Smartwatches Need to Learn from Tablets’ Mistakes

On Monday, IDC released its http://www.idc.com/getdoc.jsp?containerId=prUS41996116″>third quarter market share update for wearables and it was not pretty. While overall shipments grew marginally year on year, reaching 23 million, 85% of sales remained in the more aggressively priced fitness bands. The third quarter results need to account for the launch date of Apple Watch Series 2 late in the quarter. Small as it might be, Apple is still dominating the smartwatch market, and I do not see this changing anytime soon. In an email to Reuters, Tim Cook attempted to set the records straight by saying, “Sales growth is off the charts. In fact, during the first week of holiday shopping, our sell-through of Apple Watch was greater than any week in the product’s history. And as we expected, we’re on track for the best quarter ever for Apple Watch.”

The Smartwatch Market Shares Many Similarities with the Early Tablet Market

When looking at the wearables market, it is hard not to draw a comparison to the early stages of the tablet market. As a quick reminder, after the launch of the iPad and an initial influx of tablets that tried to compete with it, Android manufacturers relegated themselves to the lower part of the market. Here, consumers were happy to spend money for a more limited experience, more in common with a media player than a PC. As several Chinese players entered the space, tier one players defected, leaving Apple to control the most valuable part of the market.

The longevity of the tablet category seems to depend on tablets establishing themselves as PCs, thus coming full circle from the very device they wanted to differentiate themselves from.  Right off the bat, tablets replicated our smartphone experience, giving us the apps we know and love optimized for a larger screen, larger batteries, and more powerful processors. As smartphones grew in both in size and power, there was little differentiation left to be delivered. Failing to find their place between the smartphone and the PC, tablets had to try and replace one of these devices and, as no consumer in their right mind would give up their smartphone, the PC became the obvious target. Vendors are soldiering on in this space either by making devices look like a tablet and masquerading as 2-in-1s or trying to position them as the next computing platform.

Smartwatches Have No Point of Reference

Wearables, like tablets, are struggling to become a must-have for consumers. As it was for tablets, the market is polarizing towards the lower end where fitness bands offer a limited focus, simpler value proposition and, most importantly, more affordable price points.

The route to success for vendors will have to be very different, as smartwatches will not benefit from going full circle to either of the products they sprung from in analog watches and smartphones.

Tablets had a much easier starting point than wearables. Replicating what the smartphones could do was relatively simple, and although, many consumers remain to be convinced, the value proposition was clear.

For wearables, it was much harder. Early fitness bands have not become a mass market gadget, which makes understanding how a very personal device like a smartwatch could appeal to a very diverse group of people quite difficult. The combination of always-on and a small screen requires information to be displayed uniquely, both in layout and prioritization. This calls for both user interfaces and applications to be rethought. Apple, which generally does not enter a market still in its infancy, understood there was a need to learn directly from users with real life experience. The improvements to Apple Watch UI as well as the refocus around health are direct learnings from that first market seeding.

With an improved GPU on Apple Watch series 2 and series 1, we are also seeing new dedicated apps better catering to the use case rather than being a replica of the phone app.

Personal Means Finding Different Hooks

Fitness and health in the wider sense will offer little opportunity to devices in the high-end. This is because, for most consumers, fitness and health translates to simple measures such as steps and calories and these can be delivered by devices that cost a fraction of what smartwatches cost.

Adding value to these categories requires some degree of evangelizing by vendors. Apple has gone quickly down this path by showing active calories, a comprehensive list of workouts, stands, and, more recently, breathing. Gamification of health and fitness will appeal to some users, while ties into online coaching services or health insurance rewards might add value for others. Creating an ecosystem that adds value and has the user think such value comes from the device they are wearing is key.

However, the difficulty of wearables is the very personal nature of the device. Not all users find the same value from the same features. With smartphones, it was easy. No matter what apps we had on them, we all did one thing: make calls. Outside of health and fitness, there are other areas where I see an opportunity to hook consumers with wearables:

Payments: much more convenient than taking your phone out of your pocket

Authentication: today, it might be unlocking your Mac or your phone. Tomorrow, it could be your home or any of the smart devices in your home or office.

Decluttering inbound information: if used properly, a smartwatch can help you declutter your information flow by letting you see only what matters to you when it matters to you. Setting up what social media, emails, text messages get to you allows you to stay more in control without getting overwhelmed by being connected anywhere anytime.

Reclaiming your time: by allowing you to see what matters, smartwatches also help you decide what needs attention straight away or can be deferred. Admit it, when you see a text or an email, often it does not require you to act on it immediately. If you just read messages on your phone, you feel compelled to reply and, once you are on your phone, you might as well check Twitter or Facebook or read that other email that arrived earlier.

Most of the examples I outlined here speak more to a user who is technologically very engaged than a mainstream user. This is not the same as an early adopter who often also has a larger disposable income. Technologically engaged users who have multiple devices, are engaged with apps, and spend most of their time connected will see the appeal of smartwatches when properly positioned but might not see the value at the top of the price range. Apple’s move to update the GPU in the Apple Watch Series 1 while selling it at a lower price speaks to this point exactly.

Where Does This Leave Android Wear?

Frankly, this leaves Android Wear with a lot of work to be done. It seems to me that not much was learned from the tablet market poor dedicated app ecosystem, lack of software differentiation and market guidance for the vendors. The slow software update cycle, as well as the limited improvements, clearly point to a Google that has bigger fish to fry at the moment and it is unwilling to invest in a market that has yet to prove itself. Or, and I hope this is more the case, to an Android Wear Team that is regrouping to figure out how to deliver true value.

Wearables could turn out to be important assets in both the connected home and AI battles. So, while hardware might never give vendors the sales volumes they were hoping for, it might give them yet another access point to highly valuable users which, in the long run, will prove an incredible investment. Apple knows this and continues to invest in the space. Sales results from Watch Series 2 might convince others there is more to wearables than a race to the bottom.

Will Amazon Silence Alexa with a Screen?

According to Bloomberg, Amazon is developing a high-end Echo-like device which will feature a better speaker and a seven-inch touchscreen. The speaker is said to be larger and tilt upwards so the screen can be visible when on a shelf or counter and the user is standing. The Wall Street Journal reported earlier this year that Amazon’s Lab126 hardware unit was working on an Alexa-powered device featuring a tablet-like computer screen known internally as “Knight.” The device will be running a version of Fire OS.

The temptation of adding a screen

The people familiar with the product who talked to Bloomberg said the screen will make it easier to access content such as weather forecasts, calendar appointments, and news. It might just be me but I struggle to see this as a solid business driver. The great advantage of using Alexa for my morning briefing is that I can listen to it while I get breakfast ready or pack my daughter’s lunchbox. I would not have time to stop and read or even look at something. Also, Alexa’s voice travels so well across the room over the morning chaos, a screen would have me move close to it to be able to look at it.

I cannot help but think the main task a screen will help with, when it comes to Alexa, is shopping. If I am trying to buy furniture, clothes, gifts, being able to see them is a huge improvement vs. Alexa just calling out the description of the item.

Having a screen could, of course, also help with content and allow Amazon to enrich some of the experiences by adding a visual output to the voice. Music is a good example of this. But the question is whether Amazon needs to add that screen to Echo.

While a screen could add to the overall experience, I strongly believe it should not be an alternative input mechanism. Adding touch to voice would weaken Alexa in an environment where consumers feel very comfortable using their voice. As voice-first is not yet an entrenched behavior, giving an alternative would slow down adoption and negate the considerable progress Amazon has made in this area.

Leveraging Existing Screens vs. Adding a New One

There are plenty of screens we have in the home Alexa could leverage — some might even be “controlled” by Amazon, like a Fire TV or tablet. Others could be exploited by the Alexa app, like our phones. If our interactions with Alexia remain voice-first/only, the screen would be a simple display with no need to interact with it. This would make the Fire tv the perfect companion for Alexa.

The risk of adding touch is, even if Amazon does not intend it as an alternative input mechanism, consumers at this initial market adoption stage might easily revert to old habits. In a way, this reminds me of how people, at the beginning of the tablet market, bought a keyboard to use with their tablets so they could revert to a user experience they had experienced for so long with PCs and that felt familiar and safe.

Over time, as AI continues to develop, I could see a role for a device that intelligently understands what is appropriate to show on the screen and proactively does that by having Alexa suggest, “Do you want to visualize it?” or saying, “let me show you.” There are instances where displaying the content seems easier than an alternative solution. Recipes are often used as an example to illustrate how voice-only does not work. Yet, if you had an app that lets Alexa break down the steps so you could literally have her coach you through the recipe and check, “Ready?” or “Tell me when you are ready”, you would not need to visualize the steps.

The Risk of Turning Alexa from Leading Actress into a Supporting Role

Echo was successful because people bought it for what it was: a speaker with a digital assistant. Actually, a digital assistant in a speaker would be a better description of what consumers were buying. Users did not have other options but to talk to Alexa to get her to do anything. There was no old behavior to revert to.

Ironically, Alexa being trapped in the little cylinder allowed her to be free. Free of any limitations that being part of a more traditional device, such as a smartphone or a tablet, would have imposed on her. Trying to turn Echo into a glorified Fire tablet could demote Alexa to a mere feature vs. the genie in the bottle she is known for. For people who bought Echo, there was nothing else the device could do other than allowing them to interact with Alexa.

Amazon needs to penetrate our homes more as well as expand beyond them to grow engagement but this needs to be done in a way that leaves consumers deeply connected with Alexa so their reliance feeds their loyalty. Voice needs to remain the main input as this is ultimately how our assistant will become personal.

While competition in this space is growing, the battle will not be won by adding features that, while differentiating in looks, weaken the core experience. Accelerating Alexa integration with other devices, continuing to expand her skills, and improving her knowledge will help to stay ahead of the curve and keep users engaged and loyal.

Sleeping with the Enemy Would Benefit Both Microsoft & Apple

Because of what I do, I try different devices all the time. While I have used Windows 10 PCs since they became available, I never made one my main working device. For the past nine years, my main PC has been a Mac with the 12” MacBook as my latest device. Last week, I received a Surface Book with Performance Base and, after setting it up, I decided to try and make the switch.

I was particularly interested in understanding how, as a user, I could continue to benefit from the Apple ecosystem even if I did not have a Mac. Also, what is the opportunity Microsoft has to deliver the best Windows 10 + iOS experience. This is important because there are more iOS users with a PC than there are iOS users with a Mac. So it offers an opportunity for both companies to improve the cross-platform experience. While there might be an opportunity for Apple to convert a few of those PC users, the great majority are comfortable right where they are. Offering an easier cross-platform experience between iOS and Windows 10 as a differentiator for Surface would clearly benefit Microsoft.

Hardware and Windows 10 are the Easy Part

As I prepared to transition to Surface Book, there were specific aspects of my workflow I needed to address.

The hardware was not a problem. I love the keypad. I spend a lot of my day typing and I was not a fan of the keypad on the 12” MacBook. Typing on the Surface Book is extremely rewarding. The mousepad is a little more sensitive than the one on the MacBook but it did not take long to get used to it. The Surface Book’s fan kicks in often and it is quite loud which was a bit of a distraction at first. The quality of the screen is great but I did not find myself touching it very much other than with the pen to write quick notes.

I am not new to Windows 10 so transitioning was not an issue. The most annoying thing was trying to paste using the equivalent of Command-V which obviously did not work. Mac users are very different and many use their systems in a much deeper way than I do so I do not intend to speak for them. If you already use Office on the Mac, your transition will be much easier. If your documents are all in iCloud, your transition will also be easier. When I joined Creative Strategies back in April, I moved to the cloud and my multi-device life became so much smoother. Once I got on the OS X Sierra Beta, things got even better as all the files I am working on are saved to the iCloud Desktop automatically, making my ‘grab and go’ routine more accessible. Something else that changed back in April is I now only travel with my 9.7” iPad Pro. Not having to think if I have all the files I need was extremely liberating. I downloaded iCloud for Windows on my Surface Book and all my work was easily accessed. Pages, Numbers, and Keynote were also fine to use although Numbers documents missed a few functionalities and Keynote presentations had some font issues.

While the files were not an issue, remembering all the passwords for all the websites I use certainly was annoying but, of course, that is something you only do once.

I was concerned about my Apple Watch not being able to unlock my PC but Windows Hello on Surface Book was seamless. I sat down at my desk and the Surface Book was unlocked. It felt like there was no password set up in the first place.

What it All Boils Down to: iMessage and Apps

In the end, what I really struggled with were two things that had nothing to do with the OS per se or the physical device.

I use iMessage a lot during my day and, while my iPhone is always next to me, I have become accustomed to using it on my Mac. I do this because it is more convenient using a full keyboard to type but mostly because it feels more part of whatever I am doing. It remains more central to my workflow rather than a side conversation on the phone.

The other big part of my day is Twitter and the client on Windows is just painful. I asked input from my followers but the sad answer was a validation of my pain. Using Tweetdeck over the browser was far from perfect as, more often than not, I would accidentally close the window. So, as with iMessage, I resorted to having my iPad open next to the Surface Book which really impacted my workflow.

iMessage for Windows

Why does Apple do that, you ask? Because it cements iOS users even more into iMessage vs. having them look for other apps that could have them disengage from iOS. I am not advocating Apple replicate all the features iMessage has on iPhone. There are features that are not unique. So, for instance, keep invisible ink for iPhone and allow stickers. Apple has much to gain here, contrary to what it would be if it put iMessage on Android. iMessage for Windows is about recognizing not all their iOS users will be Mac users and allowing them to still get the best experience from iOS. Opening iMessage to Android will not really do much as far as driving churn and there are plenty of other apps that go cross-platform in phones that leave users with plenty of choice.

With Windows launching People with third party app plugins, it would be a perfect time for iMessage to be included.

More App investment

Microsoft has options to both improve Windows and differentiate Surface. There are steps Microsoft can take in engaging with developers more to get apps to Windows. Even without a phone business to worry about, the Windows 10 environment is behind. There are two sides of this equation. One speaks to the creators Microsoft is focusing on for the next software update and one speaks to consumers who are still very engaged with their PCs and, therefore, want a rich experience. With Apple’s new MacBook Pro on the market and the eagerness to prove the Touch Bar is the right approach for touch on a Mac, I expect Apple to make developer engagement a top priority. Microsoft needs to do the same for the platform but also should step up efforts in first party apps both for Windows and Surface. So, if Twitter is not interested in improving its app, why is Microsoft not building one?

There are other things the Windows Devices team could do for Surface like creating apps that help with content transfer for those people who are not already in the cloud.

Think Beyond Devices and Platform

What my experience made crystal clear is both Apple and Microsoft need to think beyond devices and the OS and think about the whole ecosystem and their ultimate goals.

If Apple is serious about shifting more revenue to services, why not take Apple Music out of iTunes and make is a standalone app? I have not used iTunes in years as, whenever I get a new device, all my backups are in the cloud. Having to use iTunes to play my music on a Mac or download iTunes to the Surface Book seems a very unnecessary step. While I am sure people still buy music, I would bet they are less likely to do it if they subscribe to Apple Music. Even if they did, a simple link to the store would be all they need.

For Microsoft, it is about recognizing that, whether in the consumer space or the enterprise one, Surface buyers are more likely than not to have an iPhone and be entrenched into iOS. Embracing what they are attached to, rather than forcing them to use other tools, would benefit engagement (although it might not benefit a specific service). One Drive is a good example. While it was possible for me to access iCloud, there were more steps to take when wanting to save documents as the default was either One Drive or DropBox.

Together Against Google

Both companies need to also realize facilitating this Windows + iOS world will help limit the risk of Google taking advantage of the weaknesses and grabbing users. Again, this is not about devices. I do not expect Google to win consumers and enterprises with Chromebooks and Android tablets. This is about the much bigger battles: Digital Assistants and AI. Google has always been very good at using its device-agnostic approach to its advantage. Google Maps, Google Photos and now Allo are great examples of the extent Google goes to make sure it reaches valuable customers on other platforms. It is about time Apple and Microsoft started to play the same game.

Unpacked for Friday November 18, 2016

Samsung’s Acquisitions Point to Increase Desire to Independence by Carolina Milanesi

This week was a pretty busy one for Samsung’s M&A team. On Monday, Samsung announced it would acquire Harman International for $8 billion. Later on Wednesday, Samsung announced it was acquiring NewNet CommunicationTechnologies (Canada) Inc.

In very different ways, both acquisitions point to a Samsung that wants to gain more and more independence from Google services in an attempt to strengthen its own ecosystem. This is not just driven by a need to differentiate from other Android makers but from a need to be prepared in case remaining on Android will no longer be an option.

Most coverage of the Harman acquisition focused on the car business for obvious reasons. For what it is worth, I think it is smart of Samsung to focus on the component side and position itself as a partner to the many car manufacturers rather than trying to build its own car. I am sure in South Korea alone, Samsung would find very interested partners in Hyundai and Kia. The other positive part of this acquisition is that components will end up in cars long before a finished product would get to the market, representing a much better short term opportunity for Samsung. Diversifying the client base for the component business is key as sales of smartphones slow.

The part of the acquisition less discussed has to do with the fact Harman International owns Harman/Kardon and JBL. There is an opportunity for Samsung to integrate any new/superior sound technology in their devices – Huawei had just announced at IFA their tablet MediaPad M3 featured Harman/Kardon audio. There is also an opportunity with JBL to go after the smart speaker business, especially considering the other recent acquisition of Viv. Samsung has played with S Voice before with little success but it is clear digital assistants will play a big role in the future and, although I am sceptical Samsung could pull off an experience as strong as Google, Apple, Amazon, and Microsoft can, I do believe there is a lot of opportunity for a voice-first UI to benefit Samsung’s products.

The acquisition of NewNet CommunicationTechnologies (Canada) Inc. is less flashy but a very interesting acquisition that could benefit both Samsung’s consumers and enterprise play. NewNet specializes in RCS infrastructure and services which enable things like high quality voice calls, group calls, video calls, file sharing and more. Of course, the first thought is this is an investment to acquire the capabilities of building a response to Apple iMessage and Google Allo. However, this could also help Samsung in their move into enterprise as it could give them the opportunity to build a secure Slack competitor.

The success on the consumer side will mainly depend on two key points: How engaging and differentiated the experience is going to be and how paranoid consumers are about using Google Allo. It will also be interesting to see if Samsung will create an app that will be Android-compatible vs limiting it to Samsung-only products.

On the enterprise side, I think there is a clear opportunity as Microsoft expressed in a lot of detail a few weeks ago when it launched Microsoft Teams. The solution, however, seemed more catered to very large enterprise possibly leaving small enterprise to look for something else. For many, that something else today is Slack, a success of BYOA to work especially among millennials. As Samsung is pushing its enterprise effort well beyond MDM into a fuller enterprise platform, this seems to be a perfect addition. We’ll see if they feel the same as the first results of the acquisition start to surface.

Apple’s iPhone Supply Constraints Might Worsen Next Year by Jan Dawson

Bloomberg is reporting Apple is planning to use OLED screens in at least some of next year’s iPhones but suppliers likely won’t be able to manufacture enough displays to outfit all new iPhones with OLED. Samsung appears likely to be the sole supplier and, given it has struggled to make enough screens for its own phones, this is likely to cause issues for Apple too.

We are, of course, still in the early stages of the previous iPhone sales cycle, with the iPhone 7 and 7 Plus having launched within the last couple of months. But it’s already become clear Apple is more supply constrained this year than it was last year and largely because it has moved to two new manufacturing elements which are simultaneously driving up demand and slowing down supply. The new dual cameras in the iPhone 7 Plus and the jet black finish available on some of the new iPhones are both more challenging from a manufacturing perspective and yet, also causing unusually high demand for the larger models. Apple’s comments on its recent earnings call suggest it may take longer to get supply and demand in balance this year than last year.

The shift to OLED would be a comparable one, both potentially driving up demand for new phones while also making them harder to manufacture. Apple has worked very hard over the years to secure an adequate supply of various components and materials for its phones, sometimes buying up most of the global supply for these items. But this becomes much more challenging when the suppliers are also Apple’s competitors, as is the case with Samsung. It simply can’t pay a premium to secure the totality of global supply from a company who also needs to supply its own mobile device arm. These obviously won’t be the first components Apple has bought from Samsung but, in past cases, it’s had other suppliers to use as both a hedge and for leverage. That won’t be the case, at least at first, with OLED displays.

All of this means Apple might simultaneously be in a position to drive yet another massive sales cycle for the iPhone from a demand perspective but may struggle to supply enough devices to meet that demand. One way to solve the problem is to make OLED a feature exclusive to the Plus-sized variant, much as it did this year with the dual cameras. For the last three years, Apple has made some features exclusive to the larger phones and it seems as though it wants to go further down this road, whether driven by supply constraints or by a desire to raise average selling prices and thereby drive faster revenue growth.

In all this, it’s interesting that Tim Cook, who oversaw the supply chain under Steve Jobs and led many of the strategies Apple pursued in the past, is now overseeing this challenging shift to components where that strategy can’t be pursued as easily. For all the criticism of Tim Cook that’s come from some quarters on the basis that he’s not a visionary but an operations guy, this is a big operations issue that Apple really needs to crack. So it seems well suited for his talents. It’ll be interesting to see how Apple resolves some of these challenges in the coming years.

Apple’s Design Book – by Ben Bajarin
On a weekly basis, we are reminded of how many people seem to just misunderstand Apple. You could argue the company itself is a Rorschach Test but so is each and every product. I’m not going to be blind to the reality that there are worthwhile things to criticize Apple for. But, too often, the things people criticize are the wrong areas to commit energy. The “Designed by Apple in California” book is the latest example.

I know folks don’t like, or fully understand this analogy, but Apple in many ways, is similar to a high-end car company. Perhaps Porsche comes to mind but so can Ferrari, Mercedes, etc. These are automotive brands where iconic designs and brands set them apart. Not everyone can afford one, nor does everyone plan to buy one, but their designs are nearly universally appreciated. Pay close attention to any one of these examples (throw in fashion brands or even high-end watch brands) and you will find similar design books sitting on the shelves of designer’s offices. The reason is for inspiration. Anyone who does end product hardware or industrial design will have a range of books, not unlike Apple’s Designed by Apple in California book, and they will lean on these for new inspirations as they are working out a design problem or looking for a new idea.

Subtly, this book is Apple’s attempt to give back to the design community in hopes to share how their ideas have evolved and showing many of the unique ways they have tried to create iconic products and designs. At $300, this product is not targeting everyday folks and it is foolish to think it is. People often forget there is a culture around Apple for some people and they appreciate the brand and identify with the emotional, creative, or other parts of the company. It is not uncommon to see an owner of a Porsche or a Ferrari also have similar printed materials either of books or pictures hanging on their wall because of their self-identificaiton with the product and what it stands for. Apple is very much like this and it is one the strongest things they have going for them — the emotion they bring out in a portion of their base who self-identify with Apple’s culture.

Intel Unveils Broad AI Vision – by Bob O’Donnell

At a special event in San Francisco, Intel debuted a sweeping new vision for the role it believes it can play in the rapidly evolving and highly topical field of Artificial Intelligence. The company put together an impressive set of messages that covered everything from definitions for the still little understood fields of AI, machine learning and deep neural networks, through silicon announcements, software unveilings, new customer partnerships and even a new sub-brand.

The company made clear that it believes the AI market is still in its infancy and that there are plenty of opportunities for it to make a very significant mark. The last point is important, because there’s been a great deal of press and attention to date on the role that GPUs can play in AI and deep learning, driven primarily by nVidia’s strong messaging work.

At Intel’s event, the company discussed a variety of different efforts they’re making to impact the AI market—an opportunity the company clears sees as being strategic to its long-term growth. On the silicon side, the company unveiled a new chip code-named Lake Crest, expected in the first of 2017, which uses the work done by Nervana Systems, the AI company that Intel purchased earlier this year. The new chip architecture is specifically optimized for deep learning algorithms and includes 32 GB of high-bandwidth memory (HBM2) and offers high-speed I/O and proprietary chip-to-chip protocols to handle very large deep neural network models.

Intel plans to use the Nervana sub-brand to help unify all its AI silicon and software efforts. Speaking of which, the company also described a complex set of software offerings that are designed to let data scientists pick from a variety of open source AI frameworks, including the company’s own Neon framework, which came as part of the Nervana acquisition. Essentially, Intel has created some core software that will optimize algorithms created in any of these frameworks to run quickly and effectively on a range of Intel hardware—from x86 CPUs, through Xeon Phi chips to Altera FPGAs and, eventually, to the Lake Crest family of AI chips.

In addition to the products, Intel announced several partnerships with companies such as Google and insurance company USAA to highlight their efforts. They also talked about a number of socially relevant efforts to use AI for good, such as working with cancer researchers and the Center for Missing and Exploited Children.

While the event had a bit of a “drinking from a firehose” burst of information, it’s clear Intel sees a strong opportunity for itself in AI moving forward.

The Perfect Ten of Wearables

Earlier this week, Bloomberg reported Apple is evaluating moving into digital glasses. According to “people familiar with the project who did not want to be identified” (when do they ever want to be?), the device would connect wirelessly to iPhones to show images and other information in the wearer’s field of vision. If there is a product and if Apple decides to actually bring it to market, it won’t happen before 2018.

It was not the news itself that made me think about this but rather the different comments I saw pop up on social media and in press commentary. They quickly pointed to a couple of interesting underlying misconceptions I thought it would be worth fleshing out.

Google Glass is not the Benchmark for Smart Glasses, Let’s Move On!
When we started talking about wearables, the list of devices was pretty long: bands, watches, pendants, straps, helmets, smart-fabrics, adhesive strips, cameras, and glasses. The initial vendor excitement was met with limited interest by consumers and, as vendors were trying to figure out what worked, we saw the focus centering more and more around the wrist. Google Glass very much helped that process of elimination.

But Google Glass’ flop does not mean there is no role for smart glasses. The key differentiating point between success and failure is the focus. Google Glass was not only early to market but it was also trying to be too many things at once, leaving users confused about its reason to exist. Google thought of Glass as a wearable in the same way we now think of a smartwatch – something we have on all the time. Yet, rather than focusing on a few specific tasks, Google Glass attempted to replicate many of the tasks our smartphones were performing. Glass was a camera, a search engine, an assistant, and one of the initial voice-first devices.

As people commented on the Apple rumor this week, many were quick to remind us of what Tim Cook said about Glass back in 2013 in an interview at D11:

“I wear glasses because I have to. I don’t know a lot of people that wear them that don’t have to. They want them to be light and unobtrusive and reflect their fashion. … I think from a mainstream point of view [glasses as wearable computing devices] are difficult to see. I think the wrist is interesting. The wrist is natural.”

As someone who has been wearing glasses since the age of three, I can certainly relate to what Cook meant. Glasses are not something you want to wear every hour of your day. Yet, I have no problem wearing glasses for specific tasks like sunglasses or swimming goggles. The difference here is shorter periods of time, focused tasks, and high return from the experience. This is what I think Apple would have in mind if they move into this space. Plus, of course, a design that would appeal to the mass market and would not scream “tech”.

Snap – formerly known as Snapchat – has taken part of the idea of Google Glass and made it commercially appealing to millennials. Spectacles have a funky design without being obnoxious, they are affordable, and the task they perform is perfect for the device. Snapping videos without being intrusive so as to capture the true moment and doing it fast (all you need to do is look in the direction of where the action is) sounds very simple and perfect for how Snapchat is used.

I Say Wearables, You Say Smartwatch

While one wears Spectacles, I would not put them in the wearables category, the same as I would not put a GoPro among wearables. When Cook said, “The wrist is natural”, he was looking at the Nike FuelBand he was wearing. So it would be safe to assume that, while he voiced his concerns about convincing people to wear something on their wrist, his focus was more about delivering a device that could be with us all the time so that it would learn from us and increase its value to us over time.

When we talk about wearables today, we really mainly talk about fitness bands and smartwatches and I see their role being very different from Google Glass. Their focus is to capture data as much as to display data. To be transmitters more than receivers. Think about all the sensors these devices have that help capture information which is then processed and used in different ways. Today the best showcase is fitness but, with time, the use cases will increase. They are certainly not portrayed as an all-powerful computing device. They are a companion device, especially for Apple, that might alleviate some of the load our smartphone has been carrying for so long. Interestingly, this view was not initially shared by the Android Wear team, who seemed to pitch wearables in a very similar way to Google Glass when it came to a do-it-all approach to replace most, if not everything, your phone does. The longer and more consistently you wear these devices, the greater the benefit. Which means they have to be extremely comfortable, somewhat fashionable and, if failing on the fashion part, they should almost disappear. While they might take over from your phone at times, they are not designed to be your main computing device for any long periods. The wrist is the ideal location for both collecting heartbeats and allowing you a quick peek of short and timely information.

AR and VR goggles are very different. Similarly to Spectacles, while you wear Oculus Rift, Gear VR, Google DayDream, Microsoft Hololens, their main function is to display content. For that reason, the proximity to your line of vision is critical. If you think about the main difference between VR and AR/Mixed reality, the former is about you being in a fully immersive world different from the one you are actually in and the latter is about enhancing your current world. You can see how different kinds of glasses or goggles will be required. Given Tim Cook’s public position on how AR is more interesting than VR, I can see how some of his comments about designing something people want to wear still apply.

More than the design, however, I would expect Apple to prioritize the experience in regards to safety and privacy. This might mean the use cases, at least initially, might be limited either by experiences or locations – like your car DVD player not playing on your dashboard screen when you are driving.

If true that the glasses will connect to your iPhone, it seems Apple is trying to avoid the battery issues Google Glass faced while, at the same time, showing it does not think slapping your phone in front of your face is the right thing to do even when that phone is an iPhone.

The Wearable Market of the Future
Many make projections about what the wearable market will look like by 2025 and the definitions of what is included are almost as many as the numbers thrown around. The wearable market will be much more complex than the PC and smartphone market ever were when it comes to devices that should and should not be included.

Whether or not Apple is really working on glasses will be confirmed in due course. But the fact they might be considering glasses does not negate what Cook said back in 2013. To be a wearable device in the strictest sense you need to be able to wear it 24/7 or very close to it. Wearing a device for part of the day does not make it a wearable, no more than being able to move an all-in-one desktop from room to room makes it a mobile computer. I see wearable technology as the next phase of “connected anytime, anywhere” — the main task of the devices we will be wearing will be to more clearly feed into AI and big data than feed off of them.

Unpacked for Friday November 11, 2016

Snap Starts Selling Spectacles Through Bots of a Different Kind – by Jan Dawson

Snap (formerly Snapchat) on Thursday started selling its Spectacles camera glasses through a vending machine (dubbed a Snapbot) in Venice, California, close to its headquarters. A line quickly formed and the vending machine sold out of the Spectacles at least once before being refilled. Snap also employed Ellen DeGeneres as an early tester and had her share her experience, appropriately enough, through Snapchat. The company also launched a Snapchat filter allowing users to virtually try on a pair of Spectacles.

Snap has always indicated it had a small production run in mind for Spectacles, at least at first, and its distribution strategy certainly reinforces that idea. A single vending machine is never going to sell a large number of Spectacles, even if it’s moved around from place to place roughly every 24 hours. But, of course, selling a large number of Spectacles isn’t Snap’s goal here – creating buzz, excitement, and a sense of exclusivity is. Given the high markup for Spectacles currently selling on eBay, it seems the strategy is working and the company certainly got plenty of buzz through what’s essentially a viral marketing campaign.

At some point, Snap will have to evolve beyond this early strategy if it’s to sell Spectacles in any sort of volume. The question is, just how many people will want to buy the glasses, which are relatively expensive, fairly obtrusive and, of course, better suited to the summer months than the winter (which should theoretically be arriving any day now despite the warm weather people in many parts of the US are currently enjoying). This start, though, with artificial scarcity coupled with social buzz, is a great way to test the market and seed early adopters with devices. It’s telling that Snap isn’t making review units available to journalists or traditional gadget reviewers – this will be very much a word of mouth marketing campaign, as befits a social company.

The big question is where Snap goes from here. It will likely have to move to some combination of direct online distribution and third party retailers over time to support significant scale. It’s a safe bet it will pick retailers other than those who typically distribute consumer electronics, likely including some fashion brands. In some ways, this will be the most interesting tech product launch from a distribution perspective since the Apple Watch, which also played to fashion and jewelry audiences not usually associated with tech products.

In some ways, the most amazing thing about the launch was no one was really talking about whether the Spectacles actually work well. Towards the end of the day, some tech blogs managed to grab some of the early buyers and get their feedback and it seems to be largely positive. The simplicity of the glasses is their strongest point and, of course, their integration with Snapchat is a huge strength, though it seems as though the videos can also be shared to other social media. I’m guessing we’ll be seeing circular videos shared more extensively on Facebook and Twitter in the coming months, but it’ll be a slow build given the limited distribution, at least for now.

Foldable Phones Might Be Better Off  Not To See The Light of Day – by Carolina Milanesi

The Verge reported this week that Samsung filed a patent back in April for a foldable phone. The drawings show a narrower phone with a hinge similar to what you see on a Surface Book that bends inward to close on itself like an old fashion flip phone. The folding movement is said to be automatic or semi-automatic.

A couple of weeks ago, Patently Apple uncovered an Apple patent that refers to a bendable, foldable iPhone using nanotube structures. The iPhone differs from the Samsung design in that it looks like it closes like a book.

I do not really want to get into the details of what is needed to make bendable phones that are commercially viable. Lenovo showed a concept earlier this year and so have other manufacturers.

My question is really about the need to have a bendable phone. There seem to be two main reasons: giving us more screen and protecting that screen. While I do not think smartphones should be growing much more in size, there is still room for giving us more screen without growing the overall real estate of the device. I also think there is a balance we have to think about when it comes to a device we have with us all the time. The reason why there are still consumers who like the less than 5” phones is they want something compact. Foldable might help with the size of the device but it is unlikely to help with the thickness. When I saw the iPhone patent design, I immediately thought of the many 2-in-1s that have a foldable design vs a detachable one. The weight of those devices is less than ideal and hinders the experience. As far as screens Gorilla Glass is getting better and better and our data shows major screen breaks are actually less common than we are lead to believe.

Apart from phones, however, there is a lot of opportunity for bendable technology, especially if you think about wearables. Here we have seen some curved displays but not yet a bendable one that has the guts of the device spread around your wrist — the wristband is not just an accessory but a functioning part of the device. Think how much more accurate the heart monitor could be if the sensor was where you usually take your pulse without you having to wear your watch with the screen positioned there.

VR and AR seem like another area where bendable could benefit the experience. While you can turn your head to see things around you, there would be a benefit if the headset was stretching more around your head so your eyes would have less of a blind spot and a more fluid field of vision. I am very shortsighted and I see a big difference between wearing glasses where I clearly have blind spots vs. contact lenses which allow me to really see more. Curved TVs, although not changing your experience dramatically, do help to immerse you more in the content.

There are still hurdles to a commercially viable, bendable phone but even if it could be done it does not necessarily mean it should. We also might see different iterations rather than what we have seen in the patent drawings, more aligned with what the market will call for by the time the technology is ready.

Oculus Software Update Lowers PC Requirements for VR Headset – By Bob O’Donnell

One of the more exciting developments expected to drive growth in the PC market is interest in virtual reality and head-mounted displays. The problem is the hardware requirements for the PC used to drive those headsets has been very high. That, in turn, translates into expensive new PCs—typically at least $1,000, but sometimes even more—which severely limits the potential market size for these exciting new devices.

Yesterday, Oculus took a big step toward reducing those costs—and expanding the potential audience for their Rift VR headset—with a new software update. The update leverages technology the Facebook-owned company calls “asychronous spacewarp.” Though similarly named to the “asynchronous timewarp” technology the company introduced with the official Rift launch back in March, “asynchronous spacewarp” is different and has a key advantage: it essentially allows the Rift to deliver what’s said to be a quality experience at just 45 fps (frames per second) instead of the minimum 90 fps typically required.

Translated, that means you can now get away with a less powerful (and less expensive) video card to drive a Rift experience. In theory, that means you buy a cheaper new PC and still successfully use the Rift. Realistically, though, it means a large collection of existing gaming PCs can likely be pressed into service—at no extra cost for their owners.

Specifically, instead of requiring an nVidia GTX 970 or AMD Radeon 290 GPU, the Rift can now be run on a system with any nVidia 900 or 1000 series or any AMD RX 400 series GPUs. As you might expect, the experience isn’t supposed to be as good as you would get with a newer GPU but, for existing gaming PC owners who have been dying to try a Rift, this could be a good option.

Over time, of course, the CPU and GPU requirements necessary to do high-quality VR and AR will fall into mainstream price points and be available to virtually anyone who buys a new PC. Until then, however, these kinds of software innovations will be increasingly important to introduce a wider audience to the wonders of VR.

Has Google Set Up Google Home to Disappoint?

When I saw Google Home for the first time back at Google I/O, I was excited at the prospect of having a brainier Alexa in my home. Like others, I waited and almost forgot all about it until it was reintroduced last month when I actually could go and pre-order it.

I got my Google Home at the end of last week and placed it in the same room Alexa has been calling home for almost a year now. The experience has been interesting, mainly because of the high expectations I had.

Making comparisons with Echo is natural. There are things that are somewhat unfair to compare because of the time the two devices have been on the market and therefore the different opportunity to have apps and devices that connect to them. There are others, though, that have to do with how the devices were designed and built. I do not want to do a full comparison as there are many reviews out there that have done a good job of that but I do want to highlight some things that, in my view, point to the different perspective Amazon and Google are coming from when it comes to digital assistants.

Too early to trust that “it just works”

Like Echo, Google Home has lights that show you when it is listening. Sadly, though, it is difficult to see those lights if you are not close to the device as they sit on top rather than on the side like the blue Echo lights that run in circles while you are talking to Alexa. This, and the lack of sound feedback, make you wonder if Google Home has heard you or not. You can correct that by turning on the accessibility feature in the settings which allow for a chime to alert you Google Home is engaged.

It is interesting to me that, while Amazon thought the feedback actually enhanced the experience of my exchange with Alexa, Google did not think it was necessary and, furthermore, something that had to do with accessibility vs. an uneasiness in just trusting I will be heard. This is especially puzzling given Echo has seven microphones that clearly help with picking up my voice from across the room far better than Google Home.

The blue lights on the Echo have helped me train my voice over time so I do not scream at Alexa but speak clearly enough for her to hear even over music or the TV. This indirect training has helped, not just with efficiency, but it has also made our exchanges more natural.

OK Google just doesn’t help bonding

I’ve discussed before whether there is an advantage in humanizing a digital assistant. After a few days with Google Home, my answer is a clear yes. My daughters and I are not a fan of the OK Google command but, more importantly, I think there is a disconnect between what comes across like a bubbly personality and a corporate name. Google Assistant – I am talking about the genie in the bottle as opposed to the bottle itself – comes across as a little more fun than Alexa from the way it sings Happy Birthday to the games it can play with you. Yet, it seems like it wants to keep its distance which does not help in building a relationship and, ultimately, could impact our trust. I realize I am talking about an object that reminds you of an air freshener but this bond is the key to success. Alexa has become part of the family from being our Pandora DJ in the morning to our trusted time keeper for homework to my daughter’s reading companion. And the bond was instant. Alexa was a ‘she’ five minutes out of the box. While Google Assistant performs most of the same roles, it feels more like hired help than a family member.

Google Assistant is not as smart as I hoped

The big selling point of Google Home has been, right from the get go, how all the goodness of Google search will help Google Assistant be smarter. This, coupled with what Google knows about me through my Gmail, Google docs, search history, Google Maps, etc., would all help deliver a more personalized experience.

Maybe my expectations were too high or maybe I finally understand being great at search might not, by default, make you great at AI. I asked my three assistants this question: “Can I feed cauliflower to my bearded dragon?” Here is what I got:

Alexa: um, I can’t find the answer to the question I heard

Siri: Here is what I found… (displayed the right set of results on my iPhone)

Google Assistant: According to the bearded dragon, dragons can eat green beans…

Just in case you are wondering, it is safe to feed bearded dragons cauliflower but just occasionally!

Clearly, Google Assistant was able to understand my question (I actually asked multiple times to make sure it understood what I had said) but pulled up a search result that was not correct. It gave me information about other vegetables and then told me to go and find more information on the bearded dragon website. The first time I asked who was running for president I received an answer that explained who can run vs who was running. Bottom line, while I appreciate the attempt to answer the questions and I also understand when Google Assistant says, “I do not know how to do that yet but I am learning every day”, the experience is disappointing.

Google is, of course, very good at machine learning as it has shown on several occasions. I could experience that first hand using the translation feature Google Home offers. I asked Google Assistant how to say, “You are the love of my life” in Italian. I got the right answer delivered by what was clearly a different voice with a pretty good Italian accent. Sadly, though, Google Home could not translate from Italian back into English which means my role as a translator for my mom’s next visit will not be fully outsourced.

We all understand today’s assistants are not the real deal but rather, they are a promise of what we will have down the line. Assistant providers should also understand that, with all the things the assistants are helping us with today, there is an old fashioned way to do it which, more likely than not, will be correct. So, when I ask a question I know I can get an answer to by reaching for my phone or a computer or when I want to turn the lights off when I know I can get up and reach for the switch. This is why a non-experience at this stage is better than the wrong experience. In other words, I accept Google Assistant might not yet know how to interpret my question and answer it but I am less tolerant of a wrong answer.

Google Assistant is clearly better at knowing things about me than Alexa and it was not scared to use that knowledge. This, once again, seems to underline a difference in practices between Amazon and Google. When I asked if there was a Starbucks close to me, Google Assistant used my address to deliver the right answer. Alexa gave me the address of a Starbucks in San Jose based on a zip code. Yet, Alexa knows where I live because Amazon knows where I live and my account is linked to my Echo. Why did I have to go into the Alexa app to add my home address?

Greater Expectation

Amazon is doing a great job adding features and keeping users up to speed with what Alexa can do and I expect Google to start growing the number of devices and apps that can feed into Google Home. While the price difference between Google Home and Echo might help those consumers who have been waiting to dip their toes with a smart speaker, I feel consumers who are really eager to experience a smart assistant might want to make the extra investment to have the more complete experience available today.

We are still at the very beginning of this market but Google is running the risk of disappointing more than delighting at the moment. Rightly or wrongly, we do expect more from Google especially when we are already invested in the ecosystem. We assume Google Assistant could add appointments to my calendar, read an email or remind me of upcoming event and, when it does not, we feel let down. The big risk, as assistants are going to be something we will start to engage more with, is consumers might come to question their ecosystem loyalty if they see no return in it.

Touchscreen or No Touchscreen, That is the Question!

A lot has already been written about Apple’s Touch Bar for the MacBook Pro and how Apple should have just gone all in and actually added a touchscreen. I hinted on the day of the event that the Touch Bar could actually end up being more impactful than a touch screen and I would like to explain why.

Windows Touch Screens Were a Response to Mobile

I think it is important to look at why we have touch screens in the Windows camp.

Touch screens on Windows were not the result of a platform need. When we started to see hybrid devices running Windows, we were still on Windows 8, which was not optimized for touch. Nor were touch screens the result of an innovation aimed at changing the way we worked and interacted with content.

We got touch screens because Windows as a platform was trying to catch up to mobile.

With very little opportunity for growth in smartphones, and iPad at the high-end and cheap Android tablets at the low-end impacting PC sales, Windows PC makers wanted to fight back by adding the one function the world seemed never to get enough of. By adding touch to PCs, vendors were hoping to shift the downward trend in PC sales while decelerating tablet growth.

Then there was Surface. Microsoft started Surface because what vendors were releasing at the time was failing to compete with tablets. Consumers were not interested in buying a new PC and enterprises were still not sure they wanted to invest in the premium that touch was bringing to the new machines. Surely productivity did not need touch!

Not just about the hardware

Even Surface did not hit a home run the first time around. While it was the best hardware Windows had to offer at the time, the first iteration of Surface running Windows 8 was a less than optimal experience when using touch. The obsession of competing with the iPad was also giving way to confused products like Surface RT.

Fast forward to today and you have Surface Pro 4 running on Windows 10, offering a full computing experience in a versatile form factor with an OS that runs well with using both touch and keyboard.

Looking at hardware alone, however, is not enough to understand how far a device can go when it comes to bridging PCs and tablets. Apps have been key in tablets. So much so that the market has been clearly split in two: a high-end that is dominated by iPad, where there are over one million dedicated apps, and a low-end market where Android tablets reign supreme mainly as content consumption screens.

Windows based 2-in-1s, Surface included, suffer from the lack of touch-first apps that would help move the needle in adoption and, most of all, with engagement and loyalty. It is for this reason that seeing Microsoft invest in first party apps is so refreshing. Microsoft is delivering value and hopefully showing the potential to developers even with both apps and new devices such as the Surface Dial. In an interview with Business Insiders, VP of Microsoft Devices, Panos Panay said something I could not agree more with: “The entire ecosystem benefits when we create new categories and experiences that bring together the best of hardware and software.” 

Meanwhile, across the fence, the Mac OS store has not captured developers in the same way the iOS Store has. The prospect of being able to reach hundreds of millions vs. tens of millions of users has kept a lot of developers focusing on iPhone and iPad.

Adding touch support for macOS Sierra might have left users not much better off than they were before. I assume developing for the Touch Bar is much easier than designing a brand new app for Sierra optimized for touch, which ultimately would result in a better experience for the user.

The “I need a keyboard” argument

Clearly, Apple did not just do the Touch Bar because it was easier to develop for. Apple continues to maintain that vertical touch is not the right approach. Many disagree because the extensive use of touch is getting us more and more often to reach out to touch our screens. Yet, when we touch our screens, we generally want to scroll or select. We really do not want to do complex things which begs the question, why can’t we do it on the trackpad we have on our keyboard? We can discuss this point till the cows come home and we will find pros and cons on both sides.

So let’s look at this point a little differently. There are two main reasons why someone buys a MacBook Pro today: OS and the keyboard. Rightly or wrongly, many people still think iOS is not a “full OS” – another point we can discuss till the cows come home. But the keyboard is key.

If the keyboard is so important for these users, it seems fitting Apple focused on making that experience better. In a recent interview for CNET, Jony Ive said:

“Our starting point, from the design team’s point of view, was recognizing the value with both input methodologies. But also there are so many inputs from a traditional keyboard that are buried a couple of layers in…So our point of departure was to see if there was a way of designing a new input that really could be the best of both of those different worlds. To be able to have something that was contextually specific and adaptable, and also something that was mechanical and fixed, because there’s truly value in also having a predictable and complete set of fixed input mechanisms.”

Taking touch and contextualizing it to the keyboard to make gestures, steps, and functions more natural, immediate,and precise makes a lot of sense to me. As often with Apple, you get what you asked for but not in the form you thought you wanted it.

What Does This Mean for the Future?

For Apple, it means it is serving two different audiences that think of computing in different ways. Apple will do so for as long as it will take for MacBook users to be convinced the iPad Pro and iOS 10 represent the next computing platform.

For Microsoft, it is about focusing on the larger and longer term shift that will see Mixed Reality play a big role in the way we interact with devices, the way we do business, and the way we learn. Microsoft is making sure it is shaping its own path rather than finding itself blindsided and left to scramble as it did with mobile.

Creativity Is the New Productivity

Every three months, we are reminded of the doom and gloom of the PC market. As PC vendors report their earnings and various bean counters – I used to be one – publish their market share numbers, we are reminded replacement cycles remain long and consumers do not seem interested in upgrading.

I’ve discussed before what I see as a crucial step in breaking this process: stop talking about PC replacement and start talking about what the new PCs have to offer and the role they play in your portfolio of devices. This week, with both Microsoft and Apple holding their device events, I hope this is exactly what we are going to see.

If we look at the invites the two companies have sent out, there is not much to go on. Microsoft is a little more generous in giving us a taste of what the announcement will be. We assume it is a device event because of the time of the year, although the invite itself says, “What’s next for Windows 10”. We are also invited to “Imagine what you’ll do”, which is as fluffy as an invitation can be to open our minds to new possibilities. Yusuf Medhi, VP of marketing of the Windows and Devices group, urges us to “get ready to get creative”. So it would be safe to guess it is about a device that is going to focus on creativity.

Apple’s invite was even more cryptic, saying. “Hello again” — which many connected to the “Hello” used for the Mac launch in the 80s. Rumors have it we will see three different devices: a 13” MacBook and a 13” and 15” MacBook Pro. Aside from the device specs, what will be interesting is how Apple positions these new devices against the iPad Pro. As many of you will remember when the iPad Pro was launched, Apple had an ad that asked, “What if your PC was an iPad Pro?” Of course, while their focus was on the competing Windows devices, the question raised doubts in certain minds on what the role of the Mac will be going forward vs the iPad Pro.

Mobility Changed the Meaning of Productivity

I think it is important to look at how our workflow has changed over the past few years to understand what role different devices could play in our life.

According to the dictionary, productivity is a measure of the efficiency of a person, machine, factory, system, etc., in converting inputs into useful outputs. Productivity is computed by dividing average output per period by the total costs incurred or resources (capital, energy, material, personnel) consumed in that period. When we moved from analog to digital productivity and creativity were very much intertwined as thanks to computers we were able to do things we had not been able to do before and in much less time.

I strongly believe that mobility change the meaning of productivity.

The “connected anytime, anywhere” world we live in has put more emphasis on the speed of that output rather than the complexity or quality of it. Gone are the days when people put their “out of office” hat on and are not available while they are out. The only time I put my out of office hat on is when I am traveling in different time zones and it is really more to apologize in advance for the delay in getting back to people than warn them I will not be available. Whether through social media or email, mobility made it all about the timeliness of the information we create and exchange. Because of this, we have become accustomed to triaging our work on the go with devices that are very light weight, have smaller screens, and have, in more cases than not, built-in connectivity. While we might not be creating a full presentation on the go or might not be writing the next New York Times bestseller, we see what we accomplish in our day on the go as being productive. These devices have allowed for what used to be down time during travel or in between meetings to be an opportunity to keep up with what is going on at the office when we are not physically there. It has also created the opportunity to turn us all into control freak workaholics but that is a different story.

Work and Play is More Fluid

The other side of the coin for this always-on world is work and play are more blended. Both with content and tools, we cross boundaries all the time. Consumerization of IT, bring your own device, bring your own app, the cloud, and real–time collaboration are some of the result or the spark of such blending. This means when we look at our next PC/Mac to buy, we want to see familiar technologies we have come to love and depend on like touch, voice, high-resolution screens, fast processors, and even pen support. Having all the apps we use every day on our PC/Mac would also be great but, given that our phones are never far away from us, this is not necessarily a must.

Creativity Is All About Thinking Outside the Box

So, if productivity has more to do with our response time, making highly mobile devices more suited for it, what is creativity and what kind of devices does it require?

According to the dictionary, creativity is the mental characteristic that allows a person to think outside of the box, which results in innovative or different approaches to a particular task.

First, let me say I realize not all white collar jobs are created equal and require the same skills and tools. I also realize there are many verticals, from health to education that, depending on where you look, are either stuck in an analog world or are full on into a digital one.

If I consider how my job has changed over time, I cannot help but see the impact of creativity in what I do. I see my job as delivering insights and advice to my clients. That has not changed since I started over 16 years ago. What has changed is what I deliver and how. I used to engage in three main ways: writing reports, delivering presentations and taking calls. Today, while I continue to engage that way with clients, it is not the only way I deliver value to them. Social media, interactive webinars, podcasts, and blog posts are added to my output list. Having the ability to manipulate charts as I present using Pixxa, or to draw a mind map on my iPad Pro or Surface during a meeting, I am embracing new technologies and devices to make my workflow more effective. When I am not on the go, I appreciate a device that gives me a non-compromised experience. A device that allows me to be immersed in what I am doing whether that is combing through thousands of data points, following a tweetstorm, watching a live stream of an event or recording my weekly podcast or experiencing a mixed reality environment.

This is good news for PC vendors because, if I am not alone, it could mean consumers shopping for PCs will be looking to invest more money for that non-compromised experience. It is also good news for platform owners who will have another platform for consumers to engage with. This last point is, of course, particularly important for Microsoft who needs to continue to build engagement with Windows 10.

In order for this to happen, however, we need to see more than just a beautiful design, which has been the focus for many vendors. Looking like a MacBook Air is not going to be enough for users who really want to have a rich experience. The focus should be on pushing the boundaries of how hardware, software, and apps all come together. While this gives an advantage to the Microsoft Surface family, and Apple’s Macs,  over other manufacturers who do not control their entire destiny, I strongly believe this will be a win for the entire industry but most of all for the consumers.

Unpacked for Friday October 21st, 2016

Apple’s Eddy Cue says TV needs to be reinvented – by Carolina Milanesi

At a Vanity Fair conference in San Francisco this week, Apple’s content guy, Eddy Cue, repeated something his CEO Tim Cook has said before: TV needs to be reinvented. What was interesting is he specifically referred to the difficulties of navigating and finding content.

As reported by Macrumors, Cue said television needs to be reinvented because of confusing, hard to navigate interfaces. “You live with a glorified VCR,” he said. “You’re still setting things to record. There are 900 channels, but there’s nothing to watch.” He went on to say there’s incredible stuff to watch but the interface makes it impossible to find content. “The problem is the interface,” he said. “The ways you interface with it are pretty brain dead.”

This seems to be very much in line with the rumors we have been hearing over the last few months that referred to Apple’s intention to focus on a content guide rather than on a TV set. The current version of the Apple TV has already started to show the potential with the focus on apps, Siri universal content search and single sign on. While many think this is a plan B for Apple, given the inability to close content deals, I believe it is not a bad plan at all. Focusing on the content guide part allows Apple to do several things.

It would strengthen our reliance on Siri to look for content, something we can already do today with the latest Apple TV. It would give more visibility to Apple as to our viewing habits, helping Siri to get smarter in making recommendation on content as well as search. As users get to their content through the Apple guide but not necessarily pay Apple for the content, they will see Apple as an enabler strengthening their ties. As we know, users are loyal to content, not TV stations or service providers, which means Apple will be helping disenfranchise content providers even further. Lastly, it might help with original content production.

Cue also said Apple is very much interested in original content and they would have made Game of Thrones if they had had the opportunity to do so. As we know, Apple is planning a series on apps as well as “Carpool Karaoke”. He also added Apple is looking to be a platform for their own content but for competitors’ as well as the focus remains to deliver on the experience of bringing the content to users with the least friction and the best user experience. Sadly, however, this does not necessarily mean all competitors will play nice as we have seen this week with Spotify said to be de-prioritizing developing an app for Apple’s tvOS. It is clear Apple needs to grow the current base of Apple TV owners if it wants to appeal to more content providers an,d in order to do that, they might need to think about a different hardware approach, either by lowering price or maintaining price but adding functionality. Right now, Apple TV is for hardcore Apple buyers which represent roughly 20% of the Apple installed base. While this is not a small number, it might just be that content owners are looking for more so they can make up for the revenue that would go to Apple for using their store.

Nintendo Reveals the Switch – by Ben Bajarin

Today, Nintendo revealed their newest member of the Nintendo game console family called the Nintendo Switch. The product combines a range of ideas that have been tried before but elegantly put together in one device.

nintendoswitch-800x615

As you can see, it looks like a tablet with standard game controller buttons on the side. The game unit is both mobile, to played on the go in this form, but can also be the heart and mind of a game console that plugs into a TV for a bigger screen and multiplayer experience. The Switch is both a TV gaming console system and a portable gaming console system in one package.

Interestingly, the company which has experimented with solutions like this is NVIDIA with their Shield gaming tablet, gaming handheld, and gaming set-top box; Which is why it wasn’t surprising to learn that a custom version of NVIDIA’s mobile Tegra processor is what is powering the Nintendo Switch.

Honestly, I’m extremely skeptical of this approach. This type of solution, which tries to be a hybrid TV gaming console and mobile console, runs the risk of not being good at either. Now, the caveat for Nintendo is they don’t have the most graphically intense games and, to be honest, their biggest asset is their proprietary game titles like Zelda, Super Mario Brothers, Pokemon, Donkey Kong, etc. The fact these extremely popular brands will run only on this system is what may help it succeed but even then, I question if this is the right approach.

I’m not convinced Nintendo’s customers want another mobile screen. In fact, I’d argue Nintendo would have been better off focusing their software on iOS and making custom gaming controllers for iPad and iPhone. Take, for example, this approach that Apple shows off in many of their Apple stores.

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This is not that dissimilar of an approach to the Nintendo Switch. Yes, Nintendo would have more control over the entire experience if they control all the hardware and thus, design a better experience but I wonder if the world is heading in the direction of us using the phones and tablets we have with us to play games vs. buying another portable screen.

While I fully understand why Nintendo wants to control the entire hardware and software experience, I do feel they are leaving money on the table by not focusing their first party software strategy more on iOS and Android than their own mobile hardware platform.

Verizon Reports Results and Sheds Light on iPhone and Note7 in the Process – by Jan Dawson

Verizon reported its results for the third quarter on Thursday morning. It’s the first of the four major US wireless carriers to report, though both T-Mobile and Sprint have provided some preliminary numbers and, among those three, it saw the worst performance in terms of the traditional postpaid phone business — it lost subscribers while the other two made solid gains. However, it did better in prepaid and overall, though there are some ongoing worries about the FiOS TV business. Verizon said soft demand for linear TV was one of the challenges it faces.

However, the company also shed some light on both the iPhone 7 and Note7 in its remarks. Executives said the Note7 recall had impacted upgrade rates, which were up in Q2 but down year on year again. In general, device sales were slow for much of the quarter but picked up right at the end thanks to the iPhone 7 launch. However, the “backlog” in meeting demand, especially from upgraders, also impacted the overall upgrade rate among the base. Verizon is expecting supply to eventually meet demand sometime this quarter but wasn’t sure at what point.

More broadly, it’s looking like the iPhone 7 will drive a healthier upgrade cycle this quarter for the wireless carriers than we’ve seen in quite some time, after several quarters of falling upgrade rates across the board. Though we’ll only see a minor impact in the Q3 numbers reported over the coming week or so, we should see a much stronger impact in Q4, when the vast majority of this year’s upgrades to the iPhone 7 will happen. It’ll certainly be worth listening to the other carriers’ earnings calls for any commentary about how sales are going so far this quarter.

More broadly, Verizon continues to face several headwinds at once – it has reduced its landline footprint significantly in recent years and has also dramatically slowed the rollout of its FiOS services, both of which are limiting its upside in both broadband and TV services. Meanwhile, it’s investing more heavily in alternative video services, with both skinny bundles through FiOS and its Go90 over the top service. The latter has some impressive viewing figures on a per user basis – 30 minutes per day – but Verizon still hasn’t provided any actual user numbers, which leaves us without much context for the usage figures.

On the wireless side, we’re seeing the ongoing impact of intensifying competition as both T-Mobile and Sprint compete more aggressively for a fairly static base of customers with pricing and promotions designed to lure customers from the competition. Verizon lost postpaid phone subscribers in a third quarter for the first time ever, likely as a result of both increased direct targeting from Sprint (which lured away Verizon’s old “can you hear me now?” pitchman), and more general competition from T-Mobile and AT&T. Verizon is the only carrier that continues to refuse to offer unlimited data plans to new customers under any circumstances and it will be interesting to watch whether it can hold out indefinitely on that point.

Tesla Hardware Upgrade to Enable More Autonomous Cars – By Bob O’Donnell

Tesla Motors unveiled a next-generation set of sensor hardware and compute engine for its line of electric cars and announced that, going forward, all of its cars will be enabled for fully autonomous driving with future over-the-air software updates. Of course, exactly what’s meant by “fully autonomous driving” remains to be seen, but it is, nevertheless, an important step for the company.

One of the big winners in the announcement is NVIDIA, whose DrivePX 2 platform was selected to sit at the computing heart of this new technology upgrade. The DrivePX 2, which was unveiled at this year’s CES, features NVIDIA’s Tegra CPU and Pascal GPU engines and is targeted exactly at the kinds of semi-autonomous and fully autonomous driving applications Tesla promises will be enabled over the new several years.

In addition to the DrivePX 2, the upgraded Tesla solution features eight new 360° cameras, 12 ultrasonic radars and one forward-facing radar versus one forward-facing camera and a lesser number of lower-resolution radar sensors. According to the company, these additional and upgraded sensors are essential in enabling the additional levels of autonomous control they plan to offer.

In a strange and controversial move, Tesla CEO Elon Musk chided people not to write negative articles about the potential concerns around the semi-autonomous capabilities this new upgrade will enable (something I did several months ago in a piece for USAToday: “Is semi-autonomous driving really viable?”). In fact, he actually said doing so essentially amounts to “killing people” because it could somehow delay the expected safety benefits autonomous cars are expected to bring.

While I’m certainly positive about the potential for saving lives and improving overall automobile safety, attempting to shut down debate on a discussion-worthy topic seems dangerous itself—particularly in a democratic society with a free press.

Despite this problematic stance, it is good to see Tesla continuing to press forward with its ambitious plans for improving autonomy and safety in cars. There’s no question that, without their aggressive efforts, the rest of the auto industry would be moving at a slower pace.

Digital Assistants: Me Smart or World Smart?

Digital assistants are hot, that much is clear. What is less clear is what role they will play in our life. More importantly, how much we will let them be part of our life. I personally believe the extent to which we will feel comfortable including them in our lives will depend on how much we can trust they know us and how human-like our interaction with them can be.

I have spoken in the past about Jarvis and Mary Poppins as the two types of assistants I see vendors currently focusing on. One being very personal and one being more shared across family members. Both these roles imply quite a deep knowledge and understanding of what I as an individual and we as a family unit do, how we function, what we like and dislike. While asking our assistant for weather updates, fun facts of the day, alarm settings and correct spelling is quite fun, the novelty quickly wears off and the perceived return on investment is not actually life changing. Context and personal knowledge is what will deepen our relationship: warning you it will rain on Sunday when your assistant knows you are going to a BBQ, setting the appropriate timer for the cupcakes you just put in the oven, reminding you of what happened to you personally on a day 4 years ago — this is the kind of intelligence that will leave users wanting more and thinking about the assistant like a true genie in a bottle. Think about it this way: we all turn to Google to ask questions, so often that some even wonder if we might no longer be trying to remember because we know we can Google everything any time. Yet, I would argue, Google search does not evoke any emotional connection. Facebook memories, however, by serving you posts from your past that happened on a specific day, makes you relieve that experience – although more intelligence could be applied here when it comes to sad events in someone’s life – and really playing on people’s emotions while subconsciously making you appreciate Facebook and making you want to invest more time posting.

It’s all about me
One of the most annoying things for me when I start using a new assistant is to have to train it to say my name correctly — “Caroleena” not “Carolina”, like the US states. If you know me personally, you might have heard me say that, if I do not correct the way you say my name, it is because I do not expect to see you again. However, if we work together or I see you socially on a regular basis, I will correct your pronunciation. Why? Because if you keep on calling me Carolina I feel you do not really know me and, more importantly, you are not actually interested in knowing me. Right now, there is not much our assistants know about us that they are actively using to serve us. They might know where we live, where we work, might recognize my husband and daughter but there is little to no pro-activity in using that information in the exchanges we might have. Some have security concerns about just how much information they share with their assistant but the reality is you are not likely to share more than what you are already doing in various social media posts, online calendars and emails. The key difference, however, is what you share with your assistant will make a difference to you: reminders, alerts, suggestions, recommendations. Not everything can be learned automatically, though. So, at least initially, you will have to enter information, which is not very different from what most of us do today with our calendars, either digital or the old fashion one on the kitchen wall.

Better than us

Aside from being about me, I want my assistant to interact with me in a natural way. Last Friday, I had the pleasure of being a guest on Science Friday to discuss Digital Assistants together with Justine Cassell, one of the researchers at Carnegie Mellon behind SARA, the Socially Aware Robot Assistant. It was fascinating to hear that SARA spent 60 hours watching human interactions in a team environment and how those interactions changed over time — not necessarily for the better. One observation was as the humans became more familiar with each other over time, praise went down.

We have seen Microsoft’s bot Tay fail miserably because it became too human. Tay was modeled on a teenage girl, used millennial slang, knew about pop stars and TV shows and was quite self-aware, asking if she was ‘creepy’ or ‘super weird’. Sadly, she quickly started to be inappropriate, possibly succeeding in being a teenager but failing to be the marketing tool Microsoft wanted her to be. That was an extreme case, but it really showed the dangers of having bots and assistants learn from human interactions. At the time, Ina Fried wrote an essay I thought was exactly on point in how bots need to be better than humans, not equal to them.

The “I do not talk to technology” hurdle

Most consumers are not comfortable talking to technology, especially in public. This feeling is not just driven by talking into a phone or a PC – headphones would easily solve that problem – but it is more about having to learn to speak in a certain way in order to get a response. As humans, we do not talk to each person we encounter in a radically different way. We might be more or less polite or more or less formal, depending on the relationship we have, but the core of our question stays the same. We do not start each question by reengaging the interlocutor by saying their name like we have to with the assistants most of the time. We also do not always say everything we should or mean what we say. With current assistants, there is no real margin of error on the human side. We must be precise and offer all the information needed in order for the assistant to serve us. This is just too much work to put in especially as most people see assistants as nothing more than a voice search.

The combination of knowing us personally and letting us speak naturally will be key in growing our interactions and, ultimately, our dependence on our assistant. We might use different generalists but we will likely want one optimized assistant. It is interesting that this week, Russ Salakhutdinov, a computer science professor at Carnegie Mellon University, announced on Twitter he will be joining Apple as their director of AI research. I trust Apple will know its users the most because of the trust they have in the brand and the level of engagement they have with the products and the ecosystem. What Apple needs to focus on now is making Siri more conversational and proactive. This, of course, will take time. While we wait, we should be able to see continued improvements in the smartness of the device and apps we are using every day — from the camera, to Photos, to our calendar. Let’s appreciate the brains more as we wait for the pretty voice to become more and more part of our life.

Unpacked for Friday, October 14th, 2016

Amazon Demonstrates Its Pragmatism with Physical Retail for Groceries – by Jan Dawson

The Wall Street Journal reported this week that Amazon is planning to build convenience stores and curbside pickup locations for groceries, in an expansion of its existing grocery delivery business. The convenience stores would sell basic items, while the pickup locations might make use of clever technologies to automate and speed pickups.

This investment, assuming the reporting is accurate, is a great demonstration of Amazon’s pragmatism when it comes to expanding its business. Yes, its retail business is almost entirely about online ordering and delivery but it’s not religious about either of these things. Ultimately, what Amazon is building is an online-first and not an online-only business. That gives it the flexibility it needs to dip its toe into physical retail when it makes sense, as it has already done with its first brick-and-mortar bookstore in Seattle.

Why groceries? Well, this is easily one of the largest retail categories and doing well here would boost overall spending on Amazon considerably. However, it’s not one that lends itself well to traditional e-commerce – it often involves last-minute purchases as well as heavy, bulky, and perishable items which are not well-suited to traditional shipping. First-party delivery can solve some of these problems but still runs into issues with people not being home, traffic, and so on. Shifting to a physical retail model turns this from a customer delivery model into a store logistics model, something that eliminates many of the challenges associated with selling groceries. The convenience stores also support the impulse buy on the way home, which Amazon.com can’t manage for most purchases.

Amazon, of course, isn’t the only online company dabbling in physical retail. Google has announced it will have a pop-up store in New York in the coming months to support sales of its new hardware products. These companies are learning that, when it comes to certain product categories, online retail just doesn’t cut it, while third-party retail also has its downsides. It’s interesting, though, that all this is happening in the context of a very challenging overall market for physical retailers, with many closing stores in the face of higher e-commerce sales driven by – among others – Amazon.

The big benefit for these online-first retailers, however, is they can be very strategic and selective about their physical retail presence, creating new categories of stores rather than following traditional models, and thereby avoiding some of the pitfalls their offline-first competitors are struggling with. In addition, because these stores are complements to, rather than competitors for, online retail they don’t have to offer everything – just those categories of products that make sense in a store. These stores, then, are best seen, not as a standalone strategy for Amazon, but as part of a continuum of options for both ordering and receiving goods which will likely to continue to evolve over time.

Of course, for those of us that don’t live in the major coastal cities, this will be yet another example of a service that exists only in theory, as Amazon tends to invest ever more heavily in additional shopping and delivery options in the most densely-populated areas first. Citizens of New York and other such cities already enjoy one-hour delivery and other perks the rest of us can only read about online.

Sony PlayStation VR Brings Virtual Reality to the Masses – by Bob O’Donnell

The buzz and hype around virtual reality has been extremely high for the last few years but the real-world impact has been fairly muted. Sure, there’s been some interesting experiments with Google Cardboard, Samsung’s Gear VR and other mobile-driven VR headsets, but most people acknowledge those products can’t really compete with more powerful PC-driven options from Oculus and HTC when it comes to a truly immersive VR experience.

Sony, however, is looking to take a different tack with its new $399 PlayStation VR headset, which works along with the 40 million+ PS4 game consoles already in people’s living rooms. Essentially, they’re bringing what many reviewers are saying is a VR quality of experience similar to those higher-end headsets but at a more affordable price. Even more importantly, they’re providing it as an accessory to a device people already own.

The result is an opportunity to really bring virtual reality to the masses in a way no previous offering from other vendors has. Plus, because much of the early compelling content for VR is gaming and entertainment-focused, it’s a great match from both a product and a customer perspective. Anyone who has invested in a PS4 is clearly interested in gaming and the PlayStation VR promises to bring a new, higher-level of gaming immersion than most have ever experienced.

This is an important point to remember because the vast majority of consumers have still had very little or no experience with VR. For many of them, PlayStation VR will be their introduction to virtual reality. As a result, I think is likely going to get some of the benefits that come from being first to market—it’s bound to create a lot of buzz and excitement around the product and the Sony brand. Given how long it’s been since Sony has had a truly groundbreaking product, it’s likely going to provide a much needed boost.

Though it’s still early, initial reaction from Japan suggests the company could have a big hit on its hands. Customers travelled long distances and formed lines outside of retailers in an Apple-like way to purchase or place an order for a PlayStation VR—that’s something we haven’t seen for a Sony product in quite some time.

Moving forward, Sony is also hoping to expand beyond gaming and possibly even bring new customers to the PS4 and forthcoming PS4 Pro updated gaming console by providing entertainment-related “experiences” tied to Sony-owned media content, as well as educational and virtual travel type offerings.

It’s still early days for VR, but I have a feeling Sony is making a strong debut.

PC Market Shows Little Sign of Improvement – by Carolina Milanesi

It is that time in the quarter when IDC and Gartner publish their PC market share and, while the numbers differ slightly due to methodology (Gartner does not include Chromebooks and iPads), the sentiment is similar. IDC is calling for a 3.9% decline while Gartner puts the year on year decline at 5.7%. The US market was practically flat for Gartner while IDC recorded a second quarter of positive growth.

In their commentary, both companies cited slower replacement rates in the consumer market and lack of upgrades generated by Windows 10 in the enterprise. Nothing new really. Back in April, we ran a study in the US market to understand intention to purchase and the picture was not encouraging. Of the 550 consumers we interviewed in the US, only 12% had upgraded their PC in 2015 and 26% had a PC that was five years old or older. When asked about intention to upgrade, 62% said they were not upgrading over the next 12 months. When asked why, 70% of owners of a five years old or older PC said their current PC works fine and they do not see the need for a new one. Only 9% said they could not afford it. Looking at usage paints the entire picture. Users of newer PCs are more engaged and use their PCs for a wider variety of tasks. Most users with PCs 5-6 years old say they do social networking (28%) and manage files (22%). In comparison, only 10% of owners of PCs 1/2-year-old use their PC to manage files.

Vendors need to re-engage consumers with the PCs by making them appreciate the rich experience a PC can deliver compared to a smartphone and a tablet. When mobility is not the priority, consumers need to perceive the added benefit of a PC experience. Clearly, price is not an issue as that only comes up with less than 10% of consumers who are not intending to purchase a new device. They are clearly saving that money or using it on something else. With more devices being pitched as smart, consumers no longer see the PC as the only device with brains. The biggest problem I see in the Windows ecosystem remains the lack of applications which would bring some of the most used features and experiences people love on their phone to the PC.

If vendors can crack this “added value” point with consumers, they could see an increase in ASP even though sales might not return to growth quite yet. Times remain tough, as shown by the recent news from HP that they will lay off 3,000 to 4,000 employees over the next three years in an attempt to save $200 to $300 million per year beginning in fiscal 2020. Earlier in the year, HP had already announced they will be laying off 3,000 employees by the end of December. HP is currently number two in the market ranking very close to leader Lenovo.

Apple Increases Its GPU Talent Acquisition – by Ben Bajarin

Business Insider broke some news that Apple is increasing its talent in the GPU department by hiring key folks from Imagination Technologies. Apple uses a GPU license from Imagination and does some customization to the IP but it is unclear how much. It has been rumored Apple was looking to design its own GPU. However, I’m not sure starting from scratch is the likely way they would accomplish this.

The GPU is increasingly becoming one of the most important parts of our computing devices. When it comes to computer vision, AI, AR/VR, and anything related to the visual and graphic elements, the GPU is involved. Knowing Apple likes to own and control the full stack when it comes to the critical components of computers, it seems inevitable this will continue to spread to the GPU given how critical it is for future computing experiences. This is a matter of when not if.

CarPlay: The Best Incarnation of Apple’s Ecosystem

Apple is making a car. The code name is “Project Titan.” Apple brings back Bob Mansfield from retirement to lead the project. Apple lays off dozens of employees who were presumably working on the car project that was never confirmed. Apple might no longer be making a car. There! You are all caught up on the months of speculation around Apple and cars!

What I do know for sure is Apple is in my car today. A new car I have had now for about 10 days. A totally unnecessary purchase justified by the fact that my old car – a 2014 Suburban – was not technologically savvy enough. Now, I have the 2016 model and it does all sorts of things for me — warning me about lane departures, making my seat vibrate when a car or pedestrian is approaching me while reversing, and showing me the direction with a big red arrow on my screen. The most interesting part, however, is having CarPlay and Android Auto.

As I am currently using an iPhone 7 Plus, I tried out CarPlay and the results are quite interesting.

I have been using Google Maps pretty much since I got to the US four years ago. My old car had a navigation system but I hated it so I was using my phone with a Bluetooth connection. I had tried Apple Maps when it first came out but went back to Google and soon got used to certain features, such as the multi-lane turn as well as the exact timing of the command. I got comfortable with it and, aside from trying out HereWeGo and Waze, I have been pretty much happy with Google.

Having CarPlay made me rediscover Maps and features like where I parked my car, the suggested travel time to home or school or the office, suggestions based on routine or calendar information — all pleasant surprises that showed me what I had been missing out. It also showed me how, by fully embracing the ecosystem, you receive greater benefits. Having the direction clearly displayed on the large car screen was better and, while there is still a little bit of uneasiness about not using Google Maps, I have now switched over. Maps on Apple Watch just completes the car experience as the device gently taps you as you need to make the turn. It is probably the best example I have seen thus far of devices working together to deliver an enhanced experience vs. one device taking over the other.

Music has been in my car thanks to a subscription to Sirius XM but, at home, we also have an Apple Music subscription as well as Amazon Prime Music. With CarPlay, my music starts to play in the car as soon as the phone is connected and, despite my husband’s initial resistance, this past weekend, he was converted. He asked Siri to play Rancid and he was somewhat surprised when one of his favorite songs came on. My daughter is also happily making requests to Siri and everybody catching a ride is quite relieved not to be subjected to Kidz Bop Radio non-stop.

The best feature, however, is having Siri read and compose text messages for you. I know I can do that outside my car as well but I rarely do, because, well frankly, I don’t have to: typing serves me just fine. When I interact with Siri, the exchange feels very transactional, i ask a question I get an answer and that is it. The car is the perfect storm when it comes to getting you hooked on voice commands. You are not supposed to be texting and driving, the space is confined, and there is little background noise as the music is turned off when you speak (I have to admit a switch to turn off the kids would be nice too). Siri (she) gets commands and messages right 90% of the time which gets me to use her more. Interestingly, it is also the time where I have a more natural, more conversational, exchange with Siri:

Siri: There is a new message from XYZ would you like me to read it to you?
Me: Yes, please.
Siri: (reads message)
Siri: Would you like to respond
Me: Yes
Siri: Go ahead
Me: Yada Yada Yada
Siri: You are replying Yada Yada Yada, ready to send?
Me: Yes

At the end, you have a pretty satisfied feeling of having achieved what you wanted and not once moving your eyes from the road ahead.

Our Voice Assistant survey did show a preference for consumers to use their voice assistant in the car. Fifty-one percent of the US consumers we interviewed said they do, so I am clearly not alone. I would argue that interacting through car speakers vs the phone – assuming you are not holding the phone to your mouth which would not be hands-free – gives you higher fidelity and therefore a better, more engaging experience.

While we wait for autonomous cars (maybe even one by Apple) to take over and leave us free to either work or play while we go from point A and B, it is understandable that CarPlay stays limited to functions that complement your driving but do not interfere with your concentration. That said, I think there is a lot of room for Apple to deliver a smarter experience in the car if it accesses more information from the car and the user. Suggesting a gas station when the gas indicator goes below a certain point, suggesting a place to park when we get to our destination, or a restaurant if we are driving somewhere where we have not been before and are close to lunch time. The possibilities are many.

The problem with CarPlay is it relies on consumers upgrading their cars to one of the over 100 models available or integrating CarPlay kits — which range from just under $200 to over $700 depending on brand and quality. This is a steep price to pay when you are not quite sure what the return on your investment will be. Apple needs to find a way to lower that adoption barrier for CarPlay so as to speed up adoption. The more users experience CarPlay, the easier it will be to get them to take the next step when it comes to cars, whether an Apple-branded car or a fuller Apple experience in the car.

Unpacked for Friday October 7th, 2016

Samsung Buys Viv: Let the Battle Begin! – by Carolina Milanesi 

On Wednesday, news broke Samsung had agreed to buy Viv, the AI and assistant system founded by the creators of Siri. Viv will continue to operate as an independent company that will provide services to Samsung. While the acquisition was lead by the Mobile group, you could see how Viv could appeal to other Samsung lines of business such as TV and home appliances.

From a technology perspective Viv differentiates itself in two key ways:

  • It is interconnected, meaning the information flows more freely so the queries can be more complex and conversational — closer to how humans actually speak to one another
  • A software feature called ‘dynamic program generation” which allows Viv to understand what the user wants and to create programs on the fly to handle those queries

Given Viv is not in any commercial products as yet, I will focus my discussion on what this means for the companies and their competitors.

Samsung has been trying to limit its dependence on Google services for a while. Samsung has also been competing with Apple pretty much feature for feature. Given also their SmartThings play, the Viv acquisition announcement should really not come as a surprise to anyone. The timing of the announcement – a day after Google’s Sundar Pichai announced they are moving to an AI first world from a mobile-first one – could not have been better. Even more so after we heard Google Assistant will, at least for now, remain bundled in Google’s new phone Pixel instead of being pushed through any Android phone running Android 7.1.

For Viv, going with the top smartphone vendor in the world also makes sense although I would urge them not to see all the phones Samsung sells as a possible host for a personal assistant.

While everything on paper makes sense, how this acquisition will work remains to be seen. I struggle to see Samsung aiming to compete with the digital assistants that Google, Apple, Amazon, and Microsoft have been talking about — ones that require powerful back ends and ton of data. Samsung, for me, remains first and foremost a hardware company and I would expect them to use Viv to add value to their hardware. Lately, Samsung has been pushing the ecosystem of products they have from phones to tablets to wearables to TVs. Having a strong voice UI that bridges those devices could be a strong push in the “better together” story.

Twitter looks doomed to go it alone or be snapped up by Salesforce – by Jan Dawson

Rumors started some time ago that Twitter was becoming an acquisition target, largely because its share price was so depressed that it was becoming cheap. Since that time, a number of possible suitors have emerged and the share price has risen sharply, only to fall precipitously again as those suitors have fallen away one by one. At the end of trading on Thursday, its share price was more or less identical to a month earlier, after something of a roller-coaster ride.

The big challenge with acquiring Twitter is the synergies are pretty thin for almost any potential acquirer. Each of the companies floated has had some potential synergy but the combination of the rising price and the downsides to an acquisition have made it tough to justify the purchase. For the ad-centric acquirers such as Google, the ad synergies seemed the most obvious drivers, but Twitter is still such a small business it wouldn’t make much difference to scale for any of the big players. Yes, a Google acquisition would help Twitter by giving it far more scale and a bigger audience, but it’s far less clear a Twitter acquisition would help Google.

Media buyers were among the other strong suitors, notably Disney. The rationale here seems to have been more about distribution and leveraging Twitter as a channel for content. The big problem here is any content owner who wants to use Twitter to distribute content today can already do so – as demonstrated by the NFL, Bloomberg, Cheddar TV and others. Perhaps the integration might deepen a little under an acquisition scenario, but not by much. On the other hand, an acquisition by one media company would make every other media company reconsider its use of Twitter as a distribution channel, for fear of playing second fiddle to, and sharing usage data, with a competitor. Disney’s pullout seemed inevitable, but it was also smart.

Salesforce appears to be the last big company still considered to be in the running but here too the rationale is weak. Salesforce ostensibly wants Twitter for its customer service and data possibilities, but it feels like Salesforce could accomplish much of what it might want by integrating with Twitter rather than absorbing it. One wonders whether this is something of a vanity acquisition for Marc Benioff and Salesforce, as much as a rational one, which is always a dangerous starting point for such a thing.

Lastly, and perhaps most importantly, it’s also not clear that any of these acquisitions would be good for Twitter as a product. None of the companies considered to be in the running had a pedigree that suggested it would somehow run Twitter better than it’s currently being run. And that’s what Twitter currently needs more than anything: better strategy and execution. Yes, ad synergies would help on the monetization side but it’s user growth that’s the real problem (and the real reason for the depressed share price). It’s looking more and more likely Twitter may have to simply go it alone at this point, unless Salesforce really does come through. Neither option seems all that appealing, however.

Facebook Pushes VR Forward – by Ben Bajarin
Facebook announced some interesting things around VR at the Oculus developer conference yesterday.

The first was a social VR experience and a set of developer tools around having people’s avatars join them in virtual reality. Mark Zuckerberg did the demo and had two colleagues on stage in VR with him during the demo.

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There are a number of things going on here that signal some interesting directions for VR. First, notice they aren’t totally in virtual reality. This is basically mixed reality, where you blend the physical and the virtual. There are cameras capturing the room in VR and then showing that video in the headset to the user while placing digital elements over the physical world. The avatars are digital and the room is the physical element. The demo went on to have all three people together underwater and on the moon, all the while interacting with each other while in any number of virtual spaces. Imagine, you are at a sports venue, concert, park, another world, etc., with your friends in VR displayed as their avatars. While you notice the avatars look like cartoons today, that will not be the case in the distant future. At some point, your friends or family will look virtually real in this space as you interact with them from afar.

Second, there are facial expressions happening as well. This gets interesting as the headset will look to capture the person’s facial expressions in real time and display them virtually so you can see their reactions as well. Capturing the body as well will be coming in the future so, not only would you see friends or families facial expressions, but all of their body movements as well.

Every major player in VR hardware or components talks about all the additional facial and body expressions which will be enabled in the future so we can have physical representations of us inserted virtually into any environment we choose.

Secondly, Facebook announced a standalone VR headset that will be better than a Gear VR device but not as good nor tethered to a high-end gaming PC.

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This product has all the major components integrated into the headset and is code named Santa Cruz. There aren’t many technical details available == like what the processor or GPU specs are — but this is the direction the industry needs to go to take VR mainstream. Wireless, head-mounted VR units are where the market is headed but we need a lot of development still to make it happen.

Overall, we are making great progress in VR and even the mixed reality technology. Mixed reality is what I think has the biggest potential and makes the most sense for us to spend significant amounts of time in spaces that blend the physical and the virtual.

Google’s Pursuit of Happiness: #MadeByGoogle

After weeks of speculations and leaks, Google finally announced its first #MadeByGoogle smartphones called Pixel and Pixel XL. Yet, the phones per se were the least interesting part of the event in my opinion. What was really interesting was Google’s focus on AI as the next platform after mobile and how, in order to be the winner in that battle, they feel the need to go deeper into hardware

Pixel is No Nexus

While the premise of the Pixel phones might be the same as Nexus – always the latest software and a pure experience – everything else points to a very different role these products will play for Google.

First, of course, the phones, made by HTC with the VR viewer Google branded. Second, Google stated they had a lot to do with the design of the phones vs the Nexus phones — which were a rebranded version of a specific marker flagship product.

The limited appeal of Nexus in the past, though, had little to do with how the phones were designed or who made them and a lot to do with how they were sold. With Pixel, Google is not just relying on the Google Store for distribution but is partnering with carriers across different markets — Verizon in the US, EE in the UK, Rogers in Canada, Deutsche Telekom in Germany — as well as key retailers such as BestBuy and Carphone. It seems quite clear Google will put a marketing budget behind these devices; something it did not do for Nexus.

I would expect sales volumes to be significantly higher than their previous Nexus products. Yes, I know that does not say much, given Nexus represented less than 1% of overall Android sales. But let’s be clear — Pixel is not designed to appeal to every Android user out there. Hence, the premium price.

The little pitch about the new feature that allows users to easily switch OS’, including helping you port iMessages, was a nice giveaway of who Google is hoping to capture. Before we get to iPhone users, though, I think an easier target is high-end Android customers, most of whom are using a Samsung Galaxy S phone now.

With Pixel being the first Daydream-ready phone and, most likely, the only one shipping in time for the holidays, Google adds VR as a cherry on the cake and will give the Daydream View free with preorders as well as pricing it $20 less than the Samsung Gear VR. This is more bad news for Samsung who has a clear head start in VR but will now face more competition and might need Facebook to be more of an enabler when it comes to content so as to compete with Google’s YouTube. Of course, YouTube VR access will not be exclusive to Daydream-ready devices but we could certainly see dedicated content for them as the user base grows.

Google is best on Pixel

Pixel is also clearly aiming at turning Android users into Google users with Pixel, Google Assistant, Allo, and Photos brought to the forefront so the user is not just engaged with the OS but engaged with Google more and more. There are many Android phones out there but only two Google phones for now. With this focus, Google might not need to make Android proprietary in order to control it.

If you think about the Android smartphone market now, you have Samsung and Huawei as the main player at a worldwide level. Then, you have a bunch of brands that are strong players in some markets. Then another group that is very localized. With Pixel, Google is playing a similar game as Microsoft is with Surface; they just seem to be less shy about it. So Google still needs all the other Android makers to churn out devices because not all Android users are interested in Google services or have access to those services or are actually valuable to Google. Google was quite careful at the end to talk about Google being best on Pixel vs Android, aside from the mention of being able to run the latest version. While Nexus was the purest Android experience, Pixel is the best Google experience. It will be interesting to see how the services differ on other devices going forward, if at all. Today, for instance, we heard that Pixel comes with Google Photos built in and offers free unlimited storage at full resolution for both pictures and videos.

Moving to an AI-First World

Before we got to the devices announcements, Sundar Pichai set the scene as to what the next battleground will be: AI. Google Assistant comes embedded in Pixel and in November, could enter our living room through Google Home. Pichai explained how “Google for everyone” will become “Google for you” (and you and you and you and you). Google Assistant will be tailored to you and your individual needs. Some may wonder why Google is actually bringing Google Home to market when there is an army of phones out there that could run the Assistant. Well, first of all, the army is not ready. Most of those phones run on old software that does not support Google Assistant. Although, if running Lollipop and up, you could have Allo running on your phone. Second, Google Home might convert some Apple users who are not quite ready to give up their iPhone yet but might be intrigued by a home device. Third, as Echo taught us, a voice-only device might get us to embrace our assistants faster and more deeply. Considering the aggressive price of $129, Google sure wants to sell a lot of these.

The demo was impressive from a conversational and range of knowledge perspective. The latter should not be a surprise, given Google has search in its DNA. While this less transactional exchange might make Google Home quite appealing, some of the use cases will be limited to the user who owns the account it is paired with.

You heard me talk in the past about the role personal assistants might have. When Google Home was introduced at Google I/O, I thought Alexa was depicted more as a Mary Poppins and Siri was more and more like Jarvis – especially now that she can whisper in my ear through AirPods. If Home can only be associated with one account, for now, it means it will only know about one person’s calendar appointments, shopping list, etc – pretty much everything but music as Google Home supports multiple music accounts. I am not sure if this setup decision plays to “the head of the household”, which seems to fit with women not generally being interested in interacting with Alexa according to our research. Yet, if you ask most families when it comes to family routine, calendars, homework and the like, it is really not the dad who is in charge – and yes I know I am stereotyping. So even Google Home seems to be more like Jarvis than Mary Poppins. It raises the question of, why do I need it in the home vs on my phone? Maybe this is why we have Pixel with an embedded Assistant and phones that run Allo.

There was more #MadeByGoogle at the event like the 4K Chromecast and Google Wifi but they were completing the picture rather than making it. What was absent was the rumored new platform mashing together Android and Chrome codenamed Andromeda. Though, given the focus of the event, such an announcement would have felt very much out of place. We’ll see if Andromeda will surface closer to Google I/O in 2017. There is a lot to digest from today and many questions will be answered when the devices start shipping later in the year.

Unpacked for Friday, Sept 30th, 2016

Goodbye Moto! – by Carolina Milanesi

Earlier this week, several publications reported Lenovo had conducted a new round of layoffs at Motorola. According to Droid-life, over 50% of Motorola’s existing US staff have now lost their jobs. Other sources reported the numbers are as high as 700 out of the existing 1200 employees would be asked to leave.

Motorola quickly tried to limit the damage by stating the current layoffs account for less than 2% of Lenovo’s overall workforce of around 55,000 employees. This only emphasizes how Motorola was swallowed, chewed up and spit out. While key people left Motorola soon after the acquisition, there was still talent within the company. People who understood the mobile business and helped to deliver products such as the Moto X, Moto G, and Moto E.

While the Moto X, Moto G, and Moto E were not able to save Motorola from being acquired, I believe they could have done some good to Lenovo if marketed properly and widely. At the time of the acquisition, the Motorola brand still mattered in the US and China. However, an unclear positioning against the Lenovo brand made it difficult to capitalize on that value.

More recently, it became obvious Motorola was only an independent company on paper and all the decisions on products and go to market were decided in China. Moto Mods are a good example of something I very much doubt came out of Chicago. While there is nothing wrong with the Moto Z (it is actually a great phone), Mods very much feel like tech for the sake of tech mainly because of how consumers have felt for years about modularity and price.

I struggle to see how Moto as a brand will be able to make any inroads from now on, especially in the US, where consumers still have a strong sentimental attachment to what used to be the mobile phone market leader. The smartphone market is not the PC market and, more importantly, the consumer market is not the enterprise market. Clearly, Lenovo followed the ThinkPad strategy but the results will be quite different in my view. Moto’s bat wings will remain on some products but consumers will know that what they buy is Lenovo.

Spotify reported to be acquiring SoundCloud – Jan Dawson

This week, reports emerged Spotify was preparing to acquire SoundCloud. This feels like the rare example of a media merger that makes perfect sense for both parties. Spotify would get some exclusivity, which has been challenging to achieve otherwise, by incorporating the many additional tracks which exist only on SoundCloud. That means mixtapes, podcasts, bootleg recordings, and much more which aren’t available anywhere else. Spotify could use a boost ahead of its IPO and, though the acquisition won’t solve all its problems, it should help increase investor interest, not least because it becomes a unique proposition in an increasingly vanilla world of streaming music.

For SoundCloud on the other hand, being part of Spotify solves a problem it tried to resolve with its recent foray into subscription services, which by all accounts hasn’t gone all that well. SoundCould would get a big backer, be paired with the largest paid streaming music service in the world, and wouldn’t have to raise more funding on its own.

All this, though, highlights the challenges of competing in the streaming music market. As I’ve written before, the basic value proposition is so simple it’s tough to differentiate. SoundCloud is a rare exception because it’s approached the market very differently by attracting grassroots musicians as they come up through the ranks but then inevitably, ceding them to the big labels and major streaming services.

Apple tried to mimic some of that value proposition with the Connect feature in Apple Music but it’s been hampered by being part of a somewhat exclusive walled garden within an app rather than on the open web. Apple had the potential to create the soup-to-nuts music service for everyone from bedroom guitarists to rock stars when it created Apple Music but has definitely done better at the high end. SoundCloud potentially gives Spotify an interesting new way to approach the same problem, by integrating the place where many artists already make their start.

Qualcomm in Talks to Acquire NXP – Ben Bajarin

Reports came out yesterday that Qualcomm was apparently in talks to buy NXP. This not long after NXP had finalized acquiring Freescale, making them a top five semiconductor company. Qualcomm remains the undisputed #2 semiconductor company in revenue, behind Intel, but I’ve believed for some time they need to go on a buying spree to play catch. I just didn’t think they would be interested in such a large deal which, at 30 billion, would be nearly 30% of Qualcomm’s market cap. That being said, NXP would fill some gaps in Qualcomm’s overall offering as they look to provide complete solutions, top to bottom, to build any number of technologies in the future.

I’ve written extensively about the consolidation of the semiconductor industry. This consolidation is inevitable as more companies look for one-stop shops to buy all or most of the components they need to go to market with a product. By including NXP’s portfolio, this gives Qualcomm the opportunity to have a larger share of the bill of materials across many different categories — smartphones, IoT, connected cars, smart home, wearable technology, smart cities, and more. The scale opportunity, along with the possibility of capturing a larger share of the BOM, is the big upside to this deal if it happens.

While a large dollar value, it seems the street is positive on the deal as both Qualcomm and NXP shares rose yesterday. NXP does fill a lot of gaps where Qualcomm is behind. This deal would undoubtedly strengthen Qualcomm’s overall portfolio.

Google Upgrades Their Cloud Offerings – By Bob O’Donnell

One of the few areas where Google is noticeably behind their competitors is in the area of cloud offerings for business. The company has been seen as a much smaller player than Amazon, Microsoft, or IBM for quite some time, but they made some announcements this week to step up their offerings.

Notably, the company switched to the imitative but obvious name Google Cloud for its key hosted offerings. In addition, it consolidated its Google Work for Business and renamed Google Apps for Work to G Suite. The net result is that, along with new management in the form of Diane Greene (former CEO of VMware), the company now has a unified set of offerings under a single umbrella name.

Along with the rebranding, Google announced a number of enhancements to G Suite. Many of the new capabilities leverage machine learning and AI-type efforts to create new features. For example, for people who don’t understand how to do formulas in their Sheets spreadsheet app, Google is starting to incorporate more natural language processing that can convert text requests into formulas.

Google also announced Team Drives, a new app optimized for storing and sharing files across a team of workers. The bottom line is Google, like Apple, is making a renewed pitch into the enterprise because growth in the consumer market has stalled or even started declining. It remains to be seen how successful the company can be for business applications and services but clearly, there are focused efforts to try and create new opportunities.

HERE: A Clear Case of Together We Are Stronger

Ahead of this week’s Paris Motor Show, HERE announced how its Open Location Platform (OLP) aims to gather real-time data from sensors on board of connected vehicles to create a live assessment of road environment that will make driving more secure for drivers as well as driverless cars. In order to achieve this goal, HERE will start sourcing sensor data from Audi, BMW and Mercedez-Bens. More brands will be added over time.

The data provided anonymously by the car makers will be the basis of four distinct services:

HERE Real-Time Traffic

HERE Hazard Warnings

HERE Road Signs

HERE On Street Parking

These services will be made available to any auto maker, municipality, road authority, smartphone maker and developer to license. While connected cars today are still limited, HERE is expecting other auto makers to join the current lineup and contribute their car data.

Openness in data sharing, which is a first in the automotive market, clearly shows how much is at stake for car vendors.

HERE Focuses on the Bigger Picture

HERE has come a long way since launching as the separate brand mapping service of phone maker Nokia. From a pure mapping service for consumers, it built a strong enterprise business and white-labeled its maps for big names such as Amazon, Facebook, and Baidu. In 2015, HERE was bought by a consortium of German car manufacturers that included Volkswagen (Audi’s parent company), Daimler (Mercedes-Benz parent company), and BMW. Since then, HERE has been moving fast in closing more enterprise deals and expanding the consumer offering with HereWeGo which really takes the brand from offering a mapping service to offering a transportation concierge service.

HERE’s mapping apps on iOS and Android have very positive reviews but uptake remains limited, especially in markets like the US. This is not necessarily because of the superiority of Google or Apple maps but because consumers tend to use what comes as a default or is linked to a popular brand. These entrenched behaviors keep Google Maps as king of a castle. Trying to change that would require a lot of effort and marketing dollars, with a return on investment that would likely not be significant enough for HERE.

The recent announcement from HERE makes a lot of sense when it comes to how the OLP could become a more critical consumer enabler, albeit an invisible one. We spend so much time looking at Google and Apple, we sometimes forget consumer engagement is not just valuable when there is a direct return on your own brand. In other words, HERE cannot be successful outside the enterprise only by becoming a strong consumer brand.

What is at Stake?

The data that cars will be able to collect will be key more than the services both as a source of revenue and an engagement point with users. Artificial intelligence in the car will benefit tremendously from all this information and so will our personal assistants.

Google has been at this for years when it comes to collecting data for its map service, both from a world layout perspective and user preference and habits, including catching Pokémons. Smartphones have democratized navigation in the car, preventing the attach rate of built-in navigation from really taking off. While the integration of navigation has been trickling down from luxury models to more basic ones, the premium consumers still have to pay for navigation and cost of keeping the maps updated are still negatively impacting in-built navigation.

Semi-autonomous and autonomous cars might change the rule of engagement with consumers who are starting to rely more on what comes built into the car and, over time, using their phones as a secondary screen. If you see maps and the data as the intelligence that powers your smart assistant, you can see how the model that HERE is setting up offers big upsides.

Of course, Google and Apple will try and own that whole experience from maps to virtual assistants, but car vendors have the opportunity to offer an alternative by integrating HERE services out of the box — or, in this case, out of the garage — and let the virtual assistant the user prefers (Siri, Cortana, Alexa, Google assistant) tap into the data and be my interface.

There will also be consumers who do not buy into the virtual assistant scenario but would love to have a chauffeur in the sense of a curated, safe driving experience. This is another role car vendors might want to play. The key to success, however, is not to make these features premium and static. Innovation in the mobile world happens faster and would always offer consumers more for less.

Of course, as HERE does not just make this data available to car vendors, the opportunities to be the data engine for players wanting a piece of the pie of the connected car will be endless.

Apple Watch Speaks The Only Language Wearable Consumers Understand: Fitness

The iPhone is such a big part of Apple’s revenue that we have seen a lot of coverage and attention paid post-launch event to iPhone 7 and 7 Plus. While Apple Watch is nowhere near iPhone revenue yet, it deserves our attention because of the role it will play in Apple’s future.

Early Adopters’ Learnings

When Apple originally introduced Apple Watch, it focused on design/style, communication, and fitness. While design made Apple Watch stand out from the competition, I think it is fair to say it captured more tech adopters than it did jewelry buyers and fashionistas.

Communication was about two main things: notifications and digital touch. Notifications ended up being a strong driver of satisfaction but not necessarily of purchase. This is because it is quite hard to articulate how notifications can impact your phone usage and the value they bring to you. This is a feature that delivers different returns to different people that will be discovered as they use Apple Watch. For some, it is about being in control. For others, it is about being in the moment. For others, it is about never missing what is most important. Precisely because it is so personal, it is quite hard to pitch it to potential buyers, especially as many see their phone playing the exact same roles.

Digital touch was an attempt to broaden the way we communicate by adding more of a personal touch from a device that is the only one consumers see as more personal than their phone. However, the limited number of users early adopters could interact with, coupled with the fact that, more likely than not, people they wanted to interact with might not have had a Watch, a spose or a child, limited the appeal.

When all is said and done, fitness remains the strongest purchase driver for wearable buyers at the moment, especially as we expand beyond early adopters.

Doubling Down on Fitness is not a Change in Focus

Wearables are not a must have. I have been saying this since the very beginning of the market. This means consumers need to be convinced to invest in them. Fitness has been, from the beginning, what resonates with them because it is the obvious use case, compared to what could be done with smartphones.

77% of American consumers we interviewed in the spring said they bought a wearable device because of the step counting feature. Another 38% said they wanted a heart rate monitor and 36% wanted a sleep tracker.

Apple, by adding GPS and a swim proof design to Watch Series 2, combined with an improved CPU GPU and a brighter display, provides a solid upgrade for current Watch owners as well as a more attractive proposition for users who are either looking at upgrading from a fitness band or who are wearing a smart device on their wrist for the first time, especially given the $369 starting price.

With fitness at the center of Apple Watch’s line up, having a Sport edition no longer made sense. But adding a trusted sport brand like Nike to the portfolio makes a lot of sense particularly as the price of the entry-level Watch now starts at $20 more than the Sport edition did. As Apple did with the activity and workout features, with Watch Nike+ it tries to appeal to both serious and occasional runners with dedicated workouts. Apple’s gamification effort, which started with the badges users could earn, increases with watchOS 3 as users can now create groups they share, compare, and challenge in their achievements. While personally I am not a fan (mainly because I hate public shaming), the social aspect is certainly more rewarding for some than any badge of honor Apple could ever give them. The activity rings can also now be more central to Apple Watch with some new faces that display the information in a more effective way for users who really want to stay focused on their daily goal.

There is Luxury and then There is Luxury

Apple Watch buyers certainly appreciated the design, the quality of material, and the overall look and feel of the product. While they might have bought Apple Watch instead of another smartwatch based on looks, I am not sure many bought it thinking they were buying a piece of jewelry. As it is the case in the traditional watch market that Apple now measures itself against, there are different kinds of high-end watches. Apple repositioned its luxury threshold, going from the Gold Edition, priced at $10,000, to the ceramic edition priced at $1249. From an addressable market perspective, there is certainly a bigger segment for the ceramic edition than there was for the gold, especially as Apple is still working on establishing a more comprehensive brand status that includes more than just tech..

Hardware Only Tells Half the Story

Most of the learnings from the first Apple Watch release are best demonstrated by how the UI has morphed. As for the marketing messaging, Apple only tweaked what it had initially delivered with watchOS to improve the experience and widen the appeal.

Digital touch has now been integrated as an option to respond to messages in the same way it has been added to messages in iOS. It might just be me but, even the way scribble and digital touch have been added to iOS, it links nicely to the Watch, helping to socialise this way to express ourselves as well as widen the circle of people who can now receive and send heartbeats or kisses or fireballs or even a heartbreak. It sure is something my eight year old has happily embraced on her iPad.

Swiping, now part of our muscle memory thanks to iPhone and iPad, also plays a more proactive role in watchOS 3 as it is the case for the revamped launch screen. Force Touch is still there but is not highlighted – the same as for iOS.

After using Apple Watch Series 2 for over a week, it is the speed and the improved battery life I came to appreciate. While I have been waiting to be able to swim with Apple Watch (I wish it was available when I went on holiday), it is speed and battery life that positively impact my daily experience. The new GPU and CPU make a great deal of difference when launching apps and interacting with Watch. Apple built it and now I hope apps will come. This is still what I hope to see now that developers can no longer use the excuse of a sluggish OS that did not allow them to design Watch apps. Apple tried to kick things off with Breathe an app that aims at showing there is more to health than calories and steps. While I am still getting used to it and have it set for every three hours rather than every hour, I find that between stand and breath I am more conscious of how long I sit and how caught up into things I get and these help me take a moment.

With developers more likely to be waiting for a broader addressable market, I think we will see sales pick up, thanks to the lower priced but upgraded experience of Watch Series 1 now at $269 and the broader appeal of GPS and swim mode in Series 2.

It’s hard to see any other brand top Santa’s smartwatch list for this coming Holiday Season.

Unpacked for Friday September 16, 2016

Samsung officially recalls the Galaxy Note7 in North America – by Jan Dawson

Samsung has finally issued an official recall of the Galaxy Note7 phone in North America, working with the US Consumer Product Safety Commission. This follows several weeks of informal recall activity, with Samsung encouraging owners to return their devices to retailers in exchange for refunds or alternative devices. The official recall formalizes the process but will hopefully also raise awareness, as only a small portion of owners have complied with the instructions to return their devices up to now.

The whole Note 7 problem couldn’t come at a worse time for Samsung. It has completely hamstrung its ability to compete with Apple’s new iPhone 7. Rather than being out for several weeks ahead of Apple’s devices and benefiting from the strong reviews, Samsung is now unable to sell any Note 7 phones through the pre-order period for the iPhone 7 and much of the first week of retail sales. That’s going to put a big dent in Note 7 sales and, given Samsung will have to focus on replacing devices already sold when its inventory starts to ramp up again next week, it’s quite possible the phones won’t be available to first time buyers for some time to come.

To its credit, Samsung acted quickly once it was clear there were significant and widespread problems with the devices but its recall hasn’t been successful in getting people to return them in large numbers. At the same time, Samsung’s messaging around the recall has been inconsistent and even misleading at times, with them at first promising new devices would be available within days but, more recently, pushing the date back to September 21st.

The bigger damage – as Tim Bajarin wrote earlier this week – is the lasting damage to the brand. Samsung’s reputation for customer services has taken some knocks previously across its various product lines and, without a direct face to customers in the US equivalent to Apple’s retail stores, it struggles to communicate with customers and give them somewhere to go with their concerns. Instead, those concerns have to be managed by wireless carriers and consumer electronics retailers, most of whom have no incentive to sell customers another Note 7. Many customers will end up buying other devices, including iPhones. Obviously bad news for Samsung.

There’s no doubt Samsung will recover eventually, though there will be some after effects. But when it comes to Note 7 sales, it’s now a certainty Samsung will sell far fewer than it would have hoped to and the costs of the recall and the lost sales will be significant. That’s particularly sad given Samsung has largely righted its smartphone ship recently and begun making some progress in terms of sales and profits. These problems will now set those efforts back for at least a quarter and probably more.

A Tough Week for Wearables – by Carolina Milanesi

Unless you are Apple, Fitbit, and maybe Samsung, this week seems to have been a tough week for wearables. Two unrelated news items point to an industry struggling to make this new set of devices really compelling to consumers.

Will We See a Microsoft Band 3?

On Wednesday, ZDNet reported the team working on Microsoft Band to run Windows 10 is no more and there are no plans to bring to market a new Band this year. Microsoft then issued a statement saying it will still support its Health platform and will continue to sell Microsoft Band 2. If this were not enough reassurance, on Thursday Microsoft changed the name of the health app on iOS, Android and Windows Phone to Microsoft Band.

Not seeing a Band 3 by the end of the year would not necessarily be a bad thing. Microsoft is clearly not interested in the wearables market as a way to drive revenue from hardware. There are two things that matter to Microsoft: showing off the cloud platform and engaging consumers with a much more personal device than a Surface. While the first one is a clear asset and one that is appreciated by the current Microsoft Band owners, in order to take advantage of it from a big data perspective Microsoft needs a larger number of users than what it currently has. However, the design of the Band did not appeal to many users and the sophistication of the data provided is more than most current consumers looking at wearables are interested in.

In other words, Microsoft Band was too early for the market. Consumers are certainly interested in health and fitness, as we have discussed on a few occasions over the past weeks, but their requirements are actually pretty basic. A recent survey we ran in the US points to the vast majority of consumers wanting information on their caloric intake and activity level and not much else beyond that.

Microsoft could go back to the drawing board from a design perspective but educating the market requires a lot of effort. Effort it might leave to its competitors and then come in and say, “We can do that and more.”

I very much doubt Microsoft will entirely abandon wearables as they offer a good platform to Cortana, especially as Microsoft cannot rely on its own mobile phones and data points to a low uptake of Cortana on non-Microsoft smartphones.

No New Devices Coming from Google’s Key Android Wear Partners

LG, Huawei, and Lenovo all confirmed to CNET this week they are not planning to launch any new wearables before 2017. I guess they do not expect consumers to flock to the stores over the Holidays to buy smartwatches. As I discussed in my IFA article last week, it was quite telling that a show that has been the stage to important wearables launches in the past only had Samsung unveil a new product this year and it does not run Android Wear.

Sales outside of Apple and Samsung have been pretty limited as have been Android Wear developments. It seems to me Google has bigger fish to fry with Home and Daydream – things consumers are actually excited about – than trying to convince consumers they really need to buy a smartwatch. I would also argue that, considering how tepid the response from developers has been on WatchOS, it does not bode well for the Android Wear camp. Historically, developers have chosen to go iOS first and, with the new enhancements coming from Apple Watch Series 2, I would expect them to speed up their development there. So, even if Android Wear could improve, users might be faced with limited apps that would curb the value of a smartwatch over a fitness band. A fitness band which, on average, is $100 or more cheaper than a smartwatch.

Given how slow the uptake has been, unless you have resources like Samsung, you need to pick what you are focusing on and vendors are wise not to rush to deliver something for the Holidays that is not that different from what they had last year. Between Apple and Samsung’s marketing, their effort would be more than likely wasted.

The bigger question is whether or not waiting for 2017 will make the market any more receptive. Most vendors believe having cellular connectivity will make a big difference in uptake but I remain highly skeptical this is what consumers are really waiting for.

Apple’s AirPods: The Brave will be Rewarded

There has been a lot written about Apple’s move away from the audio jack, before and after it actually happened. Many people are outraged a technology that has been around for so long and still supported by so many hardware vendors was “taken” away so abruptly, so prematurely.

We heard similar outcries when Apple adopted a USB Type-C only port for its MacBook. And people were not too happy when Google moved to USB Type-C for its Nexus line. Sadly, as painful as it is, if we want change, we need to make the first step. But, when that happens, we are never happy.

Change sucks! And Apple knows that so it does not take it lightly nor does it think all its iPhone installed base is ready for it. What I find particularly interesting about this saga is Apple has actually been quite considerate in including an adapter so users can use other headsets with their iPhone if they wish. This is about making sure consumers do not have to pay a high price for Apple’s desire to move ahead. But there is a price: $40 for a third party adapter that allows you charge your iPhone 7 and 7 Plus while continuing to use your headset. While the availability of such an adapter was one of my first questions to Apple, I came to realize, as I thought through the different scenarios, I can count on the fingers of one hand when I actually found myself needing to do that. So, while I might end up buying one, it is more as a security blanket than an actual need. Of course, if I do not want to have that problem at all, I could buy the new AirPods for $119 more than the EarPods adapter would cost. And the AirPods are really the story here.

A Cornerstone of the Device Ecosystem Experience

As with the EarPods, Apple designed and brought to market the AirPods under its own brand because they are going to be key to the user experience with the iPhone and other devices. If it were just a question of selling an accessory, Apple could have easily created a set of wireless headphones under the Beats brand and added them to the other new headsets introduced on stage. But the AirPods are not just an accessory. They are an important tool to show users who are embedded in the ecosystem the power of owning multiple devices. Think about the call functionality already going over the Watch and the Mac. And now, think of the fact Apple took time on stage to tell us that, when we connect our AirPods to the iPhone, they are automatically connected to our other devices through iCloud. Now I can take a call from my Watch without looking like an angry Dick Tracy or from my Mac without shouting at it. Think about listening to music from your Watch while you run or getting directions while you walk through the city. After all, many wanted GPS so they could leave their phone at home, no?

Cut the Cord and Let Siri Free

The choice of devices the AirPods empower is also an incredible opportunity for Siri to play a much more active and personal role day to day. This, in turn, will increase our dependence on her (yes I do personify Siri the same as I do Alexa). AirPods could improve our experience, particularly in the home, not just with Apple TV but with other HomeKit-enabled devices. It will also make it easier in environments where there are different devices and users so my Siri will respond only to me; she will be truly my personal assistant. I do not think what we have today is the end goal — there are still things that need to be worked on — but this first generation of AirPods clearly show what the future could look like. While a 5 hour battery life to listen to music might not seem like enough to many, you do not need both pods to interact with Siri — which means you can potentially cover a full day of Siri interactions using the charge in the holder. Music lovers might not like the fact Siri stops the music so she can better hear your comments but even this should be something that can be changed in future iterations.

Look at the Apple Watch to See the Progression

The bottom line is that, in a very similar way to Apple Watch Series 1, with AirPods you are buying into the future not quite knowing what the immediate benefits will be. Users will discover benefits as they go along and will help Apple refine the experience in the process, exactly as it happened with Apple Watch Series 2.

One of the complaints I heard was about Apple’s misjudged list of priorities: wireless headphones came before wireless charging. As much as I like the convenience of wireless charging, the reality is, whatever your device is using to charge — pad, pillow, stand — it still requires a wire into the wall. So, while it might look nicer, it does not actually change your behavior unless I am missing something. This is why, at the end of the day, for a company that never does tech for tech’s sake, prioritizing wireless charging did not make sense.

The approach Apple took with the removal of the audio jack and the addition of the Lightning EarPods alongside the AirPods shows Apple’s appreciation of its user base that is now no longer made up of just early adopters. While early adopters will likely jump on the AirPods, the rest of the base will have the time to adjust to the idea without feeling they are missing out on what the iPhone 7 and 7 Plus have to offer.

Unpacked for Friday September 9th, 2016

Apple Music Numbers Show Continued Rapid Growth – by Jan Dawson

One of the numbers mentioned in Tim Cook’s “Updates” section at the beginning of this week’s Apple keynote, which may well have been missed in the focus on the latest iPhone and Apple Watches, was a new number for paid Apple Music subscribers. Apple now has over 17 million paid subscribers, which puts it over half of Spotify’s most recent paid subscriber number of 30 million.

Perhaps more significantly, if you assume a $10 per month average revenue per user (this is the standard price in the US, whereas lower pricing in some other markets is likely offset somewhat by family subscriptions at $15), this number puts Apple over the $2 billion annualized revenue rate for the first time. Spotify’s revenue last year was around $2.2 billion in total, so Apple is now getting very close to Spotify’s scale in revenue terms. Spotify has around 100 million total users, with about 70% on the ad-supported service, so Apple achieving similar revenue numbers with a fraction of the subscribers helps explain why the music industry has been so supportive of Apple’s efforts.

The broader financial benefits together with more direct financial incentives are likely the reason why Apple has been able to secure 70 first-run and exclusive releases for Apple Music in its first year or so, another stat Tim Cook touted during the keynote. Those exclusives, in turn, are driving interest in Apple Music and Apple seems to continue to turn trial subscribers into permanent paid subscribers at a decent clip. Since the launch of Apple Music, Apple has added around 50 thousand subscribers per day, with a more recent average closer to 30 thousand. At that run rate, it might hit 20 million subs by the end of the year.

In the grand scheme of things for Apple, Music is still small – even at $2 billion a year, it’s well under 10% of Apple’s Services revenue, which in turn is only around 10% of total revenue. But the healthy growth indicates Apple can successfully launch paid content services to its installed base, something that should give it confidence to try this approach in other areas, notably video.

Traditional IT Companies Announce Major Changes: Dell, HP Enterprise, Intel – By Bob O’Donnell

Though most of the world was focused on the relatively hum-drum announcements Apple made this week regarding their new iPhone 7 and Apple Watch Series 2, there were several very important announcements from the large, traditional IT companies this week. Dell announced they completed their merger with EMC to form Dell Technologies; Intel sold off its McAfee security arm to investment firm TPG, and HP Enterprise unloaded its software business to little-known Micro Focus International, a British-based software company that typically focuses on applications that work with older computer systems.

Individually, each of these announcements was definitely newsworthy but, collectively, they demonstrate that what many consider to be the “boring” old part of the tech business is very much alive and eager to make important strategic changes. Interestingly, the HP Enterprise and Intel deals reflect a desire to slim down and specialize, whereas the Dell/EMC merger represents the complete opposite. Chairman Michael Dell’s vision is to build a powerhouse of key hardware and software technologies, with a single perspective, in order to control all the tools necessary to build and deploy comprehensive solutions to today’s leading tech problems.

Throw in the fact HP, both Enterprise and Inc., remain public companies, while the vast majority of Michael Dell’s empire remains private, and you have a nearly perfect lab experiment of opposite strategic approaches to compare. It will be several years before we truly know which solution proves to be the most successful, but the dichotomy between the two approaches couldn’t be more distinct.

From a big picture perspective, the announcements reflect some strategy readjustments that were long overdue. Arguably, the Intel deal is the most obvious in the sense there never seemed to be a great fit between Intel and McAfee, nor was there much cross-fertilization between the two companies. For HP Enterprise, their deal gives them the opportunity to fix the widely-recognized blunder of their $11 billion Autonomy purchase.

For Dell Technologies, it’s clearly more of a bet that owning several key components necessary to drive changes—the transition to public and hybrid clouds, the move towards the Internet of Things in business environments—will be key to driving successful deployments. Frankly, I like the potential of what this Dell/EMC combination has to offer but executing on the core principles will be key to long-term success.

Nintendo Decides They Finally Like Money – By Ben Bajarin

Years ago, during my first writing gig for Slashgear, I wrote this column titled “Does Nintendo Hate Money?” My argument was they were missing mobile and thus missing being a key player in one of the largest computing shifts we have ever seen. Luckily, they have finally seen the light.

Mario Runs was likely in the works well before Pokemon Go hit the market. But my hope with Pokemon Go was that Nintendo would finally see why they need to bring their iconic brands to smartphones. I’ve long toyed with the scenario of Apple buying Nintendo, since these games as iOS exclusives would only strengthen Apple’s differentiation, as well as add a big upside in software/services revenue. Unfortunately, had this even been an idea for Apple, they should have done it before their stock went on a run, thanks to their waking up to the smartphone gaming era.

I understand why Nintendo took so long. They were, in fact, deploying a philosophy not that dissimilar to Apple where they make their own hardware and software. The problem here is the video game console market is niche and very small compared to smartphones. The notion that Nintendo needs to define the hardware experience in order to differentiate their games is no longer defensible. There may be some experiences Nintendo leaves to their consolers but that is for a niche segment. The time has come to bring Mario to hundreds of millions of consumers who have never played this franchise or others from Nintendo. And it’s time for Nintendo to make money off customers they never had a chance of selling a console to.

Lastly, I like the business model Nintendo is utilizing. Coming from a gamers perspective, many of the freemium games are designed in a way to manipulate the game play so you have little to no chance to progress in the game without spending a lot of money. While I understand why, the game dynamics are the exact opposite of consumer friendly. As controversial as this statement may be to some, freemium needs to die because it creates really crappy games. Pay a small fee once is the way to go as it yields a much more consumer friendly experience. Let’s hope this model works and is used as an example for others to learn from.

Added Revenue Might Not Be The Most Valuable Benefit AirPods Bring to Apple – by Carolina Milanesi

Apple talked about the removal of the audio jack as a courageous move and, while it might be a little exaggerated, it is true that every time you try and fix something that is not broken you are playing with fire. Humans do not like change, not even when change might be bringing them a better experience or simply a futureproofed one.

What is interesting is the options Apple has given users to deal with the change. There are Lightning EarPods in the box, an adapter for older EarPods in the box, the new AirPods, Beats Headsets and all other headphones and earphones for sale. So plenty of choice for iPhone 7 users. This made me wonder what the AiPods buyers can tell Apple about themselves:

  • They appreciate good sound quality
  • They value the full ecosystem of products that can connect to the AirPods
  • They engage with Siri
  • They value Apple even over an Apple-owned brand like Beats
  • They are not price sensitive
  • They are early adopters
  • They are making a statement

Looking through this list, it is apparent to me many of the statements would apply to Apple Watch owners. This in turn makes me wonder if AirPods are a way for Apple to test the next step in wearables and/or the role voice UI could play going forward. A way to test how far they can push the more engaged group of users they have.

The fact AirPods came to market under the Apple brand rather than Beats is also significant in my view. It means Apple sees them not only as innovative but as a key part of the experience going forward. An experience that users who appreciate the end to end offering will seek out first and therefore become ambassadors for Apple exactly as they have been doing with Watch.

IFA2016 at the Intersection of US and Asia

Believe it or not despite my numerous 3GSM, MWC, CES and CeBIT shows, this was my first IFA show in my 16 years of covering the consumer electronic market. With over 300 exhibitors spread over 25 different halls, IFA is the trade show that gives you a taste for what the hot products for the holidays will be. Over the past couple of years, more and more vendors have decided to use the show as their launch platform for the products that will see them through the last calendar quarter of the year. This year was no different and we saw several phones, wearables, laptops as well as appliances and accessories being launched in the days before the show floor officially opened.

Making a Break for European Companies is Harder

At every show I go, I always make a point to attend a Showstoppers event, not just because it is the best way to reconnect with many industry friends and have some food and beverages but because it is a great way to see many companies all in one location and come away with a feel for what the show will be about. At the IFA Showstoppers this year, I came away with a sense of how much harder it is for a European company to make a break in the market. While there were European companies both at Showstoppers and at IFA, you clearly felt the American and Asian companies, in particular, Chinese and Korean, are the ones running consumer tech. Of course, if you follow the market, this is not news to you. As a European transplant in Silicon Valley, I saw for the first time the price of being a startup or a well-established but small company in Europe dealing with country specific languages, privacy regulations and tax and trade laws. Not many of the companies I spoke to sold in the US or even across the whole of Europe. This is a considerable disadvantage when you think of the market access a US startup has by just selling to Americans or a Chinese vendor has within its home market.

The sad realization of the market dynamic comes from the fact IFA is often dubbed the European CES and it started out as a showcase for home-grown talent. European talent was not missing as I spoke to Finnish, German, Swiss and Italian companies but clearly, many saw little opportunity to make it past their country’s border.

With so many companies from overseas at the show, it was also obvious that Europe, as a market, continues to matter a lot. The strong presence of regular consumers at the show underlines that the interest in this sector remains strong with the biggest crowds to be found around VR, Gaming, TVs, Smartphones and connected Home Appliances booths.

As you hear announcement after announcement of products and you look at stand after stand there were a few key themes that I think are worth focusing on.

Wearables Were not the Belle of the Ball

The growth in interest in IFA seems to be directly proportional to the growth in attention for the wearables market. Despite the Gear S3 announced here by Samsung and products by Fossil, Withings, Jabra, TomTom and others, it did not seem much attention was paid to this category this year. As it was the case at CES and MWC, the longest lines of people were at stands where one could try a virtual reality experience. When it comes to the wearable devices announced at the show, there was a common thread: make consumers forget about the tech. Aside from Apple Watch, smartwatches have not really sold in large volumes. Consumers remain skeptical about the need for a device that, in their eyes, replicates many of the functions they find on their smartphone. Apple was the only vendor that, from the start, tried to position smartwatches more like jewelry than tech. As tech has not been selling very well, vendors have started to focus more on design and making their smartwatch look as close as possible to a traditional watch. This is more a case of hiding the technology under the hood than actually stripping out functionality in an attempt to appeal to a wider number of people. While design matters, of course, price points are more of an inhibitor and no vendor thus far seems to be wanting to address that.

Chinese Smartphone Players Go Lower to Aim Higher

Another apparent trend at IFA2016 seems to have been the focus on the larger Chinese brands of Huawei and ZTE to lower their prices of the mid-tier so they can aim for higher market share. Huawei launched Nova and Nova Plus priced at 399 and 499 Euros respectively. Adding these products to the existing Honor line, which was meant to be more affordable, shows an increasing pressure on the number one Chinese brand (to get to the second leading smartphone spot fast) but also pressure in the home market to become more price competitive as vendors such as Vivo and Oppo are growing share.

ZTE launched the Axon 7 Mini a 5.2” smartphone with 3GB of RAM running on the Qualcomm Snapdragon 617 priced at 299 Euros that focuses on a younger demographic and their love for music. ZTE has grown in share in the both Europe and the US but it seems the biggest progress was made in their communication, brand image, and quality of partners as they announced Dolby as a partner for their new device as well as their sponsorship of German football team Borussia Monchengladbach, adding to their sponsorship of Spanish team Sevilla FC. Over the years, ZTE has suffered from similar identity crises to HTC as the needle between brand focus and carrier focus kept on swinging but it seems now settled with ZTE really wanting to invest in its own brand, at least in markets like Europe where direct channel is more of an option than in the US.

Make PCs Sexy Again!

PC vendors were very busy at the show trying to make PCs of all shape and sizes sexy again with some more successful than others in giving consumers a legitimate reason to buy.

Lenovo announced the Yoga Book, a new addition to the popular Yoga family that does not make you choose between typing and writing as it adds a keyboard that lights up when in notebook mode and turns into a tablet when the device is opened like a book, mirroring what is written on the screen so it can be saved. Users can choose to write on the slate or on a normal paper pad as the pen is also a normal pen with an ink cartridge. Offered in an Android and Windows variant and priced at $499 and $599 respectively, the Yoga Book is certainly a highly mobile device that could marry content consumption and creation with the added benefit of the pen and paper effect for people who think better when they write.

It was much harder for me to see the value of the Acer’s Predator 21 X (the X is for EXTREME), a notebook aimed at gamers that weighs 17 pounds and features a 21-inch curved display. While the size of the display (for a notebook) and the fact it is curved deserves a “wow”, it is really hard to see how many people will actually carry it around. And if mobility is not a priority, then why not buy a desktop? If the design was not enough to raise concerns of how big the addressable market will be, Acer also said that it will cost in excess of $5000.

Trying to get consumers to pay attention to the PC market with VR headsets, AI enabled speakers or curved TVs hitting the market is hard but it will not PCs that sport technology for the sake of technology that will get them to reach for their wallet.

Immersive is the next Mobile

Finally, either from a visual or audio point of view and across products such as VR, phones, TVs, tablets, vendors were focused on pitching an “immersive” experience. As mobile is gone from the hottest attribute to use to describe a device to a necessary one, immersive seems to be replacing it in many product descriptions. From quality of sound for headphones, phones and tablets to curved TVs and Quantum Dot technology, to 360 degree cameras and the ultimate experience of VR, vendors seem to want us to escape our reality and be fully immersed in whatever content we want to consume. Considering how things are going in the world at the moment, this does not actually seem like a bad bet.

Don’t Over-Simplify Women’s Lack of Interest in Smartwatches

Current smartwatches sales are heavily skewed towards men. In the US, Galaxy Gear ownership skews 76% towards men and 24% female. Current Apple Watch ownership splits 80% men and 20% female for early adopters which are predominantly male. Among mainstream consumers where the balance of men and women does not skew to men, Apple Watch sees a 65% male and 35% female split. On the other hand, Fitbit ownership is over 60% female. Given the clear split, it is understandable vendors seem to be wanting to cater to women and men through two different products: fitness bands and smartwatches. This week at IFA, we are expecting products that will likely fall into one of these categories with design aimed at the different genders. From size to colors used for the bands and more, smartwatches are clearly male while fitness bands range from heavily female to gender neutral. Look at the Samsung Gear S3 launched at IFA as a good example of a male targeted device.

Not just about design

However, just looking at sales and ownership numbers and concluding women do not buy smartwatches because of the design is an over-simplification of what is going on in the market and one that will turn into a self-fulfilling prophecy.

When talking about gender differences, one risks quickly falling into stereotyping but it is a fact women tend to be technology laggards compared to men. Because of that, they tend to spend less money on technology unless the product has more of a visceral appeal.

Try as you might, smartwatches are still not perceived as jewelry. The value is still unclear and the price remains relatively high compared to fitness bands. 85% of women bought a wearable to count their steps. Only 11% bought it to receive notifications. However, after having a device that supports notification, close to 20% of women say it is one of the features they find more valuable.

So fitness sells but why does it have to be a band?

Women are more likely than men to wear jewelry or an expensive watch before they bought a wearable. This means wearables have to displace something which is harder than covering a previously “naked” wrist. Considering only 18% of women we interviewed said they bought their wearable because of the look and feel, it seems to me that is points to a lack of value for money proposition for women. Remember, they are technology laggards so tech, per se, is not a selling point.

Bands are cheaper and meet the key needs but vendors should not neglect women when it comes to smartwatches. Gender neutral designs have done very well for Pebble. They see the female vs male ratio almost opposite that of their competitors. Apple has also fared a little better thanks to the different sizes of Watch. This really is a case of “build it and they will come”. With the right design and marketing, smartwatches could appeal more to women. If the fashionable component is added to the mix, price will be less of an issue and could actually offer more of an upside than it would with men.

Don’t think of size, think of thickness

The real issue women have with smartwatches is the thickness rather than the overall size of the face. Larger can actually be fashionable but thickness and weight actually impact the overall experience. Of course, thickness is somewhat mandated by all the sensors in these devices. Yet, considering what we said about what women want from their wearable and the lower price tag that appeals to them, examining what is necessary and what is not might be a good place to start. This does not mean making “dumber or simpler” smartwatches for women. Hopefully, vendors have learned something from trying to do the same in the early stages of the smartphone market.

Avoid the temptation to just cater to today’s buyers

With other hardware segments struggle — from PCs, to tablets, to smartphones — it is understandable vendors are focusing more on what sells today than what could sell tomorrow. However, in the long run, women represent an opportunity that cannot be neglected. By positioning smartwatches as being “just for men”, vendors might convince women this category has nothing to offer, leaving them to be content with more and more affordable fitness bands.

Unpacked for Friday, August 26th, 2016

Rumored $5 Amazon Music Service for Echo is not an Easy Sell – By Carolina Milanesi

This week, several publications reported on the rumor Amazon might be launching a music service for $4/5 that will be available only through the Amazon Echo. The news was received positively but I am not so convinced that uptake will be a slam dunk.

Current Echo Owners

Sales of the Amazon Echo have been estimated at four million units thus far, which would not be a bad start for the service. Yet, consumers who bought an Echo did not do it for a music service but for Alexa’s abilities. If they did try the Music service that comes free to Prime Members, they might have been somewhat disappointed given the limited choices. Trying something that requires paying a monthly subscription, albeit cheaper than most out there, might require some reassurance on the quality of the catalogue.

Music Lover vs. Casual Listeners

It is hard for me to see music lovers invest in an Echo in order to listen to the music through the service as the quality of the speaker is ok but not great. Of course, you could link your Echo to a Sonos or other speaker systems. Yet, if you are serious about music, you might find the fact the service is only available within the home (at least for now) leaves having to choose another service for your on-the-go needs.

If you are a casual listener, you might be ok with the quality of the speaker but not with the cost of the service. It will be interesting to see if Amazon will stop supporting other music services through Echo. This would not be a surprise after we saw the Amazon store stop sales of Apple TV and Chromecast.

Pitching to Potential Echo Buyers

Echo is a speaker so listening to a music service through it makes a lot of sense. Except, I really do not think of Echo as a speaker. I think of Echo as the genie’s bottle where Alexa lives. Trying to advertise it as an enabler of a music service would risk, in my view, confusing consumers as to what Echo’s true value proposition is, bringing this magical device to the level of a commodity one.

Maybe my concerns are misplaced and consumers will just consider the money savings vs. a different service and be happy with it. Time will tell.

WhatsApp begins passing user data to Facebook – by Jan Dawson
WhatsApp on Thursday announced it would start passing the user data it collects to Facebook, with the intention of helping to better target advertising. This coincides with a move to allow businesses to send users messages through WhatsApp and it’s easy to see the two changes taken together as a potential invasion of privacy.

Technically, WhatsApp is sticking to its anti-ad principles in a strict sense — ads won’t appear in WhatsApp. Rather, Facebook will gain additional insights into its users by tapping into this new set of user data, much as information is already passed back and forth between Facebook and Instagram. But it’s hard to avoid the sense WhatsApp founder Jan Koum’s principled stand against advertising in WhatsApp is beginning to erode or, at least, this is the first step in that direction.

History suggests this will be in the news for a few days, causing a small outcry and perhaps prompting some users to opt out of data sharing with Facebook but that it will quickly blow over. People in tech tend to have long memories – I saw people sharing a tweet from Jan Koum decrying advertising in general that was several years old after the news broke – but most ordinary people have no idea who Jan Koum is, never mind that he has an opinion on advertising. All they know is that WhatsApp doesn’t have ads and, if that doesn’t change, they likely won’t care what else might be happening behind the scenes.

Perhaps more significant is the business angle on WhatsApp itself, which is the first hint of a real monetization strategy for WhatsApp. The company famously had very little revenue when it was acquired and it subsequently killed off the annual fee and with it, revenue altogether. But opening up to businesses in a manner similar to some Asian messaging apps has been in the cards for some time for both Messenger and WhatsApp and we’re starting to see the first moves in this direction. This needs to be very carefully managed by WhatsApp so as to protect the user experience and avoid the sense of spam, something the company’s blog post on Thursday makes clear it’s aware of. Some businesses, of course, are already using WhatsApp in this way informally and, in those markets, it won’t be much of a cultural shift. Elsewhere, it will be a bigger change and it will be interesting to watch how users respond (and whether they show any interest at all) in markets like the US.

Two Interesting News Bits About Apple – Ben Bajarin
I want to add a few points to some news tidbits about Apple from yesterday that are of particular interest. The first is this note by Bloomberg that Apple is looking to integrate a specific technology that is, as far as I know, is unique to Japan. It allows for an Apple Pay-like tap-to-pay feature in areas of Japan like their transit system.

I find this interesting because Apple was on a path to sell only one SKU of the iPhone in every part of the world. This would make the supply chain a bit easier to manage rather than having different SKUs for different countries. However, if they are taking the path to localize specific hardware and features in iPhones that contain would be unique to that country, it could signal a strategic direction of a more local focus of products. While I’m speculating here, Apple could be on the path to start selling region specific iPhones. Of particular interest to me with this strategy is India. I’ve long held a scenario in my mind where Apple sells products that are only sold in certain regions. India was always one market I thought this made sense in since the market has much more extreme price sensitivity than others Apple is eyeing. The more they flex their supply chain muscle to regionalize iPhone hardware in different regions, the more this type of strategy becomes possible.

The second is another article from Bloomberg that Apple is working on some new apps that could fall into the social category.

The article speculates this is an attempt to compete with Snapchat and Facebook but this is highly unlikely. The trend within social networks is not to consolidate. The most recent Q2 data we have on social networking behavior indicates that, on average, global consumers have eight different social networking accounts. While the number they use regularly is lower than that, the bottom line is people have a broad capacity to use many different social networking apps and they use them for different reasons. It would be absolutely foolish to believe people will leave Snapchat or Facebook. This is less about competing and more about enabling. Apple can integrate features, similar to Snapchat for example, into something like iMessage or the camera app which enables consumers to share in whatever way the choose. I could imagine a scenario where features Apple comes up with for the camera app or others find their way to Snapchat.

Bottom line is that Apple is smart to create new experiences via first party apps which are capable of things that don’t exist in other apps or platforms. But no one is going to leave the networks they are part of. It means the better strategy is to enable unique things of the iPhone to be used on these different apps and networks. Live Photos being integrated into Facebook is a good example of this. Look for this type of strategy rather than a replacement or a compete with type of strategy from Apple.

LeEco Wants into Consumers’ Living Rooms before it gets into Their Pockets

Over the past few months, if you cover consumer tech and are based in Silicon Valley, you may have come across a new name: LeEco. Formerly known as LeTV, had a slow ramp up as video content provider but its popularity picked up over the past few years thanks to deals like the one with the director of the movie, “House of Flying Daggers”, to create content for its smartphones. The change from delivering content to delivering an end-to-end solution that includes hardware spurred the change in name.

Consumers are still Precious about Their Smartphones

If current investments are something we could use to judge future performance, LeEco would be a winner. After opening its US head office in San Jose back in April, LeEco invested $250M in real estate, buying Yahoo’s property in Santa Clara in June and, in July, it invested $2 billion to acquire TV maker VIZIO. Just testing the waters is certainly not the approach LeEco is going for.

VIZIO commands the second largest market share in the US (after Samsung) which makes for a nice addressable market for LeEco content, apps, and cloud offering. Considering that the ultimate goal for LeEco is trying to get to US consumers through their TV vs. their smartphone, it seems like a smart move. While the smartphone market is changing in the US and new brands are making their way into consumers’ pockets, competition is still strong, especially at the high-end. Battling there might require more time and marketing budget than LeEco can afford. Gone are the times when a new brand could come and white label a phone for a carrier, take years to build trust and then build a brand. Time and decreasing margins no longer make this strategy viable and LeEco is very well aware of it. Furthermore, when the key differentiation is not hardware but services and content, brand matters even more and so does building a trusted relationship with consumers. It seems to me LeEco is trying to do that by acquiring talent from key players in the consumer electronics market and creating a strong Silicon Valley brand. While this might not immediately help with consumers, it certainly helps in building relationships with partners.

Smartphones sales might be decreasing and margins thinning but consumers are no less in love with these devices. Smartphones remain the most personal consumer electronic device yet – something wearables aspire to be – and because of that, brand choice remains a key factor in the purchasing process. Consumers do not feel the same way about their TVs. Quality, of course, plays a role but the purchasing process is more focused on value for money than “what does it say about me”. This makes getting into our living rooms easier for LeEco than getting into our pockets. However, getting consumers to engage with their content and cloud offering might pose more of a challenge than it has been in China. We have plenty of examples of new content platforms for smartphones that vendors have launched but never went anywhere — Samsung Milk Music being the latest casualty.

Consumers are cord cutting but the choice for content is certainly not limited which will require LeEco to spend big bucks to secure original content and rights acquisition of key events like sports or entertainment. While I would guess LeEco might be less demanding than other hardware vendors trying to secure deals with content providers, there are plenty of players out there lining up to sign the most popular TV shows. In China, LeEco TV channel has secured several popular Pay TV content deals to bring US PGA Tour golf, Wimbledon tennis and English Premier League soccer but subscribers have not come flocking so far.

While in the US, a phased approach that takes LeEco from the living room to the pocket might work best, in India and China a simultaneous attach makes more sense as consumers rely on their smartphones even more than consumers in the US. In June, LeEco became Coolpad’s largest shareholder with 28.9% ownership and, at the beginning of August, LeEco’s CEO became Coolpad’s Charmain of the Board. Pressure in the home market lead Coolpad to look at India, where they want to get to a 5% market share by the end of 2016, focusing on the high and mid-end of the market. Last week, the two companies launched their first device together — the Cool1 Dual, a 5.5” smartphone between $219 and $299 in price depending on the variant. In India, LeEco and Coolpad will focus on the online population first and then they will move offline. In China, however, as both brands are established, there will be a separation of the two linked to the channel: LeEco will focus on online while Coolpad will stay offline. LeEco’s content could give an interesting differentiator to Coolpad’s hardware while LeEco, which so far has had limited sales in China, could leverage Coolpad’s supply chain as well as patents for further international expansion.

The Ecosystem Challenge

Aside from fighting against major competitors in each market — Alibaba, Google, Apple — the big challenge LeEco faces is the same as others like Xiaomi, are facing: ecosystems rarely leverage. While international expansion leads to economies of scale and opportunities for better margins in hardware, closing content and services deals rarely take advantage of a more international play. Deals need to be done locally and cultural differences mean a lot of effort has to be put in understanding consumers’ habits in each market. Though, at the end of the day in each market, the winning formula will be the same: deliver a differentiated offering or one that delivers a better experience when all the pieces come together. This might lead LeEco to look at the areas they have invested thus far and rationalize which make sense together among TVs, smartphones, VR, self-driving cars, and smart bikes to name a few. From a hardware perspective, some of these segments like TVs and smartphone run on thin margins but could be enablers of further revenue opportunities. Others, like cars, have sizable revenue opportunity but already fierce competition and no apparent and immediate link to the remainder of the ecosystem. Narrow and deep vs. broad and shallow might give better returns in the end.