Technology at its best is packaged up and designed to be useful to its owner. What is useful may very well differ between segments. For example those who like to tinker and control more of the technology the own may define usefulness differently than someone who is not a power user and finds technology generally scary or unapproachable. For some more is more and for others less is more. This is fine and to each his own, however, I would contend that there are more humans out there who prefer simplicity over complexity.

Creating something complex is easier than creating something simple. Simple solutions require sophisticated technologies. However, to create something simple I don’t believe you start with the goal of simplicity. To create something simple you need to focus on creating something useful. Simplicity leads to usefulness, and as I stated in the beginning, usefulness is the greatest feature of all.

Consumers aren’t turned on to technology products because they are simple. They are more interested in them being useful.

Microsoft Surface and the OEM Dilemma

On Tuesday Patrick pointed out that the dynamic between OEMs and Microsoft may be forever changed. The primary reason for this being that Microsoft has signaled intent to compete directly with their partners in the tablet PC arena. What I want to examine in this article are the major points of concern from an OEM (Microsoft partner and original equipment manufacturer) perspective.

Trust
The Microsoft partner dynamic is one that has historically been based on trust. The company providing the main software layer, in this case Microsoft with Windows, needs to be closely working with the company making the hardware which will run said software, in order to assure some level of quality assurance and user experience. Of course this has not always been done well but it is none the less the goal. Because of this reality both Microsoft and hardware partners need to be in communication very early in the hardware process.

In many cases OEMs share specific details of their hardware roadmap with Microsoft. If Microsoft intends to be a competitor then any hardware OEM will have to think twice about how much roadmap and hardware detail around tablets they share with Microsoft. In this scenario there is a significant risk that the software and hardware are not tightly integrated (and it should now be obvious how important that is) thus resulting in poor user experience and a poor reflection in the market for all companies involved.

Tablets are the Future
Many of the authors in our forum here at Tech.pinions are proponents of the critical role that tablets play in the future of computing. This is an incredibly important category and arguably more important to the future of computing than the notebook category. With that in mind, and depending on your opinion on the matter, Microsoft is getting into the game in one of the most important segments going forward.

I can entirely see Microsoft’s reasoning for this move and honestly, based on my convictions on where this industry is going, if I worked at Microsoft I would heavily advocate this direction . They simply can not afford to sit back and watch the iPad completely destroy any competing tablet. Microsoft is a platform company and is responsible for an ecosystem. Every customer that enters Apple’s ecosystem, whether that entry point is an iPad, iPhone, Mac, etc., is potentially a customer who will not be leaving Apple’s ecosystem any time soon–if ever.

In reality, Microsoft partners are likely to be more focused on notebooks in the short term than tablets. Which means there is a possibility that Windows 8 would have lost more time in the tablet space. So it makes sense that Microsoft felt the need to make sure a compelling product was available at launch. However, the tablet segment is one that OEM’s need to focus more on, perhaps more than notebooks, and can not afford to not have a compelling play themselves. My concern if I am an OEM is that Microsoft intends to compete with me in one of the most important categories going forward.

The challenge will whether or not Microsoft can walk a line that few have tried. In this case be vertical in a segment but also be open in the same segment and others.

Brand
Lastly, and this point could prove the most costly for the Windows ecosystem. Microsoft will have Surface, other brands will have what? Slates? Tablets? or perhaps some other new name they come up. So if I am a customer shopping for a Windows 8 based tablet, I need to learn, study, then decide between Surface, Slates, Tablets, or any other number of names and tablet brands. All with different looks, feels, ports, CPUs, versions of an OS, keyboard accessories, general accessories, capabilities, etc.

Contrast that with Apple. If I want a tablet in Apple’s ecosystem, right now my options are the iPad (2 or current). Yes with minor different configurations but my point is the brand. The iPad is Apple’s tablet, now choose which iPad you want. The environment around Windows 8 tablets is going to be much more confusing.

The tablet sector is one that is maturing. Consumers, who have not yet owned a tablet, are interested in what a tablet means to them and how it fits in their life. I would argue that right now consumers don’t know what they want in a tablet. Therefore if they are presented with too many choices which confuse and frustrate them how can they feel comfortable making an informed opinion. Take USB for example. A consumer looks at this option and says I have USB in my notebook. Why do I need it in my tablet. Maybe they do and maybe they don’t but having not owned a tablet yet how do they know? This is one small observation of the overall consumer adoption cycle and how it works. This is also generally why a market like this favors the market leader and in this case the iPad. Once a market segments the door opens for specific feature differentiation. The market for tablets has not yet segmented.

I firmly believe that any platform or ecosystem that offers confusing choice to consumers around tablets is going to have an uphill battle.

Of course one possible way Microsoft can maneuver in light of everything I have pointed out is to let Surface be a general brand and product strategy that others OEMs can participate in. I suggested this on Tuesday when I stated that Microsoft should let other OEMs participate in the Surface program. Time will tell what path they take.

Regardless one last point on hardware needs to made with respect to open platforms like Windows, Android, etc. Hardware only exists as a gateway to a software and service ecosystem. Thus a platform like Windows creates platform loyalty but it does not create hardware loyalty. Therefore, those who compete only in hardware will have to do so with every upgrade cycle. This means for Microsoft its a win-win for their platform either with their hardware or others. If this plays out how I think it might, I can’t say it’s a win-win for OEMs.

Microsoft Should License Surface Technology and Brand to Partners

Microsoft’s Surface PCs are yet to hit the market so it may sound odd for me to propose what I am about to propose. However, the potential impact of a Microsoft branded tablet for their partners is significant if Microsoft is actually choosing to compete with them. I tend to believe Microsoft may be challenging them and in the process creating some useful and innovative solutions designed to help their partners not compete with them.

Surface PC is being positioned as a new family of computers. There is some truth to that and there isn’t at the same time. This is a class of computer some call convertibles but we refer to them as Hybrids. We have written many articles about this form factor and why we think it is interesting. The key takeaway is that to truly engage in productivity tasks a keyboard is a necessary accessory and we already see demand in professionals and many consumers to use a keyboard with their iPad.

The demand is there and Microsoft believes Windows 8 is uniquely positioned to meet the needs of the customer who wants true tablet and true notebook functionality in the same device–and they may be right. I say that because if there is a sweet spot in the market for a product like Surface, Microsoft is the only one merging touch and mouse / keyboard computing to a single OS. Microsoft may not have been the first to create a product like this but they may be the first ones who make it work.

With all of this context I believe the smartest thing Microsoft can do is license the Surface Brand and many of their hardware innovations like the Touch Cover, Type Cover, Vapor MG, Digital Ink, etc., to any hardware partners who wants to make a Windows 8 Tablet. 


In this scenario Surface could be to Microsoft what UltraBooks are to Intel. Microsoft can influence the specifics of the hardware and provide them with the tools to create Surface PCs. Microsoft could still sell keyboard accessories or perhaps others they come up as well, which is a model they are already successful with.

This path would also allow Microsoft to build the Surface brand and keep all Windows 8 tablets under the same brand. This is a good positioning strategy so consumers are not confused when they see an OEM tablet which is not a surface computer but is similar. Given the youthfulness of the tablet category, and the challenge of a horizontal platform while a market is maturing, the less confusion in the market the better. Given what I have seen so far the best path forward is for every Windows 8 tablet to be a Surface PC whether it has the Microsoft brand on it or not. 

Lastly, this move would not put Microsoft in a position to compete with their partners but rather spur interest in a category that is beneficial to the Windows ecosystem. They can then let their hardware partners take it from there and come up with differentiators that fit the surface computing paradigm.

This direction would require Microsoft to work much closer with their hardware partners going forward. Something I believe Microsoft should have been doing all along and yet they have not. This has led to quite a bit of frustration with some partners to which I have first hand knowledge of.

From what I have seen so far there are enough interesting features to generate interest in Surface PCs. The bottom line is many professionals and some consumers are looking to unite a keyboard with a tablet. For those a Surface PC may be a viable option. However, we believe that even though the hardware is compelling, it will not change the fact that for Microsoft to be successful customers have to want more than the hardware, they have to want Windows 8.

The challenge staring Microsoft in the face is convincing customers Windows 8 is a software platform worth their time, energy, and overall commitment.

The bottom line is I am excited by what I saw. More importantly I am impressed that Microsoft did something bold and took a risk. Whether it works or not, this is the kind of thing they needed to do to stay relevant in the new era of personal computing.

The One Thing I Want to See from Microsoft

I have been following the news coming out of Microsoft’s TechEd conference closely. I was scheduled to attend the event but family circumstances altered my plan. There are a host of things that are of interest to me regarding Windows 8. Not everything I am interested in will be addressed until much closer to launch but it has been interesting to see the major messages around their next major software release at their TechEd conference.

The more I study the trends in the industry the more I am convinced that Microsoft’s future depends on them becoming a hardware agnostic software company. Throughout most of Microsoft’s history, all their major innovations and value have been strictly limited to companies who license their software platform Windows. This worked in a Windows dominated world but with the role of smartphones, tablets, and even shifting tides in notebooks / desktops, it is clearly no longer a Windows dominated world. I don’t personally believe we will see a Windows dominated world again the way we did as the computing industry was maturing.

Related: Why History Won’t Repeat Itself

If this is true then the market will support a multitude of software platforms. Which means for a company like Microsoft the key strategy should be to innovate through software for all hardware platforms.

The first obvious move could mean to bring Office to platforms like iOS, Android, and perhaps RIM IF they make a comeback. Reports have come out about Office for iPad and I hope they are true. Microsoft is committed to Office and it would be wise for them to re-envision office for every software platform. When Microsoft began taking the Mac and OS X seriously they brought office to the Mac in a relevant way and did not just port the Windows version. I believe they should do the same thing for iOS, Android, and perhaps Blackberry 10 if it gains traction.

But the thing I would really like to see from Microsoft is something new. Something not Windows and something not Office for personal computing. Microsoft’s innovations have revolved around Windows and Office but I wonder what is beyond. I’d like to see new software, for the new personal computing era, created by Microsoft.

Take for example Apple’s iLife suite of software. It blows my mind that Microsoft has not felt compelled to solve the problem of ease of use for digital media creation and management. I know Microsoft has relied on partners in this area like Adobe, ArcSoft, Pinnacle, etc., but given how key this experience is to consumers I would have thought it was important enough for Microsoft to control the way Apple does.

Even if the area of creativity is not of huge interest to Microsoft I would like to see them create new software or apps that is unique and fresh for their ecosystem and beyond. Windows and Office have been pillars for Microsoft but I am not convinced they are the only legs they have to stand on going forward. I appreciate their efforts to re-think user interfaces for the next era but I still want to see more. I also wonder if just re-imaging a user interface is enough in todays world.

We are entering a new era of computing where we will face new problems which will present new opportunities to solve through software. Which brings me to the one thing I am desperately interested to see from Microsoft. Vision.

Why We Started Tech.pinions

June 13, 2012 marks the one-year anniversary of our site, Tech.pinions. In light of its anniversary, I thought I would share why we felt compelled to attempt something different within the public tech media forum, namely to start a website dedicated primarily to opinion editorial and long form columns.

One of the primary functions of my job as an industry analyst is to study the industry at large and attempt to make insightful observations about all of its happenings. Besides meeting with as many technology companies as my time allows, I find reading quite a bit of tech journalism to be helpful. The problem I found was that much online technology journalism is focused more on information than insight. Tech journalism at its best tells stories and covers informative facts and is genuinely more informative than insightful. There is nothing wrong with this model and I find it particularly helpful in my line of work.

However, what I desire to read is a wide range of informed and insightful opinions on key industry topics. What I have found in my 12 years as an analyst is that insightful perspectives in the form of opinion columns were much harder to find than informative content. I believe both have a role in shaping this industry’s future, and our goal with Tech.pinions is to provide a place where interested readers can find a wide range of opinions, that we hope share key insights and perspectives, on a wide range of subjects related to the technology industry.

Our goal is to accomplish this vision in a number of ways. The first is to be highly selective in the opinions we allow to be published. We seek out a wide range of opinions from individuals who have a history of credibility and a reputation in this industry. We seek out authors who are professional industry observers, experts in their field, company executives, and many other kinds of insightful individuals. The casual reader may not know who the author is, but oftentimes industry insiders will know the author. Because of this we found it important to include the bio of the author on every post so readers can easily see who the person is and what their background is. I personally find this very important when reading content on the Internet in order to know if the author is credible and should be trusted for their opinions, insights, and perspectives.

One other point on this first goal should be made clear. Opinions are not facts. The opinions we publish are based on expert experiences, insights, and data, but the point remains that opinions are just that–people’s opinions. Because of that we fully expect healthy and respectful disagreement from time to time. We only ask that the dialogue be respectful because in the end, everyone is entitled to their own opinion and most importantly, the beautiful thing about opinions is that they open the door to disagreement. We hold our writers to a high bar with their content and we intend to hold our commenters to a high bar as well. So when we disagree, let’s agree to disagree.

Secondly, our goal is insight and perspective, not breaking or reporting news. You will not come to Tech.pinions to find breaking or timely reporting of news. Rather you can come to Tech.pinions to find insightful perspective from trusted industry sources about the news or tech industry landscape. We may not cover every bit of news or industry angle, but what we do cover we hope to provide fresh and unique insights about.

Third, our content will come largely in the form of columns. I personally love reading longer form content from trusted industry sources. It is simply much harder to find a collection of this content since many outlets favor news over editorial. We strive to do the reverse and make editorials and columns our priority rather than trying to break news. Though we do from time to time comment on what others have written, you will find no regurgitating of other blogs’ content; rather all our content is 100% original.

Our mission will remain to provide original insights and fresh perspectives on all things related to tech. And we hope that more than anything, Tech.pinions is a contribution to the technology industry at large where intelligent conversations can live.

The Apple Promise To Their Customers

I don’t normally put out an article about another article I have written but for this particular one I wanted to share it. In my weekly column for the tech section of TIME.com I wrote about what I am calling The Apple Promise to Their Customers. The line of thinking which I think is interesting is how Apple is now on an annual cadence for software releases on all their hardware. Each year Apple customers will get new features and new functionality. This is a powerful value proposition.

Here is the article give it a read and I would love to hear any thoughts.

Why Only Apple Can Promise A Better Experience To Customers Every Year

What I want to acknowledge is that some new features Apple brings out exist on other devices. Many can look at one single feature, like Maps for example, and point out that it is not new. I have heard this for years from heavy supporters of other platforms when Apple fans sing the praises of new features that have existed elsewhere for years.

This thinking misses the point because the fact that one single feature exists on another device is irrelevant to the customer who does not have that device. For an iPhone customer the fact that Android has had turn-by-turn navigation for years is an interesting but useless fact. The customer who bought an iPhone most likely knew those features existed on other devices but still choose the iPhone for a host of other reasons. The features and functions that led a consumer to choose an iPhone over other devices were probably less about one or two features but about the whole experience and package. This is why it is significant that Apple every year brings new features and even existing features to their customer base. A feature like turn-by-turn navigation may not have been important enough for a feature for a consumer to not buy an iPhone but now that it is there it sure is nice to have.

It is important to get beyond a feature by feature mindset. It is the combination of many features that make up the total experience with a device. Just because one device may have a feature the iPhone doesn’t, does not mean that device can stack up to the total experience of the iPhone. And some may argue the reverse and that is fine because my point is that it is less about a singular feature and more about many little features working together for the whole experience. If we want to debate devices lets do it on the grounds of the experience not the features.

Second, and I didn’t point this out in my TIME column, let’s not get stuck on mobile with this annual cadence. Apple is now on a yearly cadence with OSX to add new features and functionality to Mac hardware. This is not something we can say of other companies (and I am including service packs in this statement.) Consumers of Mac hardware (and there are a lot and growing fast) can be assured their hardware will get new features and functionality every single year. That is tough to find outside of the Apple ecosystem.

Sorry for writing an article about another article but I wanted to add some additional context.

Here is the link again to my TIME column.

Why Only Apple Can Promise A Better Experience To Customers Every Year

The Most Amazing Notebook Yet

It is possible that for many tech industry enthusiasts and followers that by my title alone you know what product I am talking about. In case you don’t know I am talking about Apple’s newest hardware innovation released today at their annual WWDC. This product is the MacBook Pro with Retina Display.

Apple pushed the envelope in engineering design for size and weight for a 15′ notebook. The new design alone would have been enough to impress but Apple didn’t stop there and added what is the best display on a notebook I have ever seen.

When I first saw the MacBook Pro with Retina Display, I had a similar experience to when I saw the Retina Display on the new iPad. I simply couldn’t stop looking at it. With the Retina Display on iPad, Apple set a new bar with the visual experience on a tablet. They have now done it again and set a new bar for a display on a notebook.

It is significant that this display innovation on a notebook comes to the MacBook pro line. Creative professionals are among the group that Apple has always had loyalty with. And it is with this group who tends to value performance more than mobility. The customer for the MacBook Pro wants performance in a portable package but doesn’t desire the tradeoffs in performance that need to be made for the ultra-portability offered in the MacBook Air.

Apple has delivered to this audience not only an extremely thin and light machine with all the performance for a creative professional but they added to it a display they will truly appreciate. Creative professionals look at things like graphics, animation, video, pictures, etc., all day and desire extremely high resolution monitors in order to do their work more efficiently. Many in this segment use a notebook or a desktop paired with an external monitor that is capable of higher resolution than can be offered on a notebook. With the MacBook Pro with Retina Display, creative professionals can now take that high resolution display that they need for their work with them.

I am confident that this new MacBook Pro with Retina Display will draw attention and turn heads. The whole notebook is an impressive piece of work. I am also confident that those in the market for a performance machine will seriously consider this new MacBook Pro. There is however, something perhaps even more interesting that may arise.

With the arrival of the Retina Display on iPhone and iPad, we saw a dearth of new software get created that took example of this new higher resolution display. I assume the same will happen now with the emergence of the MacBook Pro with Retina Display.

It is no coincidence that Apple released this new product at their annual developer conference. It is the third party developer community who contribute such value to the Apple ecosystem. I can only imagine the next generation of software experiences that will be created with what is clearly becoming Apple’s high resolution revolution.

My guess is this is also just the beginning. I think anyone who believes that Apple is not innovating in Mac hardware would be incorrect. Like the first generation MacBook Air, I believe Apple will bring these innovations downstream again to more notebooks over time. Again keep pressure on the competition and continuing to make some of the best engineered notebooks on the market.

The Apple Ecosystem Just Got Stronger

Apple today at their World Wide Developers Conference released a number of things that have made their ecosystem even stronger. I am of the opinion that one of the best ways to analyze computing platforms is to look at them as ecosystems. When consumers purchase a personal computer like a desktop, notebook, tablet or smartphone, whether they know it or not they are investing into an ecosystem.

Related Column: It’s All About Ecosystems

Not too long ago computing platforms were islands unto themselves. Each product stood on its own and wasn’t connected to other devices in a meaningful way. But now that consumers are purchasing more and more computing products they began to demand that their devices begin to work seamlessly together for a more fulfilling experience. This demand has led to the birth of more holistic computing ecosystems. And interestingly software companies who offer platform software for desktops / notebooks, tablets, and smartphones are the companies building the most robust ecosystems on the market and right now only Apple and Microsoft fit that bill. Today Apple with the release of new and updated Mac hardware and software and the release of their newest mobile operating system iOS 6 just strengthened their ecosystem all together.

It all revolves around iCloud

Tim Cook said something that made perfect sense to an Apple observer like me. He said that iCloud isn’t just a product, it’s a strategy for the next decade. With that fundamental point in mind it becomes easy to see why Apple is integrating so iCloud into the core of their OSX and iOS software. iCloud is the glue that holds all of Apple’s hardware and software together. Take for example some simple features they have added with the newest Safari.

It may seem small but this little thing is just the tip of the iceberg when it comes to the value of Apple’s ecosystem. Imagine you use a notebook, tablet, and smartphone regularly. In the usage of all three of those products it would seem logical that you would browse the web frequently on each of them. Now what if you where on the couch looking for a recipe and you wanted to view that very same recipe on your tablet or smartphone. Most people would either have to re-search for that recipe on the other device or you could email yourself the link. With the latest version of Safari for OSX Mountain Lion every single web page you have open as a tab is available to you on any of your OSX or iOS devices. So if I want to look at a web page I have open on my Mac from my iPad, I simply click the new iCloud tabs button on the top of Safari and all the same tabs open on my Mac are available for me on my iPad or iPhone.

This seems like something small but it is extremely useful and demonstrates the value of iCloud integration across hardware and software to create a consistent and useful experience. This is just one of many new features and advancements Apple is making through software to better delight their customers by solving current and future problems.

The Vertical Advantage

The tight integration of software innovations with specific hardware innovations all around a service like iCloud is easier when you control all the moving parts. I have emphasized this time and time again but it is this fundamental point that gives Apple such an advantage. The Apple ecosystem has no external variables. Apple doesn’t need the support of hardware or software partners in order to advance their ecosystem. This point can not be stressed enough.

It is because of this vertical advantage that Apple can annually release a unified launch of new hardware and new software all designed to work better together. And it is this better together that creates the fundamentals of the Apple ecosystem, which just got stronger.

Making The Devices We Know and Love Better

The last key point about the strength of the Apple ecosystem is that with this latest software for Mac, iPhone, and iPad, Apple has made the experience even better. I would contend that many of the devices we know and love have become even more useful. Now many may argue that some of the new features released are available on other devices or platforms. That is all fine and good for customers of other platforms but the bottom line is I and hundreds of millions of other people have invested in Apple’s ecosystem when it comes to my personal computing needs. So for me the fact that Apple has developed new features to make my experience with their hardware even better is most welcomed.

At the end of the day it is those features that add to our experience, make these products easier to use, and more importantly make using these products in our daily lives that much better. It is the small things like being able to ignore an incoming call with a text message or reminder to call the person back is extremely useful. The improved maps and elegant navigation is also a welcomed additional improvement. Perhaps the biggest improvement of all is the major upgrade to Siri.

All of these things and more are focused on one singular thing, making the devices we know and love better and more useful. Apple is continuing to make their hardware more functional every year. I am not sure it is possible to say that any other company is delivering their customer base new and improved features and functionality to all their hardware on an annual basis.

This is just one more thing adding to the already strong Apple ecosystem and it will be very interesting to see how the competition responds.

Why We Need More Specialty Tech Retail

Big box tech retail had its time but for certain types of technology I am convinced there is a better way to sell. I am convinced this is the case because big box retail simply offers too much choice. The real opportunity ahead is to provide better curation of that choice.

I am an avid and highly competitive tennis player. When I buy tennis equipment I buy the good stuff. More often than not the equipment I need is not found in a big box sports retailer. Rather it is found in specialty stores where the store owner is highly curating what products are carried in the store and more importantly highly knowledgable of all the goods. This is just one of example of many advantages of more specialty retail outlets and in every case it is generally the same–better products and better service.

From a technology standpoint I want to look at a couple examples.

Home Audio and Visual

Magnolia Hi-Fi was a purely specialty show room and retail outlet for high quality home AV products. You could go to Magnolia and experience the best in home CE for both the mid and high end. Magnolia never carried the cheapest home CE products but they carried the best in the categories they chose.

During the time of the CE industries transition from analog broadcast to digital broadcast and HDTV, these stores saw quite a bit of foot traffic and drove sales. There were several reasons for this.

The first was that people were hungry to learn about HDTV and all the different nuances of HDTV’s at the time. Magnolia carried a relatively limited line of HDTV’s in their outlets so it made the learning process a bit easier to take in but they also staffed very intelligent staff who clearly explained the products, their benefits, and the technology.

During the same time if you went into a Wal-Mart or Best Buy, you were confronted with too many options and SKU variables, too many screens plastered right next to each other, and staff that had a general knowledge of the products at best but couldn’t explain specifics. All of that together left consumers with too much information to process and often leaving the store less confident about buying a new TV than before.

What Magnolia did for the market while it was still being born was key. They curated choice and helped consumers feel confident and knowledgeable about their purchase. This is simply something big box retail can not do.

What About Computers

Apple, I believe, is setting the example of how computers may be sold in the future. This is why I believe Microsoft is getting serious about putting retail stores in many of the same areas as Apple stores. My observation of this move is that retail stores for computing may be more about ecosystems than anything else going forward. Let me explain that.

Apple is vertically integrated and will sell hardware and software all for their proprietary ecosystem. Microsoft’s ecosystem is not proprietary since they don’t make computers. Because of that they need partners like Acer, Dell, HP, Lenovo, etc., who may not open their own stores all over the world. However, Microsoft may and sell all those partners hardware through their stores, which all cater to the Microsoft ecosystem. In a Microsoft store the singular point is the Microsoft ecosystem rather than any one vendor. The difference in Microsoft’s licensable platform vs Apple’s vertical integration is the fundamental point that makes these different channel strategies a reality.

The benefit of this model is that you know where to go depending on whose ecosystem you have invested in. If I am an Apple customer, I can go to an Apple store and find many products, curated on my behalf, to meet my needs when it comes to the Apple ecosystem. Microsoft’s channel strategy will be the same, although it will carry competing brands, the point remains that they are all related to the Microsoft ecosystem.

You can argue that a big box retailer can accomplish this with a store within a store mentality. But, I would disagree, on the premise of sheer floor space. A retailer like Best Buy views inventory in terms of how much they can put on shelves since they have space to fill. A smaller retailer has very little space and must be highly selective due to their lack of space. The result is more curation rather than less.

I have long used Barry Schwartz’s book The Paradox of Choice as a reference for this thinking. The primary point remains in consumer psychology that too much choice is overwhelming. Many of the points of this book validate the fundamental reasons why Magnolia Hi-Fi and Apple stores are successful. Consumers want choice but rather than throw every possible choice under the sun at them, it is better to give them choice of a select list of products which are curated by the retailer. This is again a strategy which can only be employed by smaller retailers.

To go forward in this model retailers will need to accept the “if I don’t have it someone else does” mentality. Because a specialty retailer will have to be selective, they simply can’t carry anything. This strategy has its benefits which I pointed out above and will work for many things but it also has its negatives. The primary negative being what if no store has what I want? This may be where online comes into play.

If your specialty retailers don’t have the precise product mix then perhaps online will fill the void. To use my tennis example, I prefer a very specific type of replaceable over grip. My preference in this matter is different than the mainstream so not many specialty stores carry it. So I order in online in bulk, wait a few days, but have my needs satisfied.

I am not sure if big box retailers have much of a future. I think they have their place for certain types of goods, but I have my doubts when it comes to computing goods. I, for one, think the current big box retailing experience is pretty poor and for many of the goods I would buy in a Best Buy, I have moved to purchase online.

Simply put my experience is far more superior in specialty retail over big box retail when it comes to the things I care most about. It is this fundamental point that leads me to believe that computers (i.e desktops, notebooks, smartphones, tablets) are better sold in specialty locations rather than a try-to-please-everyone-and-end-up-pleasing-no-one-big-box-retailer.

Google, Quickoffice and Productivity Beyond X86

In an interesting move today, just weeks before Google I/O, Google has announced via their blog that they have acquired Quickoffice, a productivity suite of software, and team. This move has a number of interesting implications.

First and foremost I believe this move again signals Google’s intent to go vertical. Acquiring Quickoffice certainly gives them a differentiator for their own hardware when it comes to productivity software, should they choose to use it that way. Of course on the surface and in the short term I would expect them to bundle this productivity suite on all Android devices. This move on the outset is designed to go right after Windows on ARM (Windows RT) and the inclusion of Microsoft Office on all Windows RT devices out of the gate.

This move is largely focused on tablets. It is no industry secret that Google is in the weakest position when it comes to tablets. The iPad has continued to dominate, and most likely will for the foreseeable future, but the lack of industry confidence in Android tablets has been astounding. In fact many analysts, our firm included, have more optimism for Windows 8 based tablets which are not even in the market yet over Android tablets which have been in the market for 2 years. It is not everyday that professional forecasters and industry observers will give an advantage to an unproven and unreleased platform, yet that is exactly what has happened. This again just re-enforces the lack of confidence in Android tablets to break into the mass market.

Google will obviously seek to change all of this with their acquisition of Quickoffice. This demonstrates, to this analyst at least, that Google may be starting to understand tablets and that tablets are a viable platform for productivity. I have been of the opinion that Google had not been interested in tablet productivity and in particular tablets (or Android for that matter) in a business setting. Most of Google’s moves and posture toward this market has been focused on consumers. Just look at the renaming of their store as an example. The Google Play Store doesn’t make me think I should go purchase productivity software or applications.

The other interesting observation I would throw out is that the myth that X86 (or Intel and AMD Silicon) is the platform of choice for productivity is certainly busted. I believe I could make an extremely strong case of this point simply doing an analysis of the iPad but with Microsoft Office on Windows RT and now Quickoffice as a standard for Android, we certainly have enough evidence that ARM platforms will be fully sufficient not only computing platforms but productivity platforms.

Touch Computing and The Re-Birth of the Software Industry

It seems like you can’t go anywhere in Silicon Valley without hearing about someone who’s making an app. Apps are all the rage these days and software engineering is one of the hottest jobs all over the world. But in the not too distant past, there wasn’t this much excitement around software.

In fact, I have heard from many executives who have been around a while that the excitement around software and apps today reminds them of the same excitement around software when personal computers were first gaining steam.

Although there are some similarities between the industry today and the PC software industry when it was first getting started, the excitement around software today is taking place on an entirely different kind of computer. The excitement around software today is entirely focused on touch computers like smartphones and tablets.

Smartphones are contributing and are the device that began this new app economy but tablets are where the next real software innovations will be focused on in my opinion. I say this because I am a big believer in the tablets ability to take significant time away from the traditional PC. Our research indicates that consumers are comfortable doing the vast majority of tasks they used traditional PCs for in the past on their tablet. Because of that point we feel the tablet represents one of the most exciting platforms which will lead a new software revolution.

Starting Over

I think a strong case could be made that much of the focus of the software industry over the past few decades has been on professionals and the workplace. In my opinion, only in the last five years have we had what I would consider a pure, mature consumer market. The maturity of the consumer market for personal computers is the foundation that has led to the rebirth of the software industry. If the first phase of the software industry was focused largely on businesses, then the next phase will be largely based on consumers.

Although we can articulate what is happening by proclaiming that the software industry is being reborn, in all actuality it’s starting over. The first software phase was all about creating software for desktops and then eventually laptop computers. Both were driven primarily by mouse and keyboard input mechanisms. The software generating all the excitement today is fully around touch as an input mechanism. Given the drastic differences between touch computing and mouse and keyboard computing, software developers are reinventing or at the very least re-imagining their software around touch computing. It is this reinventing and re-imagining of the software industry — brought about by touch computing — that leads me to believe it’s almost like it’s starting over more than it’s being reborn.

New Hardware Is Driving New Software

This rebirth of the software industry is being driven primarily because of new hardware that’s selling like hotcakes to the masses. Although it’s easy to get excited about all the shiny new smartphone and tablet hardware, it’s important to remember that hardware is only as good as the software it runs. I could own the most amazing and elegant piece of hardware, but if it runs poor software, it’s no better than a paperweight.

When I speak with software developers who are driving this new phase of software, they’re largely focused on the iPad and the iPhone. These two platforms are giving software developers valuable experience in gaining expertise, making the next generation of touch software much more personal. This is important because new platforms incorporating touch are on the horizon based on Windows 8.

Windows 8 presents a radical departure from the normal desktop/notebook operating system that Microsoft usually churns out. Windows 8 will be the first OS to combine a touch-based operating system (called Metro) with a mouse-and-keyboard operating system and a familiar Windows interface. These two experiences combined together will lead to a new generation of notebooks, desktops, and tablet-notebook hybrids, all with touch interfaces.

Regardless of your opinion about Microsoft’s approach with Windows 8, the reality is that over the next few years, touch computing is coming to a wide range of laptops and desktops.

What’s Next?

That’s a great question, and my answer may surprise you. I believe the next big software craze will be around television. I know it may seem crazy to think about running apps on your TV, but that’s what I think is next. Google is already going down this path with Google TV, letting software developers make apps for the big screen; Samsung is also doing this with its line of Smart TVs. And there’s speculation that Apple has big plans for the TV industry — if that’s true, I believe apps will be a part of the strategy.

Even though there are products on the market that let you run apps on your TV, those developers have yet to re-imagine their apps on the big screen. Just as software developers are having to re-imagine their software for touch computing, they will have to do the same thing for the TV.

We live in extremely exciting times and things will get even more exciting. I firmly believe we will see more fascinating innovations centered around personal computing hardware and software over the next 10 years than we ever saw in the past 30 years of the PC of the industry, and I’m glad that we’ll get a chance to observe them firsthand.

The Case for More Choice in the iPhone Line of Products

There is much to be said for Apple’s current iPhone and iPad strategy being very focused and very limited in terms of product line diversity. Of course you can make the argument that Apple already offers a line of products being the 3GS, iPhone 4, and the iPhone 4S. What I want to explore is why I think it makes sense, or will make sense in the future, for Apple to offer a more comprehensive lineup of current generation iPhones.

There used to be a time 10+ years ago when I was in the minority of computing users who used, loved, and passionately defended my usage of Apple products. Back in the day being an Apple consumer made you feel like you were going against the flow, like you were unique. I used to show up to Industry Analyst meetings or go into the press room of events (before the time of bloggers) and be the only one with a Mac. Now it seems everywhere you go you see as many Mac’s as Windows products and in some locations, businesses, departments, etc., Windows client hardware is entirely extinct.

To be honest I sometimes miss those days where I feel like I was in the computing minority. Where I had the feeling like I had discovered a secret that no one else knew about and I was better off because of it. I know those days are gone and there is simply no going back. I am also extremely happy that millions upon millions of new consumers are coming into the Apple ecosystem and discovering the secret we Apple loyalists have knows for years. But like I said, I still miss those days when I was in the minority. I know there are folks out there who can relate to this.

I have racked my brain on how some glimpse of those days can exist again and the only thing I have come up with is a more robust line of products. Perhaps ones for the super high end, ones for the middle and ones for the low end. Again I see this as similar to cars where a brand like Mercedes-Benz would have their luxury lines that only few would dare go after and aspire to acquire. But Mercedes-Benz also has lines like their E-Class which is more middle of the road when it comes to their price points and the C-Class for entry level customers. The key to the Mercedes brand and the C-Class is that it isn’t the cheapest car on the road in its class but there are those who will aspire to pay a little more because of the Mercedes brand and experience.

I could see Apple doing something like this where they have some designs that truly push the envelope in design and engineering and cater this iPhone and or iPad to the upper end of the customer class. This line could cater to those who want to be in the minority and use these products as status symbols. I am fully aware of the vanity I am promoting but again I am thinking out loud here.

This would ultimately offer existing and new Apple customers slightly more choice than currently available. I know this goes up against conventional wisdom of a simplified line of products but I believe the simplified line works best when a market is maturing but more choice is desirable once a market is mature. The market for smartphones is still maturing as many consumers are still experiencing their first or second smartphone. Consumers needs to be on at least purchase number three or four before their tastes are refined and they start knowing what they want, why they want it, and shopping with those specific needs, wants, and desire in mind. It is when consumers reach this point that I feel they would desire more variation in form and function related to the iPhone.

The key however is to vary the design not the experience or the software. I am simply advocating for some variation in hardware design related to a specific line. It will be key that the software experience remain consistent while the hardware design be free to appeal to different tastes of consumers. This is not uncommon in other Apple products where they offer different screen sizes, colors as in the iPod Nano and Shuffle, and even varying capabilities.

In fact if you think of the progression of products from the first iPod all the way up to today you would find that the varying degree of choice started off limited but then expanded as the market matured. In fact the iPod from 2001 to date, is the example I hope Apple continues to follow. Even as there was no competition and Apple utterly dominated the portable MP3 market, they continued to innovate, differentiate, and never became complacent but rather continued to make the best products year after year–again, all without any competition. (Thanks John Kirk for mentioning this to me)

This is why I think the case can be made for Apple to offer more choice in the current generation iPhone lineup–if not now in the near future. Perhaps it will have something to do with market maturity or even perhaps designing products for people like me who just want something different from the masses. But in my opinion, offering designs that cater to unique segments needs, wants, and desires will be key for Apple to continue to satisfy their customer base.

Why Google Should Fear Facebook

I have written quite a bit about my doubts of Facebook’s long term value. And amidst all the recent news about their IPO woes it seems like investors are skeptical as well. Last week I wrote an article highlighting my thoughts on why I am skeptical about Facebook’s long term value. Today I would like to explore a scenario that is the flip side of the argument I laid out last week. In this scenario Google should be very worried about Facebook–if they are not already.

Maybe this is weird but I have debates in my head where I argue many sides of a point or hypothesis while I am building my analysis. Even though I may have a conviction that a scenario goes a certain way, I believe it is important to examine all sides. My overall skepticism with Facebook’s business model, and value, is based on the assumption that their advertising business model and other potential revenue streams is limited to Facebook–their only asset to date.

There is no question that Facebook is gathering a database of extremely detailed profiles of Facebook users. The assumption has been that they would use that detailed user profile to match advertisers up with the right consumers as those folks use the Facebook service. As I pointed out last week, the reason consumers use the Facebook service is different from other services or content they consume where advertising actually works. Advertising works well when the ads are related to the content being consumed. With that in mind, if Facebook was to create an advertising network similar to what Google does with AdSense they could potentially take a big chunk of Google’s business.

One Ad Network to Rule Them All

Google has built their ad network by linking advertising up with related searches. This makes a great deal of sense and works quite well. Google uses services like Gmail, Android, Picassa, etc., to try and gain more information about people so they can sell more targeted ads. However for Google to come even close to knowing intimate details about me and my life, I would need to use all of their services. Something that it is not common for many consumers. However for Facebook to know all the intimate details of me and my life, I only need to use Facebook. Therefore, Google basis most of its targeted advertising value by knowing what was searched but Facebook can base its targeted advertising by knowing more about the searcher.

If Facebook created a service like Google’s AdSense they could extend their extremely targeted advertising strategy beyond the walls of Facebook. Given that many websites which require you to log in to sign up for a service, give consumers the option of logging in with Facebook, there are a myriad of ways Facebook can leverage their consumer profiles with all their online partners.

Extending value to advertisers and brands beyond the walls of Facebook is key to Facebook’s value in my opinion. This model could be completely disruptive to not only Google but the vast majority of advertising networks.

The Broader Opportunity

Even if Facebook employed this strategy, displacing something like AdSense is no easy task yet the upside is significant in my opinion. On Monday, Tim explored whether Facebook’s best days are over or ahead. He pointed out that the trend of vertical social networks is one we are watching quite closely. Whether it is publishing sites or communities based around specific interests, we believe those are the places where targeted advertising can thrive and return value. Facebook either needs to figure out who to create these niche communities within the walls of Facebook or do what I propose and give those sites access to their ad network.

What makes this strategy so interesting is that if it were done right, Facebook as a service could exist solely to collect key data needed for advertisers. If Facebook could have success building an ad network and monetizing it primarily with partners then potentially Facebook itself could be advertising free. Ads on Facebook right now clutter and detract from the experience which brings me there in the first place ( I also believe they are useless in their current form). I truly believe that if Facebook is reserved to only make money within the walls of Facebook, that they will make compromises that will seriously detract from the Facebook experience and drive consumers away. However, if they can make money outside the walls of Facebook then they have a chance of creating better experiences and keeping loyal Facebook communities.

Lastly, the broader opportunity becomes even more interesting as we think about mobile and emerging platforms like the television. My point that Facebook may very well know more about me than any other company pitching advertisers becomes interesting with mobile advertising and even my future experiences with TV. If TV networks can partner with Facebook for example they could begin to deliver some of the most valuable advertising in the form of rich media due to the amount of information they know about me. Which if you think about what ads I see today on TV, in print, online, etc., it becomes clear very little is known about me.

Facebook, in my opinion, is the only company today who is in a position to completely change the advertising realm across a range of mediums. However, it depends on them thinking bigger than themselves and the destination they built.

3 Columns Skeptical of Facebook’s Long Term Value

In light of Facebook IPO day, I thought I would share three key columns I wrote about Facebook. I remain skeptical of Facebook’s long term value. Specifically the business model and sustainable value to those they depend on to make money. Facebook, like Google, is a company where people are the product. The big difference in my mind between those two companies is that Google has quite a bit of proprietary IP around solving a problem–search. Facebook may have some enabling technology, may or may not actually be a sustainable social platform, but is the problem they are solving one that is defendable?

If the answer is yes then how do we explain the massive migration from MySpace to Facebook? Yes Myspace did not innovate and did not develop solutions that cater to a larger demographic. Facebook did a great job expanding their value from college students only to a wider audience. That being said what is stopping someone from coming up with a better idea, or a better way to stay in touch, than what Facebook has? Is the problem they are solving really that hard to solve?

The first column I wrote almost a year ago for TIME looks at this subject of whether Facebook can go the way of Myspace. I encourage you to read it as the first of the three columns I wrote. It will give you a timeline of my thoughts, how they evolved, and the overall case I make against the long-term value of Facebook.

Could What Happened to Myspace Happen to Facebook?

I decided to revisit this topic just earlier this year, again for TIME, where I explore if Facebook has peaked and we are now witnessing the beginning of the end. This particular article is by and large the most read piece of content I have ever written. It could picked up by other major outlets like CNN, the AP, and a few others. And if you take a look at the comments you can see how heated the debate gets. My overall point was that if you look at users of Facebook who have been on the service for a length of time they tend to see their usage decrease. We can call this Facebook fatigue but the initial thrill of discovery weans and the service becomes more management than discovery. Discovery, in my opinion, is one of the stickiest psychological aspects of any online service. Think about why you spend time browsing in a mall, or electronics story, or Amazon, or an App store? It is largely due to the thrill of discovery or the hopes to find something new of value.

This is the same experience for a new Facebook user. It is the thrill of connecting with old friends, colleagues, or classmates that engaged us in the beginning with Facebook. Seeing what loved ones from a far are up to, finding new friends or interests. But then there comes a point where that initial thrill of discovery weans and the service can become overloaded with information you don’t care about or are not as interested in any longer. Things like this are the root of my concern of Facebook over the long haul.

Is This The Beginning of the End for Facebook?

My most recent column, which we ran here on Tech.pinions, was on why I wouldn’t invest in Facebook. My overall reasoning is built upon my above two points and columns. That if consumers, the longer they use the services, are not as engaged with Facebook then the value to an advertiser goes down.

Recently news surfaced that GM was stopping advertising on Facebook due to the ads not paying off or delivering the ROI they expected. This was predictable and not surprising based on the arguments I have offered. When you think about why ads work on TV, print, and other forms of offline media, it is because the audience is either engaged and captive, or highly segmented, or both. Think about why ads work in Men’s Fitness for example, a service I subscribe to. I am interested in fitness, exercise, etc., and nearly 90% of the ads I see in this magazine are relevant to the subject matter of the captive audience. The same is true with TV shows and a range of other mediums where advertising has been historically successful.

In all of those mediums where advertising pays off, there is a captive audience, engaged with content directly related to the theme of the ads. This is not true of Facebook. If the content I am engaged with is that of friends and family then how exactly do advertisers match their content up with me in a relevant way? Facebook has to hope that I share my interests, likes, dis-likes, etc., in order to get a detailed information about me as possible in order to help link advertisers up with me based on my interest. The only problem is that the thematic content related to sports, fitness, hobbies, interests, etc., is not the reason I go back to Facebook. It is simply to stay in touch with friends and family.

The psychology of what has made ads useful in other targeted content mediums does not translate to Facebook. It is because of that point that I struggle with Facebook’s business model.

Why I wouldn’t invest in Facebook

In the column above I point out why I think more vertical social networks, ones that cater their content, services, and engagement around specific things, have more of a chance at being successful. Social networks for car lovers, food lovers, fashion fanatics, fitness, health, mothers of kids of all ages, etc., provide more valuable content and lead to a more captive and segmented audience. It is in these environments that an online social platform can thrive.

Maybe Facebook will figure out whom to segment its social platform even further in order to drive more engagement around specific subjects. I think this will be very difficult for a general-purpose social network to accomplish but perhaps they will figure it out.

For now I will remain skeptical and observe as more vertical social networks arise and become more valuable to advertisers.

Our Future Smart World

One of the things our firm does for our clients in the technology industry is help them think about the future. This one thing alone is one my favorite things about doing trend forecasting, future scenario planning, and analysis. In fact, many of my absolute favorite types of conversations are ones that include extensive use of words like someday and in the future. However, it comes with a downside. Spending quite a bit of time envisioning the future leads can often lead to disappointing experiences with technology in the present. Mostly because we dream big about all the possibilities with technology and how smart technology will continue to solve problems and make our lives better. This happens to a degree today but not to the extent we envision. It all comes down to dreaming about what is possible with technology and realizing we are no where near having our smart devices fulfill their potential.

I see so much more potential for smartphones, smart TV’s, the smart home, smart health, traditional computing products, game consoles, cloud services, etc., than exists today. However, for some reason tablets are the category exciting me the most and not disappointing me. I can only conclude the only reason why that is the case is because tablets are so new and still in the process of defining their roles in the lives of consumers.

Smart Devices Aren’t Really Smart–Yet

This perhaps is one of the things that frustrates me the most. I know we are pushing these devices to their computing limits today but I know truly smart devices are not too far off. My point on this topic is that today devices we call smart contain no real artificial or adaptive intelligence. The only reason my smartphone or tablet may be different than yours is because I put the time in to personalize it. I don’t go buy a new smart device, let it learn about it me, and then have the device customize the experience for my unique uses. For it to be smart, in most cases I have to add the intelligence to make it smart. Someday this will be the case.

To illustrate this point I would like to use App stores as an example. You and I may use our smartphone in entirely different ways. A smartphone can represent a number of different things to a number of different consumers. Take Apple’s app store for example. If two consumers open the app store and look at the featured section for example, they will see exactly the same thing. Yet how these two consumers use this phone may be polar opposites; they see the same static information. The only time this changes is via search and perhaps Apple’s Genius suggestions ( which I have never found useful for my own needs.)

If my smartphone was actually smart when I went “app store shopping” I would be presented with a fresh and dynamic view of applications based on the things I have primarily been using my phone for lately. This would be a fresh personalized app shopping experience that could change on a daily, weekly, or monthly time frame depending on the things I have been doing the most lately with my phone. Or perhaps even change with the seasons. When Football season starts, my smart device would know I like football and specifically the 49ers. I would like to see whats new in software for Football experiences like games, news, and more.

Of course one may say that this is the point of search. I agree, however search is best, in my opinion, when you have a general idea what you are looking for. It is less useful when you have a vague idea or no idea and are in a browsing mode. I do this quite a bit as I just open the app store to do some general browsing. I would love a more customized app store experience based on my unique uses with my smart device. It is these kinds of adaptive and dynamic experiences with smart devices that are unique to my personal habits and needs that I am looking forward to with the next generation of smart technology.

What it will really boils down to is that our smart devices will move from being useful to also being helpful. That, I feel is the root, of the artificial intelligence element of the smart device future. A world where smart technology is helpful as well as useful is a vision I can get behind. And by helpful I mean able to anticipate the user needs and preferences and offer up assistance based on context and situation.

Right now we are in the stage where our personal computing is more personalized by me than dynamically customized by the devices intelligence in order to become truly personal. In the future I assume the ideal scenario will be where both exist. There will be times where I want the assistance of the device to customize or anticipate my needs, wants, and desires in any situation, and other times where I want to spend the time to customize it myself.

Many things, from more advanced semiconductors, better predictive software and artificial intelligence, and cloud technology need to come together to make this future a reality. As I survey the landscape today we still have a long way to go before this vision of the future is realized, and I can’t wait until this happens.

Affordable UltraBooks are Coming But They aren’t UltraBooks

There are looming PC wars coming and it isn’t between Macs and Windows based notebooks. If you follow this industry you know that Intel is seeking to rejuvenate the notebook market. They are doing this by putting quite a bit of marketing weight behind the term UltraBook. To spur development in this category, Intel is putting some very specific hardware specifications around the term that OEMs like Dell, HP, Acer, etc., must conform to if they want their notebook to be called an UltraBook and take advantage of Intel’s marketing dollars for UltraBooks. Obviously every OEM is making UltraBooks.

The challenge as I see it for UltraBooks is that many of the first ones at launch and perhaps those that follow will be priced more in the premium price range rather than value. Many of the early UltraBooks we will see will be $699 and above although a few may get lower and many will skew higher as well. What our consumer data from our own research and consumer interviews is telling us is that Apple has about a $250 grace price point. Consumers know Apple’s Macbook Pro and MacBook Air lines are not the cheapest products on the market. For MacBook intenders, any comparable product must be at least $250 less than a comparable MacBook product to fully sway a consumer when price comes into play. But as I have pointed out before price is becoming less and less of an issue in mature markets.

Although we expect UltraBooks to continue to drop in price there is a sub-category of notebooks emerging which may be even more interesting.

If It Looks Like an UltraBook…

Intel wants to own the UltraBook category. They are investing a lot of money around the term. However, there is a strict set of requirements notebook OEMs must abide by if they want to use the term. If there is one thing I have learned in my 12 years of being an industry analyst it is that OEMs don’t generally like being told what they can and can’t do with their hardware designs. Every OEM wants to take advantage of the thin and light designs driving UltraBooks but they may want to vary the CPU capabilities, and what if they want to use an non-Intel chip for a design that looks exactly like an UltraBook? The answer is they can’t call it an UltraBook.

Earlier in the week AMD launched a very impressive 2nd-Generation A-Series APU, codenamed “Trinity.” Many OEMs have strong relationships with AMD and will most likely use these chips in their lineup of notebooks. So how do OEMs cover their bases by making non-Intel UltraBooks? Well, HP recently launched a new term called SleekBooks. We call this category Ultrathins and we expect many Ultrathins to enter the market well below the price of UltraBooks. And that is what makes this so interesting.

While Intel is going out and spending millions of dollars marketing the UltraBook term, it will indirectly benefit a range of competing platforms. Ultrathins will look nearly identical to UltraBooks with the only minor configurations or specifications, that many consumers may not even notice. The bottom line is that consumers will walk into retail and see UltraBooks, SleekBooks, and perhaps more terms on the way, and with all of these options consumers may very well go with price and walk with with something other than an UltraBook. Perhaps even not knowing they didn’t purchase an UltraBook.

Now, on the surface it may seem as though Intel may not like this scenario. But realistically Intel simply wanted to rejuvenate the notebook category. I believe their marketing of UltraBooks is going to do just that. Even though it may very well help their competitors chipsets and even to a degree help Apple.

I have a feeling there is a large chunk of consumers who are due for a notebook upgrade. The iPad has, for some, served as a sufficient supplement to their existing notebook making it easier to delay the purchase of a new notebook. Whether it is UltraBooks or these new thin and lights that will look and smell like UltraBooks but be priced quite a bit lower, we expect at least a short term positive jump the overall notebook category over the next few years.

Mac Momentum

This is one of the more interesting things to watch. Mac sales are growing at incredible rates. It seems each quarter Apple is selling more Macs than ever before. I was recently in an Apple store with a newly renovated training center. When I walked into the store I assumed the training tables would be filled with people learning how to use their iPads. Instead every table and every consumer at that table was learning how to use the new Mac they just purchased.

If Ultrathins that are very thin, light, and powerful hit the market below the $599 price like we think may happen, it could provide a serious jump start to the notebook category. And at $599 or lower the prices of quality notebooks will be significantly less than an entry level MacBook Air, which may be a key in slowing down Apple’s momentum with Macs.

The Notebook form factor is facing important times as consumers are faced with new questions about computing and their own computing preferences due to the iPad. Consumers are asking new questions about their own computing needs and looking more intently for specific solutions–especially those shopping for new notebooks.

This is exciting and challenging for many in the notebook ecosystem.

Tablet Computing in Portrait Mode

Last week I wrote about my two must have iPad accessories. In that list I included the Logitech Ultra-thin Keyboard Cover. Among the many reasons I like this case over similarly good ones like the Zagg Folio or the Adonit is because it allows me to do computing on my iPad in portrait mode. It is very interesting to me that so many companies who make keyboard accessories assume that when you want to use the keyboard you want to use it with the screen sideways or in landscape mode. Even the Logitech Ultra-thin case has the smart cover magnet in the dock groove assuming you want to prop it up with the screen horizontal. Notice most tablet manufacturers orient their buttons and ports in a way that assumes mostly a landscape over a portrait mode of use. The iPad is the exception where the buttons and ports seem to by oriented for more portrait mode–at least in my opinion.

Interestingly, I have found that my preferred use for docking the iPad and using the keyboard is in portrait mode. I am convinced that computing in portrait mode is far superior to landscape mode for many different tasks. This hit me the hardest when I used the iPad for the first time for browsing the web. Browsing the web in portrait mode is by far the best way to browse the web. This should be obvious since many websites are designed with up and down scrolling rather than left to right. Browsing the web in portrait mode allows you to see more of the website at one time. Beyond browsing the web there is another use case that I believe computing in portrait mode is far superior for and that is writing.

Better In Portrait Mode

I do quite a bit of writing whether it be reports, columns, or even responding to clients with lengthy emails. This is one of the reasons that using a keyboard accessory with my iPad is a must. Writing while using the iPad in portrait mode is a powerful experience. The primary reason for this is because you can see more words on the page when writing in portrait mode. Throughout human history, whether penned by hand, or while using a typewriter with a paper stand in the back, producing the written word on a medium that is longer than it is wide has been the norm. When you see people using pen and paper today you don’t normally see them turning the pad of paper sideways. Yet if you think about it, writing, working, and being productive while looking at a medium that is longer than it is wide is something that is foreign to the world of computers.

Computing in portrait mode is relatively unexplored territory. Since the beginning computers have had square monitors which eventually evolved into the norm for today which is 16:9 landscape. Due to the standard landscape orientation of computers to date, software has mostly been written with this screen orientation in mind. What happens, given the massive growth of tablets, and the fact that they are also computers, if software developers start thinking of writing software for use while in portrait mode? Most apps today, with the exception of things like games, support different screen orientations. What is missing is that the user experience with the software does not change much based on my screen orientation. Apple’s Mail app actually does change the UI when in portrait or landscape mode. However, when I am in portrait mode I can focus on the email because the side bar containing my inbox goes away. But when in landscape, the inbox sidebar is present and stays in sight.

This is a good example of a software interface being designed to make the application useful whether it is in portrait or landscape mode. Different screen orientations will present different looks and ways to use screen real estate. I believe that as software developers re-imagine their software for tablets they will also consider dual screen orientation experiences with the same software.

Portrait vs. Landscape

With this in mind I have been thinking a lot about the types of things I prefer to do while in portrait versus landscape modes with the iPad. Nearly all tasks that would qualify as productive I prefer to do in portrait mode. While the other tasks, with the exception of web browsing, like playing games, watching video, etc., I prefer to do in landscape mode. Reading is sometimes productive and sometimes for entertainment but either way reading is far better in portrait mode over landscape. This of course makes sense for things like video since they are produced in widescreen not portrait. For games it depends on the game since there are many great games that use both screen orientations. What has stood out for me though was how many tasks that were considered working or productive tasks that I preferred using the iPad in portrait mode.

This is something that is only possible with tablet computers since laptops and desktops are not designed to allow you to change your screen orientation based on the software experience you desire to have. This also makes a very compelling case for a keyboard accessory for a tablet.

One of my biggest complaints with the iPad’s virtual keyboard is not that I can’t type fast on it because I actually can. My biggest complaint is that I can’t use it for any real productive input while in portrait mode. And when I use it in landscape mode it takes up nearly half the screen leaving me with very little of the software application to see while typing. This completely defeats the profound experience I have while writing in portrait mode due to how much of the screen and words I can see at one time.

These are the kinds of experiences that are only available on the tablet form factor. I hope that as keyboard accessories continue to get refined and perfected, so will the software that will change not only our computing paradigm from mouse and keyboard to touch but to also break away from landscape computing as the only mode for working on a tablet.

Mobile TV May Make A Comeback

I have been tracking the mobile TV space since the early 2000’s and mostly given up after the last push, using DVB-H failed. I tracked quite a bit of research around mobile TV in North America and we performed our own use case research as well. North America as a market for mobile TV is very different then markets like Asia and other parts of Europe.

Large parts of North American populations don’t spend long periods of time commuting on things like trains. In many other parts of the world this is the case and those markets are the ones where Mobile TV has had more success. However, with the rise of tablets, and perhaps even greater installed base of smartphones I wonder if Mobile TV could make a comeback.

While here at CTIA I got caught up with an organization called the OMVC or Open Mobile Video Coalition. This organization is helping launch a new service in the fall called Dyle.tv. What makes this solution different, and perhaps what gives it the best chance to succeed, is that it is built upon the existing ATSC digital broadcast infrastructure. DVB-H required quite a bit of new infrastructure investments and many did not make them. By integrating right into the existing ATSC infrastructure for broadcast today many broadcasters and networks immediately take advantage of this solution. There are two requirements to make this work. First the broadcast stations need only spend between 15,000-25,000 dollars to add the additional infrastructure to broadcast their existing ATSC signal to mobile devices. This, I am told, is very simple to install and would take a technician about two hours install. Second, the DTV chip needs to be embedded in a mobile device or built into an accessory for a mobile device like a tablet or smartphone.

Dyle.tv will be a free service and will be available as an Android and iOS app. The only cost associated is what is added to the cost of the hardware or can be purchased separately as an adaptor for things tablets and smartphones. The key point is that the rights from every major North American broadcaster have been secured and broadcast content from every major network will be available through the Dyle.tv service.

Dyle.tv will launch in the fall and details about the launch, supporting devices, and adapter accessories will be released around that time as well. It will launch in 210 markets in the US.

Although the market and the infrastructure may be right for mobile TV to make a comeback there is something a bit more interesting with this service. Networks who choose to use their existing infrastructure to deliver mobile TV via Dyle.tv to consumers will deliver up to 19.4 mbps bandwidth to devices enabled with the DTV chip. This means that it is possible, should the major networks participating in this service, to also make their streaming content available for catch up TV through this application. And oh by the way the group behind Hulu is the same group who is helping drive this service.

My opinion of mobile TV is that it is only good for live content like news, sports, and check-in-tv. The concept of “check in” TV is where you quickly flip to see what’s on when you are bored or standing in line or want to kill time. It breaks down when you come up against content you have not seen yet due to missing the narrative. Plus with the time shifting habits of most American TV watchers most shows are sitting on the DVR waiting for them at home. So the concept of mobile TV as a time killer is more the value proposition. Integrating this solution into automobiles could be interesting as well. However, if catch up TV solutions via a streaming model get integrated with the Dyle.tv service then it could present a much more compelling value proposition.

I will be curious to see more of the details when this service launches in the fall. There are some interesting elements, that if done right, could become an interesting feature and a differentiator for some hardware vendors.

Dear Industry: Focus on Profit Share Not Market Share

The interest in the tech media world around market share is fascinating. Each quarter reports come out, for the quarter only, pointing out different vendor and software platform market share for things like tablets and smartphones. As interesting as it is to look at market share of hardware and software platforms, it is more interesting and relevant to look at profit share–a metric I think is more important.

Apple is perhaps the best example in this metric as a recent statistic points out. Asymco shared that in the smartphone segment Apple obtained 73% of operating profits, Samsung 26% and HTC 1% while everyone else lost money. Apple continually captures significant profit share of the markets they compete in, and to Apple profit share is more important than market share.

A common thread of thought in the tech industry, which I believe seriously lacks perspective, is that industry history will repeat itself to the degree that a platform will have the majority share of a market for a long period of time. What I truly believe many are waiting for or looking to happen is for the “open platform” like Google or Windows will rise to dominate the market since open should always win–a premise I reject. If anything I would place my bet on the closed system in a pure mature consumer market.

In my last Dear Industry column I pointed out many reasons why I don’t believe history will repeat itself. My whole argument is based on other consumer goods in other mature markets where there is simply not a dominant market share leader. Again this is true because consumer preference drives segmentation in mature markets.

If you look at other companies in mature or post mature markets like consumer goods or automobiles, you find that each of them focus more on operating efficiency in order to maximize profit share. Of course they would love to see their market share increase dramatically but in post mature markets consumers are driven by personal preferences. Consumers driven by personal preference know what they want and why they want it. Because of preference driven choices, market share shifts simply don’t happen often due to preferences being established. Think Coke and Pepsi, or Mercedes and BMW, or Nike and Adidas.

There are, of course, a number of differences between the computing market and consumer goods. But there is something about consumer markets that I think is interesting that may shed light on how to focus on profit share over market share.

A Deeper Look at Consumer Preference

What is interesting about consumer preference is that it is largely subjective. Although their preferences become refined over time that refinement often comes from subjective perceptions rather than objective ones.

To what extent subjective refinements around personal preference take place over time as consumers shop for computing products is yet to be determined. However, as the market for products like smartphones and tablets matures; I have a hunch that many early perceptions and experiences happening currently with technology products will shape future consumer preference.

On that point, a common foundation shaping consumer preference is the experience they have with a brand, product, or service. If consumers have a poor experience with a brand, product, or service, it becomes increasingly difficult to win them back. The importance of first impressions with consumers can not be overstated.

Understanding consumer preference is a key to understanding how to focus on profit share.

Create Features of Value

The second key point to drive better profit share is to focus on creating features consumer segments find valuable. If you look at any mature product strategy striving for profit share you find that the strategy is to maintain price but layer on features with each new product generation.

The key to that specific product strategy within a segment is to identify value and anticipate future value through research and development. Companies that do that well continually introduce new features that the market segments they are focusing on find valuable. Creating features of value is one of the better strategies to maintain a desired price within a segment and to avoid a race to the bottom.

Specifically in regards to the computing segment it is important to create products that do things better than other products on the market. Right now I am seeing a number of smartphone vendors start do this around the camera. The HTC One X for example is touting several features specific to the camera that is differentiated from the pack. For this strategy to work a “better” camera needs to be perceived as a feature of value that is important enough to sway consumers.

In an increasingly segmenting market feature centric products and product experiences are key to sustainable differentiation. When this strategy is employed it creates a better foundation to focus more on profit share of a specific segment.

Of course operating efficiency is key as well to drive better profit share. But both of the above points of understanding consumer markets and focusing on creating valuable products and experiences will shape operating decisions all the way down to the supply chain.

A strong argument can be made that by focusing on profit share by creating valuable features and experiences could lead to better market share. My overall point is that the right way to approach strategic product and roadmap decisions is to focus more on strategies that drive profit rather than market share.

Companies that employ a market share only strategy run the risk of gaining no market share and making no money.

Tablets: Numbers and Observations

Both IDC and Display Search released updated numbers for the tablet segment. There are some interesting key take aways from both sets of numbers.

IDC confirms Apple’s dominant position with regards to iPad share and points to slumping Android shipments for tablets which is no surprise. The Display Search data is a bit more comprehensive which includes forecasts as well as OS share in the press release.

There is one thing that sticks out to me and it is related to Windows 8. In the IDC press release they make it clear that Windows 8’s impact is too early to tell. Whereas Display Search takes a stab at forecasting share for Windows 8 and RT but gives the advantage to Windows RT over Windows 8. This is interesting because it implies that from Display Search’s standpoint they do not have much confidence in Windows 8 on X86 but have some confidence in Windows RT to gain some traction in the tablet market.

If you look at the updated numbers from all the major forecasting firms, it is becoming clear that most, if not all, acknowledge that the tablet market could be larger than the notebook and desktop market. Regardless of your belief on that point the bottom line is that tablets and smartphones are the only real growth segments of the computing industry. IDC still is committed to calling all tablet “media tablets” which I think is wrong. There is no doubt at this point in time that tablets are computing platforms not just media consumption platforms.

In Display Search’s numbers, I think they are being overly generous to Android given the trouble it has said so far in tablets. I personally tend to believe that Windows 8 or Windows RT has more of a chance in the tablet market to succeed.

I still remain convinced that Apple will remain the undisputed leader in tablets due to the iPad becoming the standard in terms of tablet computers. In this release, my friend Richard Shim rightly points out that as the tablet market matures there will be opportunities for segmentation within the sector as vendors carve out differentiation.

As with all forecasts we have to take them with a grain of salt to a degree. Things can change quick and a couple of factors, like subsidization, could drive tablet shipments much faster than is currently being forecasted.

The bottom line is, vendors who are not establishing a tablet strategy may very well be left out of one of the hottest segments of computing we have seen in some time.