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

Is There a Technology Race to the Bottom With Price?

I have been surveying the collective schools of thought related to the Amazon Kindle Fire launch. One thing that many writing publicly on the matter emphasize is the price of the Fire and rightly so. $199 is an aggressive price but I would argue that price is not everything when it comes to personal technology.

Those that incorrectly believe the Kindle Fire is a threat to the iPad use words like commoditization of hardware. Again the common logic is that because one competitor comes in at a lower price it will force the market down. This however is entirely incorrect.

There will be some who try to compete on price with Amazon however they will likely fail and either lose a ton of cash attempting to compete or exit the tablet market entirely.

Apple however has no need to get more aggressive on price with any of their products.

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What is key to understand is that if Amazon did not have a robust services business as a retailer and distributor of digital media the Kindle Fire would not be successful even at $199.

This statement is made clear in Jeff Bezos quote to Brad Stone in his Business Week Article.

“What we are doing is offering premium products at non-premium prices,” Bezos says. Other tablet contenders “have not been competitive on price” and “have just sold a piece of hardware. We don’t think of the Kindle Fire as a tablet. We think of it as a service.”

I have said before that the Kindle is to Amazon what a retail store is to Wal-Mart. The Kindle represents access to Amazon’s services.

That philosophy is made clear when Bezos states that they don’t view the Kindle as a tablet but instead as a service.

This backs up my point that without the backing of the Amazon services the tablet would fail even at $199. Subsidizing hardware in order to make up revenue on the services is a strategy employed by many. However it only works when a service powers the hardware.

What Could Really Change the Game
I’ve had this discussion lately with a few other analysts around whether or not Amazon ultimately wants to be in the hardware business. Right now they have to in order to gain market momentum and validate their service with hardware.

What could be very interesting is if Amazon gave away or licensed their software for other tablet vendors. This would allow for hardware innovation in and around Amazon’s ecosystem. If the business model panned out Amazon could even include hardware partners in the services revenue over time. Amazon already has revenue sharing business models in place so this is not a stretch to imagine.

Amazon does not have the desire or expertise to make extremely elegant hardware. Which is why it is interesting to think about the possibility of letting those who have hardware expertise design some innovative hardware around the Amazon software and services platform.

Like Google, Amazon is a services company who thinks about hardware and software as a way to access their services.

The other thing this strategy would do is put pressure on Google with Android. If Amazon’s Android fork can provide a better experience and economics for hardware partners and developers Android could be in trouble.

Price is important but I contend it isn’t everything. Just because products are cheap it doesn’t mean they are quality in all aspects of experience.

We will see what the reviews have to say once they actually get to review the Fire. My sense though is that everyone will make a bigger deal of the experience with the Amazon services over the hardware.

Why Amazon’s Silk Browser is a Big Deal

In my opinion what Amazon has created with their Silk browser is the most interesting part of their Kindle Fire announcement.

One of the key reasons is because it is an example of the kind of differentiation I have been ranting about lately – especially around “tablets.”

I have been writing quite a bit about my frustration with a dearth of differentiation by consumer products companies. One of the key points I have been hammering home is the need to bring something unique to the table when creating consumer products.

Amazon has done just that with their Silk browser. Specifically what I mean is that they could have simply shipped any number of browsers on the Fire yet they decided to create their own. Why? Because no browser on the market fit their vision for a browser with an emphasis on consuming content and media tied specifically to Amazon’s cloud computing vision.

That last sentence is why I feel Silk is a big deal for Amazon. Myself and many others tend to lean in the direction of our computing future taking place in the browser.

Anytime I hear someone is working or releasing a browser I tend to look at it from the viewpoint of our future with a de-centralized computing platform where the browser is the new OS.

Amazon may very well be looking to- and innovating for – the long term future with Silk. What’s more is they are bringing their own vision to the table with this browser. They are thinking about it in terms of their own unique cloud services.

In fact what is very interesting about Silk is that I don’t believe it exists to differentiate Amazon’s hardware but rather to differentiate Amazon’s services.

If that is true then what is to stop them from putting the browser on other platforms like Android, iOS, Windows or OSX? Nothing, and that is exactly what I think they will do.

Amazon, I believe, is brilliantly going to create an ecosystem tied to their services and then release hardware agnostic software that uniquely take advantage of the breadth and depth of Amazon’s services.

At a fundamental level this is also Google’s strategy, however at this point in time I feel Amazon has more to offer and a better chance at success. Not to mention more consumer trust.

My analysis of what Amazon is doing with Silk is going to be an evolving one as I experience it more for myself and observe the decisions Amazon makes related to it.

However for now by bringing a browser to market that takes advantage of key Amazon services that no other browser can do is a fascinating initial strategy.

One of the reasons I say that is because what if Amazon doesn’t believe that a general browser is the browser of the future? Perhaps they can envision a future where consumers use multiple browsers to get differentiated experiences with services offered by companies.

If the browser is the OS of the future then that could seem logical. We choose operating systems today based on our preference of UI, experience, etc and what if the same is true of browsers in the future?

So Amazon focuses their browser around media consumption, publishing, reading, as well as customer loyalty to their services. Therefore when consumers want Amazon services they use the Amazon browser. When they want Apple services they use Safari, when they want Google services they use Chrome, and when they want Microsoft services they use Internet Explorer (a name I hope changes.)

I use different apps for different tasks today so I don’t believe it is a stretch to think that I may use different browsers for different tasks or use cases in the future.

In fact in this future it is possible for me to consume services from a range of different providers rather than simply commit to one service providers ecosystem.

This is all theoretical analysis of course but I find it very interesting to think about related to the future of computing.

Now back to present. Regardless of where Amazon goes with Silk in the future I do feel they are orienting themselves to take advantage of the cloud computing future in new ways. And specifically they are creating key hardware and software technologies that are setting the foundation for Amazon’s future as a services company.

Why The iPad Could Be Huge in China

I’ve stumbled across some interesting research from Citi Group Financial’s internal research group. The research report was specifically about tablets but the part I found interesting was their research related to tablets and China.

Citi surveyed almost 2000 people and found some interesting results globally for tablets. With the US they found that tablets and specifically the iPad were not an immediate threat to replace PCs. Their research pointed out that in the US only 8% had purchased a tablet with the intent of replacing a laptop. The bulk of the usage of tablets the research turned up was for more lightweight consumption. Things like web browsing, email, social networking and multimedia were the top usage models. Their China research however turned up very different results.

It appears that in China there are significantly more people looking at buying tablets and using them as a laptop replacement. 21% of the people in their China survey said they currently own a tablet compared with 17% in the US/UK. 26% of China respondents said they intend to purchase a tablet over the next 12 months compared to 12% in the US/UK.

More interestingly with this data was that 31% of Chinese respondents said that their interest in purchasing a tablet was to replace their notebook. Another 26% expressed interest in a tablet to replace their desktop and another 30% interested in replacing their Netbook with a tablet.

The reason the iPad could be huge in China is firstly because China is a huge market and second because they appear to be interested in a tablet as a PC replacement. Which is a fundamental difference than why US and UK consumers are buying tablets.

If it was clear before it should be crystal clear now why Apple is so laser focused on China. In fact all the trends in China are playing to Apple’s favor. The iPad for example has 73% of the tablet market share in China and we can expect that to grow over the next few months and even more with version 3.

The other interesting thing about China is that it is one of the fastest growing regions for PC sales. This data seems to suggest that China could also become one of the fastest growing regions for tablets as well.

When I first read this data, I thought it seemed a bit too optimistic about China and tablets. Mostly because we are constantly reminded by all the large PC vendors how fast China is growing as a market for PCs. So this data seemed at odds with the reality that PC sales are accelerating in China.

PCs are still maturing in China so why would there already be significant interest in tablets over PCs? The answer I feel lies with China’s need and desire as a market for small and mobile technologies.

Netbooks had quite a run in China and for many Chinese consumers Netbooks were the best priced and sized computers for their first PC purchase. The iPad in terms of size and mobility are highly desirable among the Chinese consumers and may be some of the central reasons they are attracted to tablets so heavily.

Because China is so large and because PCs are selling like hotcakes over there I don’t suspect that tablets will eat into PC sales in any way that should alarm manufactures. Both will continue to grow and accelerate extremely quickly.

It is important to note that the China based research was done with those who are in the upper and rising middle class, which is a large and quickly growing segment of China consumers.

Whether it is with iPads or Macs Apple has a huge opportunity in China.

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Dear Industry: Dare to Differentiate

Why should I (or anyone) buy your product or service over another? This is one of the most important questions any company in business should be asking. Right now it seems in the consumer and personal electronics industry too many executives answer that question with “price”. Their thinking is “My product costs less therefore it is the more desirable option.”

The only problem with that answer is that it is fundamentally flawed, particularly when a product or service competes in a market that is mature or post-mature. In mature product markets there is significantly more happening during the purchasing process.

The reason price is what most companies in the personal technology industry is because price was what drove the explosive growth over the past 10-15 years. However now that the market for PC’s is mature and smart phones and tablets will mature very quickly. Strategically thinking through product differentiation will be central to the innovation and product planning process.

Understanding Mature Markets
In a mature market differentiation is everything. This is true for the simple reason that in a mature market most consumers know what they want in a product and shop accordingly. As a product or category goes through the maturation cycle consumers first purchase helps to familiarize them with the product for the first time. This is happening now with smart phones and tablets.

Consumers are experiencing their first or second smart phone and their first tablet. This will continue to be case for the next few years as these categories mature. After owning one or two product generations consumers begin to become more familiar with their desires for a product.

However the PC market is fundamentally different. Most consumers have owned at least one if not several desktops and or notebooks. Because of this they now know for the most part what they want and what they don’t want with a personal computer and they are shopping accordingly.

It is with this consumer mentality that differentiation is crucial.

This idea first hit me five years ago when I was doing some specific analysis around differentiation. I walked into Best Buy to try to get the consumer experience for shopping for a notebook.

What I saw was a line of notebooks spread across the computer aisle all looking roughly the same. They all ran the same OS with no clear value proposition in favor of one over another except for price.

So as I watched consumers come in and shop for notebooks what was the first thing they went up and looked at? The price tag. Price is important but it should not be the only value proposition of a consumer product.

In a mature product market consumers move to shopping from price to preference.

PC’s Are Now Like Cars
I use this analogy quite a bit but the automotive industry I feel is the best example of a post mature product market to study.

There are more examples of technology and automotive industry similarities than I have time to get into but we can look at a few.

When consumers shop for cars they already know what they want based on their needs or preferences. Do they prefer a truck, do they prefer a minivan, do they prefer an economy car, do they want to save gas, or do they want to drive in luxury. These are all pre-defined buying characteristics that consumers are self-aware of.

The automotive industry has segmented and each segment has its own unique needs, wants and desires.

Similarly with regards to the technology industry consumers are shopping for PCs and other devices based on preference. For some price is their preference, like an economy car, however that is not the only differentiation opportunity.

Hardware Differentiation is Not Enough
All of that context on mature markets and the automotive industry to say that hardware differentiation is simply not enough.

Apple differentiates itself in three vectors all working together. These vectors are hardware, software and services. Apple services differentiate their software which differentiates their hardware. Because Apple is vertically integrated and own’s every level of their differentiation they stand apart from the pack.

It is for this reason that some level of vertical-ization is necessary in order to compete going forward. It is also for this reason enabling technologies or middleware companies need to figure out how to help their hardware partners differentiate their products.

This is never more glaringly true of a problem than with Windows and with Android. Android and Windows are middle ware software providers that solve the software problem for hardware manufactures but add the problem of differentiation.

Devices running the same software can only be different through hardware. This is why in my scenario above when I was looking for notebook differentiation I saw all the notebooks at Best Buy running Windows. None of them were really any different because of it.

Differentiation is no easy task in todays landscape. None the less the answer is innovation. Right now I see companies innovating looking through the rear view mirror rather than innovating with a forward-looking philosophy.

Dare to differentiate, dare to innovate and look to the future not to the past.

Read the First in the Dear Industry Series:
Dear Industry: The Series Introduction

2 Reasons HP Should Not Spin Off The PC Business

I have been thinking about this ever since the news broke that HP wanted to spin-off their PC business. My company Creative Strategies, Inc has a long history with HP of providing industry and trend analysis to many key groups within the company. Because of that relationship, it would pain me to see HP make a questionable decision to spin-off their PC business.

Right now HP appears to be a company with serious identity issues. We don’t know what is going to happen with their current CEO although rumors are floating that there may be a change at the top. As the board is faced with many tough decisions, I genuinely hope that with these gut wrenching decisions they also reconsider spinning of the PC business.

Bloomberg ran a report yesterday stating that they are in fact reconsidering the proposal to spin-off the PC group. I hope this report is true.

There are two fundamental reasons why spinning off the PC business is the wrong decision for HP.

Hardware Only Business is Dead

A simple look at the history of the technology business highlights some profound truth’s about how hardware evolves. We are in a world where every PC maker other than Apple is dealing with the commoditization of hardware. If HP was to spin-off the PC business they would leave the new entity to solely compete in the global economy with price. This is a battle that a US vendor cannot win against the low-cost strategies of Asian OEM’s.

Proprietary software and services are needed in order to differentiate and add value beyond price. A hardware only business does not have this advantage and can only compete on price.

A hardware only PC business would not likely survive where the industry trends are heading. Which leads to the second reason this is a bad idea.

We Would Lose a Key US Based OEM

If the above scenario played out we would lose a key US-based PC vendor. Only Dell and Apple would be left. Please note, I am not saying HP would go away, only that the spinoff and whatever it would be called have a hard time thriving as a hardware only business.

Because of the historic role HP’s hardware has played in the evolution of the technology industry, it would be tragic if it faded into irrelevance.

I fully understand HP’s desire to move more into the software and services business. Apple has the same strategy, but for Apple, the hardware continues to be a key strategic element to complete and differentiate their ecosystem.

I wish HP would understand this and value the role of hardware in our computing future. Indeed, their PCs and tablets can provide a powerful screen that taps into next generation software and service optimized for their own ecosystem. And they have many of the key elements to continue to thrive as a hardware, software and services company.

Rather I would love to see them craft a vision of what the future should look like with HP hardware, software and services in it and then relentlessly innovate.

Is Apple Stock and Customer Satisfaction Tied Together?

The American Customer Satisfaction Index (ASCI) recently released their findings across multiple industries. Unsurprisingly Apple continues to reign supreme when it comes to customer satisfaction. In fact according to the release Apple’s customer satisfaction is now at 87% 9 points higher than their closest competitor.

There was however another point in this release that caught my eye. A quote from the release states:

“In the eight years that Apple has led the PC industry in customer satisfaction, its stock price has increased by 2,300%,” remarks Claes Fornell, founder of the ACSI and author of The Satisfied Customer: Winners and Losers in the Battle for Buyer Preference. “Apple’s winning combination of innovation and product diversification—including spinning off technologies into entirely new directions—has kept the company consistently at the leading edge.”

Perhaps there is a correlation to customer satisfaction and stock price. One could make a strong argument looking at the above quote and statistic.

This I believe speaks to the difference in thinking quarter by quarter with your product roadmap and to Apple’s approach that innovates for the long-term and for the future.

Many intelligent financial analysts and consultants have remarked on how developing products that satisfy consumers is a more valuable and sustainable strategy then developing one that satisfies investors.

The Harvard Business Review calls this thinking Customer Capitalism and I believe it is spot on.

I would argue that this data validates that focusing relentlessly on the customer experience as a holistic part of the brand and product experience pays off with Wall Street in leaps and bounds.

Dear Industry: The Series Introduction

Tech.pinions exists to be a valuable resource for the technology industry. Editors, authors, and contributors to Tech.pinions are all professionals from within the technology industry. Most of our writers are professional analysts whose life work and analysis is designed to be speak to and for the technology industry at large.

Our goal as a site is to be a platform where credible and respected voices can add valued perspective and expertise on all the latest happenings in the world of technology.

Thus enter the Dear Industry series. With this series our aim is to address at a high level big picture topics that need to addressed and wrestled with within the technology industry.

Topics like innovation, strategy, differentiation, competitive advantage and more are all high level topics we intend to address and share our unique perspectives on.

The aim of this series is to, at a high level, be accessible by the technology industry at large using Tech.pinions as the platform.

Like Tech.pinions itself, our goal with the Dear Industry series is that it would be a benefit for the whole of the technology industry.

The iPad is Hot in Small Business

One of the most interesting things related to our tablet research of late is what is happening with the iPad in small business.

Apple in their last earnings reports made some points related to the iPad and the enterprise but it is small businesses who are adopting the iPad at incredible rates.

We are still underway surveying small business all over the US but with more than two dozen small business owners already surveyed it is clear the iPad is hot in small business.

This is a significant trend. First of all because the sales of these devices would fall under general consumer sales. So we wouldn’t necessarily be able to track them as specific sales to be used in small business like we can enterprise adoption.

I have a hunch, which would be hard to quantify, that a significant portion of iPad sales are being put to use in small business in some way shape or form.

I have talked to restaurant owners using them to take orders and send automatically back the kitchen. I have talked to financial advice firms using them for notes, organization, and to walk clients through data. We have talked to consultancies, legal firms, small boutique shop owners, automobile dealerships, photographers and a host of other types of small businesses and nearly all of them are finding creative ways to integrate the iPad into their business.

Interestingly so far in our study over 85% of small business owners we surveyed are either using the iPad in some way or plan to purchase and use one within the next year.

A key observation coming out of this research so far is how all of the small business owners using the iPad for business have been using non-customized apps right out of the app store.

This differs from many enterprise solutions where the enterprise or IT department often times creates custom applications. Small business owners don’t have the luxury or resources to have custom apps built to serve their needs so they find apps or combinations of apps that fit their purposes.

Another key finding in the remarks of many small business owners and users of iPads was that they felt the iPad made them competitive. For some, part of their reasoning for buying the device was that their local competition was now integrating iPad and they wanted to stay current.

Another fascinating finding was how many small business owners found that using the iPad as a part of their business gave their customers or prospective customers the perception that they were “with the times” or on top of the trends. They remarked how using technology and specifically the iPad was “cool” and they wanted to send the right message to customers.

Perhaps even more interestingly many also said that they believed that using the iPad actually helped them land new customers. This was especially true when small business owners, like several financial firms we spoke with, compete with larger firms who are not using iPads. These small business owners believed that new customers viewed their use of the iPad in their services business gave them an edge over the larger firm’s reps who still used pen and paper. Apparently it isn’t cool to show up to a meeting with a pen and paper these days. Ebay mobile is currently running a commercial that makes this point.

Lastly although we have only spoke with just over two dozen small business so far, many remarked on how many iPads they are seeing by small business in their towns by friends and even competitors. It is clear the trend of iPad in small business may be larger than most anticipated.

When asked about Android tablets price and lack of key apps for their business needs were the biggest factors keeping them from considering anything other than iPad at this point. That and they kept hearing glowing reviews from other small business owners about iPad and mixed results if any about Android tablets.

The iPad phenomena is so much more than just consumption. Small business owners, who can claim the iPad as an expense, are finding new and creative ways to integrate iPad into their workflow.

My sense tells me that we are barely scratching the surface of iPad in enterprise and small business. I believe the next year will shed much more light on the potential for iPad and business.

If you are a small business using iPad in unique ways feel free to share with us how you are using iPad in your business.

The Apple Brand Is a Powerful Selling Point

At the Intel Developer Forum this week I saw a number of interesting products and product concepts from a wide range of manufacturers.

As I looked over many of these products, some from known brands and some from more obscure brands, which are known as white labeled laptops, I started thinking about how important the role of the brand is as it relates to consumer purchasing decisions.


Currently my consumer research focus is North America, so I can’t speak for the other regions, but in the west consumers resonate with brands.

I saw many very thin and very light notebooks called UltraBooks from Acer, Asus, Toshiba and a slew of others.

Many of the UltraBook designs that I saw were poorly attempting to look like the MacBook AIR. One from Asus came incredibly close. However it was that product that got me thinking about the role of brand.

My thesis, which is and has been evolving, is that Apple’s brand is a major factor in the overall appeal of their products. This is something that can not be created or duplicated overnight by competitors.

Of course Apple makes great products but these products fall under a very distinguishable and relatable brand.

I see a lot of interesting UltraBook designs coming from manufacturers. Intel wants to get these prices down so the lure of one of these products over the MacBook Air would be price.

But here is the problem. A growing number of American purchasers don’t want cheap. Our research is showing that the value and premium segment of the market is growing at an alarming rate. And, with that segment, brand matters.

In the US and perhaps even in growing segments all over the globe, the strength of the Apple brand is unparalleled in computing currently. That causes real problems for companies like Acer, Asus, Lenovo, Toshiba etc who don’t have nearly the brand strength as Apple.

I view what is happening in personal electronics similar to what has been happening with fashion. People make brand or style centric decisions based on what they feel reflect them as a person. Again in this reality brand is very important.

Never before did this hit me with such truth than when I was doing consumer market research for a PC OEM who was struggling in the consumer segment.

My goal of the research was to explore the role of design with the younger more influential early adopter audience. The issue of design as a personal statement hit home when I showed the current non-Apple notebook design to a college student and asked for his thoughts. Calmly and quickly he said to me “I wouldn’t be seen in public with that notebook.”

Consumers in the west are now making conscious decisions about the tech products they buy and how carrying that brand around is a part of their self-image. Because of that, brand matters.

The Apple brand is just one part of a fast and deep collection of competitive advantages.

We will be doing more research on this subject soon, but I have a hunch that if you stuck any of the current UltraBooks next to the MacBook Air and asked which product would these customers would buy, a very large group of them would choose the Air and the Apple brand would play a role in that decision.

Many could argue that price matters. To this I would agree however I don’t believe that in the US, where PC’s are a mature market, that price is the only factor in that decision. Even if UltraBooks come in at $200 or more less than the MacBook Air, I don’t believe in any way that threatens Apple’s growth going forward.

How Google Can Learn From Microsoft

There has been some interesting commentary around how different the approach between Microsoft and Apple is as it relates to their developer conferences.

It is certainly true that these two companies approach them differently but as Steve Wildstrom points out in his article on why Microsoft’s approach is more open than Apple’s, it is because of the more complex ecosystem Microsoft has.

Microsoft has many vendors, who build a wide variety of product configurations based on their software. Because of that it is very important that Microsoft be open and clear with all in their value chain so that the appropriate plans can be made.

With that in mind and after reading Steve’s article I can’t help but think about how very different Microsoft’s developer and partner strategy is from Google’s.

With Microsoft they are out there talking to OEM and ODM partners early, actually working with them to make better products and tune their systems to work with Windows 8. And oh by the way they are doing this and have been doing this well over a year in advance of their product.

Now Microsoft and Google have almost identical partner ecosystems. They both rely on hardware companies to bring their software to market. Yet Google does not talk to their partner ecosystem until much later in their development. Unless of course you are one of the chosen few to go live with the latest Google release you are almost kept entirely in the dark.

That may be entirely fine for Google but that puts your hardware partners in very difficult positions because they plan their hardware and make design plans with the ODM’s at a minimum of 8 month’s out.

I can’t tell you how often I hear from OEM and ODM vendors who express their frustration with Google on how they work with their hardware “partners” around Android.

Because of this and because Microsoft takes a much more partner centric strategy with their software, I am hearing a great deal of excitement from around the industry for this next release of Windows. It appears that the vast majority of those who make PC’s and tablets are going to rally around Microsoft for this next release.

That of course does not ensure its success, my only point is that by working with partners early in the cycle it gives them a more confident feeling and approach to supporting the Microsoft ecosystem.

The level of secrecy that Google employs around Android literally makes zero sense. It would be one thing if Android was light years ahead of anything on the market in terms of an OS but the reality is it is not. I’m sure we can debate this all day but I see no value in Google keeping hardware partners in the dark as they do, and all it does is rub key partners the wrong way.

Google should learn from Microsoft on how to take a true partner centric approach to their development of Android and treat all who desire to ship Android as partners and not keep them in the dark until the last possible minute.

How Microsoft is Starting Over With Windows 8

One of the things that I have been observing as we have seen bits of Windows 8 get shared publicly, is the drastic re-thinking of the OS and the role of the OS by Microsoft.

Obviously the most glaring sign is the Metro UI which presents information in an entirely new way. The other somewhat obvious but somewhat subtle observation is around touch. Given that Microsoft has been thinking about touch as it relates to Windows for quite a while now, it is surprising that they actually got it right as late as they did.

Regardless of how long it took I actually think Microsoft has finally nailed touch at least in the area of the operating system. The next question will be can they and their development community nail touch with applications.

The last interesting observation is around Windows on ARM. There is still very little information regarding and being shared with WoA (Windows on ARM), which may not be a good sign, however we do know that new applications created using MSFT’s tools are supposedly able to cross both X86 and ARM versions of Windows.

There is still the question of legacy applications written for X86 and whether they will work on ARM. As far as I can tell from talking with industry folks the consensus is no, they would need to be re-complied or written again from scratch. Another early observation and perhaps needed clarification is whether or not the non-Metro UI version of Windows is available on ARM. I am yet to get a clear answer on that point but some trustworthy sources tell me only the Metro UI is Windows on ARM.

Now if that is true that existing Windows applications are not backwards compatible with ARM and the Metro UI is the only way you experience WoA then I am left to conclude that Windows 8 on ARM is essentially a brand new operating system.

It is an entirely new look and feel, it requires brand new apps with no support for existing ones, therefore an entirely new third-party development ecosystem needs to cultivated. If that is true then how can we not consider it an entirely new OS platform?

So why doesn’t MSFT call it something other that Windows? The answer I believe is because WoA and Windows 8 holistically is Microsoft’s best attempt to completely start over with Windows.

Windows on ARM is clearly a re-start of Windows, assuming my claim of a new OS is valid, and they are pushing the Metro UI as a larger part of the overall Windows experience while downplaying the more familiar start bar, program, task manager, application bar part of the Windows UI.

I don’t think it is any industry secret that Windows has continued to maintain many of the same fundamental OS technologies for over a decade. Some of those things like the registry for example may not be the best ways to go forward. This is why I believe Microsoft knew they needed a fundamental rebuilding of the OS at a functional and fundamental level and Windows 8 is their best attempt at a re-start.

If they can successfully transition their partners to a new OS that is built to thrive in the PC and the Post-PC era then it will benefit them greatly.

I actually applaud this work of theirs to scrap many of the things they clung to from Windows of the past and look more to the future role Windows will play in the personal computing ecosystem.

In fact if you think about it there is no better time for Microsoft to have a fundamental re-start of Windows than now. My ONLY hope is that they execute on this platform and that they get it right the first time.

I do not believe Microsoft can withstand the “third times a charm” syndrome they have faced in the past given how fast this market is moving.

There is No Such Thing as an iPhone Killer

Samsung recently released its latest smart phone in the Galaxy S II line called the Epic 4G. Some in the media are hailing it as an iPhone killer, a statement that is at its deepest level entirely ignorant. Amazon will soon be releasing a tablet version of their popular Kindle e-reader and again people will proclaim or at least ask the question “is the Kindle Tablet an iPad killer.”

What I want to make clear is that there is no such thing in today’s technology landscape as an iPhone or iPad killer, or any other product killer for that matter. Many seem to assume that the tablet and the smart phone markets will be very similar to the historical PC landscape. Historically with PCs one dominant software operating system dominates and the rest have marginal market share at best. Even the PC landscape is changing.

The fact is that the market for PC’s, smart phones, tablets, and anything else we dream up will never again look the PC landscape during the 90’s and early 2000’s. There simply will not be one single OS that dominates the landscape. The market will support many and therefore there will be many choices and choice is good.

The reason for this is because when a market is maturing there is generally fewer or less quality options. There is in essence a market standard that leads the market to maturity. With PCs it was Microsoft and Windows which led the way as the standardized technology by which the market matured. With the Smart phone and tablet it will be the iPhone and the iPad that will lead the market into maturity. However once a market matures it begins to segment.

With Windows and the PC it took the product nearly 25 years to reach maturity. Smart phones, tablets and more will not take nearly that long and in fact will mature in around 3-5 years.

Due to the rules of market maturity, I can confidently say there is no such thing as an iPhone or iPad killer. There are only other product choices. John Gruber over at Daring Fireball makes some similar observations on how the market will support multiple solutions.

Why do I know this you ask? Because a Toyota Corolla is not a Mercedes-Benz killer. A Ford Truck is not a Prius killer. And an even closer analogy, a BMW series 3 is not a Mercedes C300 killer or vice-versa. The market can sustain all these automobile products.

To use another example Pepsi is not going to release a Coca-Cola killer. You simply have a choice of Coke, Pepsi, Sprite, Root Beer, Mt Dew, etc.

I have been studying the automobile market as it relates to a mature consumer market for some several years now and the similarities between the automobile market history and the technology market history are strikingly similar. The big difference is that the automobile market is about 20 years more mature than the PC industry. However when you study how the market matured and consumers adopted new technologies in the automobile industry you find moments in time that are very similar to the moment in time our industry is currently in.

Therefore we learn a lot about how today’s fragmented yet competitive automobile market and what it can teach us about what the consumer technology landscape of the future will look like.

This is the reality in mature consumer markets. There is a dominant solution that leads the market to maturity as consumer who are interested in their first product in the maturing market go with the market leader. As they become more familiar with their needs or wants with that product they then begin to shop around based on preference.

This is why the abundance of Android smart phone in the early stage of a markets maturing is actually more harmful than productive for the Android solution. I have stated before that the Android market is too saturated for its own good and that will be the case until the smart phone market reaches peak maturity in 3-5 years.

The critical key to any company in the market wanting to maintain or grow market share is to be around when the market actually does peak. Because once it does it is very difficult, without a pure market disruption, for new entrants or those who have minimal market share to grow.

Establishing market share early is of the utmost importance.

Why Some Products Are Not For You

Credit - slcook52 (Sylvia) Flickr
One of my favorite commercials growing up was for a product called Bubble Tape. If you don’t know or don’t remember, Bubble Tape was six feet of bubble gum rolled up tightly to fit into a can that looked like chewing Tobacco. The gum tasted just like bubble gum but you got six feet of it. What I loved the most however was the tagline which went “six feet of Bubble tape, for you not them” said in a confident and aggressive voice.

Sometimes in debates I get with people over the whole Windows is better than OSX or Android is better than iOS or Windows phone, I just want to yell that’s because it isn’t designed for you.

The smartest companies in the world pick a segment of the market and own it, defend it and innovate for it. Perhaps the old adage proves true again that you can’t be all things to all people. Yet that is what so many tech companies try to do. They want to go after every segment of the market with a one size fits all design approach, thus spreading their products and their resources to thin.

What becomes of companies who try to go after every segment of the market is that the end up not being as good in areas where companies have focused. For example the iPad is not as good of an e-reader as the Kindle for various reasons. There are pros and cons to reading on both however for the serious reader of books, who has chosen that as the dominant use case, they will generally choose the Kindle.

There is a specific use approach to product development where a company or a technology just focuses on a limited set of use cases and makes the product the best for people to whom those use cases are valuable.

Car companies think like this. They don’t try to create a car that is all things to all people. If a car company tried to create one single car that appealed to those in the market for a truck, or a mini-van, or an economy car, or a luxury car, that car would actually be none of those things. Instead car companies develop cars for specific segments of a market.

Yet this is not how we build technology products. Currently we develop products that are all encompassing. All things to all people. That has gotten this industry pretty far, however in the future I believe technology companies who make personal technology products will need to think more like car companies.

For now however just starting by looking at the Law of Diffusion of Innovation is helpful.

What this image demonstrates is how the market segments are broken up at a high level using the law of diffusion of innovation. It also shows how large as a general percentage of the market each segment is.

The consumer of technology in each of the market segments has different expectations and uses with their technology. Therefore there is a lot of product fragmentation and differentiation opportunity in each of the market segments.

Designing a product for the innovators and early adopters is very different than designing a product for the late majority for example. Apple, I would argue, focuses on making products for the middle two markets in the chart above. The early majority and the late majority. That market consists largely those who are not tech elites but want products that “just work” and add value to their lives not make it more challenging.

Moving forward in this new world of computing where more than just the PC is an important part of the consumer ecosystem, tech companies need to understand how important it is to design for specific parts of the market rather than be all things to all people.

All Eyes on Microsoft and Intel This Week

This week two industry heavyweights will be holding conferences around their companies greatest assets. Microsoft will be holding its Build Conference where they will highlight and showcase Windows 8 their next major OS release. Intel will be holding its annual Developer Forum which is designed to promote and encourage new innovation in hardware and software for Intel’s X86 CPU architecture.

Myself and many in the industry will be closely tuned to these events this week as we look for Microsoft and Intel to show us their vision of the future of the PC and post PC landscape.

Both Microsoft and Intel are key players and heavy influencers in the technology industry. These events are important for them to demonstrate to the world, and more importantly to the key players in their ecosystem, their value.

With Microsoft I anticipate much of build to be about Windows 8 on other platforms than PC’s. I expect, and hope, they show how Windows 8 will add value to the hardware manufacturers who have set their eyes on smart phones and tablets. We already know that Windows 8 will inevitably be shipped on new PC’s going forward. If you make PC’s for a living, and are not Apple, you have no choice but to use whatever Microsoft builds for you. I am more interested in what Microsoft has to offer in the areas where they are not the only OS in town.

I also expect their Windows on ARM initiative to be highlighted and emphasized. I believe the Windows on ARM campaign from Microsoft is one of the more important if they want to see their Windows OS get to more devices like tablets and smart phones. Those devices do not run Intel’s X86 architecture, but rather run an ARM based architecture. If Microsoft can gain momentum getting software developers to use their tools to develop software for Windows on ARM then they have a clear path to bring Windows software to new devices running the ARM architecture.

Intel on the other hand sees the trend of Post PC devices and has to be worried because that future right now does not include them. Intel is aggressively working on bringing their ATOM processors to smaller devices to compete with ARM, the only problem is right now there is no competition. Manufactures looking to bring tablets and smart phones to the mass market are not even considering Intel at this point in time.

Intel at IDF this week, I am betting, will focus heavily on mobility and Smart TV. Within mobility I expect them to push heavily their UltraBook initiative showing off a range of new devices and PC prototypes to showcase the kind of devices they want to see hit the market.

(Related: WIll UlraBooks Make PCs Interesting Again)

I would not be surprised if Intel also shows off a tablet or two and perhaps even some early smart phone hardware running Intel silicon.

The bottom line is both Microsoft and Intel making big showing at Build and IDF are key. They are both key players in helping drive innovation in the technology industry.

We will see what kind of vision both of them provide of the future.

iOS is Still The Best Choice For Developers

Yesterday The Yankee Group released an interesting set of findings from a research study they conducted. The crux of the article was around how Android app piracy is hurting Android developers. The report claims that because of app piracy on Android, developers are losing up to $10,000 in revenue.

We have known for a while that Android has an issue with malware being brought in through apps and now to add to the issues plaguing developers they now have the added threat of having their software pirated.

Android has always catered to the “tech tinkerer” so it isn’t shocking that these underground app stores exist where you can get any app you want for free.

Google’s lack of control or polices related to the Android Market is one of the biggest weaknesses of the entire Android ecosystem. A quote from the report states:

“Android apps are living in the Wild West without a sheriff,” said Carl Howe, Yankee Group director of research and author of the report “Android Piracy: How Republished Apps Steal Revenue and Increase Costs.” “With five other major mobile OSs competing for consumer dollars, Google can’t afford to simply let pirates kill app developers’ businesses. They need to foster some law and order or developers will flee to other platforms and Android will lose customers.”

The Yankee Group’s survey findings from Android developers parallel our discussions with them as well. Many developers we speak with, who develop apps for both iOS and Android, constantly tell us of their frustration and fear with the Android Market.

This is one of the reasons we think that what Amazon is up to could prove disastrous for the Android Market. If some of our early theoretical analysis is correct, Amazon may be planning to use their fork of Android to entice Android developers away from the Android Market.

From many of the developers we have spoken with who also submit apps to Amazon’s app store we have heard much more positive things. Things like Amazon supports them more, has better recommendation algorithms to help their app get discovered and economic value as well. On top of that Amazon doesn’t accept every app submitted, they do actually have a process for approving quality applications to their store.

Based on much of our own research as well as many new reports like the one from the Yankee Group, we have to conclude that for the time being iOS is still the safer and more reasonable platform for developers to continue to pour resources into developing applications for.

For any platform to be successful it needs to have a robust, thriving and more importantly confident software developer community. Google needs to resolve these issues, take more control and cater more to developers if they want their version of Android to continue to garner support from developers.

To add further support for the argument that iOS is still the best place to focus precious developer resources to, the report also states that iOS consumers download six times more apps than Android consumers. So for the developer there is a 6x better chance of getting their application into the hands of consumers.

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