How Many Times Can Zuckerberg Patronize His Users?

Last Thursday evening, Facebook’s CEO, Mark Zuckerberg, published an op-ed in the Wall Street Journal in which he tried to explain “The Facts About Facebook” focusing specifically on the advertising and data privacy aspect of the business.

There is a lot I found patronizing and self-serving in what Zuckerberg wrote starting with his choice of having his piece aimed at clarifying things for the general public published behind a pay-wall. It seems to me this was more aimed at Washington than Mr. or Mrs. Smith trying to figure out where those ads for an air-fryer are coming from.

Many of the points Zuckerberg makes have been heard before either during his Washington visit in front of Congress or on his apology and commitment posts on his Facebook page. I will only touch on the ones that to me, as a Facebook user, are the most aggravating ones.

“I was not trying to build a global company”

I do not doubt for a minute, that when Zuckerberg started Facebook in his college dorm, he had no plans to turn it into a global company. I do think, however, that he wanted for it to be successful which means he knew it would need scale and because of that some thoughts on future influence might have been advisable. I also think that what Zuckerberg set out to achieve has little relevance when the reality of today is that Facebook is a global company. More importantly, Facebook is a worldwide platform with enormous influence on how people see the world and connect, and this is what Zuckerberg and its leadership team must address.

With success comes responsibility and accountability. Zuckerberg is responsible for what happens on his platform, and he must be held accountable. We heard apologies, but we have seen little evidence that the vast impact Facebook has on its users’ lives is calling its leaders to change their modus operandi.

“Everybody should have a voice and be able to connect”

Facebook is free because everybody should have a voice and a way to connect. Well, first of all, I would say that Facebook is as free as inkjet printers are cheap. You do not pay for Facebook the same way you do not pay much for inkjet printers, but boy those cartridges cost a pretty penny.

With Facebook, the currency is our data. Data that Facebook does not sell, Zuckerberg made that very clear and I am confident people understand that. But they also know that the data is at the core of Facebook’s business model and they are unclear of the extent that information is used. Zuckerberg claims that this data is a price that most of us are willing to pay to have more targeted ads. This seemed a bit of a stretch when most of the 1000 Americans consumers we, at Creative Strategies, interviewed at the time of the Cambridge Analytica incident were either very concerned (36%) or somewhat concerned (41%) about Facebook’s privacy practice.

The reality is that there are other ways to effectively target ads than to collect so much personal information about a user. Yet, switching the current model to a subscription service to rely less on advertising is too much of a gamble. Our data showed that only 2% of the panel was interested in paying and another 5% would do so if monthly payments were less than $5. And this was in the US where average income level if high compared to some of the emerging markets where Facebook is extremely popular like India or Brazil.

“Transparency, choice and control”

“You have control over what information we use to show you ads, and you can block any advertiser from reaching you.” This is the second part of Zuckerberg’s argument that I find condescending. We want better ads, but if we do not, we are in charge of the data tap and can turn it off when we want.

I find fascinating how Zuckerberg flips the accountability on us freeing himself. The fact that finding all the knobs and levers to turn to change setting is impossible coupled by the fact that an understanding of the complex business model Facebook operates are two points that never come up. I would also add that making the service free allows it to reach users who might just be not tech savvy enough to understand all the knobs and levers.

Transparency, choice, and control are all smoke and mirrors. The recent announcement of a plan to integrate the three messaging services – WhatsApp, Instagram, and Messenger – will only create more undefined boundaries despite the initial promise of an encrypted service.

Not a Charity Business

Zuckerberg concludes his op-ed with this:

“For us, technology has always been about putting power in the hands of as many people as possible. If you believe in a world where everyone gets an opportunity to use their voice and an equal chance to be heard, where anyone can start a business from scratch, then it’s important to build technology that serves everyone. That’s the world we’re building for every day, and our business model makes it possible.”

You really would think Facebook’s business model should be preserved as the best philanthropic exercise ever where equal voice and opportunity are at the core. But when both good and evil have a voice and equal opportunity, it is hard to see how things could just run smoothly. Repeating the same story over and over will not make it turn true, and users have started to show their patience is running thin.

Zuckerberg could have admitted that Facebook got too big for its own good, he could have also recognized that the leadership needed time to figure out a course of action and he could have broken things down to truly put us in the driving seat. Instead one of the first things Zuckerberg did when governments around the world started scrutinizing his business was to hire a new Head of Comms, UK politician Nick Clegg, to do damage control. Not a move that fills me with confidence on Facebook’s intention to seriously reevaluating their business model and the platform shortfalls. The recent discovery by TechCrunch that Facebook through a third part has been paying teenagers to access their phone data bypassing iOS rules by using an enterprise certificate for the VPN shows how hungry Facebook is for your data. The fact that these are teenagers is even more disturbing.

Ignoring Women is the Biggest Mistake Tech Brands Can Make

Well, ignoring women, in general, is a mistake, no matter whether you are in product planning, marketing, politics or just living with one!

Over the past few years, many marketing experts have been talking about the growing power of female consumers, and a quick search finds plenty of services aimed at upping brands’ game when it comes to selling to them.

It is estimated that in the US, women drive roughly 70-80% of consumer spending with their purchasing power and influence. They also identify themselves as the primary shoppers for their households influencing as much as 91% of purchases according to some recent studies. The vast majority of women also think that most marketing messages show a lack of understanding of what drives their purchase decision.

All of this is not news, especially if you are a woman,  but what makes it particularly relevant for tech brands today is that technology is broadening its reach into domains like home, car, beauty, education, shopping where technology will be part of a product and not necessarily be seen as one. Because of that, women will be even more likely to be the primary decision maker or a strong influencer in the purchasing process. So if tech becomes the core product differentiator either because of hardware features, or software or AI, brands better learn how to include female buyers in their thinking.

Targeting Women and Including Women in Your Audience is not the Same

It is fascinating how often tech brands will look at new geographies or adjacent segments to their core as a way to expand their revenue opportunity ignoring something as simple as addressing a part of the consumer base that just does not look like their CEO and head of engineering. Or deciding without any due diligence that a segment that has been ignored in the past should always be ignored. Sadly, female consumers fall often into either one of these categories.

Some of the companies that do not ignore the increased purchasing power women have been displaying, still believe that all it takes to planning and marketing products that speak to women is the old “paint it pink, and they will buy it.” But catering to women, I can’t believe I am writing this, takes more than a pink version of your product!

It certainly helps if your process from product conception, to design, to marketing have women involved. This tends to happen when a product is specifically targeted at women but rarely occurs in tech where, unless you are talking about a connected bra or a smart mirror, women are often an afterthought addressed with small tweaks in design (pink!) or marketing.

I spent my time at CES this year looking for tech aimed at women mostly because I wanted to see how bad it was. I have to admit I did not find much, good or bad, outside of some connection fashion, motherhood and beauty products. What was amazing to me was how pitch after pitch it was clear I was not the intended buyer. Whether I was meeting someone over a connected car concept or a connected pet gadget a man had already been given the buyer leading role, and I was merely a supporting actress if I was considered at all. At times women might be the final users but not the buyer. At the FoldiMate demo, I lost count of the times I heard “you can buy for your wife” as if there are no wives out there who have the purchasing power of buying it for themselves if they needed one.

Women First, Consumers Second

While I warn about the danger of stereotyping, some characteristics tend to be true for women in different countries, and you can see this more clearly today than you ever did thanks to social media.

Women are caregivers which means that whether they are looking after a child, a parent, a partner or a pet they are making decisions that involve others and purchasing tech is no different.

Women are also multi-taskers which means that we appreciate simplicity – not because we cannot handle complex but because we do not want to spend our energy on that if we do not need to.

Women are influencers, big influencers to other women more so than men are to men. Millennial women and Gen Zers have a growing voice in many domains including tech. Just take a look at the increasing number of female tech reporters, female gamers, but also women that are in critical roles such as teachers and educators.

Women care a lot about ethics, privacy, and security all critical topics in today’s tech world. This means that the tech product you are designing might come under higher scrutiny especially when brought into the home. It also means that who you are as a brand and what you stand for will likely play a role in the decision process.

We see good customer service not as a differentiator but as a basic requirement.

We tend to be more practical, which results in a higher appreciation for products that set realistic expectations rather than products that over promise and under deliver.

The list can go on, but you get my point that we are a complex buyer that needs proper attention and consideration. There is always a significant risk when talking about designing and marketing products for a segment whether defined by gender, age or ethnicity. Generalizations and stereotyping creeps in when you are talking about a group as a whole rather than acknowledge all the different individuals that while united by some attributes, remain different and unique. So dear tech brands, you might not always get it right, but you will undoubtedly have a higher chance to do so if you start to acknowledge that not all your buyers are bros.

Smart Home: It’s Connected Folks, not Magic!

Every year I go into CES with a list of what I hope to see, and I walk away with sore feet, some excitement and a couple of unexpected trends that have little to do with technology and a lot to do with poor marketing. And man, those trends bug me! Two years ago, it was AI washing, and this year it seems that tech companies got out of their way to portray the connected home like a magical space where everything that is connected and smart will also be self-sufficient when it comes to initiating complex business transactions. In the connected home of a not-so-distant future, appliances will order supplies like detergent, self-diagnose issues and call for a repair service and more. As I listened to the pitches and watched the beautiful videos, I could not help but think of today’s reality and how much will have to change before what those tech companies are selling becomes true.

My Reality

Here is a bit of a reality check on my home. Just before Christmas our fridge started tripping the breaker every time we used the water dispenser. We had noticed that the floor around it looked swollen and we feared a leak. My not so smart fridge had not told me anything other than that cry for help by tripping the circuit. The steps I took to solve the situation were many and not straightforward ones:

  • I first contacted my home insurance to check on coverage, but the insurance would not say anything until an assessment was made. They advised calling a repair person to establish the cause of the possible leak
  • I then yelped an appliance repair person
  • I made the appointment
  • The repair person found the fridge was leaking which meant that the insurance was not stepping in, so I had to close my claim
  • The pipe that takes water from the filter to the water dispenser was compromised, so the repair person took it out and ordered one
  • A week later the repair person came back, but the pipe that was ordered did not fit, and a new order had to be placed
  • Three days later the new and correct pipe arrived and was fitted but a second pipe was compromised
  • So, two new pipes were ordered as to be on the safe side we swapped them all out
  • Three days after that the pipes arrived and were fitted.

As you can imagine I would have welcomed AI with open arms if it meant to have my fridge functioning sooner. But the reality is that AI would have only helped to ease part of my pain.

AI Does not Account for Business Models

There is no question that self-diagnose would have helped catch my fridge issue earlier as well as order the right pipe. But the rest of the process involved was quite complex and one that would be solved more by business agreements than technology. How would my fridge know if the repair is covered by insurance? Actually, how does the fridge know I have insurance at all? Do I trust my fridge to call the best repairman for the job?

It seems to me that brands painting this idyllic picture of a home that is basically self-supporting is so far away from reality not because of the technology needed to make it happen but because all the business ties that would bring that picture to market are just not in place. Because of all this background work, but also country-specific requirements related to privacy we will also have a vision that will not be the same across markets. What a brand might be able to deliver in the US, is likely to be very different when taken to European markets or Asia.

Brands understand the need to build these alliances mostly in the e-commerce and payment space. Last year at CES, Samsung announced its partnership with Mastercard and FreshDirect and ShopRite for its Smart Hub Fridge so users can buy groceries directly from their connected fridge when they are running low on some items. Providing integrated solutions able to replicate what the Amazon Dash button does for washing powder or detergent also seems an easy enough answer for connected appliances of today.

Yet, the vision depicted by LG during their press conference was one of pure magic that required not only business relationships but also a great deal of information from the user. Another significant neglect in this idyllic portrait is to recognize that today much of the relationship consumers have with their appliances is through a third party and not directly with the brand that was purchased. Whether that relationship is with BestBuy or another Big Box Retailer or with a home appliance insurance, chances are the brand we bought is the last player we think we will ever interact with. So, the question is: would we trust it?

The Disservice of Painting the Big Picture

While painting the nirvana of the connected home is very tempting, I think that ultimately this picture does a big disservice to the opportunity the connected home has to offer. An opportunity that has a lot of value in the short term in just providing me, as the homeowner, with a lot of information. Going back to my real life example. All I needed my fridge to do was to provide me with information about the leak and the correct pipe number to purchase. That would have been a huge help in saving time and money.

While maybe not as grandiose as the picture these brands want to paint there is plenty of value that can be delivered today that will drive sales and loyalty as well as confidence in the future bigger picture. It might not be as sexy for early tech buyers, but it is certainly much more approachable to the mass market buyers.

Baby steps will also allow these brands to be ready to support customers and most importantly to make sure they are not seen as the weakest link when something does not go according to plan in a chain of events that are out of the brand’s control. I would be expected to blame brand X for a fridge that breaks down but is it fair I blame them for a poor repair service? Well if the fridge initiated that repair and I had no voice in choosing the provider, of course, it is fair. Are brands ready for the extra pain?

Digging a Little Deeper into Apple Revenue Warning

What was supposed to be a slow return to work after the holidays, mostly prepping for CES, got much more exciting thanks to a letter to Investors that Apple’s CEO Tim Cook wrote on January 2 warning investors about the performance in the December ’18 quarter.

You can find the full letter here, but in essence, Tim Cook points to weaker iPhone sales in Greater China due to a more fragile economic environment, longer replacement cycles due to more carriers moving away from subsidies, the battery replacement program and higher prices driven by a weak Dollar.

After reading the letter in its entirety and listening to Cook’s NBC interview, there are a few points that I think are worth highlighting.

Greater China

The data shared on Greater China points to a mixed-bag performance for Apple rather than overall doom and gloom. iPhone sales were so weak in Greater China that they negatively impacted overall revenue. Yet the fact that other products and services performed well would indicate that the concern some expressed of a possible Apple boycott on the back of the US sanctions as yet to materialize. Growth in services revenue also suggests that the current user base in China remains engaged in the ecosystem, a behavior that we know drives loyalty.

What is happening is that a weaker economy now impacted by the sanctions is lowering consumer confidence. Many are jumping to the conclusion that Apple’s loss in China is a win for the Android ecosystem players as consumers churn. There is no question that Huawei, OnePlus, Oppo, Vivo, and Xiaomi have grown in China offering an alternative to non-local brands but this has been true for quite some time, and most of their growth has been coming from within the Android ecosystem. While current economic conditions might drive some iPhone owners to look at switching camps looking for cheaper devices, it is more likely they will delay their purchase especially if they do not “need to upgrade.”

We will know more next quarter when buying behavior during Chinese New Year will bring some clarity on whether the slow down Apple is experiencing in iPhone sales will continue and whether other brands will be impacted by the weaker consumer confidence.

Installed Base Outside of Early-Tech

Many industry commentators are blaming the current iPhone performance on Apple’s decision to increase prices of the new iPhone Xs and Xs Max compared to last year’s iPhone X. I think this might be a little too simplistic an explanation of the current environment Apple is facing.

Apple proved with the iPhone X that a high price did not deter consumers. In markets such as the US where most consumers are on installment plans the difference between the iPhone X and the iPhone Xs is a few Dollars a month. What might have played more of a role is that some iPhone X owners might not have seen the need to upgrade to the iPhone Xs especially if they were not on an annual upgrade program or the bigger size of the iPhone Xs Max was not of interest. While this is not changing the fact that replacement sales are impacted it does paint a different story for the future.

Cook’s specific mention of widening the annual upgrade program to more markets, offering installment plans options with more trade-ins and making it easier for people to transfer their data on new devices are all steps that point to wanting to nudge mainstream users to move to newer models. This is where the problem lies — those more pragmatic buyers who are satisfied with the features their current model offers. From Apple’s comments it seems that this is now a larger group than it used to be in previous years and the part that Apple underestimated. This is likely to be an industry-wide problem and Apple’s retail strength will make tackling it much easier than for any other vendors.

Considering other devices sales remained strong this quarter despite availability constraints on Apple Watch, AirPods and MacBook Air, we should also consider that some of the disposable income that in previous years might have been put towards a new iPhone might instead have been diverted towards another Apple product. Not a bad thing for Apple!

I do also wonder if the current iPhone lineup might have played a role in the lower upgrade sales as mainstream consumers are resisting some of the changes such as larger form factors, Face ID and the lack of a headphone jack. This is the first time Apple has a full portfolio of products that are two years old or less. Uncertainty around these new features coupled with the battery replacement program might have pushed potential buyers to keep their older iPhone with a new battery and renewed life. I see these as deferred sales rather than lost sales. When the time comes, it will be interesting to see if these pragmatic buyers will spend more money upgrading to the latest model and seeing it as a multi-year investment or whether they will choose an older product at a reduced price.

Hardware and Services: An Intertwined Opportunity

Don’t be too quick to criticize Apple on the new portfolio and consider how hardware and services are intertwined in Apple’s future. For Apple, it is paramount to drive users to newer models and not just because of the hardware revenue those sales generate. Newer products with the latest features make sure users can engage in new services and use features that increase stickiness to the ecosystem. This engagement is what Apple must continue to foster to be able to benefit long-term from the user base they have built.

It is very telling that at a time when Apple decided to no longer disclose iPhone sale volumes, they also decided to start sharing services gross margins. Apple made it clear they want investors to focus more on the opportunity services offer to the company long term. If you think about this opportunity, there are no other smartphone vendors other than Google that can say their users are generating revenue for them even when they are not buying new products. So, while lower iPhone sales are certainly something to be concerned about Apple continues to show there is an upside in other product categories and services.

Apple vs. Other Smartphone Vendors

This final point is possibly the most important one to keep in mind when we compare Apple to other smartphone vendors. Apple’s revenue while highly dependent on iPhone over the years does not end with the iPhone. While it is true that no other single product has done for Apple as much as the iPhone, the product offering as an aggregate still puts Apple ahead of all other vendors who might be selling higher volumes but have no direct way to monetize from their users once the sale has occurred. The only exception being Xiaomi, but with the caveat that its monetization helps recuperate the initial loss on hardware. All other Android vendors are mostly working to drive value to Google rather than themselves.

Even Samsung, a brand that offers a much broader range of products, even broader than Apple, is still struggling to benefit from the user base to drive not just services revenue but also cross-device stickiness.

Apple’s strong reliance on iPhone revenue makes it hard to not see Apple as a smartphone vendor but measuring its future opportunity only on iPhone sales is shortsighted.

News You Might Have Missed, Week of December 21st, 2018

London Gatwick Airport Shuts Down Due to Drone Activity

On Thursday the runway at Gatwick airport remained closed until 3 a.m. and then was shut down again 45 minutes later after “a further sighting of drones.” It was still closed as of Thursday evening, and police are hunting for the drones’ operator.

Via Cnet

  • London Gatwick is one of the busiest airports in Europe especially at this time of the year.
  • While many might think it is silly to think that a small drone could inflict any damage to a plane there is plenty of research that proves the opposite. While the probability of a collision is small, drones can be drawn into the turbine of the plane or could inflict serious damage to a cockpit windshield.
  • According to the UK Airprox Board, there were 92 instances of aircraft and drones coming close to colliding in 2017.
  • As prices continue to decrease and capabilities continue to increase, the threat that drones pose to an aircraft is high. Charter planes or helicopters that are smaller and tend to fly at lower altitudes are the biggest risks but of course, all planes during takeoff or landing are a target.
  • The risk is high because there is a certain degree of stupidity in this area with users not realizing the impact that a small device can have when gravity comes into play. Stupidity aside there is also a high risk of criminal activity where bad players might want to intentionally cause harm.
  • Retail drones have a geofence that does not allow them to fly within a couple of miles from an airport but apparently, this can easily be bypassed if you know what you are doing.
  • There is technology available to track, divert and disable rogue drones but these systems are being deployed very slowly in specific locations rather than systematically across countries.
  • Drones pose other security threats when you think about crowded events or even heavy traffic roads.
  • Like many other technologies that are being brought to market today, we are simply unprepared when it comes to security, safety, insurance and of course policies and regulations.
  • I do also wonder if today’s culture is very different from the past. Model airplanes are no different from drones but I do believe that today’s culture looking for the stunt, the video hits on social media and of course terror threats make the comparison between drones and model planes quite hard.

Google Home Holidays Ad

In the “Home Alone Again” ad Google brings back Macaulay Culkin in his role of Kevin — but this time, with a more modern, Google Assistant-powered setup.

Via The Verge

  • Google is going all in with Holidays ads they even have one for Google Duo where the Video Chat service is strategically positioned as a FaceTime that works across platforms and keeps families on Android and iOS together!
  • In this very cute Google Home ad, Culkin relies on Google to help with some of the famous bits from the movie, including the famous “Operation Kevin” that automates things like locking the door, moving around a cardboard cutout on a Roomba, and turning on the lights to protect against a Joe Pesci-like thief.
  • Why am I talking about an ad? Because making an emotional connection with consumers is as important as showing how a digital assistant can help.
  • There is still a lot of work that needs to be done to get consumers to push the boundaries of what they can ask their digital assistant to do as well as how many devices can be connected to and operated through a digital assistant.
  • In past ads, Google had been focused on what Google Assistant can do for you with the “Make Google Do it” with this add there is a more deliberate focus on the connected home.
  • There were many products shown in the ad but interestingly there were no Nest products despite a request to lower the temperature and one for showing the front door.
  • After bringing back Nest into the Devices groups it seems to me that their products are still not seen as part of the Made by Google line up and therefore mostly an afterthought. A very different approach from Amazon’s rapid assimilation of the Ring product line.
  • Some have also noticed that the phone used in the ad does not reflect any existing hardware which seems a little strange given how popular the Pixel Phones have been.
  • If the phone was meant to show a generic Android device then I would have expected to see third-party Google Assistant enabled devices but this was not the case as all the other devices were Made by Google devices.
  • Maybe we are all reading too much into this phone thinking about an unreleased model when the answer could be as simple as the fact that for a company that has focused on software for so long the world of hardware is still all a bit new.

Slack Bans Users Who Have Visited US-sanctioned Countries

On Thursday, some Slack users began to report receiving a message from the app notifying them they had been banned from the service because of their ties with one of the countries the US has an embargo with Iran, Cuba, North Korea, Syria, and the Crimea region or Ukraine.

Via Mashable 

  • The message clearly states that the ban from the services is due to complying with export control and economic sanctions laws.
  • However, many users who received the message and lost access to the service took to Twitter to say they are not in Iran nor do they have any ties with any of the countries listed.
  • Furthermore, users lamented the inability to appeal against the decision especially given that they received no warning this was going to happen.
  • It is clear to me that the current political climate is making companies nervous and when you are popular but well aware that you do not have the gravitas the big Internet giants have you pick safe over sorry.
  • According to a Slack representative the ban was implemented through geolocation which relies on IP addresses as Slack does not have access to nationality or ethnicity data of its users.
  • Considering how some of the users who were banned did not reside in any of the countries listed, one has to wonder how accurate that geolocation data was.
  • I suppose it is somewhat refreshing to see a company not adopting the “move fast break things” mantra. But, it does seem that Slack is either over concerned or not up to speed with all aspects of the law in this regard.
  • Since 2014, US sanctions have included a license for personal communication tools like chat and social media that are used to exchange personal communication. It would seem to me that Slack would fall into this category.
  • Some of the concerns Slack might have about making sure to be compliant might be linked to the fact that its service is not blocked in Iran like other messaging services are possibly making it a preferred service.
  • After ZTE and more recently Huawei, it is understandable why a US company might want to take a broad brush approach first and maybe review later.

What to Consider When Marketing PCs to Millennials

Millennials are so yesterday! Gen Z is who we are told we should worry about. True, we must understand our kids now to figure out how they will shape the world. In the short term, however, especially if you are trying to flog, I mean sell, something, it is Millennials you want to understand as they are the ones with purchasing power.

A couple of weeks ago I shared some data from a recent study we, at Creative Strategies, conducted in the US on workflows and the importance that some features native on smartphones are having on determining what users want to see on their PCs. While I was looking at specific sample cohorts, I found some fascinating data points that PC manufacturers should keep in mind when targeting Millennials.

Technology Adoption

Early tech adopters are often characterized by two core qualities: their tech-savviness and their high propensity to adopt technology early in the cycle. Many assume that, as most Millennials grew up with technology, they are by default, early adopters. Millennials (18 to 34 years old) in our panel certainly check the first box: 72% of them consider themselves pretty tech savvy with family and friends often turning to them for tech advice. When it comes to buying new gadgets though, only 50% said they tend to be the first person in their peer group to purchase.

Work and Play is a Blend even on a PC

I often talked about how Millennials seem to have given up on trying to find the work-life balance that we, members of Gen X, have been desperately tried to find. Instead, Millennials are working towards a blend of work and play that ultimately might deliver a balance or a better sense of being in control. When we asked our panelists how often they start and finish their work or student day at home only 10% of Millennials said never. This compares to 18% among Gen X.

The phone is the tool Millennials turn to so they can check emails, calendar, and social media before heading out in the morning (45%) and keep an eye on things in the evening (27%). What is interesting is that the PC that for many generations had represented the king of productivity and even more so since we have been blessed with smartphones, is becoming more a device that Millennials rely on for both productivity and entertainment. Twenty-three percent of our panelists in the 18-34 age bracket open their PC/Mac/Chromebook in the morning to check email, calendar and social media but 17% turn to the same devices in the evening to binge watch content or for gaming. This is almost double the number of our panelists in the 35-54 age group.

The Right Tool for the Job

Over the past couple of years, we have seen operating systems as well as apps trying to bridge the divide between phones and PCs. Apps allow users to do most of what they do on their phones on the PC and the other way around although maybe a little less naturally. Operating systems even allow users to pick up a phone call or answer a message from their PC/Mac so not to interrupt their workflow. How much Millennials embrace this cross-over compared to Gen X is quite interesting and could help PC vendors better understand what features to focus on both in their product design and their marketing.

Maybe the most telling data point that shows how differently Millennials think about their phone and their PC is that answering a phone call does not top the list of the tasks they turn to the phone for. Social media tops their roster and with a clear lead over Gen X. This can signal two things: one that social media for Millennials really started on a phone rather than a PC. Twitter, Instagram, WhatsApp are the children of the app stores. Facebook, on the other hand, had the chance to establish itself on the PC before it moved to mobile and for many Gen X, the PC is still where social media happens. The other point this data might signal is that Millennials are embracing other devices, like the PC, albeit only a little, when it comes to voice communication.

I shared some data earlier that shows how, when it comes to entertainment, Millennials seem to be happy to turn to the PC especially if they have been on the phone all day. When we asked device preference for video, however, 43% of the 18 to 34 years old on our panel picked their phone over their PC. Such preference might come down to privacy, apps or force of habit we will dig more into this in future studies. Whatever the reason, however, PC manufacturers often think that given a choice for content consumption users will pick the bigger screen and this data shows that this is not the case which should give them some food for thought.

More tidbits from the study showed us that Millennials are more comfortable using their phone as a hotspot, are less concerned about Wi-Fi security, but they are also less willing to share personal data to get it for free. Isn’t fascinating that a generation who lives on social media could be concerned about privacy? Certainly, a topic to explore more in the future, but for now maybe a warning that this generation is more complicated than it looks.

News That Caught My Eye: Week of December 14, 2018

Sundar Pichai’s Congress Testimony

 On Tuesday this week, Google’s CEO Sundar Pichai testified before the House Judiciary Committee

Via CNN 

  • The overall sentiment after the hearing was that, once again, Congress failed to ask questions that would have driven the conversation further. Most of all many of the senators failed to show a basic understanding of how the internet works or how Google’s business model works. So not much different to what we witnessed when Facebook’s Mark Zuckerberg went to Washington.
  • We all understand that in these hearings, partisan arguments play a big role in the line of questioning and so it seemed that a lot of the questions were more focused on driving a political agenda than getting to the root of the concerns about Google overall.
  • Republicans were fixed on search results pushing conservatives websites down the list implying that there are humans at Google that due to their own political believes tweak the algorithm to make that happen. One senator went as far as accusing Google to have people linking President Trump to the word idiot so that search results for idiot would bring up President Trump.
  • Democrats spent a lot of their time trying to explain to the Republicans how search works and almost doing Pichai’s job of defending Google.
  • China was of course a topic. You might remember that Google pulled out search in China in 2010 due to concerns about censorship but recently started experimenting with project Dragonfly which is, in fact, a censored search engine. When Pichai was asked about the project his answer was that Google has no plan to enter China at the moment and that they will be transparent when they do. Surprisingly nobody asked a follow-up question to this answer which should be: so why are you experimenting if there are no plans to launch?
  • Data collection was another topic. If you followed Mark Zuckerberg’s testimony you might remember he was asked whether some sort of regulation should be set for tech companies when it comes to data. To this, he replied: “I think the real question, as the internet becomes more important in people’s lives, is what is the right regulation, not whether there should be or not.” Pichai was asked a similar question on the right to privacy to which he replied: “I think a framework for privacy where users have a sense of transparency, control, and choice, and a clear understanding of the choices they need to make is very good for consumers.” It is fascinating to see how both answers point to a belief that both companies are already doing the right thing when it comes to data and privacy.

Asus CEO Resigns

 On Thursday, ASUS announced that long-time CEO Jerry Shen is stepping down ahead of “a comprehensive corporate transformation” — part of which involved a new co-CEO structure, as well as a major shift in mobile strategy to focus on gamers and power users.

Via Engadget

  • The CEO role will be split between Y. Hsu who will lead the PC business and Samson Hu who will lead the global customer service business. Jerry Shen will become the CEO and Chairman of the startup iFast focusing on B2B AIoT.
  • According to IDC ASUS held the number six spot in the PC market with 6% share in 3Q18. It had peaked in 4Q15 with 8.2% share when it reached number 4. In smartphones, IDC has ASUS at number 13 globally with less than 1% share in 3Q18
  • Interestingly in a Q&A translated into English by Digitimes, the current CEO blamed a friendly corporate culture that led to a group mentality which stopped innovation. This to me is such an interesting idea as I do see this being present in other Asian organizations but only in the lower ranks rather than management so I do wonder why within Asus it was able to jeopardize the entire business.
  • The shared CEO role has been working well for Huawei and even Samsung now has a similar setup. When companies are as big as Huawei and Samsung having a leadership that focuses on core businesses might make it more effective thanks to a deeper degree of focus. It seems a little bit of an overkill for a company like Asus, but the decision might be driven by a need for core-competencies. The new co-CEOs have also worked well together in the past in their role as joint COOs so this might also have played a role.
  • The stated new focus on gamers and power users to revamp the mobile business looks like a high-risk move to me. While I understand the mass market mobile phone business that the Zen line was addressing is a highly competitive one, I do not think these two segments are easy to conquer. Power users are extremely demanding and a lot of what they require today is software and experience driven not just hardware driven. It seems that brands like Xiaomi and OnePlus have strong bases among these users.
  • The gaming segment will see increased competition this year as Samsung at their developer conference publicly stated their desire to own the mobile gaming experience. that coupled with their new strategy to drive new tech features into the mid-tier will put pressure on competitors’ pricing.

Apple Opens New Campuses

 Apple today announced a major expansion of its operations in Austin, including an investment of $1 billion to build a new campus in North Austin. The company also announced plans to establish new sites in Seattle, San Diego, and Culver City and expand in cities across the United States including Pittsburgh, New York and Boulder, Colorado over the next three years, with the potential for additional expansion elsewhere in the US over time.

Via Apple 

  • Tim Cook had told President Trump that Apple was committed to generating thousands of new jobs. As announced in January, the company is on track to create 20,000 jobs in the US by 2023. In 16 states, Apple today employs over 1,000 people.
  • Some of the chosen locations might point to business areas that would benefit from a local talent pool. Seattle is home to Google AI business, Microsoft and Amazon possibly offering talent acquisition opportunity for AI, Cloud and content services. Austin is already seen as a Silicon Valley transplant with many companies already there including Apple. San Diego has, of course, plenty of talent in semiconductor seen how Qualcomm is based there.
  • To those concerns that so many different locations might make it more difficult for Apple to operate I say: don’t worry. Having been to Apple offices outside the US, I have to say that it does not matter if you are in London or Beijing when you are at Apple you are at Apple. That has been my experience over the years.
  • Diversifying locations might also help Apple to diversify its workforce more something that the company has put emphasis on resulting in small improvements but still a lot of work to do.

What I Learnt about My Kid After a Week with a Phone

My daughter is almost eleven, and she is yet to get her own phone. She really does not need one as she is homeschooled and we are the ones taking her to most of her activities. For work and play, she has both a Surface Laptop and an iPad. But last week was different as I was attending the Qualcomm Snapdragon Summit in Maui and she came with me. I let her borrow an iPhone XR so she could keep me posted of her and my mom’s whereabouts over iMessage.

Electronics at home are an “earned privilege.” Most days we trade electronics time for reading, focus during homeschool time or outstanding behavior. Of course on holiday with grandma, while mom was busy in meetings, that earning factor went out the window and there was access to an iPad in the room and an iPhone outside.

Not that I planned on it, but this “experiment” of mine came on the back of the 60 minutes special on-screen addiction, which provided a lot of information of the impact of screen-time on young brains. If you watched that or just read through the summary here, you will think I am crazy to think that after a week try-out I still plan to give my child a phone. The core reason behind my decision is that I saw how the phone in the big-wide-world for her was a tool even more so than any electronics she uses at home.

Personalization, Mobility, and Camera

Despite knowing that the phone was a week loaner, my daughter took great care in making it hers. After using her Apple ID to log in and restore from her iPad backup, she changed her locked screen, her background, chose her screen brightness and sound – which to my surprise was not mute as it has been for me for years now. You could clearly see that personalizing the phone was a way to express herself.

It was also evident that the increased mobility of the phone form factor over her iPad got her to use it more across the board but also a little differently. This meant taking advantage of different features like maps to navigate our outings, nature apps to recognize local flowers and fish, and a translation app from English to Hawaiian.

The camera that at home is mostly used to have fun with stickers and silly videos became a tool to record fun moments with a friend or document local wild-life not for posting on social media but merely to make memories. Thankfully, aside from what mom posts, my kid has no social media presence, which for some parents, I know, is too much already!

Different Gaming

Seeing how my daughter can turn into a “gremlin fed after midnight” when at home she has to stop gaming, I was concerned that a phone would just make things worse. I was amazed to see that she was playing different games to what she usually plays on her iPad. Minecraft, Fortnite, and Roblox were put aside for Sonic, puzzle games, and brain training games.

It seemed as though, her iPad is her proper gaming device while the phone was indeed a mobile gaming device used more as gap filler with simpler games. The proper gaming session would return in the evening when the phone turned into her music player, and the iPad resurfaced for gaming.

While we have consoles at home, the time spent on them is somewhat limited mostly because my child is a touchscreen gamer by nature and the controllers, to this day, feel a little foreign to her. I do wonder if the success of the Nintendo Switch – which is on her Santa’s list – is due, in part, to its ability to bridge the console and tablet experience so well.

Obsession vs. Addiction

What transpired from the week was also the difference between obsession and addiction. There is no doubt that some games lead to behaviors that closely resemble addiction. For my kid Fortnite, Minecraft and Roblox certainly show the dark side of her. Yet, what drives her is a little different for each game. With Fortnite it is about team play and not letting the team down in the game, Minecraft is about accomplishment and in Roblox is more about the social aspect of it, players are friends from school we talk to!

Outside of gaming though I feel that it is more about little obsessions rather than addiction. This is no different than discovering a book series and wanting to read the whole set in one go, or watch a movie like “Black Panther” enough times to know almost the entire script!

So in the week with her phone, I saw the current Avengers craze moving from the TV screen and comics to memes, a new vehicle for her obsession enabled by the internet. I am sure that in a few months we would move on to something else in the same way we liked pizza for the past six months and now we hate it!

My main issue with studies that look at screen time as a generic thing is that things are not as simple as that. So I do not dispute science. I am sure young brains are affected by what kids do on these devices, but it is precisely what they do that we need to look into. One data point mentioned in the program was that toddlers asked to return an iPad used to play an instrument in a game did so 45% if the time while toddlers who played a real instrument did so 60% of the time.  The key here is not the screen, but the app and the gratification the app gave through different stimuli. I am sure if you tested kids doing math with pen and paper and kids doing the math on an iPad they would stop at the same rate when asked!

My Key Takeaway

So what did we learn?

For my daughter, after a week in Paradise, the biggest sadness came not from leaving sunshine, pools, and turtles but rather from returning the phone to me.

For me, this week was key to understand that learning how my child uses technology is no different than figuring out what sports she wants to engage with, what movies are appropriate for her and to some extent what kind of human being she should be. Like anything else, kids need guidance on what is right for them and what it is not, but this has much more to do with how they engage with the screen than screen time per se. In other words, not all activities done through a screen are created equal, and it is up to me as a parent to guide her to those that enrich her life. Of course, guidance alone is not going to be enough, if you are a parent you know that, so having tools that help you monitor, set the right access and making sure your child is not taken advantage of are indispensable. Pandora’s box does not have to be ripped wide open!

PC Users’ Smartphone-Envy

Millions of people rely on their smartphone every day for their on the go computing needs. For many, especially in younger demographics smartphones are their sole or main computing device. Whether it is email, social media or gaming consumers across the world have become highly dependent on their phones so much so that the whole tech industry has started to address screen addiction. Considering how much time users spend on these devices, we at Creative Strategies wanted to understand how smartphones fit in people’s workflows and to do so we conducted an online study at the end of November across 1000 US consumers.

The first interesting data point we found is that it 34% of our panel has both a work PC/Mac and a personal one while only 15% relies solely on a work PC for both work and personal computing needs. Forty-three percent of our panel only has a personal PC/Mac. This landscape is fascinating as it points at the opportunity there still is to reach consumers and not just IT departments when it comes to PC sales. While engagement on PCs might have dropped when smartphones first hit the market, it is clear that PCs and Macs still have a place in our homes.

That said, just the fact that 56% of users on our panel do not have a Windows PC with a touchscreen points to an installed base that is ready for an upgrade. This is even more obvious when we see that 61% of the PC users on our panel said their PC has no support for pen.

A Reality Check on How People Work

Before getting into what users want for their PCs, I think it is interesting to look at how they are currently using them as this will provide excellent insight into how to market their next upgrade. Among the people who are currently working 47% said they are usually working from their office desk and another 30% work at their home office desk making mobility not a high priority among our panelists.

Work and life balance is still a struggle for most as we seem to rely on our phones to keep us on top of things without being dragged into work more than necessary. And so 40% of our working panelists check their email, calendar and social media every morning before leaving for work. Twenty-seven percent keep an eye on things on their phone in the evening trying not to open their PC while 11% are always on their phone in the evening but uses their PCs to either binge watch or game. Only 17 percent of our working panelists never start or finish their working day at home which makes me feel somewhat better about my work/life struggle!

When it comes to how people work across devices, there was much less consensus than we had for where work takes place. Our working panelists are quite varied in their habits of working on one machine or multiple ones. Seventeen percent never work on multiple devices, 12% often start working on a work device to end on a personal one at home, 23% only use their work device while 25% pick up a phone or a tablet for a quick edit. Twenty-three percent work seamlessly across devices depending on convenience. What is interesting is that this number only grows to 29% among early tech adopters pointing to the fact that working across devices does not necessarily require tech expertise these days, especially when the multiple device mix includes a phone.

Top Asks from PC users

With the phone being the most used device by many people it is no surprise that there are features that users will want to see on their PCs too. This is not about being able to do the same things they do on their phones, but rather it is about benefitting from some critical enablers of the experience their phones can deliver. It was evident among our panelists that voice calls, messaging, and social media are best dealt on a phone than a PC.

So when we asked consumers which features their smartphone has that they would want to see on their PC the wishlist reflected all the key qualities of a smartphone. First on the list is long battery life (36%) Instant-on (29%) and cellular connectivity (25%).

Interestingly, the second highest feature was face-authentication at 30%. This reflects my previous comment that the PCs owned by our panelists seem to be on the older side and of course, it also demonstrates the lack of FaceID support on the Mac. Considering about 40% of our panelists had the newest Apple and Samsung’s smartphones which support face authentication this ask is not a big surprise and as more phone manufacturers embrace face authentication the need to support it on the PC/Mac will grow. For PC makers this is already an option as Windows supports Windows Hello, but it will be interesting to see what Google and Apple will do going forward.

Pain Points Are Not Always a Driver

In technology, I often find myself pushing service providers or hardware manufacturers to look at solving real-life problems to drive uptake of services or hardware refresh.

It is interesting how, when it comes to connectivity, consumers do not see it as a pain point, but they still want it. We asked our panelists how easy they feel it is to find an internet connection for their PC/Mac/Chromebook when they need it: 31% said it is very easy because they only use a computer at home on WiFi and 17% do the same at their office/campus. Twenty percent said it is not a problem as they mostly work from their desk where their computer is connected. Eighteen percent uses their smartphone as a hotspot and only 5% who are highly mobile users admit that finding connectivity is a constant challenge.

If this were the issue Always-on and Always-connected PCs aimed to solve it seems that the pitch to deliver the kind connectivity that only 6% of our panelists experience with their connected PCs would not lead to much of an uptake. Yet, it is clear to me from the fact that 25% said they would want a cellular connection that when we talk about connectivity, it is not a question of solving a problem but rather delivering a level of convenience we have got accustomed to with our phones.

If I am right, what PC makers, Qualcomm, and carriers will be able to offer in terms of plan activation and compelling data pricing will be the key to the success of the Always-on, Always-connected PC. Offering that convenience for a free trial period will get users to never want to give it up, setting the bar for what the next computing experience should be like.

Two Tech Trends That Failed to Save My Black Friday

I make no secret that I love to shop. I like buying things rather than the actual process of shopping. Before I get out the door, I know which stores I will go to and have a clear idea of what I need or want to buy. While my outing might still take a couple of hours, it is a targeted and organized operation, despite what my husband and kid might say.

As I take pleasure in buying not shopping, I do a fair amount online. Amazon is my friend, but so is a long list of websites that carry my favorite brands, accept Apple Pay or Paypal and offer free shipping.

When big sales days come around, like Black Friday, I prioritize online shopping, but I will go to some physical stores mostly for clothes and accessories. This year I found going to the local mall an excruciating process, more so than it usually is, and mostly because I saw all the different ways tech could have made it better but didn’t.

AI and Big Data

Let’s start with how stupid the shopping process still in. Both online and in-store there is little or no intelligence used by retailers to make your experience less painful and more rewarding for you and them.

This lack of intelligence starts from home where you are inundated by ads leading up to the big day that more often than not poorly reflect your buying habits. This is particularly ironic this year when both tech and politics have spent several months discussing privacy and how much information internet giants should have access to. Well, right now they, as well as most of the retailers I shop from, have access to a lot of information, but the targeted advertising I receive is still pretty dumb. The foot crumbs I leave as I go from site to site follow me with very generic suggestions but one has to wonder why those sites I trust, and I shop from more often do not have a profile for me.

Let’s take Amazon as an example of an online retailer as I shop with them consistently and I purchase a vast range of items for myself, my family, pets, and home. Amazon has the list of all my orders as well as everything I browsed and how many times I looked at an article without clicking “buy.” Why don’t I get an email with suggestions from the deal of the day that match my buying patterns? For instance, why don’t I get prompted for an item I looked at but did not buy? Chances are I did not do so based on price, so an offer might get me to finally purchase. Or again, why don’t I get offers on products upgrades? Say I bought a Ring doorbell two years ago and the latest model is now on sale. Why not send me offers for complementary products like what I might want to add to my smart home after buying several Echo products, a doorbell, and some bulbs?

Much of the same could be said for those brands I shop from on a regular basis and even more so those where I am part of a reward program. If I have a reward card in my digital wallet that pops up to tell me I am close to a specific store why doesn’t that retailer push it a step forward and send me relevant offers on what is available in store? Why aren’t traditional apparel retailer offering an in-store version of stitch-fix where based on your previous purchases and your body type they put together a number of outfits that on a specific date and time will be ready for you in a store changing room. You would walk in straight to the changing room you were notified on your phone as you entered the store, you try everything on, tap the RIFD tag of what you want to keep before you put it in a bag and walk out while your credit card is automatically charged. I give you that such a system might not be viable on a heavy traffic day, but hard to believe it would not work any other day.

I understand that much of the sales occurring on Black Friday end up being for items you had not planned to buy, but intelligent shopping does not mean that impulse shopping must die. It would actually mean you end up being more exposed to items you are likely to respond positively to resulting in more revenue for the retailer but also a much higher satisfaction on your part. At the end of the day, there isn’t much that is more satisfying than a successful shopping spree.

Mobility

Black Friday is such a big shopping day that stores have been opening earlier and earlier with some stores now starting their sales on Thanksgiving Day. I have gotten up earlier in the past mostly to avoid the crowds, but this year was not one of those times, and I had to make three attempts to reach the mall. That’s right only on Sunday I was able to get to the parking structure of the Westfield Mall in Santa Clara and park my car!! The first two times it was impossible to even get to the parking structure due to the high volume of cars.

So this begs the question: where were Lyft and Uber? In the land that invented ride-share and scooters, it seems to me that talking about the death of cars ownership was immensely premature. I understand of course that scooters might not be the safest choice when you are holding shopping bags, but why are people not relying on Uber and Lyft to avoid the pain of parking? I would guess that a lot has to do with how many of these malls treat rideshare services as second-class transportation providers and relegate them to drop off and pick up from locations that are less than ideal for both passengers and drivers. In my case a Lyft driver would either get stuck in the same traffic I was trapped in for over an hour or would have to drop me off miles away from the entrance.

Why are malls not keeping pace with what their customers want and offer preferential lanes and temporary parking spots for rideshare companies? Airports have adapted to this and while some airports still make you walk miles to get to a ride-share pickup location things are changing fairly quickly. Malls should learn from it especially in the US where parking is free. I can see other countries like the UK, where most shopping centers charge a fair bit to park, resisting such change as it would result in a loss of revenue.

 

What ruined my Black Friday could have been solved by technology today, not in some distant future. As I have often said though, technology might be ready, but business models and humans are not. Data and AI have the power to make my shopping much more tailored to my needs and ultimately more effective. This coupled with a pain-free rideshare trip to and from my favorite stores could have delivered a “shopping like a star”experience. But if the big parking structure that is being built next to the mall is a good indication of how quickly things will change I am sad to say it will be a while before retail catches up with what technology can already enable.

News that Caught My Eye: Week of Nov. 16, 2018

Citrix Acquires Sapho

Citrix announced on Thursday that it had acquired Sapho, a leading micro-app platform which it will use to enhance the guided work capabilities within Citrix Workspace, enabling people to work with even greater speed, intelligence, and simplicity.

Via Citrix

  • Sapho is very well known for delivering micro-apps for collaboration platforms such as Slack and Microsoft Teams
  • The micro-apps are linked to popular SaaS products such as Outlook, Google Drive, Salesforce, Concur and the allow for actionable tasks within those collaborations tools.
  • Citrix paid $200 million in an all cash deal for the startup that had raised just shy of $30 million since 2014 a good return for Sapho but a good investment for the future of Workspace for Citrix.
  • Citrix will integrate Sapho within its Workspace so as to streamline processes and workflows. For instance, a Concur micro-app allows a manager to approve or deny an expense report all without having to leave Workspace and launch Concur full app.
  • This seems like a very good fit given the overlap the two companies had in their client base and the request both companies were receiving from customers for more integration.
  • Many companies will appreciate the integration of Sapho’s micro-apps into Workspace purely from a productivity perspective. However, users will also see a way to bridge old and new by bringing legacy apps that might have lost some
    “sexiness” into a much more modern workflow that will appeal to the growing numbers of the younger workforce.

Facebook: Delay, Deny and Deflect

 In a devastating article, the New York Times, citing more than 50 sources, accused Facebook of:

  • employing a Republican opposition research firm to “discredit activist protesters,” in part by linking them to the liberal billionaire George Soros;
  • using its business relationships to lobby a Jewish civil rights group to flag critics and protesters as anti-Semitic;
  • attempted to shift anti-Facebook rhetoric against its rivals to soak up the blame by planting stories with reporters;
  • posting “less specific” carefully crafted posts about Russian election interference amid claims that the company was slow to act;
  • and urging its senior staff to switch to Android after Apple chief executive Tim Cook made critical remarks about Facebook’s data practices

Via The New York Times 

  • Over the past year, I have discussed the Cambridge Analytica as well as Mark Zuckerberg and Sheryl Sandberg’s trips to Washington several times. In my assessment, there were always two constants: one that the business model called for growth and more growth and two that Zuckerberg just does not seem in touch with his own company or humanity
  • After this week, and especially after today’s call with the press, I am even more convinced that those two points are true but a few more were added.
  • As you can imagine, Facebook denied that much of what the New York Times reported was true. Yet, the call itself was the best example of delay, deny and deflect.
  • Deny the story
  • Deflect by announcing that Facebook appointed a new independent council to deal with appeals to decisions on content. It seems that this council was thrown together in a rush and has no real power to actually change the course of things.
  • Delay responsibility as Mark says that users are pretty clever and they should figure things out by themselves. This in particular seems to be missing the very point of why fake news, propaganda and the rest worked. Users are not smart enough to figure out whether what they read is true or not. It also seems like Facebook is throwing in the towel and putting the burden on the victim. It is like saying I cannot hold on to this dog but I trust you can run fast enough not to get bitten! It just does not work like that. The responsibility must be on Facebook
  • As I always say, it is not the incident that will get you to lose customers but the way you respond to it. With Facebook users might have moved on from the Cambridge Analytica story, but management lack of leadership, their little willingness to be held accountable have done nothing to reassure users that things will be different in the future.
  • Facebook’s leadership might just see #deletefacebook as an annoyance for now, but I do wonder if the biggest impact this whole situation will have on the business is going to be a lack of trust from advertizers in the company’s management to resolve it, but most importantly in their ability to recover from it and move the business forward.
  • The board continued support for Zuckerberg and Sandberg might also start to concern Washington who has started asking questions before the Midterms and will only escalate as we get closer to the 2020 Presidential elections.

Google Maps New Features

Last year Google enabled users in select countries to message businesses from the Business Profiles on Google. Sending messages to businesses gives you the opportunity to ask questions without having to make a phone call. Now you’ll see your messages with the businesses you connect with via Business Profiles within the Google Maps app, where you’re already looking for things to do and places to go or shop.

Via Google 

  • Google announced that this feature will be coming last spring at Google I/O and I thought it made a great deal of sense.
  • Keeping users inside the app to get more information makes perfect sense and in a world where it seems we all prefer to message than talk so does letting you message the store to save you a call.
  • I also like the thinking behind keeping messaging businesses separate from personal messaging so there are no concerns about accidentally messaging a business rather than a personal contact
  • Of course, Google wants you to message rather than call not just cause they want to make your life easier. If you call the business there is no direct way for Google to use the information you share to improve the service, something they can do with messaging. Think for instance if you are asking about whether or not there is parking at a store. Once you get your answer that information could be added to maps for other users to know without having to ask.
  • All that said, there is a concern that I share with some who have reviewed the new feature that maps is turning into a huge source of information at the expense of the very thing they were designed for: navigation
  • Users can find the new richness of Maps overwhelming. More importantly, with more information displayed on the map core information like street names have less space making reading the map harder.
  • It will be very interesting also to see how this feature is enabled within Android Auto. I would expect that for legal reasons that messaging will only be supported by voice which might lead some users to revert to calling the business for a more straightforward exchange
  • It is always hard to find the right balance between offering more information and keeping things visually simple for straightforward navigation and this is especially true with maps. I have always been a fan of Google maps because it gives me more so I am eager to test if more is just becoming too much!

 

 

Dolby Brings a New Dimension to Home Entertainment

Consumers are very familiar with the Dolby brand. Whether you often visit a Dolby Cinema or you have a TV or computer that supports Dolby Atmos and Dolby Vision you know Dolby delivers one of the best entertainment experiences that allow you to lose yourself in the content you are consuming.

At a time when delivering an experience has more and more to do with the combination of hardware, software and AI, Dolby brings to market its first consumer device: a set of wireless headphones called Dolby Dimension.

Making Hardware Does not Make You a Hardware Maker

It is always easy when a brand brings to market a product in a category they had not been present before to think of it as “entering the market.” Of course, technically this is what they are doing. But there are different reasons why a brand decides to get into a new space. Potential revenue is mostly at the core of such a move, but even then how that revenue is generated differs. Sometimes revenue comes directly from the new product. Other times, the revenue upside comes from how the product is able to boost brand perception in areas the name was already present.

When Dolby spoke to me about Dolby Dimension, I thought about how well it fits their history and DNA as well as delivering on a market need. To understand why Dolby is taking this step one should take a quick look at how home entertainment is changing.

In a recent study across 2044 consumers by the Hollywood Reporter it is clear that in the US, binge-watching is becoming the norm and not just for millennials. While 76% of TV watchers aged 18 to 29 said, they preferred bingeing, older age brackets are not far behind with 65% of viewers ages 30 to 44, and 50% of 44 to 54 who prefer binging. And it is not just about how many people binge-watch it is also how often they do so. Across the national sample of the October study, 15% say that they binge-watch on a daily basis. Another 28% say they binge several times per week.

Many will argue that the wireless headphones market is already super competitive and that Bose fully controls the high-end of the market, so Dolby should have thought about it twice before entering this space. But see, this is where the “entering this space” debate starts. From how I look at it, Dolby was looking to expand the way their technology and experience can be experienced. This took the form of a set of headphones that bring value to a specific set of consumers who appreciate high-quality sound, spend hours watching content on whatever screen is most convenient in their home and see the $599 price tag as an investment in a superior experience that allows them to binge smarter.

It is when you look at the technology packed inside Dolby Dimension and the specific use cases that Dolby has in mind that you understand why this is not a simple branding exercise. The initial limited availability to the US market and distribution focused on dolby.com confirm to me that Dolby is not interested in a broader consumer hardware play, which I am sure will leave hardware partners to exhale a sigh of relief.

Not Just Another Set of Wireless Headphones

Most wireless headphones are designed today for users on the go. They help you being immersed in your content or your work by isolating you from the world around you thanks to noise canceling.

There are some models in the market, the latest one being the Surface Headphones, that allow you to adjust your voice canceling feature to let some of the world in if you need to. This is however done manually.

Dolby Dimension is designed with home use in mind which means that a few things are different. First, the new Dolby LifeMix technology allows you to dynamically adjust how much of the outside world you can let it. Settings, activated through touch controls, will enable you to find what Dolby calls the “perfect blend” between your entertainment and your world as well as entirely shutting down the outside world through Active Noise Cancelling. If you, like me, binge-watch in bed at night you might appreciate being able to choose between being fully immersed in your content when your other half falls asleep before you and snoring gets in the way. Other times, you might want to be able to hear your daughter giggling away next door because she decided to ignore your multiple lights off requests!

Over the days I had to play with Dolby Dimension what most impressed is how it really gives you the feeling of sitting in a theatre. This is especially striking when you are watching content on a small screen like a phone or a tablet. The sound, which of course Dolby will tell you is half the experience, really brings that little screen to life letting you enjoy content at its best. I felt so immersed in what I was watching that I am pretty sure I got to experience the kind of “mom’s voice canceling” my kid has naturally built into her when she is watching any of the Avengers movies, or she is gaming!

There are a few more details that highlight what Dolby had in mind with these headphones. Dolby Dimension can be paired with up to eight devices, and you can quickly toggle between your favorite three with dedicated hardware keys on the right ear cup. When you pick your device, hitting the key associated to it will take you straight to your entertainment app of choice like Netflix or Hulu, not just your device.

Battery life reflects a best-sound approach by delivering up to 10 hours with LifeMix and Virtualization turned on and up to 15 hours with low power mode. So whether you, like 28% of the study sample, binge-watch two to three episode per session or like another 21% you watch four episodes at once you will be left with plenty of power. While we might be tempted to think about a long flight or a day at the office, this is not what Dolby Dimension was designed for and to be honest if those are your primary use cases Dolby Dimension is not really for you.

Headphones are Key to the Experience

It is fascinating how over the past year, or so, headphones have become a talking point in tech. I think the last time that was the case was when Bluetooth was introduced and we got excited about being able to have a conversation on the phone without holding the phone.

When we are discussing the lack of the audio jack from our devices or which digital assistant is supported (assistant that you can summon with Dolby Dimension) we are pointing to the fact that headphones have become an essential part of our experience. Considering how much time we spend in front of one screen or another, both at home or on the go, being able to enjoy both visual and audio content is growing in importance. As intelligence gets embedded in more and more devices and smaller and smaller devices benefit from higher processing power, headphones can become a device in their own right rather than being viewed merely as an accessory.

While I don’t believe Dolby is interested in becoming a consumer hardware company, I am convinced they will continue to innovate and look at how consumers habits are changing when it comes to consuming content. As we move from physical screens to augmented reality experiences and eventually virtual ones, Dolby might continue to take us on a sensory journey through technology and if needed hardware.

News that Caught My Eye: Week of November 9, 2018

One big eye catcher this week…

Samsung’s Developer Conference

Key news from SDC18 included:

  • New mobile experiences with Infinity Flex Display & One UI: The Infinity Flex Display builds on Samsung’s legacy of category-defining form factor and display innovation, paving the way for a breakthrough foldable smartphone form factor. One UI is Samsung’s new smartphone interface, featuring a clean, minimal design that makes it more convenient for one-handed use.
  • The new Bixby Developer Studio and Bixby Capsules:  Bixby is evolving into a scalable AI platform to support diverse products and services. The company unveiled new ways for developers to easily bring voice to their services.
  • Works with SmartThings certification program: A re-designed suite of tools that make it faster and easier for developers to connect their devices and services to the SmartThings platform.

Via Samsung 

  • I have been attending Samsung’s Developer Conference for many years now. It started in a hotel in San Francisco and moved to the Moscone Center only a couple of years ago.
  • In comparison to Apple, Google and Microsoft, SDC certainly it still feels like a much smaller affair, but I felt this year Samsung did not just talk the talk. There were a series of announcements that will make a concrete difference to their developer base.
  • With Google taking care of the core engagement with developers, Samsung can focus on what they believe would give them a differentiated edge over their competitors but also what makes them less reliant on Google from an ecosystem perspective.
  • In the past differentiation was more about the look at feel of the device, but with AI a new phase started where differentiation will be driven by an intelligent personalization of both software and services.

One UI

  • This is the evolution of TouchWiz, which became Samsung Experience and now One UI. TouchWiz basically was a skin that Samsung put on its devices to differentiate it from stock Android devices and other players. Over the years the differences between what was stock and what Samsung diminished making switching vendors within Android less daunting for users.
  • I found myself arguing with fellow analyst Bob O’Donnell whether or not I would call One UI a skin mostly because it seems to be very Google-like, with rounded corners for everything from dialogs to icons, and a bigger focus on stark contrasts and color.
  • Samsung will offer an open beta testing program for this Pie-based One UI for the Galaxy S9, S9+, and Note9 starting in November for customers in the US, Korea, and Germany, with other countries to follow later.
  • As far as I can remember, this is the first time that Samsung offers a beta trial which is another sign of how the company is changing under DJ Koh’s leadership.
  • The primary focus of the One UI is to declutter user experience and let you focus on what you are doing at the moment. It also tries to make the task easier for you by bringing text boxes where you type closer to your thumb for one-hand operation on larger screens.
  • It will be interesting to see how One UI will work on the new foldable screen that can run three separate apps simultaneously.

Infinity Flex Display

  • Talking of foldable. Samsung launched the new Infinity Flex Display. This was, in my view, the most misunderstood part of the event with many reporters covering it as if it were an actual phone.
  • Samsung said on stage that the phone was disguised in a wrapper of sort and maybe it was and maybe it was not. I have no reasons to believe what we saw was the final design.
  • While some were talking about disappointment driven by the fact that the screen folded inwards rather than outwards it seemed to me that the practicality of that design was  put aside for the wow effect.
  • I am not saying that over time we might not have a screen that folds outwards but there is quite a bit that needs to be solved before we get there. First how you can disable half of the screen when it folds as one so that you do not activate the back of the screen as you hold it. Second would be power consumption as you would power the entire screen even when you only use half. Folding outwards would be much easier if you had two separate screens that are separated by an ever so slim hinge.
  • Rushing to determine how successful the phone that was not announced will be is quite hard when you do not have one critical data point: price. I cannot think that any device built on an Infinity Flex Display will be anything but expensive and given flagship products are already around $1000 you can see how, at least at first, these devices will be positioned as premium.
  • Another interesting commonality of some of the articles I read had was the search for a use case. I am not sure I would think about it any differently than the many use cases that drove our average phone size up over the years. Video, gaming, increased productivity are all to benefit from some extra screen.
  • The point the foldable design solves is reducing the overall size of the device but also creating the ability to maintain a known user experience when all you need is the screen size of a current phone.

Bixby

  • If the Infinity Flex Display was the most misunderstood announcement, Bixby was the least loved one.
  • Samsung announced Bixby Capsules and Bixby Developer Studio. The easiest way to think of the first is to think of Alexa’s skills, while the second is a set of tools that uses AI to help developers add a voice first interactions for their apps and services
  • The reason why many are skeptical is that Bixby has had little uptake so far which is fair.
  • That said, I guess I look at this in a pragmatic way which is that Bixby is part of a larger AI play that Samsung cannot just ignore and embrace Google for or any hope of differentiation vanishes.
  • I know that if you look at it from a consumer perspective you can say that users want to use Google Assistant so Samsung should not bother spending money on Bixby. But every interaction you have with Bixby brings valuable data to Samsung.
  • I would argue that Samsung is only now setting things in place for Bixby’s success from a broader language availability to developer tools, and most importantly their own understanding of what role Bixby will play in the Samsung’s ecosystem.
  • Opening up the SDK, delivering tools that aim to limit the work to “port” what a developer might have created for another digital assistant as well as the creation of a market place are all key steps. Steps that might lead a developer to try and take advantage of the large installed base of devices Samsung has across the home, not just phones.

Gaming

  • Finally gaming. What started with a Fornite exclusive on the Galaxy Note 9 developed into a strategy to make Galaxy devices the best mobile gaming experience on Android.
  • In a very smart move, Samsung had Microsoft on stage talking about Microsoft Project xCloud which is their new gaming streaming service.
  • Samsung and Microsoft are good partners on a series of different offerings that go across phones and PCs. It makes sense that Microsoft looks at the vendor that owns the most valuable Android users as a way to tighten the link between phones and Microsoft’s products that being Xbox or Windows 10 PCs.
  • Samsung is expanding developer support for gaming so they can take full advantage of the hardware. Think about S Pen, for instance.
  • Another reason for Samsung to double down on gaming now is of course the role that Samsung plays in the 5G roll out. While all the vendors and carriers involved are excited about the arrival of 5G consumers are still trying to figure out why they will need a 5G phone. Starting with gaming is not a bad way to convince them to trade up!

What the iPad Pro Enables Matters More Than What It Replaces

It has been quite fascinating reading the reviews of the new iPad Pro this week, and even more so reading the comments those reviews received. The process highlighted a few interesting challenges we have when we go through significant technology transitions and what might be holding us back from moving faster.

We Feel Compelled to Put Devices into Buckets

Of course, we give everything a name: a baby, a dog, and a device. We name items to market them and sell them which, of course, makes a lot of sense, but then because of that name we compartmentalize them to count them, project them and see how they are performing in relations to other devices.

Most of the times this works, especially when devices are single purpose: a camera, an MP3 player, a VR headset. But when devices can do multiple things and what they can do is determined by the software or apps they run or even by the accessories you can attach to them things get complicated very quickly.

Often we end up creating artificial categories based on how the product is marketed even though the way it is used is very different from what it says on the box.

Those Buckets Might Prevent Us from Looking Beyond the Hardware

For those devices that do multiple things, it is at times harder to see what they are competing with because the one thing that might drive buyers to get them in the first place is different from person to person. If you think about smartphones, for instance, some buyers might prioritize the screen size, others the camera, and others the quality of their calls.  While many will be similar the importance put on those features will be different and more importantly what people consider a deal breaker is likely to be even more different.

The look of a product is at time deceiving. Something might look like something else but behave very differently, or something might look very different but behave the same or drive the same behavior. Think about netbooks and notebooks for instance. On the surface, they looked very similar with the most significant difference being size. Yet their performance was very different which in turn drove very different use cases. Another example is lower-end tablets running Android. At the beginning of the market they looked very much like an iPad, but in countries like China, they were really competing against MP4 players because their software and weak app ecosystem limited their use cases to watching videos. When you think you are competing with something different than what you are, success is hard to come by as marketing, channel presence, pricing, target audience, all will be off for the product.

The look, however, often determines what people expect. If you quack like a duck you are a duck the same way that if you look like a notebook I expect you to run a specific OS, support a mouse, be great at productivity.

Let’s Talk About the Mouse and Other Must Haves

The PC market is a unique case study because of how many entrenched workflows users have. These are workflows that are old and might not be perfect, but the familiarity we have with them leads us to believe we cannot do without. The mouse is a good example. For many PC users the mouse is a core part of the experience which means that because the iPad Pro does not support a mouse, it cannot be a PC replacement.

Let’s look though at where the mouse comes from, which is a world where the PC was in the same place day after day, after day. Over time that PC moved around with us and the mouse cut the cord and came with some of us. I will always remember one day being in an airport lounge at SFO and seeing a lady who set herself up at a table with her laptop, a mouse and a portable printer. In her mind, I am sure, she was being mobile, but the reality was quite different.

If Apple thinks the iPad is a true mobile computer, then it makes sense that it is looking at an alternative to a mouse when you are trying to pinpoint something on the screen. If you are using the device on the subway, as you walk, in the car touching the device with your finger or the Apple Pencil makes much more sense than using a mouse. If I am right, mouse support is not a technical issue but a conscious decision of what fits the experience. The same can be said for support for a wired printer. This might not match people’s expectations of a true computer, but it matches human behavior.

File systems at an OS level is another behavioral debt we have. Does it still make sense to have one when much of our work is done in siloed apps and or stored in the cloud for easy collaboration?

Focus on What Devices Enable

We can argue as much as we want about whether or not an iPad Pro is a PC or not but I think we cannot argue with the premise of what the next computing experience is likely to include:

  • a mobile, not a portable device that is always connected
  • a more versatile operating system that transcends product categories
  • multiple input mechanism: touch, pen, and voice
  • “satellite” experiences driven by other devices such as AR glasses, wearables, IoT devices and sensors

Because of these characteristics, new workflows will be created, and old ones will evolve. Like for other industries, like the car industry, these changes will happen over the course of many years and impacting, people differently based on their line of work, their disposable income, the market availability in their region and most importantly their entrenched behaviors. Who gets there first does not get a medal but gets to show the way to others by showing what works and what does not.

 

News That Caught My Eyes: Week of November 2, 2018

Google’s Employees Walk Out

On Thursday, there were a series of employee walkouts at around twelve Google offices around the world. The demands of the employees:

  • And end to forced arbitration
  • A commitment to end pay and opportunity inequality
  • A publicly disclosed sexual harassment transparency
  • A clear, uniform, globally inclusive process for reporting sexual misconduct safely and anonymously.
  • Promote the Chief Diversity Officer to answer directly to the CEO and appoint an Employee Representative to the Board

Via Recode

  • I covered the New York Times story about Rubin last week and as I said, Google should be doing more and it seems that many employees thought that too.
  • While Pichai had responded to the New York Times story he had not offered any concrete steps on how he was planning to change processes and culture
  • On Thursday, Pichai showed his support by sending a letter to the employees saying managers were informed of the walkouts and supportive and so was he: “I understand the anger and disappointment that many of you feel. I feel it as well, and I am fully committed to making progress on an issue that has persisted for far too long in our society… and, yes, here at Google, too.”
  • While Pichai’s letter shows empathy, once again, it fails to give concrete suggestions on what he and the board will implement to drive culture change.
  • Google’s employees have been vocal before about Google’s projects like Dragonfly (the censored search-engine for China) and Project Maven (for better AI for the US Military).
  • A week after the Project Maven protest, Pichai released ethical guidelines for AI so it will very interesting to see what his response is after today.
  • This is of course not just a Google issue and I feel any company that will step up first in creating new processes along the line of the demands put forward by the Google employees will have not just a hiring advantage but a better working culture that will ultimately benefit the overall business.

 

Royole’s bendy-screen unveiled in China 

Royole Corporation – a specialist in manufacturing flexible displays – unveiled the FlexPai handset at an event in Beijing. When opened, the device presents a single display measuring 7.8in (19.8cm) – bigger than many tablets. But when folded up, it presents three separate smaller screens – on the front, rear and spine of the device.

Via BBC

  • It is quite impressive that this six-year-old California based company was able to be first at what Samsung, LG, and Huawei all promised to do soon.
  • The demo of the device launched at an event in Beijing looked pretty rough, but that is not a big issue given the company plans to sell mostly to developers at a pretty hefty price too.
  • Despite their stated intent to want to seed this device to developers one has to wonder if they wanted to show their tech early to land a deal or even an acquisition from one of the main vendors.
  • I remain skeptical about foldable screens on a phone for a few reasons:
    • Apps optimization
    • The overall thickness of the device
    • Price
  • If the price is too high for mainstream adoption then app optimization will lag which in turn will delay volume sales and price decline.
  • This was one of the big reasons why larger tablets never took of in the Android ecosystem and I fear foldable phones might die a similar death.

Apple’s Q3 Earnings

Revenue reached $62.9 billion, which is a 20% increase. For fiscal year 2018, revenue grew over $36 billion to $265.6 billion, an all-time record. Apple experienced double-digit growth in all geographic segments and new revenue records in almost every market we track.

  • This was the best quarter ever for Services, with revenue up 27% to an all-time record of $10 billion.
  • iPhone revenue grew 29% year-over-year, and the installed base again grew by double digits.
  • Apple returned more than $23 billion to investors during the quarter, including almost $20 billion in share repurchases.
  • In the December quarter Apple expect revenue to be between $89 billion and $93 billion.

Via Apple 

  • Apple stock declined after earnings due to the softer guidance for 4Q18. Interestingly this was in large due to expected continued weaker consumer confidence in emerging markets and continued weakness of the Dollar.
  • It seemed that Apple factored in a prolonged weakness of the $ following the mid-term elections.
  • iPhone ASPs stole the show with a 28% increase year over year driving growth in revenue despite units. We should see a similar trend in iPads once the new iPad Pro models start shipping.
  • As it happened with the iPhone last year, ASP guidance for next quarter is softer due to the mix of products which more early adopters’ purchases of the iPhone Xs Max happening in the third quarter.
  • Demand in China continued to look healthy across product lines which is always good news
  • Services revenue grew to $10 billion with 300 million subscriptions. While the first number is impressive it is the second that speaks to how prosperous Apple’s future will be as it moves into more subscription option with the rumored video service and news service
  • Some believe that part of the share decline following the call was linked to the announcement that Apple will adopt new reporting practices that involve no longer reporting unit volumes. Apple will report revenue by product line only.
  • This should not really be a surprise as we see market saturation limiting sales but ASP increase and mix shift benefitting revenue. Apple seems to be forcing the hand of investors after asking for months to look at other data points that help to understand the health of the company other than unit volumes alone.
  • On the call, Luca Maestri pointed out that other vendors such as Samsung do not release unit volumes which albeit true should not be a decision driver on Apple’s part nor a justification.
  • Tim Cook talked about the retail business both in terms of stores opened and activities within the stores from Kids camps to sessions. We heard those numbers on stage in Brooklyn at the voice of Angela Ahrendts. It is amazing how these stores continue to be a strong revenue generator, marketing opportunity and now a learning center for many users. Apple is educating customers in doing more with their devices and as I said many times engagement drives loyalty.
  • For the holiday quarter, it will be interesting to see how the iPhone XR will do and what Apple learned about planning for three different products at the same time when it comes to production.
  • On the iPad and Mac front, it seems that pre-orders of the new models are going well but of course it is very early days.

 

Apple’s Vertical Integration Shines with the New iPad Pro Line

This week at an event in Brooklyn, Apple launched a new MacBook Air, a new Mac Mini, and two new iPad Pro. It is interesting to me that these devices came to share a stage because in a way they represent key products in the history of Apple’s computing offering. The Mac Mini reinvented the desktop computer, focusing on a minimalistic design yet without sacrificing performance. The MacBook Air took the MacBook line to a higher degree of mobility and introduced an all Flash architecture. And finally, the iPad Pro started to lay the foundation for what Apple calls the “future of computing”. I want to focus on the iPad Pro because to me it is certainly the product with the most fascinating but also the most complex story to tell.

The iPad’s Journey

When the first iPad came to market in 2010 the easiest way to explain it was to describe it as a big iPhone. Users were in love with their iPhones and they were spending more and more time on mobile devices to the detriment of many other things including their computers. At least at the start of the whole tablet market, these devices, including the iPad, were seen as a companion to a computer as well as a companion to a smartphone. Back then the four biggest shortcomings that people listed as reasons why the iPad could not replace their computer were: the operating system, the keyboard and screen size, and the performance.

Since then, the iPad has grown in size, power and brain in particular with the iPad Pro. So much so that the latest additions to the line are, as Apple pointed out, faster than 92 percent of the PC sold over the past year. You might argue on this number but the fact of that matter is that the new iPad Pro models are as powerful as many PCs.

What has also grown is the numbers of apps that have been designed for the iPad to take advantage of both a touch and pen-based workflow. At the same time, we have also seen workflows shift more and more to apps which are helping to see less of a difference between what an iPad and what a Mac could do, especially as a consumer.

The latest iPad Pro models and their increased performance push apps further like Adobe demonstrated on stage. Adobe was an early believer in the iPad, designing a mobile version of its Photoshop app with touch and pen in mind. At the event this week, Adobe was on stage showing what they referred to as the “real” Photoshop which will arrive in the App Store in 2019 and offers a full desktop app still optimized, of course, for touch and pen. What was interesting to me, as Adobe went on to show Project Aero, their AR focused creativity suite, was that now on the iPad Pro you can do what you do on a computer and more. More importantly, you are not necessarily bound to do it in the same way you used to. You can be creative or productive in similar or different ways, the choice is really yours.

The Future of Computing is not for Everybody…Yet

I said several times that I was looking forward to an event where new Mac and iPad models were introduced side by side because I wanted Apple to tell a story. A story of where computing is going and which device is for whom. Apple did not tell a story, but it certainly tried to shape our thinking around the iPadPro by talking about sales and performance compared to notebooks. This is where Apple believes the iPad Pro is competing. But Apple realizes that this transition is not going to be as simple as the kind of change they introduced with the MacBook Air. This is because with mobility the biggest change in workflow was where you could work not how. Embracing new workflows will take a while.

It was fascinating to have people point out to me after the event that the only thing that the iPad Pro is missing now to be a computer is mouse support. This to me is a symptom that shows how these people are not ready to transition all their computing needs to an iPad Pro. Either because of comfort or because of the kind of tasks they perform, a touch and pen first workflow would not suit them. This is why Apple continues to update its Mac line. But also, this is why Mac OS, while remaining a separate OS, will allow for apps to look and feel more like they do on iOS so that workflows could seamlessly go between an iPhone or an iPad to a Mac. The more you will be able to do that the more you will be able to consider an iPad Pro as your main computing device.

Build it and they will come

For Apple, there is no question that the future of their computing experience is in the iPad Pro rather than the Mac. You just need to look at the latest products to see how much Apple owns the experience on iPad Pro from the silicon for both performance and intelligence, to the ecosystem of apps and services, to the accessories, pretty much everything they need to control the end to end experience.

It is interesting that when I look at Surface Pro, the sole iPad Pro competitor in my mind,  I see clearly that the lack of that vertical control is what is holding them back especially in the consumer segment. Ironically Microsoft is better than Apple at first-party apps that take advantage of what the OS and the hardware have to offer to drive their vision of new workflows, but the lack of custom silicon and the much weaker App Store makes it much harder for them to compete on equal footing.

Apple has been known to drive change even when the market does not seem to be ready. With the future of computing, they have the luxury of not having to rush. They have built a strong platform and they will continue to lead people to it without yanking away the safety net that Mac products provide to many.

News That Caught My Eye: Week of Oct 26, 2018

Twitter Stock Up After Earnings

Stock up 17% on Thursday after earnings results are out.

Key data points:

  • Earnings per share of 21 cents (adjusted) vs. 14 cents expected by analysts
  • Revenue: $758 million vs $702.6 million, according to the survey
  • Monthly active users (MAUs): 326 million vs. 330.1 million projected by FactSet and StreetAccount

Via Twitter

  • It seems that investors are starting to look at the signs that point to a long-term benefit to the platform rather than focusing so much on the MAU numbers, a number that Twitter missed for the second quarter in a row.
  • Twitter Daily Average Users (DAUs) went up by 9 percent this past quarter, marking eight quarters of consecutive growth. This is a more telling data point in my view that benefits from the previous one going down.
  • In other words, overall users are decreasing mostly due to the continued purging of bots, fake accounts, and abusive users. The elimination of some of the noise and hostility is helping drive engagement.
  • Other than engagement, a cleaner, and healthier platform will likely drive more advertising revenue. Twitter revenue was up 29 percent year over year. Advertising revenue, in particular, reached $650 million, also a yearly increase of 29 percent.
  • What is also encouraging to the Street is that after ten years Twitter is finally profitable and profitably is lasting. In the past four quarters, Twitter’s net profit is just over $1 billion. In the four quarters prior, Twitter lost $367 million.
  • There is still a lot that needs to be addressed by Twitter, but at least from a business performance perspective things are looking positive.

Andy Rubin and Sexual Misconduct in Tech

The story in four bullets:

  1. Google’s creator of Android software accused of sexual misconduct by employees
  2. Google found the allegation credible
  3. Then-CEO Larry Page asked for his resignation
  4. He left with a $90 million payout & public congratulations from Google

Via New York Times

  • This is an amazing scoop by the New York Time. As you might remember many reported on the allegations over a year ago but there was just not the same level of evidence available to make it into the story published this week.
  • As the story points out, Rubin was not the only high-level executive involved in sexual misconduct at Google, but he is the most high-profile one for the role he played in tech with Android.
  • There are a few points I would like to make about the story which I think are important but by no means exhaust the conversation we should have around sexual misconduct in Silicon Valley
  • First, tech has proven to be quite forgiving over the years. Once there is judgment, that is not always the case, it passes quickly. People involved apologize, fly low for a while and they come back in a different role/form and all seems forgotten, if not forgiven.
  • Second, while the allegations might have not been as solid as they are today speculations on the reasons behind Rubin’s departure from Google have been around for over a year. Yet this did not stop Rubin from closing a door in tech and opening another under a lot of cheers with his Essential endeavor.
  • Most importantly though, as I woman, it is hard to get over the fact that despite the allegations that now turn out Google was able to validate, Rubin left Google 90 million Dollars rich.
  • It is hard because if you think it is wrong when women are paid for their silence it is even worse to think that a man gets rewarded despite what transpired. It is really making those women feel abused all over again.
  • Google’s Sundar Pichai in a memo to employees said the company is dead serious about sexual harassment and misconduct. He went on to say that over the past two years 48 people have been fired from Google over sexual harassment allegations over the past two years, Pichai said, 13 of whom were senior managers and above. None was compensated when they left.
  • The high number of people who were fired is not my concern. I would rather see a high number and think something is being done about it than see a low number and think that in a company as big as Google everything is just unicorns and rainbows.
  • Tech already has a diversity problem and stories like this are not helping women to feel the company they are working for has their back. The memo from Pichai helps a little, but Google must come out with a stronger statement to their employees both female and male. It would be good to hear from Paige as some have asked on social media.
  • Nothing will speak more than how employees will be treater in the future by HR of course, but maybe in the meantime, Google could donate money to an organization of their choice that helps victims of abuse. Showing money is not used to reward wrong-doers but to help the ones being wronged.

Amazon’s 3Q18 Earnings

Net sales increased 29% to $56.6 billion in the third quarter, compared with $43.7 billion in the third quarter of 2017. Excluding the $260 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 30% compared with third quarter 2017.

Operating income increased to $3.7 billion in the third quarter, compared with operating income of $347 million in the third quarter of 2017.

Net income increased to $2.9 billion in the third quarter, or $5.75 per diluted share, compared with net income of $256 million, or $0.52 per diluted share, in third quarter 2017.

Via Amazon 

  • There were some data points that worried investors and they had to do with Amazon’s core business. Sales growth slowed to 11% year over year. This coupled with a slow down in third-party reseller sales is showing signs of saturation which some might think could be related to this being the quarter just before the holidays. However, Amazon’s guidance for next quarter was quite conservative which is what made overall results concerning.
  • The conservative outlook for 4Q18 is not due to the increased in the minimum wage that Amazon announced earlier this month, although this will, of course, add to its operational costs. Rather, Amazon is being cautious about actual sales revenue.
  • Long-term the added cost will help with personnel retention but most of all it will help with minimizing the strong criticism Amazon has been under over the past few months in relation to working conditions at its dispatching facilities.
  • Of course, when you compare Amazon’s online sales and revenue to any leading retailer the growth they see could only be dreamed of.
  • Reading through the release it is staggering the number of devices that Amazon announced over the quarter. While most of the devices were announced at an event in Seattle last month, a lot more was sprinkled throughout the quarter.
  • Even more amazing is to see that Amazon is saying that the number of Alexa-compatible smart home devices has quintupled year to date to more than 20,000 devices from over 3,500 brands. That is an amazing growth for an ecosystem which leads Alexa well ahead of Google.
  • The problem with the Echo ecosystem is that despite its breath in products its reach is limited by the number of languages Alexa supports at the moment, which makes Amazon’s short-term opportunity mostly reliant on the US market.
  • AWS grew 46% and advertising which is not directly disclosed but makes up the vast majority of the “others” category more than doubled growing to $2.5 billion. Both are great numbers but still small in the overall revenue pie.

 

New Phones Helping with Old Phones Addiction

As we are reaching the end of the year, we will soon see coverage summarizing the tech trends of 2018. When it comes to smartphones, no doubt, edge-to-edge displays, AI, ML, cameras will all make the top ten list and so will phone addiction.

Over the past 12 months we have seen vendors playing in the smartphone market, both at an OS or hardware level, come up with solutions to help us monitor and manage the time we spend on these devices. More recently, we have seen a couple of vendors pitch smaller form-factors with a more limited set of features. These new phones are positioned as a companion to your main smartphone for those times when you want to disconnect a little and be more in the moment.

As a concept, this is not at all different from what we experienced at the start of the smartphone market when people would still have a featurephone to use over the weekend. What is different though is the reason behind the trend. Back then smartphones were really more of a work thing, which meant having them with you all the time meant you were on email all the time and therefore on the clock 24/7. Getting that featurephone for the weekend was much more about taking a break from work than taking a break from technology. The promise these new devices are making is to allow you to free yourself from the grip of your smartphone which consumes too much of your time. But is it as simple as wanting to spend time on these screens?

Phones Do So Much, How Can We not Love Them?

I am not going to argue the relationship with our phones is a healthy one, but I will argue most of us do not really want any help. The point is that these phones do a lot for us today. They have come to replace so many other devices in our lives that it makes sense we spend more time on them: listening to music, taking pictures, watching TV shows…We can also do many of the tasks we used to do only on a PC: search, shop, email, game… So our time staring at the little screen has grown.

For many people, smartphones have become a productivity as well as an entertainment center. I took a quick look at my usage over the past seven days, and apparently, I picked up my phone on average 94 times, I receive on average 240 notification per day and my usage when I am not traveling is at least 40% lower than when I am away from a computer. Some of these notifications are from the doorbell or our home security cameras so not something that necessarily requires interaction on my part, but something that asks for attention nevertheless. When we dig a little deeper, however, it is fascinating to see how much of what we can do with the phone today we used to do not just with a different device but with a non-tech tool altogether. Over the past seven days, for instance, I spent 21 minutes using my phone as a wallet, 38 minutes using it as a camera, I also used it for one hour to navigate my way around the world, 39 minutes talking to someone over Facetime, 21 minutes filing my expenses, 19 minutes booking flights, 15 minutes shopping on Amazon and one hour and 52 minutes doing email. I don’t really feel sorry about any of this as I see the phone just as a tool consolidation effort. Had I done all those things with different devices there would have been no reason to say I was addicted to something.

We Do What We Want Not What We Should

The problem starts, at least for me, when I see that over the past week I spent over 8 hours on social media. Now part of it is work, part of it is information, but truth be told a lot of it is boredom. For me, and many others, the smartphone is no different to the TV. We used to watch TV or have the TV on to fill our time even when nothing was interesting to watch. The smartphone is like having access to that TV whenever and wherever you want to tune into the reality show that is social media or gaming or anything else that helps you fill a void.

This is where the addiction is, in that filler role that smartphones play. And it is hard to let go without experiencing some level of FOMO. Like any addiction, self-discipline is not always enough. I know too much chocolate is bad for me, and I can try and limit myself to one square, but it is so much easier when I do not buy any at all. This is the premise of these new phones like the Palm. They are the equivalent of you not buying the chocolate. One could set up limits for all the apps and tools available on the phone through one of the new features like Apple’s Screen Time. But that would be the equivalent of limiting yourself to one square knowing you have a whole bar of chocolate in the cupboard.

It might be sufficient for some, as long as you first admit you have a problem of course. But what happens when you get back to your main smartphones? Are you going to binge use it to make up for the lost time?

Smartwatches Give Me All the Help I Need

This is why learning to control your use, in my view, will have more long-term effects and in my case, smartwatches have really helped. Yes, I know given the numbers I just shared you are scared to think what my usage was like before!

Smartwatches allow me to take a break from my phone by preventing me from being sucked into the phone for longer than I need to be. Continuing the chocolate metaphor wearables are the equivalent of someone breaking up a square and giving it to me while hiding the rest of the chocolate.

All those notifications I receive are not always essential. The important ones like a text from my daughter, a call from my colleague or a flight change will come to my wrist, but an Instagram like, a Facebook post or a non-work email will not. Being able to prioritize what is time sensitive and what is not is a great help in cutting back on the number of times you unlock your phone. Getting the urgent stuff to your wrist also makes sure you do not live in eternal fear of missing something, which leads to picking up the phone more often than you need.

Of course, smartwatches are not a magic wand. Users need to spend some time deciding what they want to prioritize so that the watch does not duplicate the phone. I might be wrong, but using a smartwatch to tame phone usage requires an investment in understanding where the problem is. With the simpler phone, the risk of changing behavior to fit the new device is as strong as relapsing on the smartphone that is still in my pocket. In other words, if I switch my social media time to texting time because my simpler phone does not support apps, I am just changing my addiction not controlling it.

News That Caught My Eyes: Week of October 19, 2018

Samsung Launches First Always On, Always Connected PC

On Thursday at a low key event in New York City, Samsung launched the Galaxy Book 2 running on Windows 10 and powered by Qualcomm on ARM. The device will be available on November 2 from AT&T and later in the month from Sprint and Verizon. Prince point starts at $999 keyboard and pen included in the box.

Via Samsung 

  • I had the chance to host a panel at the event with Allana Cotton SVP at Samsung Samsung, Don McGuire VP of Marketing at Qualcomm and Carlos de Torres VP of Devices Sales at Microsoft as part of the event and discuss some of the market trends in the PC market.
  • While it would have been unkind to ask the tough questions I was able to point out what I think the big challenges for this category are and have the panel comment from their perspective.
  • It is very clear to me that one of the big issues with the always-on always-connected PCs that we have seen thus far is that PC OEMs treat mobility as a feature. They do not look at this category as the next wave of computing. This means that the designs of the devices are not necessarily optimized for higher mobility.
  • You can accuse Samsung to have opted for a design that is very very similar to Surface but you cannot really fault them for it, as when it comes to this category many have done the same.
  • The other problem the first devices had was that PC OEMs do not understand the carrier business and have little appreciation of what it takes to place a connected PC into a carrier channel across multiple markets. Samsung knows that. They have the relationship with the carriers and understand the complexity of closing deals one carrier at the time, one country at the time. They are also more familiar with the installments models that are so popular with phones and they might help carriers position these devices in a similar way.
  • While Samsung does not have a huge presence in the PC market they seem to have become more interested in this segment over the past couple of years and I have been warning PC OEMs that Samsung has also been getting close to Microsoft over this time collaborating on PCs, Mixed Reality headsets and even offering some Galaxy S skews through the Microsoft Stores. In this particular segment of the connected PC, I see Samsung has a big advantage over traditional PC OEMs as long as the carriers believe there is money to be made and they become the biggest channel.
  • It will also be interesting to see how many marketing Dollars Samsung will be prepared to put behind this product to help drive consumers curiosity.
  • While some complained that the Galaxy Book 2 does not have enough horsepower, the sAMOLED 12-inch screen and the inclusion of the pen and keyboard for a $999 price point makes it quite compelling.
  • Samsung’s strategy in the smartphone market has always been to offer more for a similar price of their competitors and I think with PCs they might be happy to be a little more aggressive as they build their share and brand trust.

Sonos Might Add Roku’s Assistant to Its Devices

In a scoop story, not officially confirmed by the two companies, CNET reveals that Sonos is in early talks with Roku to add their Assistant to their speakers.

Via CNET 

  • Sonos has already proven that they are quite happy to play Switzerland when it comes to Digital Assistants so one more is not going to hurt.
  • I would imagine that they might also choose specific product lines to add the Roku Assistant to. Soundbars and more affordable speakers would make the most sense.
  • For Roku this makes a lot of sense as it is about offering choice to customers and while they have their own soundbar some customers might feel more comfortable going with a brand that is renown for sound.
  • For Sonos, the risk is minimal both from an investment perspective, this is all software support, and from a business perspective. Roku does not have “conquer the world” ambitions for their assistant such that would seem like a threat to Amazon and Google.
  • Of course, this might never materialize but if it didn’t I would expect that to be because they two companies did not reach a financial agreement rather than because there was no business sense in coming together.

Yet Another World Thinnest Phone  

The “card phone” KY-O1L is made by Kyocera and is coming to NTT Docomo next month. It’s about the same footprint as a credit card, and not all that much heftier at 5.3mm thick and 47g — Docomo calls it the thinnest and lightest phone in the world. It has a 2.8-inch monochrome e-paper screen, LTE connectivity, and a 380mAh battery. There’s no camera or app store, but you do at least get a web browser that I’m sure will be a lot of fun to use on that screen.

Via The Verge

  • Two small phones in a week! Two very different approaches between the new Palm and this Kyocera device but the shared trend of moving to the right opposite of where the flagship devices are going which is bigger.
  • This is not the first credit card size phone, ZTE had a concept many years ago
  • I find fascinating that history is repeating itself at this time. Not just with the credit card phones but with a trend we saw about 5 years ago when phone markers were bringing to market a smaller and a larger variant of the same model. The first time this happened was when phones were going over the 5.5inch screen size. Vendors were giving options for a 4.6inch device. Now the screen sizes and getting larger thanks to edge to edge displays but the overall footprint of the devices is not growing.
  • It seems however that the driver for a smaller phone now it is not really about size per se but rather about the fact that a smaller phone would not be as attractive as a larger one so you will do less and you might also end up spending less money.
  • It might just be me, but, as I said on Twitter, I think that especially the Palm device is counting on consumers having quite a weak willpower and not being able to either just turn off their devices or limit their time on them.
  • I personally doubt any of these devices will be more than a fad because of two things: first their price is still high. If I wanted to do less on my phone I could easily by a low-cost Android device or a featurephone for much less than the cost of the Palm or the KY-1OL. Second, I am still not convinced that, despite the fact that people say they want to disconnect they really want to do it.
  • Many companies are investing in tools to monitor and manage people’s time on phones. If there was a real concern with addiction people could start from there. And if there was an addiction, I hear you say, people would not do that. True, but then they would not even go and spend money on a different gadget.

Smartphone Innovation’s Geographical Shift

This week I have been in London for the launch of the Huawei Mate 20, Mate 20 Pro and Mate 20 X ( you can find a great review here ) and as I played with the devices and listened to Huawei dive into their silicon and artificial intelligence as well as watch an AR Panda deliver Kung Fu kicks on stage, I realized that these were yet more phones US consumers would not be able to buy.

Some American consumers keeping up with tech news over the past few months might have concluded they do not want to buy phones by Chinese brands as they believe that Chinese vendors would be installing spyware on their devices. While I am happy to be proven wrong, I do think much of the recent debate in the US over Chinese manufacturers has much more to do with politics than technology. I am sure many of you have much more exciting lives than mine but even so, are they really interesting enough for a foreign government to spy on you?

For the majority of buyers who follow tech and look at the success of Huawei internationally, this concern is not top of mind and they would prefer to be able to have access to their phones through a carrier than jump through hoops to get it at full price from a third party not even optimised for some US cellular bands. Google’s presence on stage with Huawei in London adding the latest Mate 20 and Mate 20 Pro to their Android Enterprise Recommended Program should help with some of the doubts people have.

More Limited Competition

So what if this political environment will result in US consumers having less choice? The US market has always been a very hard market to get into. American carriers have always been quite demanding and over the years we have seen brands that were strong in other markets, like Nokia and Sony, fail or struggle to grow in the US. Huawei had of course tried to enter the US market before, both under the Honor brand and the Huawei brand, but sales were limited. Right when the Chinese maker was close to signing with a leading carrier, last year,  the US government started talking about the danger posed by Chinese branded hardware.

One could argue, of course, that even if Huawei had a fair opportunity to get into the US market, they would find it as difficult as other brands have before them and they would fail. My argument here, though, is not about how successful Huawei would be, but rather how consumers would not have to miss out. Buyers would actually be the ones deciding Huawei’s success.

The Dynamic Nature of the European Mobile Market

In my days in London I was reminded about how much more dynamic the European mobile market is. This is due in part to the fact that it is of course made of many individual countries sharing many commonalities where vendors can enter and build their success story one country at the time. Huawei, like Samsung before them, saw its first success story in Italy and expanded from there finally reaching the UK too, a market that has been very much dominated by Samsung and Apple.

Carriers plans in Europe are more diversified than in the US with a prepay market that remains stronger than in the US and this drives different needs in terms of price points which in turn drives a more diverse supply mix. I also think that the mobile market has always been a bit more vibrant in Europe even before Asian manufacturers moved in. Back then it was about local players like Siemens in Germany or Sagem in France to name just two.

The US, on the other hand, has always been a more monolithic market where the gap between the top three or two brands and the rest of market players was way too big to be filled. Today some new names have entered the US market either online of through carriers but their volumes remain quite small. Some of these brands have their headquarters in China like OnePlus and TCL and one might wonder how long it might take for the political debate on China to impact them as well.

Getting back to the many faces of the Huawei Mate 20

What I think is interesting with the latest Huawei’s smartphones is that the company seems more comfortable talking about their advancements in silicon, particularly as it relates to artificial intelligence. Their capabilities have grown from  two years ago at CES where I accused them of AI washing. Their camera technology shows the ability the phone has to detect not just what you are taking a picture of, similar to what Samsung, LG and others can do, but also to pick which one of the three cameras will take the best shot for you and offer that solution to you. The LG V40 that sports three rear cameras as well does not offer this option despite selling under the ThinQ brand which denotes AI capabilities.

It was a shame that during the launch event CEO Richard Yu felt the need to compare Huawei’s innovation to that of the iPhone so many times. Even when you are comparing yourself to what is perceived to be the best in the market you are doing yourself a disservice by limiting yourself to be judge by the parameters set in place by the one you are comparing yourself to.

The smartphone camera remains a big purchase driver for consumers and talking about AI in relation to the camera is easier as a “show and tell,” it is also compelling and maybe more importantly it is less scary for consumers than drawing attention to AI being able to text a reply for you or spot a robot call like we recently heard from Google on the Pixel 3.

Design, which has always been a strong point for Huawei, continues to serve them well as they try new colors and finishes and even iconic camera designs on the back. Huawei also started to deliver technology firsts like under screen fingerprint on a world-wide product or the reverse changing functionality both available in the Mate 20 Pro.

Huawei’s weakest link remains software in my opinion. And this is not because I would prefer that their phones shipped with vanilla Android rather than the Huawei EMUI, but because with some features they are more focused on delivering features for the sake of it than actually delivering value. Think for instance at the ability they displayed on stage to change any light in a given photo into a heart shaped light. Calling that AI belittles what AI really does in a product like the Mate 20 Pro.

I also believe that Huawei is well aware of this weaker software play and they lack confidence in taking ownership of the things they do well. Adding features because the market demands them even when other vendors offer them does not mean copying your competitors. Yet, if your delivery mimics those vendors then you do run the risk to be labelled as someone that copies competition. Samsung went through the same self discovery process and they are closer than they have ever been to define who they are and how they want to drive success going forward.

Delivery is also important when you want developers to take advantage of your features both hardware and silicone ones. Showing what looks like an app like the 3D calorie calculator when you are in reality only showing a concept of what is possible is disingenuous and does not help grow confidence in your brand. It was a real shame that Huawei did not take the opportunity that this week’s launch offered to tell its story and bring the audience on a journey of growth, not in market share,but in capabilities and ambitions.

The complexity of the Chinese market will continue to drive Chinese makers to move fast. For some players that might mean to be a fast follower but I feel there is more and more originality coming from vendors like Huawei, Xiaomi and OnePlus. Some players might be limited on what they can do internationally due to IP, some might be limited due to a lack of understanding of international consumers but it is a shame to think that protectionism might prevent some innovation to get to US buyers.

 

 

Microsoft’s Modern Life Puts People First

Last week at an event in New York City, Microsoft introduced in a bit more details the concept of Modern Life. It is always hard when hardware is on stage to get any attention for anything else, especially so when one is trying to articulate a concept that has not been entirely fleshed out. This was not the first time Yusuf Medhi mentioned Modern Life, but it was the first time Microsoft made it a little more clear as to what it meant by it.

Microsoft’s Difficult Relationship with Consumers

After the recent reorg, many jumped to conclude that Microsoft’s decision to no longer gravitate part of the business around Windows was a clear indication that Microsoft was done, once and for all, to try and cater to consumers. I explained at the time that the change was far from signaling a lack of interest in consumers. It was quite the opposite, at least from an opportunity perspective. It indicated that Microsoft was getting ready to look at the experience that comes with Microsoft products. These are products that might be running Windows but which build on Microsoft services, first-party apps, and cross-device features to deliver a more engaging Microsoft experience.

The “I am a PC, or I am a Mac” world has evolved and, as much as the ecosystems that build on those operating systems matter a lot to users, experiences delivered through services and apps are becoming more and more cross platforms. This is why Microsoft deemphasizing the OS in favor of enablers such as cloud and AI is a smart move. Such a shift away from the underlying OS and onto apps and services you use is what is prompting Microsoft to build “bridges” for Android and iOS so that when using Microsoft apps and services your experience does not have to end when you want to move off a PC.

Such cross-pollination of these apps and services also means that, more often than not, we use the same apps and services at work and home.

Consumers Are People

It is this blurring of our work life and our personal life that Microsoft is addressing with Modern Life. Because of its history with consumers and the lack of mobile presence, Microsoft comes to this from its position of strength which is work and the PC.

Within its enterprise play, Microsoft has been focusing on helping organizations transform the workplace with its  “Modern Workplace” initiative. From cloud adoption to workforce transformation, what has been different from the past is a renewed attention to the experience of the final user of the service, app or experience. Microsoft has always been catering to IT departments, but as technology buying centers started to shift, especially for new tech, and BYOD started to include BYOA, Microsoft began to pay more attention to the overall experience that made its offering manageable and secure but also valuable to the end user.

Modern Life takes those users who Microsoft caters for in a corporate environment and addresses their needs before and after they get to the office helping them achieve what they want to achieve: finish a presentation, dialing into a call on the way home, planning a weekend away or juggle the after school calendar.

In other words, Modern Life recognizes that I am not a “worker” between 9 and 5 and a “consumer” for the rest of the time. I am a human being 24 hours a day doing different things depending on time and place but still with the same goals, values, and aspirations.

Being Mindful, not Forceful

What Microsoft is not saying with Modern Life is that one should have no boundaries between work and play. The video Microsoft opened its event with showing some of the challenges that our modern life brings might have resonated more with young millennials than Gen Xers. At the end of the day GenX is who comprises the majority of the workforce and also who will be holding the majority of buying power. For this generation boundaries between work and play are certainly much more fluid than they were for the previous generation and what they are looking for is technology that will help them be in control rather than being controlled.

Being able to share devices, technology, apps, and services across work and play does not mean one has to share data and information across the two. Keeping private what is personal and secure what is work does not have to be compromised just because we share tools like an assistant or a calendar. What sharing tools and experiences does, however, is making our life easier. Modern Life will help you do all the little things that consume your time and aggravate you so that you have more time to focus on the things you want to do.

The Advantage of Trust

Not many companies are in the position Microsoft is in when it comes to its presence in the enterprise and the trust consumers place in the brand. Apple has the latter, but their presence in the corporate environment is still limited. This is why Modern Life has the potential to drive meaningful engagement with Microsoft across the board shifting the narrative away “from using to loving Windows” to “using and loving Microsoft.”

News that Caught My Eye: Week of October 5th, 2018

Surface Headphones

This week in NYC, Microsoft announced the Surface Pro 6, the Surface Laptop 2 (both of which with a black variant), the Surface Studio 2 and the Surface Headphones. It is the Headphones I want to concentrate on because it has been the most misunderstood product in my opinion.

Via Microsoft

  • I have seen many criticizing Microsoft for entering this space due to:
    • The dominance of well-established brands like Bose
    • The narrow margin nature of the business
    • The declining sales as consumers shift to wireless earbuds à la AirPods
  • While the above three points are facts and should deter any new player from entering the headphones business, I really do not think they affect Microsoft.
  • Surface Headphones are a Surface companion. This means they are first and foremost targeting Surface users who have bought into the brand.
  • Surface has established itself as the Windows alternative to Apple Mac/MacBooks. This means that it can command a premium on its products. That said, I would expect to see offers that bundle the Surface Headphones in with a Surface.
  • The Surface Headphones are also a vehicle to increase engagement with Cortana and Skype.
  • Some believe that Microsoft should abandon Cortana and fully embrace Alexa but such a view dismisses the role that the digital assistant plays in the broader analytics game. Microsoft must continue to find ways to increase engagement with Cortana and these new Headphones are just one way.
  • Microsoft started with a design that highly complements a PC usage, especially for the kind of audience Surface, as a brand, is targeting. Over time I could see Surface expanding its portfolio possibly looking at earbuds with added sensors that could be used for health/fitness. Although the Microsoft Band was killed, Microsoft learned a lot about fitness and health and the tech they had does not have to be limited to a fitness band to be useful.
  • Over time I would also expect to see more colors. For now, despite some criticism, Microsoft stayed true to the first Surface, something the addressable market will appreciate.

LG V40 and Its 5 Cameras

LG’s new $900-and-up V40 ThinQ is different, however. In addition to a better standard camera than its predecessors, the V30 and the G7 ThinQthe V40 has two additional rear cameras, which provide different perspectives and fields of view. In total, the V40 has five different cameras: three on the back, and two on the front, which give its camera system a level of versatility that other phones don’t offer.

Via The Verge

  • Huawei started the camera “mine has more than yours” race and now LG is getting ahead with 5 cameras on a single phone.
  • Smartphone vendors are struggling to differentiate and for those who do not control the OS experience, the camera, which is one of the top features driving purchase, is the most natural place to focus on to drive differentiation.
  • I like LG’s approach, although I have not tried the phone first hand, because they did not just add two cameras and replicate what Huawei did, which is using the cameras to improve the quality of the picture by adding more detail. LG is using the three cameras to deliver three separate experiences a bit like when you carried a digital camera and carried different lenses for it.
  • The LG V40 has a standard camera for normal shots, a super wide-angle camera for capturing a wider field of view, and, in a first for LG, a telephoto camera to get closer to your subject.
  • From reading early reviews, however, the results are not as encouraging as one would have hoped and it seems that the reasons are to be found in the software and hardware choices.
  • With such a system in place and the big focus on AI, you would expect LG to have implemented an intelligent mode detection which would suggest which camera to use for the shot. LG already had something similar in previous phones where for instance the camera would suggest a “food” mode for those #cameraeatsfirst shots. Why not apply this on the V40 rather than relegating the cameras to become more of a gimmick than a real tool?
  • This is the sword of Damocles for many companies who can do hardware but still struggle with software and more importantly who look at the top line differentiation and they fail to deliver because cost control stops them from implementing the right hardware.
  • Unless innovation really brings value to customers and not just cheap thrills, sales will see blips rather than a sustained growth driven by loyalty.

Twitter Is Losing its Battles against Fake News

Knight Foundation researchers examined millions of tweets and concluded that more than 80 percent of the accounts associated with the 2016 disinformation campaign are still posting — even after Twitter announced back in July that it had instituted a purge of fake accounts

 Via NPR 

  • Needless to say, this is bad news for Twitter and Jack Dorsey who had recently answered questions on Washington precisely on what the company is doing to minimize the potential impact of fake news on the mid-term elections.
  • The study found that more than 60% of Twitter accounts analyzed in the study showed evidence of automated activity. Basically, 60% of the accounts the study looked at were bots. Many of these accounts were also found to be following each other, which would suggest that they share a common source.
  • Twitter’s response to the study was that the data fails to take into account the actions Twitter takes to prevent automated and spam accounts from being viewed by people on the social network.
  • So basically Twitter is saying that the problem would be even bigger than the study shows if it were not for what the company has put in place to limit fake news.
  • While Twitter might think this is a good defense line I am not convinced it is. To me this points to a problem that might just be too big for Twitter, or other social media platforms for that matter, to solve.
  • I am afraid I do not have the answer on how we can win this battle, but I do think we sometimes forget that these platforms are being exploited and while it is their responsibility to protect themselves and their users we should also try and understand why this is happening and who is behind it.
  • Normally I would say that educating the public to spot fake news should be a focus of these brands as well while they try and eradicate the problem. Like you do with kids, you cannot take all the bad guys away but you can teach your kids to spot them and be prepared. Sadly I think that in this case, most of the public does not want to learn how to avoid fake news whether they are spread by bots, press, or politicians.

Apple Watch Series 4 to Drive Strong Upgrade Cycle

When I first saw the new Apple Watch presented at the Steve Jobs’ Theater I immediately said it would drive a strong upgrade cycle, and now we, at Creative Strategies, have brand new data from a study we conducted across 366 current Apple Watch owners in the US the week leading up to in store availability. The study was an international one that cut across several geographies touching a total of 557 consumers. For this article, I will focus on the US data only.

Our panelists were self-proclaimed early adopters of technology with 64% of them owning an iPhone X. Eighty-Four percent of the people who answered our online questionnaire were men, very much in line with the average composition of the early tech adopter profile.

Apple Watch Served its Base Well from the Get-go

Our panel owned a good mix of models: 41% has an Apple Watch Series 3 with Cellular, another 13% owns an Apple Watch Series 3 Wi-Fi only, and 15% has a Series 2. What was a surprise, considering how early tech this base is, was to see that 30% still owned an original Apple Watch.

One might argue that maybe the reason why these users are still on the original Apple Watch is that they are not very engaged with it. The data, however, says otherwise. While they are not as engaged as Apple Watch Series 3 owners they share their love for the same tasks: decline calls, check messages and check heart rate. The most significant gap with owners of more recent Apple Watch models is in the use of Apple Watch as a workout tracker. Here original Watch owners lag Watch Series 3 owners: 62% to 76%.

Satisfaction among original Apple Watch users is also strong with 93% of the users saying they were satisfied with the product. While 93% is a lower satisfaction number than Watch Series 3 with cellular at 99%, we need to be reminded that the original Apple Watch was introduced in 2014. Satisfaction at 93% for a four-year-old product is quite impressive.

When we reached out to a few panelists to ask why they did not feel compelled to upgrade so far, they mentioned that software updates and battery life kept them happy and that it would be a change in design and compelling features that will drive them to look at a new model. In other words, the original Apple Watch was still serving them well.

Strong Intention to Upgrade

Apple Watch Series 4 seems to hit both upgrade requirements for original Apple Watch owners as 76% say they plan to upgrade with 41% who have already pre-ordered while another 32% plan to do so in the next three months. When asked to select the most compelling new features that made them interested in upgrading and the faster processor was mentioned by 80% of the original Watch owners. This was followed by the bigger screen (75%) and the ECG (61%).

Apple Watch Series 3 owners are the same but with different priorities. The larger screen is the most important driver, followed by the faster processor and the ECG. The intention to upgrade is also more cautious with 29% saying they are planning to upgrade (54% already having preordered) with some users being concerned about using the old bands on the new model and some uncertainty on which size they would prefer.

Early Tech Users find Gifting Difficult

We have discussed before that early tech users seem to find gifting new tech hard and Apple Watch owners on our panel are precisely like that. When we asked if they were planning to buy the new Apple Watch Series 4 as a gift only 26 percent said they were. This is despite Apple Watch commanding a Net Promoter Score of 72 among panelists. Among the users who are planning on gifting Apple Watch, 51% will give one to their wife, and another 16% will give one to a parent. When asked which features are motivating the purchase for someone else, four stood way above everything else: larger screen (49%), ECG (45%), and faster performance and fall detection (both at 39%).

Among those intending to gift, 22% already preordered and 48% plan to buy within the next three months.

The Apple Watch User Base is Deep into the Ecosystem

Probably the most fascinating finding of this study is to see how entrenched in the ecosystem Apple Watch users are. While many could see Apple Watch as an accessory, I firmly believe that users who are looking at it as an essential tool to manage their day and their ecosystem of devices and services are the ones who get the most return on investment. Not surprisingly, multi device ownership across the panel is quite high: 88% owned an Apple TV, 75% owned Air Pods, 71% owned a MacBook Pro, 67% owned an iPad Pro, 44% owned an HomePod.

Early tech users are a window into the future, which is why it is so valuable to study them. While the time to turn from early adopters to mainstream users might vary, I think this ownership data best illustrate what Apple is working on when it comes to its user base. I have been saying for years that Apple cares more about selling more products to the same users than just expanding its overall market share in one area. As Apple moves more into services, it will be the combination of products that are present in a household that will drive engagement and loyalty and build an audience for life.

 

News that Caught My Eye: Week of Sept 28, 2018

Oculus Quest

This week at Oculus Connect 5, Oculus announced that in March 2019 they will ship the Oculus Quest. The standalone VR device will be the first wireless Oculus hardware to sport positional tracking, both for the headset itself and the dual hand controllers. The headset will ship with 50-plus games made specifically for the device at launch. The headset will retail for $399.

Via TechCrunch  

  • On paper, the Oculus Quest sounds like the headset that could finally get consumers excited about VR. It delivers six degrees of freedom, a performance that is a little bit better than the Oculus Go, touch controllers all at a pretty aggressive price point.
  • We have known about Santa Cruz for the past two years and it seems that to deliver it to consumers with 50 titles available from day one will still take some time. But one thing is certain: time is not an issue.
  • Consumers are yet to show their excitement for VR due to a combination of factors: high prices for a high-end experience, cumbersome setup, high cost, unclear value.
  • Oculus launched last year its Oculus Go, its first self-contained headset. At $200, many believed it would be the one to put some life into a market that as yet to deliver on the many early promises. Unfortunately, Oculus Go delivered a compromised experience for which $200 seemed more than most would be happy to pay.
  • While the Oculus Quest seems a little underpowered there are certainly fewer compromises this headset offers compared to Oculus Go or the Lenovo Mirage Solo.
  • I was surprised that Oculus decided not to redesign the controllers. I know they are the best in the market, but they still do not deliver a natural experience. Maybe Oculus is keeping the update to more glove-like controllers for the Rift.
  • Oculus might be running the risk to show its cards a little too early especially as far as price point. That said Oculus has created a strong brand in VR and with the possibility of new headsets hitting the market in time for the holidays sharing specs and price for Oculus Quest might encourage some potential buyers to wait.

Instagram’s Co-Founders Leave Firm

Kevin Systrom and Mike Krieger, the co-founders of the photo-sharing app Instagram, have resigned and plan to leave the company in the coming weeks, adding to the challenges facing Instagram’s parent company, Facebook.

Via The New York Times

  • Systrom and Krieger did not give a specific reason for leaving, but it seems to be a common belief that disagreement was growing between the two and Zuckerberg.
  • The item of contention was how Zuckerberg would like to monetize from Instagram compared to what the founders believed their creation should endure.
  • Interestingly, most of the “improvements” made to the service since the acquisition seemed more aimed at helping Facebook by bringing people back onto the platform rather than designed to grow stickiness to Instagram.
  • This is a very crucial time for both Facebook and Instagram. On the one hand, Facebook has been falling more and more under the government’s scrutiny and facing growing dissatisfaction among users. On the other hand, Instagram has been growing in users and engagement.
  • Even more important is the fact that many users, me included, have started using Instragram more and Facebook less. With many users having an account on both services, it is fairly easy to switch engagement and still remain connected with the core base.
  • Instagram seems to have remained immune from most that plagues Facebook, from Fake News to politically charged posts. This might not only drive more engagement but might also provide a more positive environment for advertizing to thrive.
  • It will be very interesting to see what Zuckerberg will do next, now that Systrom and Krieger are no longer there to try and keep Instagram as true as possible to their original vision.
  • As far as Systrom and Krieger and what they will do next, they did not share much but it would be hard to believe they can pull out another Instagram success from their hat.

Samsung Electronics Chairman Indicted on Charges of Union Sabotage

Lee Sang-hoon, the chairman of Samsung Electronic’s board of directors, has been indicted for allegedly sabotaging unions in what prosecutors claim is a violation of South Korea’s labor laws, reports the Financial Times. Lee, who became chairman in March of this year, will face trial along with 31 other executives from Samsung and its affiliates. It’s the latest in a long series of corruption charges against Samsung executives.

 Via The Verge  

  • It has been a long year for Samsung’s leadership, starting with the indictment of the Vice Chairmam Lee Jae-yong for corruption. He was released from prison on a suspended sentence.
  • Then came the reorganization that tried to instill new life into the company with younger leaders appointing Kim Kinam as head of Samsung’s semiconductor and display businesses; Kim Hyunsuk as head of its consumer electronics division and DJ Koh as the head of the mobile business.
  • While these kinds of news make for good headlines they usually have little impact on the choices consumers make on what they buy, especially at an international level.
  • If you are thinking about the impact on company morale, you need to consider culture differences both at a country and company level. When the Vice Chairman was indicted the feelings were very mixed. Some felt it was time for a changed and were appalled by the behavior, but many could not forget that Samsung, at the end of the day, is a cornerstone in the Korean economy and more personally the one that puts food on the table for many families across several lines of business.
  • In today’s world where employees walk out in protest againt a company business decision and succeed in changing it like it happened with Google and their AI project, it is interesting to see how differently America, and to some extent, European companies are judged compared to those based across Asia.

I Would not Think Less of Apple for Producing the Next Game of Thrones

Apple has hbeen demonstrating over the years that it has its customers’ best interest at heart when it comes to privacy and security. Apple’s business model, which directly monetizes from hardware and services, makes such a prioritization much easier. Customers’ trust in the brand is inherited.

This week, the Wall Street Journal reported that Apple’s desire to keep its content family friendly had caused delays in the production of a show on Dr. Dre as well as of a drama based on a morning news show starring Jennifer Aniston and Reese Witherspoon.

The idea that Apple wants to stay true to its squeaky-clean image has been circulating as long as rumors of the TV service have been around. Many point to Apple’s history of care for privacy and security to explain why this would be the stand Apple will take.

Despite Apple’s investment in content production, we have yet to get any confirmation of the video service itself, let alone whether Apple will say no to any adult content.

The Content Offered Today

If we look at the content offered today across Apple services, adult content is easily found. Apple Music has songs that contain swear words and sexually suggestive lyrics. Books offers stories of romance, horror, violence. The App Store includes violent games while staying clear of pornography. Of course one could argue that the App Store does allow apps like Tumbler where pornographic material can easily be found.

Consumers navigate what is available across Apple’s services in the same way they would do on Spotify, in a book or video game store. Regulating content, while important, cannot be equated to assuring privacy and security. What Apple has in place for all the current content are ways to clearly label the content that is only intended for a mature audience. From apps to books and explicit music you can easily find settings that help you navigate content and avoid what you feel is not appropriate for you or your children. Music, for instance, has a simple setting that when turned on can exclude all music with explicit language and offers alternative versions when available.

Apple Does not Need to Be Disney

When one starts thinking of content that limits violence, nudity, and bad language, one tends to think of Disney. While you could be tempted to look at Disney and believe that they have been successful, the numbers show that over the past two years the Mouse House has been under quite a bit of pressure. A pressure that eventually had them look at acquiring Fox Entertainment only to lose the bid to Comcast.

While part of the pressure was coming by its parks finances rather than content, it is also true that Disney was starting to fight for its audience. Amazon, Netflix, and Hulu, all offered strong competition with their productions. Apple will face that same competition once it launches its video service which would indicate that not only Apple will have to spend big money but also that it will have to make its service as broadly appealing as possible.

More, importantly, however, I would argue that Apple does not need to be Disney when it comes to content as its audience does not expect them to be. Looking at Apple’s base, there is no doubt families are a big part of it. Users have grown older since their first iPhone, and we know how big iPads are with kids, so Apple offering family friendly content will serve them very well. That said, Apple is also appealing to millennials and the older segment of Gen Z whose interests, according to a bunch of “most viewed shows lists” range from “Everything Sucks” to “Modern Family” to “The Big Bang Theory” and “The End of the F*** World.” So, for a service to appeal to the vast majority of the base, Apple really has to address themes that matter to that audience as well as speak a language they understand.

Brand and Content

There is a difference, in my mind, between airing content and producing the content you are distributing. While both demand some accountability, the latter will be held to a higher standard.

I also believe the audience is quite able to decouple the brand from the show. In other words, I might object to some of the themes in Game of Thrones and decide not to watch it but that does not have me stop watching all shows on HBO.

Interestingly, I feel that while content I might not like will not impact how I think about a brand content I love will undoubtedly grow my affinity with the brand. This is particularly true for stories that cover topics dear to my heart or productions that support women or diversity or other “causes” that might be important to me.

Of course, Apple has yet to outline their vision for content, but I would expect them to focus more on the key value propositions associated with their brand.

Focus on Quality and Management

When I think of Apple, I think of quality and a consumer first approach. I would expect the same from their video service as well. Quality that will avoid cheap use of nudity, violence, and language. This does not mean that I expect Apple to focus on family friendly content only.

Once the quality of content is taken care of, I expect Apple to go beyond the standard classification of content by making it easy for users to assess whether the content is right for them or their family members and manage access of such content accordingly.

If you think about it, this approach would be no different from what Apple is doing with “the big bad internet” where Apple is not censoring behavior, but they are helping me monitor and manage when websites are trying to track me or my information. The approach would also align quite nicely with Apple News where Apple is focusing on delivering quality content and helping users avoid “fake news.”

Time will tell if my hunch of the type of service Apple wants to deliver is correct but I am quite confident that Apple is aware that to win in this game reaching a large audience is key. To quote The Greatest Showman: “ Nobody draws a crowd quite like a crowd.”