Author: Tim Bajarin

Tim Bajarin is the President of Creative Strategies, Inc. He is recognized as one of the leading industry consultants, analysts and futurists covering the field of personal computers and consumer technology. Mr. Bajarin has been with Creative Strategies since 1981 and has served as a consultant to most of the leading hardware and software vendors in the industry including IBM, Apple, Xerox, Compaq, Dell, AT&T, Microsoft, Polaroid, Lotus, Epson, Toshiba and numerous others.

What it will take to “own” the customer

In the late 1990s, I began a series of lectures at conferences titled “Three Screens of the Digital Lifestyle.” As early as 1991, I was researching how people were using various screens in their lives and made the assumption that, over the next five to seven years, all of our screens would be digital and would have some type of an OS that made them smart. At the time the key screens I focused on were the PC, TV and the featurephone but by 2007, after Apple introduced the iPhone, the third screen became a smartphone in my talks.

In these early lectures I laid out how these screens would become the hub of our digital lifestyles and I suggested the smartest screen was the PC. Thanks to Apple, we were already seeing the PC serve that central role since the iPod needed the PC to synch the iPod’s music library and was managed by the Mac or PC as well. Actually, the Mac was at the heart of Apple’s overall idea of a PC being a hub. At Macworld in 2001, Steve Jobs’ keynote focused specifically on the idea of the “Mac being the hub our our digital lifestyle” and over the next three years he made a major effort to deliver on that vision.

Eventually the Cloud became the hub for Apple as they began to move more and more of our content to their iCloud and use it to store our music and apps and push them down to our devices. Consequently, data synch was now cloud-based and the Mac or the PC played less of a role as our digital lifestyle hub. In these talks I also point out the winners in this new digital screen world would be the one’s that understood three key things I believe all consumers wanted in a digital ecosystem.

The first part of this vision is people will ultimately have many screens in their digital lifestyle. In my early talks I had suggested three screens but today we have screens in our cars, appliances, and, with the introduction of wearables, screens on our wrists, clothes and eyewear. The second part of this idea is all of these screens are connected, work together seamlessly and perhaps more importantly, are always in synch with each other. If the data on one changes, it is updated on each device in the ecosystem. The third part of the vision is the user interface on each of these devices is the same. I have always felt people were more likely to use new devices if they worked the same as on other devices they already have.

Now I realize this vision is more pie in the sky than reality today since we have so many diverse operating systems, user interfaces and cloud-based services that march to the beat of their own drums. But I believe if a company masters this concept it could create a very sticky user experience that could keep their customers in their ecosystem and allow companies to “own” that customer for a long time.

In a sense, this is what Apple, Google and even Microsoft are attempting to do as part of their grand strategic visions. Microsoft calls their version Microsoft ONE, Google’s might be called Google Everywhere and Apple uses the term “continuity” to describe their approach to this idea. My friend Walt Mossberg over at Re/code wrote a good piece entitled “How the PC is merging with the Smart Phone” which talks about Apple’s continuity approach to make the PC act, look like and work like an iOS based phone or tablet. He also mentions how Google is doing something similar with their Chromebooks and Android.

These are good first steps but I really believe consumers are asking for this merged experience on all of the screens in their digital lifestyles. Apple’s CarPlay program has this in mind when they offer a version of iOS to car makers and I am hoping they soon apply this concept to their Apple TV too. In the end, this idea of a single UI, with connected and synched screens and apps, will go a long way towards helping these companies keep their customers happy and, at the same time, use this to really entice them to stay in their Apple, Google or Microsoft ecosystem.

This does not mean some people won’t also have devices from other ecosystems. Today, my primary smartphone is an iPhone but I also carry a Samsung Note 3 tied to a Gear 2 smartwatch and one of my key laptops is a Windows PC. And in today’s world of diverse devices, especially among knowledge workers, this mixed OS and mixed ecosystem is kind of the norm. However, I believe the three big players — Apple, Google and Microsoft — are all driving towards the vision of all of their devices being connected, synched and working the same. The one who pulls this off in the most concise and elegant fashion stands to build an extended loyal customer base who lives within this ecosystem and, as their customers invest more and more in the devices tied to that ecosystem, they most will likely become lifetime loyal customers and not be easily swayed to jump to another system easily. In the future, I believe this is what it will take to “own” the customer.

The Importance of Dual Authentication in Wearable Devices

Last week, I wrote a column entitled “Understanding Apple’s Wearable Strategy” where I laid out the idea of using an iWatch or iBand for personal ID. I mentioned I had used a RFID band while at Disney World and I could see Apple making digital identity a key pillar of any wearable device they bring to market.

In the column, I mentioned how Disney used two kinds of authentication as part of their band ID program. The first part of the ID came through RFID and each band’s RFID radio would have to be touched to a scanner. When going into the Disney parks we had to scan at the RFID terminal in the entrance and also use a fingerprint reader for additional authentication to show the band in use was tied to an individual and was not being shared. Then, at restaurants and shops, we just scanned our RFID band at terminals but, instead of using fingerprint readers for the secondary authentication, we used a registered PIN number instead. The ID band worked flawlessly and provided a level of convenience that made them worthwhile.

In Europe and Canada, they use credit cards with embedded chips. When you use them at a terminal, you put in your PIN number as part of its dual authentication program. In the US, we still don’t have “Chip and PIN”. When I use my American Express card with a chip on it in Europe, I have to do what is called “chip and signature” instead of using a PIN as part of this dual authentication process. However, it’s much less secure than the chip and PIN ID program. This has cut down on credit card fraud dramatically in Europe and Canada and some day we will have Chip and PIN credit cards in the US to better ward off credit card fraud here too.

When I wrote this column I did not have enough time or space to add the elephant in the room — when it comes to digital IDs and especially using things like RFID, Bluetooth and even WIFI in these programs, these technologies bring up key issues of privacy and tracking. Indeed, Disney has had some pushback on their ID band program since some people are not happy about Disney being able to track them when in the park and knowing exactly what they are doing or buying. Any company adding digital ID technology to their wearables will have to deal with this same concern as a lot of folks would be leery of any tech company’s ability to know what we are doing and more importantly using that data inappropriately.

In the column about Apple’s wearables I stated I did not think Apple would introduce the ID aspect of their wearables at launch and instead focus on health and home applications at first. They would need time to build up trust with their wearable customers with the initial health and home apps first. They need to show they can be trusted with the data and any tracking would be anonymous and never given to anyone for any reason. This would be critical for Apple and anyone doing a wearable with any ID app-related program involved.

Interestingly, although Disney has had pushback, well over 95% of people on their properties use the bands because they are so convenient and compelling. Disney is a trusted brand and only uses the data to help with crowd control and making it easier to navigate and use park rides, restaurants, etc. seamlessly. Apple appears to have a similar level of trust with their customers since they have close to 900 million user credit cards and go out of their way to keep them secure and not track people as part of their trusted programs. I suspect Apple could pull off any ID program in a wearable much better than Google could — our research shows Google is much less trustworthy than Apple at this time and Google would have to do a lot of work to get their customers up to the level of trust Apple has with their customers.

The bottom line is I believe the role ID would play in wearables would be a killer app. Having dual authentication will be critical to its success as well as the company behind the wearable device would have to deliver a level of trust to their customers beyond what they expect today. However, as I learned from my Disneyworld experience, its convenience factor trumped any of my privacy concerns. It was easy to trust Disney with that information. I suspect Apple could get a similar response from millions of their customers if this was part of their wearable devices and, if so, it could become a monster product for them.

Why Google should have bought Oculus Rift

After I saw the Oculus Rift at a CES, I jokingly told a friend they would probably be bought by Google or Facebook for billions. This was not a prediction but a real joke in my mind since I thought of Occulus Rift’s VR goggles being only good for gaming and not much more. Sure, virtual reality goggles were cool, but software had to be written specifically for it. As far as I was concerned, it would be a niche product. The suggestion of Google or Facebook buying them was driven by the fact they have huge checkbooks and money to burn. Oculus would be as good a purchase as any.

Recently, Facebook bought Occulus Rift for $2 billion and it became clear Facebook saw this as more than a gaming product. Indeed, for them to pay $2 billion for this suggests they see its role expanding to social networks and bought it for some strategic reason most of us can’t comprehend at this time. The logical reason would be they have an idea about how to make VR a key part of Facebook. Perhaps they see it as a way to deliver personalized video communications where Facebook friends put on the Oculus Rift goggles at their locations and, through Facebook, see and talk to each other as if they are in the same place. Imagine being with a friend on a VR beach in Hawaii and have the experience as if you were both lounging on beach chairs sipping Mai Tais.

Or you could be with friends walking around the grounds of the Eiffel Tower or walking through the Louvre as if you were there. If that is what Facebook has in mind it could dramatically change how social media is used and could be worth more than $2 billion to Facebook in the long run.

However, I think the better strategic acquirer would have been Google. A few months back I was at the TED conference in Vancouver, BC and heard former NFL kicker Chris Kluwe give a talk about how Google Glass could be used to bring sports fan into the action on the field as if they were seeing it from the player’s viewpoint. He showed a video where he put on Glass and recorded himself on the field being tackled by a defensive lineman. You saw what he saw and heard at the point of impact. Kluwe pointed out that fans wish they were the quarterback on the field and imagined themselves in that role. Now, put Google Glass on the quarterback and inject that into a VR world of Oculus that would have images of the entire stadium, the broad view of the field from multiple angles and more importantly, allow the viewers to see a wide angle view of the defensive positioning as both teams line up for the next play. Intermixing gaming and a real world Glass viewpoint could change how people view sports forever. This concept could be applied to just about any professional sport played today.

You could apply the marriage of Google Glass and Oculus Rift’s VR to all types of life experiences. Imagine seeing and experiencing life in the Space Station from the eyes of the astronauts working in space today. Even if you are not a certified diver, you could explore the Great Barrier Reefs or explore as if you were there a shipwreck like the Titanic. How about the world of entertainment? What would it be like to have the option to view the movie through the eyes of Leanardo DiCarpio or Cameron Diaz? Or what about using this in the medical arena? Perhaps a surgeon could use this to do even more precise robotic surgery over the Internet.

I recently wrote in a column for PCMag about the impact POV cameras have had on things like sports, with first responders and in business situations where first person recording is important. But, if you bring Google Glass and Oculus RIFT-like VR together, this POV concept gets kicked up hundreds of notches over current POV cameras.

My big concern about Facebook buying Oculus Rift is their focus would clearly be on the social aspect. I fear Oculus could not reach its real world-changing potential under Facebook. Sure, Facebook could do their own Glass product and try to marry them with Oculus Rift. But Facebook’s approach would be for their own interests and probably be proprietary to boot. On the other hand, Google’s approach to something like this would be open source in nature and, if done properly, could revolutionize the sports industry and change not only the gaming market but bring new dimensions to all types of apps and real world circumstances. The recent introduction of their cardboard 3D googles suggest they at least have this on their radar to some degree.

Google, not Facebook, should have bought Oculus Rift. Let’s hope Google is either searching for a similar start up or will do their own version of this product. This idea is powerful and in the right hands could have quite an impact on a lot of people and industries.

Understanding Apple’s Wearable Strategy

Someone who I believe has a good sense of Apple’s thinking about wearables told me some months ago that if I wanted to understand part of Apple’s wearable strategy I needed to go to Disney World. When I was at Disney World in Orlando recently, I tried to get a sense of what this person was talking about. While I had a great time with the family, I also spent quite a bit of time checking out the ID band technology Disney is using that is revolutionary for theme parks. I see now the most likely concept behind it represents one of the three key pillars of Apple’s future wearable device strategy.

When we arranged our Disney World vacation, booked our hotel on their property and bought our Disney World park passes, we had to register so we could use their wrist band ID program. That process included connecting the band to a master credit card we would use at the various parks. We had to enter a PIN number to use the bands at shops and restaurants. We also used them to get into our rooms instead of using key cards. Two weeks before we left for vacation, the individual wrist bands with our specific IDs came to the house.

The wrist bands themselves use RFID radios for communicating with door locks, restaurant terminals, park entrance gates, etc. The first time we entered one of the parks, we had to sync our bands to a fingerprint reader for double authentication and we used the band and fingerprint reader every time we entered the parks. When we wanted to use them at kiosks or any restaurants on the Disney properties, we used the band and a PIN number to pay for meals. We also used them to sign up for Fast Passes for rides and touched them to the Fast Pass terminal when we went to go on these rides. Bottom line is these bands were ultra convenient and worked flawlessly.

Since this was a major vacation for us, we also bought the Disney Memories picture package. When a park photographer took our photos, we would just have them “scan” one of our bands and they were instantly uploaded to our special Disney Picture site where we could download them at will. But these RFID bands also had proximity features so when we were on a ride like Splash Mountain where they take a picture of you as you start the downward slide, it automatically sensed from our bands we were on the ride and that picture was automatically sent to our Disney picture site as well.

We were told Disney spent over $1 billion dollars on the bands and infrastructure technology. It is deployed through all of their 47 acres in every one of their hotels, restaurants, parks and rides. At the moment, it is only available to those with Disney property packages but I understand they are looking at eventually using these bands for everyone coming to the parks in time.

As you know, Apple and Disney are very tight. Disney’s CEO Bob Iger sits on Apple’s board and Steve Jobs’ widow, Laurene Powell, sits on Disney’s board. There is no question in my mind Apple has gone to school on this band ID concept and we can expect this to be one of the key pillars of any wearable device Apple may some day bring to market. Although the rumors are of Apple doing an iWatch, I think that design idea is actually too limited. One design might be an ID band that might look more like a Nike Fuelband that tells time as well as counts steps and calories, but an additional feature would be as a wearable ID device and work much like Disney’s band. They could also do something like an iWatch that has a big screen and be feature rich. I imagine a band could be perhaps $99 while an iWatch, depending on memory and features, would be much higher.

Mobile Identity

I actually think the ID aspect of any wearable Apple brings out is probably central to its future functionality. This is speculative on my part but, after using the Disney band for seven days and seeing its incredible functionality, Apple has to be crazy not to make this part of any of their wearables. The ramifications for Apple’s future with this one ID implementation alone could make it a huge hit. Imagine going into a Starbucks and just touching your iWatch or iBand to the terminal, entering a PIN number and it is charged to your Apple account. Or to enter your house, you just touch the Apple wearable and enter a PIN number and your are in. Yes, you can do this with an iPhone now but that means taking it out of your pocket or purse and it is only single authentication at present. In a wearable, it is much easier to use for entering the home and for all types of interactions and transactions. Its convenience factor would be very compelling. I believe something like this would be very “sticky” and keep users of these tied closer to Apple’s ecosystem.

Apple also has the fingerprint reader that would bring even greater levels of security to any wearable. While using a PIN number for part of any dual authentication is acceptable, a fingerprint reader on transaction terminals and tied to door locks and other devices could provide the even better security people will demand if using a wearable since, like smartphones, these device could be stolen or lost. Being tied to a fingerprint for authentication would be critical to the acceptance of a wearable for these types of functions.

Apple would probably have to create something like HomeKit and HealthKit for commerce related transactions so those who make these transaction terminals can fine tune them for an Apple ID iBand or iWatch. This part of the concept would be the more difficult aspect to pull off since stores, restaurants or anyone doing a financial transaction may need to have new equipment to support this functionality.

Body

The second pillar I see as part of their wearable strategy is tied to HealthKit. This would allow these watches and bands to handle all types of health related monitoring and provide valuable health data to users and their health care providers. But unlike the basic health related functions in today’s health wearables, it is clear from Apple’s Healthkit that, over time, 3rd party vendors now have a platform for delivering much greater health monitoring features that can be embedded or uploaded to an Apple wearable as well as their iPhones. I have multiple health apps on my iPhone now but on a wearable, they would deliver much more precise data capture capabilities and be much easier to use for these purposes.

Home

The third pillar would be tied to HomeKit and applications created using it. As Tim Cook stated in his WWDC keynote, we will someday be able to tell our phones or tablets we are going to bed — it would turn out the lights, adjust the thermostat, lock the doors, and set the alarm. However, I could see Apple also adding this feature to an iWatch or iBand using proximity sensors to do the same thing — perhaps even faster. I personally would prefer having dual authentication on a digital door lock. The models out today that work with iPhones just take a wireless signal scan from the iPhone when it’s waved in front of it. But by adding a fingerprint reader to these locks, they would add a second, more secure form of authentication to an iPhone, iBand or iWatch when waved in from of them to unlock the doors to your home or office.

I believe when and if Apple does launch an iWatch or iBand or what ever form of wearables they bring to market, they will initially lead with the health and home automation apps first and over time add the ID features. As you can imagine, using an iWatch or iBand for ID that can be used to do transactions, lock doors and even handle proximity functions could be controversial without them first convincing people they can trust them even more than they already do today. That could take some time.

Any seasoned Apple watcher has to marvel at the overall technology platforms Apple has been creating for their devices that include new ways to use wireless technology, fingerprint readers, sensors, etc. It all seem to be laying the groundwork for many new types of products. While wearables may be Apple’s next disruptive technology that will help expand our digital worlds, who knows what else Apple has in store that will take advantage of these rich platform architectures over time.

In the end, I believe this element for use as a Personal Digital ID that can be tied to all types of applications may be the killer app for all of Apple’s wearable devices. Combine these three pillars together and I believe they could make up the feature set of an iWatch and/or iBand. This clearly could entice hundreds of millions of new users to Apple’s broader platform of devices and really change the way we interact with our bodies, homes and retail establishments in the future.

Everything I suggest in this column is my speculation on what I believe Apple may bring to market in a wearable. I have no knowledge of what they are doing but have been carefully studying the tea leaves around Apple’s current software and architectural moves and I suggest this could be the underlying applications of any wearable product Apple could do in the future.

If so, I believe Apple could have their next big hit on their hands and add a great deal of new customers to the Apple ecosystem.

For deeper analysis see our members only article: The next Era of Mobile Identity

Only Apple, Yes, But Only Tim as Well

John Gruber of Daring Fireball wrote a great piece called “Only Apple” where he laid out a solid case that, in many instances, only Apple could deliver the type of experiences and devices that make up a huge part of their success. I suggest you read it when you have time as it delivers a great perspective on what Apple can do vs the competition.

One particular passage stood out:

Here’s a tweet I wrote during the keynote, 20 minutes before Cook’s wrap-up:

Microsoft: one OS for all devices.
Apple: one continuous experience across all devices.

That tweet was massively popular, but I missed a word: across all Apple devices. Microsoft and Google are the ones who are more similarly focused. Microsoft wants you to run Windows on all your devices, from phones to tablets to PCs. Google wants you signed into Google services on all your devices, from phones to tablets to PCs.

Apple wants you to buy iPhones, iPads, and Macs. And if you don’t, you’re out in the cold.

Apple, Google, and Microsoft each offer all three things: devices, services, and platforms. But each has a different starting point. With Apple it’s the device. With Microsoft it’s the platform. With Google it’s the services.

And thus all three companies can brag about things that only they can achieve. What Cook is arguing, and which I would say last week’s WWDC exemplified more so than at any point since the original iPhone in 2007, is that there are more advantages to Apple’s approach.
Or, better put, there are potentially more advantages to Apple’s approach, and Tim Cook seems maniacally focused on tapping into that potential.

Apple’s vertical integration allows them to be able to deliver this “one experience across all devices” and in many ways this is what really attracts people to their products. Sure, they are well designed and look cool but it’s the consistent experience across all their products I think really captures the Zen of Steve Jobs and what Tim Cook has a laser focus on as CEO.

However, I would like to suggest Tim Cook’s influence inside the company has become critical to Apple’s future and, while still being guided by the spirit of Steve Jobs, he clearly has made key decisions that, if he were around today, I don’t think Jobs would have made.

A specific one that comes to mind is a larger iPhone. Jobs was focused on the iPhone being designed for one handed operation. That is why every iPhone since its launch in 2007 has had a smaller screen compared to the competition. While I suspect he was still alive when they were thinking about moving the iPhone screen to 4 inches, I believe he would have balked at an iPhone any larger than the 5s. If the rumors are correct and Apple will deliver a 4.7″ and perhaps even a 5.5″ iPhone, this would have come about due to Tim Cook and his less dogmatic approach to the market demand for larger smartphones.

Another area I see Tim Cook’s hand is in the softer media approach Cook and team have deployed since Jobs passed away. Apple is still pretty strict on who they invite to their events but I have talked to a lot of bloggers and analysts who in the past were shut out under Steve Jobs and are now being invited to events on a relatively regular basis. I believe Tim Cook’s approach to the media is much more pragmatic than Jobs’ ever was. To Steve Jobs, the media was more of an enemy than an ally. Tim Cook appears to see the media and analysts as an important vehicle to deliver Apple’s strategic messages. He has taken this new approach which I think has really paid off in terms of how the media sees Tim Cook and Apple these days.

I also think he has dramatically impacted the working conditions on Apple’s campus. I have heard many stories of how people at Apple loved Steve Jobs but his overpowering presence created a lot of tension among his top managers when he was around. In fact, I witnessed this in person during Jobs’ first stint at Apple. Not long after the Mac was introduced, Jobs and then Apple CEO John Sculley asked me to come over and review a specific product campaign they were working on. While in that meeting a junior executive popped in and told Jobs something he did not like. He went ballistic on the guy. He told him he was an “idiot” and did not have a clue what he was doing. I remember Sculley and I looking at each other and being very embarrassed for the guy Jobs was yelling at. But that was Steve Job’s management style back then and it was one reason he was fired in 1985.

The good news is, when he came back to Apple in 1997, he had mellowed and I hear he was not as confrontational as he had been in the past. But he was still a towering figure and when he was around there was a lot of tension among those who had to deal with him all of the time. Now I hear the campus environment is much less stressful and while there is still a lot of pressure to deliver, I suspect the overall tenor of the campus environment is much different under Tim Cook.

Tim Cook has been very good for Apple in many ways and I have no doubt he will take Apple to its next level of success. As Gruber points out, only Apple can deliver a great continuous experience across devices. I would add only Tim Cook could have kept Apple moving forward and make important decisions on creating new larger iPhones that should give Apple a monster end of the year. Only Cook could have softened Apple’s approach to the media as well as create a more balanced and easier work environment for Apple employees, something I think is really important for those who work the long hours at Apple to deliver what Jobs’ liked to call “insanely great” products.

The Enduring Lure of Facebook

When it comes to technology, I am what you would call “old school”. I came out of the PC era and cut my digital teeth in hardware and packaged software and lived in that world exclusively for over half my career. I was quite comfortable with that era and have to admit that, when the Internet came along, I was both excited and somewhat terrified — it took me completely out of my analytical comfort zone. In fact, I remember having dinner with Marc Andreeson not long after Netscape was founded and, as he explained his vision for the World Wide Web, I instinctively knew this would be disruptive. But I had no clue how disruptive it would be and how much it would eventually impact my world and future analysis.

Then MySpace hit the scene and the era of social networking was born. At first I did not pay much attention to it since it was mainly for high schoolers. But once Facebook came out and extended its reach to college kids first and families second, I got sucked in. Now Facebook has become an important part of my life.

Over the last few months, I have fielded some interesting calls from media and financial analysts asking about Facebook’s long term outlook. I had one finance person actually ask if I thought Facebook was just a flash in the pan and was looking to find someone who could corroborate his position that it would lose steam and not achieve any long term value for investors.

Since I am not a financial analyst, I can’t talk to its long term financial growth potential although it does seem they have some pretty savvy business people running the company. Also, Facebook CEO Mark Zuckerberg has grown a lot over the last 5 years and seems to be guiding it in a solid direction. However, I am convinced Facebook has hit a couple of nerves that for me makes it an enduring part of my life and I suspect for millions of people this will always be the case.

The first area it impacts people is with the family connection. Most people have family scattered around the world and using Facebook to stay in touch brings significant value. Ironically, my brothers, sisters and I live in the same town but, because of our busy schedules, we don’t see each other very often. Yet, we know what each other are doing almost daily and follow the various kids’ activities on Facebook and, to my surprise, stay more connected than before Facebook. In my case, it brought another important dimension in the way of family connections. For some reason, my Filipino father never talked about his family in the Philippines. We knew he had brothers and sisters but we never knew much about them. About three years ago, I started getting Facebook friend requests from people with the last name of Bajarin in the Philippines. As I queried them, I found they were actually cousins — children of my dad’s brothers and sisters he left when he immigrated to the US and never kept in touch with. Through them, I was able to finally trace the Filipino family connections I had not even known about. And now I keep in touch with them too.

The second area where Facebook impacts people is through connections with friends. Through it I have reconnected with friends from high school, church youth groups of my past as well as friends and acquaintances I have met over the years. This has become important and enriches my life immensely, in particular when I had a triple bypass 2 years ago. During that time, I heard from friends around the world cheering me on and encouraging me during the recovery. I even had a few long lost friends who had had the same surgery and I got valuable tips about the recovery process from them. During this very difficult time for me, Facebook delivered a daily ray of sunshine and proved an invaluable way to connect and communicate with these friends from all over the world.

The third area Facebook makes an impact is with business associates and in my case, with my clients. Too often the business people we work with or know are just that — business associates not seen as human beings with their own families, hobbies and personal lives. In this case, Facebook has been a game changer for me and my relationships with people I interact with or do business with at any given time. Since Facebook by nature has a more personalized construction to its form and function compared to LinkedIn, which drives more formal business relationships and connections, Facebook’s role in enhancing my personal relationships with these business acquaintances has become important.

Hearing about a PR friend’s daughter’s ballet recital brings a smile to my face. Hearing how a Sr. Exec I know just finished his first marathon adds new respect for him and his achievement. When one of them posts they are ill, I make sure to respond and send get well wishes. When I hear one of these business associates has lost someone dear to them, I send condolences and what I say is truly sincere.

For many people Facebook has brought humanity to our many business relationships and we are all the better for it.

Facebook now connects 1.2 billion people, although I suspect the number of people who really use it consistently is only about 40% at best. Even so, the types of connections these folks have with family, friends and business associates says to me Facebook will continue to play a very important role in many people’s lives for many years to come and is by no means a flash in the pan.

Because of this role, Facebook’s responsibilities to their users increases by the day. They must be trusted to protect their users and their interests and keep them secure and stave off any type of malware that could affect them. They also have to be prudent stewards of their members’ data and keep it from any outside forces that would like to access or even exploit them if they could. At the business level, they must also continue to grow the company in order to be able to provide users with this powerful communications platform where all of these personal connections can be made.

In the end, Facebook’s enduring lure should continue to power these social connections well into the future. I see Facebook continuing to play an important role in my life for many years ahead and I believe that will be the case for millions of other people too.

A Google Like Device for Physical Objects

In late April, I had a fascinating video call with a gentleman named Dror Sharon, the CEO of Physical Objects. He showed me a product that just went up on Kickstarter about a month ago. The device is a hand scanner that can scan physical objects and tell you about the chemical make up of that object.

“Smartphones give us instant answers to questions like where to have dinner, what movie to see, and how to get from point A to point B, but when it comes to learning about what we interact with on a daily basis, we’re left in the dark,” Mr. Dror told me via a Skype video call. “We designed SCiO to empower explorers everywhere with new knowledge and to encourage them to join our mission of mapping the physical world.”

Physical Objects’ Kickstarter campaign so far has received over $2 million for SCiO (which is Latin for “to know”). At first, SCiO will come with apps for analyzing food, medication, and plants. You can use it to refine the ingredients of your homebrewed beer or figure out if an internet site’s cheap Viagra is fake. Later, the company will add the ability to check samples from cosmetics, clothes, flora, soil, jewels, precious stones, leather, rubber, oils, plastics, and even human tissue or bodily fluids.

Screen Shot 2014-06-06 at 12.14.56 PM

Above: Consumer Physics prototypes

Mr Sharon told me the “spectrometer figures out what the object is based on an infrared light that reflects back to the scanner. Most objects have different absorption rates, as they vibrate at different levels on the molecular scale. The app takes the data and compares it to a cloud-based database of objects in a data center. When it gets a match, it sends the results to the user’s smartphone.”

According to Mr. Sharon, “the food app tells you calories, fats, carbohydrates, and proteins, based on your own estimate of the weight of the food you’re about to eat. (With many food packages, you can get the weight from the label). The app could tell dieters exactly how many calories they’re about to consume, while fitness apps can tell them how many calories they’re burning. That helps people figure out exactly how much exercise they need to do in order to burn off the food they’re eating.”

As I understand it, the food app can also gauge produce quality, ripeness, and spoilage for foods like cheese, fruits, vegetables, sauces, salad dressings, cooking oils, and more. It also analyzes moisture levels in plants and tells users when to water them. Mr. Sharon suggested one could even analyze your blood alcohol level one day, but SCiO is not currently approved as a medical device.

What I find most interesting is, as users conduct more tests, the app gets better and better at correctly identifying objects. The more people use it, the richer the database of information will be to add to the precision levels of the SCiO over time and, more importantly, expand what it can understand. In the demo I saw on an Android smartphone, a ring fills up with circles on your smartphone screen to deliver the proper info. It takes only a matter of seconds to recognize something. SCiO has to be about 20 millimeters from an object before it can be used for scanning. The scanner uses Bluetooth low energy to connect with a smartphone, which needs either iOS 5 or Android 4.3 or higher.

He also showed me its ability to scan what looked like a unmarked white pill and correctly identify the chemical make of the pill. He told me it as an Aspirin and even showed it was made by Bayer. In another demo, he aimed the scanner at a plant and it identified what the plant was. These are the first category of physical products they will target but eventually it could identify the chemical makeup of just about any object. That is why he likened it to being “Google for physical objects.”

If you are a fan of police procedurals like CSI or NCIS you already know about things like mass spectrometers — professional machines that analyze the chemical makeup of objects. These machines can be very large and while there are some handheld versions available today, all are very expensive. SCiO does similar tasks in a device that can fit into your pocket. And when it ships is will cost considerably less, about $149. Now, I am not suggesting SCiO is as powerful as professional mass spectrometers. However, from what I saw in the demo, it can do much of the same kinds of chemical analysis and do it pretty quickly with the readout showing up on your smartphone.

While I find the idea of a pocket spectrometer interesting, where this could have real impact is if it could be built into a smartphone. According to Mr. Sharon, this ultimately is where he sees his technology going. His initial focus is on food, medication and plants although over time it can be expanded to cover just about any physical object. Imagine being able to point the scanner in a smartphone at an apple and know exactly how many calories is in it based on its weight. Or if you had a stray pill lying around and wanted to know what it is before you dare ingest it.

I see this particular device as a game changer of sorts. Today all of our searches are being done via text, numbers and through structural databases of some type. But with a consumer-based spectrometer in a pocket device and then eventually in smartphones, gaining a better understanding of the make up of the physical objects we come in contact with each day would expand a person’s knowledge base. I could imagine it as being part of a teaching tool and get perhaps more kids interested in science. Or used in a science related game so it becomes an important tool to solve a puzzle. At the other extreme, its impact on health-based problems and solutions could be enormous.

This is a technology to watch. As it gets smarter as more people use it and it gets into smartphones, it would add quite a new dimension to our understanding of our world and become an important way for folks to connect to our physical space in ways we just can’t do today.

Why Microsoft Should be Worried About Chromebooks

For more than 30 years, the Wintel consortium ruled the world of personal computers. This consortium was made up of a partnership between Intel and Microsoft joined at the hip when it came to creating PCs. But about three years ago that partnership began to break up. While Intel had been extremely loyal to Microsoft and its Windows franchise, Microsoft decided to back ARM-based tablets when they got into hardware and created their first Surface product. Microsoft’s move into the ARM space did not take me by surprise. In fact a year earlier in PC Mag, I wrote about the fact Microsoft had an ARM-based version of Windows under works in their labs and suggested even then that they may enter the hardware market with their own product using an ARM-based processor.

But Microsoft kept that news a secret and only a few days before they announced the original Surface tablet did Intel, HP and other PC makers even know Microsoft was not only doing a tablet of their own but had deviated from an Intel processor and used an ARM chip instead. I remember at the time the feedback I was getting from the PC crowd, who had loyally supported Microsoft through the industry’s ups and downs – this was kind of a stab in the back by Microsoft and they were not happy about it.

Unfortunately for the PC guys, Microsoft woke up to the fact they were so behind in tablets and not gaining enough ground in smartphones they needed to be more like Apple and make a fundamental shift towards owning the hardware, software and eco-system if they had any chance of competing with the IOS and Android crowd. This move has not worked out quite as well as they had hoped. The original Surface based on the ARM processor was a total failure and even their Intel based Windows 8.1 Surface models are only doing modestly well against Apple and Google’s tablet partners.

However, Microsoft’s decision to support ARM processors took away any possible guilt of Intel. The PC vendors are aggressively supporting Android and more recently Google’s Chromebook. This is a big deal and one that will have ramifications for Microsoft in the future. I know creating the Surface tablet and support for ARM seemed strategic but it really did impact the way Microsoft’s partners viewed their allegiance to Microsoft. Now Intel, AMD and all of the PC vendors are backing Android and Chrome and over time I think this will eat into Microsoft Windows marketshare significantly. With the momentum of Android, Intel and the PC vendors were going to be forced to join in Google’s quest at some point but when I talk to these vendors it was pretty clear their support for Android only gained real steam after Microsoft supported ARM and starting doing their own hardware.

In fact, it pushed Intel into bed with Google in ways Microsoft surely had not expected. Indeed, Google agreed to work closely with Intel to make sure Android would work well on Intel processors and it’s starting to pay off. Intel hopes to ship 40 million tablets in 2014 and double that in 2015 and most of those will be Android based. But where I see an Intel/Google relationship really impacting Microsoft going forward is their recent partnership around Chromebooks. At an event in San Francisco two weeks ago, Intel showed off the first generation of Chromebooks using their Core i3 mobile processors. Up until now, all Chromebooks had been ARM-based or used Intel’s Celeron processor and, by nature of these chips, they were never considered powerful laptop/desktop class CPU’s. But Intel putting a Core i3 processor in a Chromebook puts them in the class of other Intel Core laptops, albeit at the low end. Still, this is significant.

One thing you will notice when using an Intel Core i3 processor vs the top ARM chip in Chromebooks is how much faster a web page and graphics load.
Sure the apps are all HTML and Web based, but in a laptop or clamshell design, which blurs the line between consumption and productivity, faster speeds in these areas as well as better overall performance brings Chromebooks into the traditional laptop space. Yes, there are cheap Windows laptops but in our research we are finding, especially with consumers, the need for Windows and Windows apps are fading in this consumer market. In fact, we are seeing some school districts buying only Chromebooks now and hundreds are testing them in pilot programs.

What convinced me I had to look closer at Chromebooks was a chance encounter at a breakfast diner in Santa Barbara last fall. In the booth across from me was an elderly woman, probably in her mid to late 70’s, happily typing away on her Chromebook. As I was leaving I stopped at her table and asked her why she chose a Chromebook. I thought price would be the first thing she would say but instead she said “I looked at Windows laptops and Chromebooks and found that a Chromebook would meet all of my needs.” Pus, she added, she liked the sleek and light design. Since then, I have heard this frequently in our research. For a lot of consumers, Chromebooks are all they really need since most of what they do today is via Web browsers and there are a lot of Web apps that replace dedicated apps they might have used in the past on Windows laptops.

That is why Intel has pushed their partners hard to do Chromebooks with the Core i3 in them and all of the PC vendors have at least one Core i3 Chromebook in their lineups now. Even though these Intel Core i3-based Chromebooks have about a $50-75 dollar premium over ARM based Chromebooks, I believe as word gets out about the better performance one gets on an Intel Core i3 based Chromebook, it will convince many who would buy an ARM-based Chromebook or even Intel-based Celeron models that today they are at price parity with one’s using an ARM processor.

This ultimately means Microsoft now has a battle on three OS fronts. Along with Android and IOS in the mobile space, they now have to contend with their partners betting on the Chrome OS and having Intel back it big time. While I see Windows being strong in the enterprise for the foreseeable future, there are chinks in Microsoft armor when it comes to Windows with consumers and I think Intel’s backing of Chromebooks with their Core i3 processors will help these type of laptops gain more ground within education and consumers at Microsoft’s expense.

My Webinar On the Internet of Things

I wanted to let our readers know that I am co-hosting a webinar on the Internet of Things. The subject will be focused on the business impact of IoT. It is free to attend and if you are interested you can use the link below.

Webinar Details:

In just six years we are expected to grow from 10 to 50 billion devices connected to the Internet. The Internet of Everything (IOE) … and Things (IOT) holds so much potential to change how we live and do business that it is considered a major paradigm shift in our worldwide economy and culture.

– Barton Goldenberg, Founder & President, ISM, and leading customer-centric strategist, author, speaker and futurist.

The revolution has been gradual with the steady growth of Internet connections: machine-to-machine (e.g., robots, sensors), machine-to-people (e.g., wearable, home security) and people-to-people (e.g., social networks), but its future growth and impact will be phenomenal and not without its challenges.

– Tim Bajarin, President, Creative Strategies, and global technology advisor, analyst, author and futurist.

Attend this important webinar and you will learn answers to:

* Is there a sustainable driving force behind the IOE/IOT?

* How to cost-justify investing in the IOE/IOT?

* How to respond to the new data privacy issues?

* What are the resulting customer service challenges?

* What is the impact on big data analysis & insight?

* How to address new people, process, and technology issues?

Date: Tuesday, June 3, 2014

Time: 10:00 AM Pacific/ 1:00 PM Eastern

Duration: 1 hour

Register Here

Why the Surface Pro 3 is a Problem for Microsoft’s Partners

I watched the launch of Microsoft’s new Surface Pro 3 this week with great interest. Microsoft’s decision to enter the hardware business has been a double edged sword for them. On the one hand, they were able to use the original Surface RT and the Intel versions to help jumpstart the Windows tablet market and pretty much forced their partners to join them. But it also angered those same partners because Microsoft is now competing directly with them.

That is why when Microsoft CEO Satya Nadella opened the launch event by saying Microsoft does not want to compete with their partners, I had to do a double take.

Creating a premium product like the Surface Pro 3 and selling it in Microsoft stores and other retail outlets right next to similar convertibles and tablets from their partners seems like competing directly with them in my book. Microsoft’s partners have pretty much accepted the fact Microsoft is not getting out of the tablet hardware business, they are not really thrilled about it either. As I talk to Microsoft’s partners, I continue to hear complaints that this frustrates them and in some case actually angers them. But they are trying to be good soldiers and since Microsoft is still critical to their success at least in the enterprise, they just trudge along and hope they can be successful in their own right given the fact Microsoft is now going after their customers with this new tablet.

However, I suspect something that was emphasized a lot during the launch presentation is giving their partners even more concern about the Surface Pro 3. More than once it was said the Surface Pro 3 is designed to replace a laptop. If that is true and it is successful as such, this is very bad news to those who make laptops. Now, I realize this statement is pure marketing hype and the reality of the Surface Pro 3 replacing all the demand for laptops is absurd. But the message overall that the Surface Pro 3 could replace laptops is going to resonate with many in the enterprise. If Microsoft pushes this message too hard even consumers may start to think this new form factor is a laptop instead of what it really is — a tablet with a keyboard.

I have used an iPad with a keyboard for years and have multiple Surface Pro-like tablet hybrids. From my experience, I have found they cannot replace a laptop. Even with a 12 inch screen, the overall form factor is OK for some levels of productivity but not for serious heavy lifting. While Microsoft does provide a docking system to connect to a larger display, I am still not convinced this type of hybrid should be positioned as an actual laptop replacement.

Like of a lot of people in the industry, I am struggling with the actual role a tablet/hybrid will play in the long term. Don’t get me wrong: tablets are here to stay. And for some people this may be the only computer they need. When Steve Jobs introduced the original iPad he made a strong point about this product being focused on consumption and said little about its role in productivity. But once the iPad shipped, businesses like SAP, Salesforce.com and dozens of others adopted it for productivity purposes and by adding keyboards tried to make them like laptops. Stand-alone tablets excel at content consumption but even with keyboards, most hybrids have only received lukewarm reception especially in the Windows world. Part of the reason is most hybrid designed tablets have been much heavier and bulkier than the thinner and lighter iPads and similar tablets.

But the new Surface Pro 3, even at 12″, is the same weight as the original Surface tablets and even thinner. It has some new design features that actually makes it work in your lap, has Intel Core i3, i5 and i7 performance options and utilizes the pen better than any I have seen on these types of tablets. This product actually could be the first hybrid that actually can be considered a laptop replacement. The one downside of the Surface Pro 3 is its price. Even with the core i3 starting at $799 and adding the good keyboard and a docking system, it will go for about $1000.

The big question for me is how will the PC vendors respond to this? Clearly they can’t let Microsoft go after their customers without creating competing products of their own. But, do they really want to create a hybrid that actually competes with their top line laptops, which are extremely profitable for them now? Also, supporting tablets and hybrids are different than supporting mainstream laptops. I have not gotten my hands on the Surface Pro 3 yet to test it as a laptop replacement but I have spoken with some who have and they confirm its design and performance clearly puts it in the laptop category of portable computers.

This area will be important to watch over the next year. If Microsoft is even marginally successful in getting this viewed and reviewed as a true laptop replacement it would have eventual ramifications for all laptop vendors and eventually the PC market in general.

The Reinvention of Apple

Everyone knows Apple is one of the top three brands in the world and is known especially for their iPods, iPhones and iPad’s, as well as their Mac line of personal computers.

As a company, they have had a miraculous track record of disrupting industries and competitors particularly since Steve Jobs came back in 1997 and saved Apple from near bankruptcy and potential irrelevance. During Jobs’ second run at Apple, he pretty much reinvented the PC form factor with the candy color iMacs, the digital music player and smartphones. In 2010, even though tablets had been on the market for almost 20 years, Jobs reinvented the tablet with the iPad and has made it a highly successful new business for them. Apple has made all of these products icons within each product category and allowed them to become a $110 billion a year company with $160 billion in cash in the bank. By all measures, Apple is one of the most successful companies in history and continues to innovate in software and services along with introducing new models of their signature line of products each year.

Setting the Stage

Apple’s run of introducing disruptive products has been really amazing. With the iPod, iPhone and iPad they have changed the way people listen to music, made a cell phone into a pocket computer and delivered the next major new form factor in PCs with the iPad. Most companies are happy if they have one major hit and live on that hit for decades. But Apple’s successful track record has created what I would call unrealistic expectations from Wall Street and even consumers who want Apple to bring out the next great disruptive product that will turn the world on its ear and bring Apple the next great revenue boost to the bottom line. It is true Apple could still do something radical with the TV experience or enter the world of wearables in a big way. They are well on their way to making automobiles a new revenue stream over the years. But given the incredible innovation going on in the world of digital technology today, it would also make sense for Apple to make some highly strategic acquisitions of technology and companies that help grow their business beyond their core competency and current product lines.

Given Apple’s brand, cache with customers, retail outlets and superb customer service, it is perhaps time for all of us to be ready for Apple to leverage these major strengths beyond their current scope of products that only come from internal research and M&A activities. I think the financial world, as well as Apple customers, need to be open to the fact there are a lot of other great products out there that, under the Apple brand, could actually enhance their product portfolio and expand their reach in the marketplace around the world. In fact, I find this idea extremely intriguing since it could help Apple reinvent itself yet again. Remember, for almost 30 years Apple was a computer company. But by introducing the iPod and iPhone, Apple reinvented itself as a consumer electronics company and dropped the word computer from its corporate name — they are now only known as Apple, Inc.

Realistic Expectations

I don’t think I can emphasize enough the fact that expecting Apple to keep coming up with disruptive products that are game changing hits is not realistic. While I do have faith they still have a lot of what it takes to create innovative game changing products, trying to bring out something disruptive on a regular basis is highly improbable. It is also very difficult to do, which is why Apple disrupting three markets with the iPod, iPhone and iPad is truly amazing. They can continue to innovate on existing products and drive them to great profitability. However Apple, as well as Wall Street and consumers, have to be realistic on two key issues about Apple’s future.

First, as stated above, creating a new product category or disruptive product again and again is not only difficult to do but can no longer be the only strategy of Apple’s business plan. The amount of innovation going on in the tech world that Apple could tap into either at the tech licensing level or in forms of tech and company acquisitions is the most realistic thing for Apple to do to add to their future business model. While some might see this as a sign of weakness, it is actually the opposite. Apple as a single company can only do so much with its internal IP and talent. Admitting and accepting this is the first step towards Apple reinventing themselves again. With $160 billion to work with, Apple could pick the cream of the crop from the outside to bolster their current and future product portfolios.

The second thing to understand is Apple as a brand is huge. While Apple’s products will always be central to their strategy, bringing in other known brands or complimentary technologies that can be “Apple” products and sold through their online and physical stores and supported by their world class customer service could easily expand their product lines as well as help them gain more traction in markets around the world. I have to admit, when rumors came out Apple was considering buying Beats for $3.2 billion, I could not understand why they might even consider this. At first I really questioned the valuation amount but given Beats brought in $1.2 billion last year and a $3.2 billion price is the street average of 3 times earnings, at least this could be rationalized. When Google bought Motorola they paid 12x earnings for the acquisition so, by comparison, this is a bargain. I also questioned the fact that at the IP level Apple could have built this from existing licensable IP and created a high end headset of their own.

Now incorporate the possible acquisition of a highly successful branded headset into the idea mentioned above that would have Apple carry other Apple owned products that strategically compliment their core products and sell and support them under the Apple brand and you have the beginning of another dimension of a new Apple. A Beats headset by Apple could double the amount of Beats headsets sold in their first year as a branded product and with the streaming service it clearly would help Apple jump start their move into subscription based music — clearly the biggest trend in digital music.

There is another angle on the potential Beats deal I only discovered after talking to some cultural experts. It turns out a large segment of African Americans and Hispanics buy Android devices and most are in the mid range price segments for smart phones. However a big element of users in those markets do not scrimp on their sports shoes. This has fueled a great deal of Nike’s and other companies’ sports shoe strategies for decades. These groups also are at the heart of the high-end headphones market as apparently they expect their mid-range priced smartphones to have great audio quality but want the top line headphones to experience that music. If Apple understands these demographic issues, they could clearly use Beats to help them gain more traction in a market segment Google and Android dominate today.

Whether Apple buys Beats or not, the fact they possibly have even considered an acquisition like this reinforces my contention Apple has accepted the fact they can’t always create disruptive products from inside and as part of the reinvention of Apple, the company will be looking to license or acquire key companies and technologies that, under their brand, could get them even greater levels of profitability. In fact, on the recent earnings call, Tim Cook basically said Apple was not averse to making some significant acquisitions with their cash horde in the near future. I am sure all would be strategic and, as I have suggested, could bring into the Apple fold products and IP that become branded Apple products as part of this investment strategy.

As one thinks about the future of Apple, I believe we have to consider the fact Apple will continue to innovate from within and enhance their current line of products like the iPod, iPhone, iPad and Apple TV. They will also most likely enter the world of wearables, automobiles and maybe even the health market in some way. But it is unreasonable for Wall Street and consumers to keep pushing Apple for the next big thing that could disrupt markets. I know they have a great track record and we have come to expect this from them. But I am not sure in this day of digital innovation this alone should drive their strategy. Now add to this the idea of Apple using their cash to build the company through licensing and acquisitions and buying strategic products that could be sold through their branded franchise, stores and supported by their great customer experience and you have what I believe will be the next major version of Apple as Apple reinvents itself again.

Why Google Glasses is 10 years away from Consumer Success

Like many in the tech world I have watched, with great interest, the Google Glass project develop and evolve. I even became a Glass Explorer and have used it for about nine months. Like many who bought Google Glass, it now sits on a desk at home. It has proven to be less then easy to use and even worse, pretty bad at what it is even supposed to do correctly. For some, its novelty lives on but as most who bought Google Glass have discovered, this version’s UI is very bad and the dearth of any true consumer applications pretty much doomed it from the start. If I sound bitter, I am. Asking me or any other Google Explorer to pay $1500 for the privilege of beta testing a product for Google is absurd. Of course I made the decision to buy it knowing it was a wounded product and, at least in my case, I had a research motive behind it. But if I were a mainstream consumer, or early adopter, and bought this I would be pissed Google released a product to the open market instead of the actual market any Glass project should have been focused on in the first place — vertical markets.

In 1984 I was asked to look at a product for IBM and make a suggestion as to what they should do with it since it was not selling well. The product was the IBM PC Jr. Three years earlier IBM introduced their highly successful PC and it took off in business like wildfire. They made the assumption if the PC was doing well with business users, it should do well with consumers too. So they released what turned out to be a wounded product for consumers. It had a lot of limitations since it was much cheaper than IBM’s business PC; they did not want a cheaper product eating in to demand for their business product. But when I went to Boca Raton to do my presentation about this to IBM’s brass, I did not point out the PC Jr was a crippled machine and that’s why they should kill it. What I did present was a very strong and rational study on the fact that historically all new technologies first get targeted at vertical or business markets and showed them in almost all cases it took at least ten years from a new technology targeted at business users to eventually become cheap and easy enough to use for it to be brought to a consumer market successfully.

IBM was a tech company and at the time had not done anything for consumers. More importantly, they were not even a marketing company back then. Few at IBM understood the concept of the “marketing pyramid”. In the tech world, it must go through the early adopters who then suggest to people interested in what they are doing with the technology that they look at it. Over a 2-3 year period, it moves from early adopters to the next layer of adopters for any particular technology. However, in my experience I have found for any new technology to get broad adoption from consumers it takes on average 10 years to get the kind of apps and prices needed for consumer adoption. Then and only then does a new technology hit the mainstream. I told IBM they we were 10 years too early with the PC Jr and to kill it since it was going nowhere for the time being. It was not until 1994 the demand for consumers PCs kicked in — exactly ten years after the PC Jr was originally released.

I could go on an on about this tech marketing pyramid and show how things like VCRs, HDTVs, and dozens of tech products had to go through the pyramid of early adopters and ride at least a ten year slope down to delivering and acceptance of this core technology to consumer markets. This is especially true with hardware products that need to then pick up software apps and an ecosystem before it can go mainstream. Google putting Glass into the consumer market either showed their complete lack of understanding tech marketing pyramids or, even worse, targeted consumers knowing full well this market would not be ready for Glass for at least another decade and instead milk it for their own profitability.

For those of us who have put Google Glass through its paces and seen its glaring problems with consumers, it is not a surprise Google Glass will not gain mainstream acceptance for at least another ten years. While one could argue we are well into the early developer stage with Google Glass, which always goes through vertical markets first, the fact remains only now are vertical markets actually opening up their purse strings and starting to test Glass-like devices in earnest. This is interesting as Glass-like devices were introduced in 1997 and have been struggled to get serious vertical market adoption until only recently.

Google Glass also has some other problems, including social acceptance, privacy issues and how geeky one looks when wearing the current model. I have no doubt over the next decade Google and others will find ways to make the glasses less geeky and perhaps fold into eyeglass design so people don’t even know you are wearing a digital display. By then, Google and others may have worked through the issues of privacy, social acceptance and more importantly, found the killer app needed to drive this into high consumer demand. I see this tech marketing pyramid only now kicking in and am convinced Google Glass are at least 8-10 years away from being something the consumer market will adopt. During this time there will be money made with Glass in business and vertical markets but if history is our guide we won’t see Google Glass going mainstream until at least 2020.

How Apple Could Continue to Own the Enterprise Tablet Market

When Steve Jobs announced the original iPad, he emphasized its role as a consumption device. In fact, he purposely stayed away from even suggesting it could be used for productivity. However, he hedged his bet when he asked Apple’s Senior Vice President of Worldwide Marketing, Phil Schiller, to come out and briefly show off Pages, Keynote and Numbers for the iPad. The only other thing mentioned at the launch event relating to enterprise was Apple would provide some way for business users to obtain apps outside of the app store for use in dedicated business software distribution if needed. But after Schiller spoke, Jobs went right back to showing how the iPad was ideal for consuming content — showing off two games and one health related app created specifically for the event.

Jobs knew the iPad would be a big hit in the enterprise but understood that to focus on its role as a productivity tool instead of a content consumption device would have opened the iPad to serious criticism at the time. When the iPad was launched in 2010, tablets for the enterprise had been used in some vertical markets for at least ten years yet the industry had sold only one million tablets worldwide the year the iPad launched. But enterprise watchers were surprised when companies like SAP and Salesforce.com bought over 10,000 iPads each in its first six months on the market. We estimate in the first 12 months the iPad was shipping well over 1 million units that were tapped specifically for use in serious mainstream enterprise programs.

In its second year on the market, airlines, car makers, manufacturers and hundreds of companies we would classify as enterprise started buying iPads in large numbers and implementing them in their IT programs. Apple’s development tools were rich enough for most to be able to create their own apps for the iPad. At the same time, the iOS development community went into high gear and started creating all types of complimentary business apps that clearly took the iPad far beyond its role as a content consumption device.

However, there was one enterprise app almost all IT users wanted — Microsoft’s Office. While enterprise companies created their own apps, Apple’s own suite of productivity tools just did not meet the needs of many. Unfortunately, most enterprise users cut their productivity teeth on Office and could never get the hang of Pages, Numbers and Keynote. For a lot of IT users, the iPad was a great business tool but its lack of Office made it a wounded product for them. That is actually odd since Apple’s productivity tools are powerful but apparently you can’t teach old dogs new tricks. For many, Office spelled productivity regardless of what alternatives were available.

Now that Office is available on the iPad, it is clear the iPad has the missing link it needed to get even broader attention in the enterprise market. Ironically, the iPad is the #1 tablet in enterprise already. 98% of the Fortune 500 are using iPads and 91% of enterprise activations in IT are on the iPad. But I believe Microsoft’s stamp of approval of the iPad with Office kicks it up a notch for many IT users. Now it has the apps necessary for them to consider the iPad even more seriously as an IT tool.

While this is an important development, it is not the reason why Apple will make even stronger gains in the enterprise. I think it will be three distinct reasons that complement the Office availability on Apple’s iOS tablet platform.

The first is it is still the most secure OS tablet on the market. Android has a long way to go to fix its security problems. Until it does, its ability to gain ground in enterprise is questionable. While Win 8 tablets are pretty secure, it still has more security attacks than Apple has on iOS and that is a factor for a lot of IT buyers.

The second issue has to do with form factors. Apple’s iPad Air is still the thinnest and lightest on the market and to date I have not seen any Win 8 tablet that come even close to the iPad Air’s design. But lightness and thinness is not Apple’s only draw. The overall app and services Apple offers for all users is still superior to what is available on Android and Windows 8. In the Windows case, the lack of apps hobbles its acceptance in a lot of markets.

Finally, the real reason I believe Apple will own the enterprise is Apple has to respond to a growing trend for demand in hybrids and convertibles in the enterprise. The versatility of these designs speaks for themselves. While Microsoft’s Surface has not been a big seller in IT so far, companies like HP, Dell and especially Lenovo are making serious inroads into IT via the hybrids and convertibles they offer their customers. Apple can’t sit back and just let the competition gain ground in enterprise without doing something competitive and to tilt this trend towards the iPad as much as possible.

In the past, Tim Cook has said Apple is not interested in hybrids. The problem is his customers are. I saw some research recently that said the attach rate of keyboards to iPads in enterprise is almost 30%. I’ve been one of those users from the beginning. Although I have gone through a few Bluetooth keyboards over time, I now use the Zagg Folio Keyboard with backlit keys. It pops into a shell and fits the iPad so well it looks like a small clamshell laptop. In fact, I have been in many meetings where people asked me what laptop I was using. The iPad with a keyboard has been a powerful productivity tool for me from its early days and Apple has clearly tracked this trend with interest.

So how would Apple respond to this challenge? At the very least they could take a strong stand about the iPad in enterprise and start showing it off in IT settings with third party keyboards doing heavy lifting tasks in various enterprise settings. To date, Apple has had no ads for the iPad taking direct aim at its use in business. However, I think Apple has an opportunity to innovate and create something unique. If you look at Apple’s history, you know they did not invent the portable music player. They re-invented it. They did not invent the smartphone. They re-invented it. And they did not invent the tablet. They just reinvented it with the iPad.

I think they are going to re-invent the enterprise computing device with some type of sleek, thin combination that puts what is already on the market to shame and brand this as the ultimate business productivity tool. I’m not sure if it would be a MacBook Air class of device or an iPad/keyboard combo but Apple has the design skills, software and ecosystem to do something really new at these technology levels. Personally, I would like a thinner Macbook Air with detachable keyboard that can dock to a large monitor that runs iOS and Mac OS X but that may be asking too much. I believe if Apple innovates around something like this, it could cement Apple’s role in business productivity and insure their devices dominate this market even with Microsoft and Android nipping at their heels.

Does Samsung need Adult Supervision in the US?

Not long after Eric Schmidt became CEO of Google, people around Google started saying with Schmidt in charge, Google now had adult supervision. At the time, the two Google founders, Larry Page and Sergey Brin, were barely out of college and, while great engineers, they did not have the business background to really take Google to the next level. Schmidt had come from Sun Microsystems and at that time had just left the role as CEO of Novell. Eric Schmidt’s track record at Google speaks for itself. Google is the biggest search company on the planet, continues to rake in record profits and is clearly one of the most powerful companies in the world.

Over the last 9 months I have actually become quite a fan of Samsung products. During the last two years, their designs have become more innovative and to my surprise their software prowess has increased exponentially. While many have criticized their Gear smartwatch, I personally really like it and use it daily. I did not think I would be a fan of any phablet but my use of the Galaxy Note Pro has changed my mind on this type of smartphone. It sits in my back pocket and while not my main smartphone, it is the one I use for surfing the Web, connecting to my Gear watch and, because of its large screen, is the book reader I use the most when mobile. I must admit as I age my eyes have trouble reading on a smaller screen, which is partly why a phablet sized screen appeals to me.

But I have become increasingly concerned with Samsung’s lack of understanding of the American market/culture and how to market within the US. If you were at the launch of the Galaxy S4 smartphone and Gear Smart Watch or saw it on video, you know how cringeworthy that event was. Using a Broadway-like show to introduce tech products and, even worse, creating scenes that were controversial for their demeaning women in the office and you had a disaster most of us will not forget. While the final decisions on producing this production and including these controversial stereotypes rested solely in S. Korea, how in the world did their US executives not question it and allow it to go forward as it was scripted?

A side note to this is I have been covering the PC and CE business for 35 years and can tell you horror stories of when tech companies tried to be cute and added theatrical twists when introducing new technology or new devices. Radio Shack’s use of a motorcycle and cop on stage to show off CB radios turned out poorly or when Sony brings Hollywood stars into their keynotes that have nothing to do with what is being introduced are just a few examples. Who can forget Intel’s use of the Blue Man Group in a CES Keynote? Their CEO at the time, Paul Otellini’s, interaction with them was lame. My recommendation to those doing tech introductions of products is to show off what the product can do and let the product speak for itself. Just keep everything in a tech presentation focused on the product and ditch the entertainment.

Although Samsung has had other cultural challenges in our market, the recent one in which Boston Red Sox player David Ortiz took a selfie with the President when the team was at the White House, then Samsung using the selfie to promote the new Samsung smartphone Ortiz was using was completely out of line. Again, how in the world did no one in Samsung’s US executive ranks question the idea of doing a promotion using the image of the president without his permission? It showed a complete lack of understanding of the fact the president does not endorse any product by nature of his job, which implies he has to be neutral when it comes to any product, company or service.

Perhaps they need a PUSCO or Professional US Cultural Officer that all US events, ads and communications go through to keep them from making these types of errors that ultimately reflect poorly on the company and its overall leadership. If you caught the banter from the media over the Broadway launch of the Galaxy S4 you know how this one event has really colored how many in the media and even some consumers view Samsung today. With all the publicity Samsung received over the Ortiz presidential selfie, this too did not help the image of Samsung — a great company with great products.

Let’s just hope they’ve learned an important lesson from these two major missteps and some adult leadership focused on these types of issues comes soon. I would hate to see Samsung get any more black eyes in the US and would rather see their US marketing become smarter and more US savvy.

How Microsoft Could Hijack Android

Last December I wrote a piece for PC Magazine where I suggested Microsoft embrace Android in order to tap into the world of Android apps for use with Windows 8 and Windows mobile.

I argued that Microsoft would never get the long tail apps for their Windows desktop or mobile platform but there was a solid way to offer Android apps within the Windows framework that would allow Android apps to run, as is, on top of both operating systems.

I also suggested they adopt the Bluestacks player which launches the Android apps and will then run on Windows in such a way a user would not even know it is an Android or Windows app; it just works in its own right. It would give Microsoft the long tail apps they desperately need to keep Windows 8 and Windows mobile viable in the future.

At the time I wrote this I was not aware of the work Nokia was doing to create a dedicated Android Phone using the Android base AOSP (Android Open System Platform). Instead of offering Google’s dedicated apps and services, they installed Microsoft’s services and cloud apps instead. We were able to see this a month before it was introduced at last month’s Mobile World Congress. We immediately realized this was ground breaking from a soon-to-be Microsoft company and could have ramifications for Nokia and Microsoft in the near future.

While Microsoft has somewhat downplayed Nokia’s Android phones and continues to say their mobile strategies are all focused on Windows Mobile, this move by Nokia could actually become a blueprint for how Microsoft could embrace Android in a broader way and make it their own. While it would require Microsoft eating some humble pie, I see the idea of bringing Android apps into the Windows ecosystem as a powerful way to extend their OS market reach and potential while at the same time wrestle some control from Google in the process.

So, how could they do this? The simplest way would be to use the Bluestacks player as mentioned above. Instead of tying the apps and services to Google Play, they could create a dedicated Microsoft Android store and services area thereby substituting anything Google has in this space with Microsoft services. All Android apps are written under the basic AOSP architecture but are currently tied to the Google Store. It would not be difficult for Microsoft to create a Microsoft Android store and offer all Android app developers the API’s to hook into Microsoft’s Android store. It would become another outlet for Android app vendors. Android app vendors would be crazy not to do this since it expands the audience for their apps and could generate more revenue from an audience of over 150 million current Windows 8 customers and another 280-290 million Windows 8 PCs that will ship in calendar 2014.

They could do the same thing on Windows Mobile phone. In this case they would use the core Windows mobile OS, which includes all of Microsoft’s apps and services and then use the Bluestacks player to deliver the Android apps in a similar way. They would do it on their desktop or laptop platforms of Windows 8. This would mean all Windows mobile phones would now have access to the one million plus Android apps and the long tail content and apps Windows Mobile phone needs to grow.

Microsoft already makes money on Android due to license agreements with most of the Android hardware vendors. Using this strategy, they could hijack Android for their own purposes and at a dreaded competitor’s expense. While doing this would mean quite a sharp and humbling turn for Microsoft, the chance of using Android for their own purposes and wrestling it from Google is just too delicious for them to not go in this direction.

How Two Cameras ushered in the age of Digital Image and Video Documentation

Not long after my mom and dad died before the turn of the century, we finally got around to looking at hundreds of pictures my parents took from their early days as well as my early childhood. The photos brought back one particular memory of the first camera I used as a young child. It was a Brownie box camera which documented my first few years before the family upgraded to a newer Kodak camera of some sort. While the pictures of that time evoke good memories for me, shooting videos in those days was expensive and required a dedicated video camera as well as a separate video projector and screen. Consequently, I was only able to find one small video reel of less than a minute from when I was one year old and that was shot on a borrowed video camera from some family friends.

Fast forward to the late 1970’s when my son Ben was born and like most proud fathers, I bought a larger 35mm camera to document his early days and capture some of his various antics as a kid. I also saved to buy a VCR video camera so large it had to rest on my shoulder to stabilize it. From these cameras I have well over a hundred hours of Ben playing in little league, on vacation as a family and doing kid things parents like to capture during those growing years. However, to do this, I had to purposely go and get my cameras and fire them up to use them. Often I did not have them with me when Ben did something “interesting” or found something I wanted to capture in the moment for the future.

A generation later, Ben has two young girls of his own and while he has bought expensive digital cameras to document their lives, one big thing has changed. Thanks to cameras now on the market in either smartphones or in the form of wearable cameras, we can document just about anything and everything that goes on around us. These cameras have ushered in the digital age of documentation and generations from this time forward will have access to images and video documentation of our lives, culture and society the world has never had before.

The Digital Era

The first camera came from Philippe Kahn who founded LightSurf in 1998 not long after he left Borland and shortly after he had created the first camera phone solution that shared pictures instantly on public networks in 1997. The impetus for this invention was the birth of Kahn’s daughter; he jury rigged a mobile phone with a digital camera and sent off photos in real time. LightSurf was formed to take advantage of the explosive convergence of wireless messaging technology, the Internet, and digital media.

LightSurf’s core technology, the LightSurf 6 Open Standards MMS Platform, was a suite of hosted and managed MMS services that allowed users to capture, view, annotate, and share multimedia messages with any handset or e-mail address, regardless of device, file type, or network operator.

LightSurf’s products included the first mobile picture messaging solution in North America (GSM), the first mobile picture messaging solution on a GPRS carrier network, the first commercially deployed inter-carrier MMS solution in North America, the highest volume of picture and video messaging in North America and over 400 million media messages shared on Sprint’s network (powered by LightSurf).

I have known Philippe since he founded Borland, so not long after he started LightSurf he dropped by my office to show me the first camera phone I had ever seen. For me this was an Aha! moment as I immediately realized how big this could be to the cell phone market. Up until that time, cell phones were not very smart although many like Blackberry had already been used for messaging and email functions. The ability to take a picture and send it via these phones was groundbreaking. Today all feature phones and smartphones have cameras in them. More importantly these cameras become more powerful each year. Photo apps and software like Apple’s iPhoto editing programs, similar photo editing tools for Android and Windows Phone, and products like Adobe’s Photoshop have shaken up the world of photography by giving the smartphone the ability to take pictures on the spot, edit them and share them. Additionally, the ability to instantly post photos and videos to sites like Twitter, Facebook and Instagram has produced a revolution in personal photography that has impacted the world in many ways. These tools have also made it possible to deliver video chats from smartphones and tablets enhancing mobile communications in a big way.

Video in the First Person

The second product I saw I instantly knew would be a big deal was when I met with Looxcie in the fall of 2010 and they showed me the first generation of their POV (Point of View) cameras. To be honest I had real concerns about the first generation of this product since it was quite large, sat over the ear, and was clumsy to use. Although early versions of GoPro had been on the market I had not seen them in person and even in 2010 the idea of POV cameras had not really caught the attention of the consumer market. Over the last three years, Looxcie, GoPro and other POV cameras have become game changers since they began bringing video cameras into the mainstream when they started being used in the highly popular XGames. They started being used by skateboarders who posted tricks on YouTube along with people jumping out of planes with parachutes, surfers, hikers, etc. I was recently in Kauai, HI and saw GoPro cameras all over – especially used by surfers and snorkelers with watertight cases on their cameras so they could video their water sports adventures. Today, there are over two dozen POV cameras on the market including a much better version of the Looxcie catching the fancy of active consumers.

From the beginning, I thought these cameras could have an even greater impact on things like Police, Fire, First Responders and even other vertical markets like transportation, manufacturing, healthcare and others. In fact, this POV idea sits at the center of some of the Smart Glass applications I am seeing and most likely these vertical markets will be the first area where smart glasses actually take off with demand for consumers for these types of glasses a few years from now. One vertical market with a high interest in POV cameras is police departments. The key reason is related to litigation. Many times a police officer may stop a suspicious car and would like to capture the initial interaction with the driver in real time. Dash cams just won’t work in this setting but if they can video the encounter  from the officer’s POV, its use is invaluable to them if there are questions about the interaction or if the case comes up in court. Police departments around the world are searching for this type of POV camera and most likely the most nonintrusive answer will be via some type of smart glass or digital video camera strapped on their lapels or other parts of the uniform for use as they approach a driver where they sense a potential issue. The savings in litigation fees and potential suit payouts alone would pay for the cost of these in no time. The best video camera I have seen especially for Police comes from Vievu.

Although cameras have become pretty ubiquitous since they are in well over one billion smart phones and several million POV cameras already on the market, it is clear these types of cameras have become disruptive in many ways. More importantly, they have brought us into the age of digital documentation and will be important tools that leave a rich legacy of our time for generations to come.

Chromebooks and the Low-Cost Laptop Collide

At the HP analyst meeting in Boston, I was intrigued by two products showed by its Personal Systems Group. As you may know, HP is going through a major turnaround and for some time it was unclear how committed the company was to the PC business. Under its last CEO, in fact, HP was actually looking to sell its PC business. When Meg Whitman became CEO, however, she made a commitment to PCs. Since then, HP has been trying to innovate around various PC and tablet form factors.

The two products that caught my attention were the new Pavilion X360 laptop, which is similar to Lenovo’s Yoga design, and its updated Chromebooks. What makes the Pavilion X360 so interesting is its price of $399, which includes an Intel Baytrail Pentium class processor, 4-gig DRAM and a 500-gig hard drive with an 11.6-inch HD screen. During the event, HP also highlighted its new Chromebooks, priced between $250-350, depending on the configuration.

Various PSG managers and VPs told me that Chromebooks are very popular in education markets, as well as the consumer market, where people understand the role of the cloud and just want a cheap laptop for Web browsing, Web services and Web apps. This latter group of consumers is growing and HP is very pleased with the uptake in sales of Chromebooks to both groups.

But HP wanted to have some Windows laptop replacements for previous low-end laptop models. With this in mind, at Mobile World Congress (MWC) last week, the company announced the Pavilion X360, which caught a lot of people’s attention because of its attractive price and robust capabilities. Add the Yoga-like features—so it becomes a tablet, too—and you can see why it got a lot of media attention. In fact, it even won PC Mag’s Best of Show Award this year.

As I looked at these products side by side, it was clear to me that they are on a collision course, at least to some degree. In terms of price, the two are so close that from a consumer or even educational buyer’s standpoint, the bump up to a Windows 8 system is almost negligible. More importantly the X360 is much more versatile from a hardware standpoint. The fact that it can run any Windows application further enhancess its perceived value.

To be sure, Chromebooks are not going away any time soon. Google and its partners are highly committed to them and they will continue to be a good option for education and a lot of people who would only use the device for Web browsing. But the appeal of having a fully loaded PC with a 500-gig HD—in combination with a relatively fast and power-efficient processor—for just a little more is certainly compelling.

HP also showed off the 6- and 7-inch Phablets it introduced at MWC India. Although HP seems to have no interest in getting back into the phone business in the US, this phablet is scheduled to be introduced in Europe this summer. An Android-based phone, it is priced very aggressively. The 6-inch model is priced at 249 Euros, while the 7-inch model is 299 Euros. These are unlocked phones with two SIM card slots for dual communication capabilities.

These new products suggest to me that HP is much more serious about its PC business now than when I met with people from the company last year at this time. They are also working hard at innovating around PC and tablet platforms. While I myself am mainly a MacBook Air user, I personally would buy the X360 as my home Windows 8 system for use with Windows apps that I need every so often. I wouldn’t go so far as to say that HP is completely back and not going to experience bumps in the road in the future. But last quarter’s financials were solid and positive. My observations of the PSG group suggest to me that it is back on track and serious about PCs again.

One last note from the HP event. I had the opportunity to chat with CEO Whitman, at which time I asked her about something she said in her opening presentation. She confirmed that HP now has $9 billion of free-flow cash in the bank and zero operational debt. This is a far cry from the company’s financial situation this time last year and very good news indeed for this Silicon Valley hi-tech icon.

How Facebook Could Become the World’s Largest Telecom Provider

When Facebook bought WhatsAPP for $19 billion it shocked even the most seasoned veterans here in Silicon Valley. Most of us analysts questioned how they came up with this valuation. We then started trying to dissect this deal and figure out why Facebook decided to pay so much for this messaging company. There have been thousands of articles written about this acquisition as analysts and media have tried to make sense of this move by Facebook. The fact that WhatsApp had 450 million users was easy to see as the main reason since it could help Facebook get to their next goal of adding another billion users to their social media platform. It was also clear that WhatsApp could add another platform layer to Facebook’s infrastructure that could eventually become an ad vehicle as well.

Although this is the largest price anyone has paid for a company of this nature, one thing I have learned about acquisitions here in Silicon Valley is that a lot of valuations are based on future opportunities and not necessarily tied to current or even projected earnings by itself. Most of the great ones are highly strategic and bring unseen value to the company in ways that most cannot even grasp at the time of the investment. I suspect there is even more behind this acquisition.

One of the more interesting features of WhatsApp is its VOIP calling feature. I use it all the time when I am on Wifi to bypass my telecom carrier to cut down on minutes used via my current voice plan. And here is the best part. It cost me $1.00 a year to call anywhere in the world and talk as long as I want. An even more interesting data point is that WhatsApp already has 450 million “VOIP” customers compared to Microsoft’s 200+ million on their Skype platform. While I also use Skype, especially when I am abroad, the way the VOIP feature is seamlessly integrated into the WhatsApp message application. Which has become an important messaging medium for me when connecting with family and my staff, makes it even easier than having to fire up my Skype App to make my VOIP calls.

Although many WhatsApp users are also Facebook users, the fact remains that WhatsApp still gives Facebook millions of new users to connect to and at the same time got a powerful communications platform that allows them to innovate with and make it part of Facebook’s services. But what many have not realized is that WhatsApp has now given Facebook the opportunity to become a major VOIP provider and could even pave the way to for them to become the world’s largest telecom provider someday.

This idea has been on my mind since I heard of this news last week. Since I am a heavy user of their VOIP calling service it got me wondering if this was not at the heart of this acquisition. Facebook itself is a great communications platform in its own right. But for many, especially in emerging markets, voice calling is still at the center of the way they actually communicate. What if Facebook could also become an MVNO at the local country level and become the major telecom supplier especially in emerging markets and end up providing a of one-stop fully integrated communications medium and telecom platform.

Mark Zuckerberg is highly focused on bringing billions of people online and what better way to do this than by creating a social, messaging and VOIP platform for these markets and then providing the pipes and very low cost links to make this happen. Mark will push to try and get the local telecoms to be more aggressive in their data pricing and reach. If he can’t, he could be the one to do it via an MVNO (in emerging markets) play and use ads and services from these local markets tied to their social and messaging apps to subsidize the telecom piece if needed.

This scenario is not too far fetched. Adding an MVNO layer could help Facebook achieve even greater WW reach and eventually become the world’s largest telecom provider in the process.

My Blueprint for the Future of Microsoft-Part 2

In a recent column I wrote what I called my Blueprint for the future of Microsoft. In it, I proposed that Microsoft be broken into three separate companies or divisions – one focusing on IT, Enterprise and Business; one focusing specifically on mobile; and another aimed squarely at entertainment and the connected home. Many of the comments at the end of the article supported this viewpoint or at least saw merit to it. On the other hand, since this column was linked to by many other sites, I also got comments at the other end of the spectrum that suggested I was nuts. The best one recommended that I should apply to be on Microsoft’s board. One major blog in Seattle even used it as the basis to argue that Microsoft should not spin out Bing or the Xbox group.

When I wrote the piece I thought that allowing them to be separate companies had merit and in many ways I was thinking it could work. But since that time I have been studying more of Microsoft’s overall cloud initiatives and am wondering now if the best way to do this is to just create three distinct divisions that would have a laser focus on their specialties and integrate Microsoft’s overall cloud products into all of them in one form or another. For example, Bing would be a critical tool for use in IT and Enterprise, mobile and any entertainment and connected home products. Also their synchronization layer would be needed to keep all apps and services in sync between any of these divisions. To some degree I suspect this was part of Ballmer’s One Microsoft vision, however, I believe that ultimately his vision was still too PC centric and that is why he clearly was not the right person to move Microsoft forward.

Focus

The ultimate idea behind my blueprint still stands. It needs to be split into three major divisions that have a laser focus with objectives to be the top players in each segment they target. In past years as Microsoft grew, most of the focus was on their current cash cow products, such as Windows and Office, while the mobile group did not receive the proper attention or focus since PCs were still the major products being supported. However, with Apple introducing the iPhone in 2007, Microsoft should have seen its potential and put as much money and focus on mobile from that point on. Instead we heard that the mobile phone group was constantly competing with other more profitable Microsoft businesses for R&D funds during that time as well as clashing with the Windows group since it appears that they wanted the core Windows OS to eventually be Microsoft’s major mobile OS in the future.

By the time Apple introduced the iPad, Microsoft should have been ready to move Windows Mobile onto that platform and instead we got the current version of Windows 8.1 being pushed down to smaller screen sizes. This only emphasized the fact that the company continues down a PC centric path instead of seeing mobile for what it is – an opportunity create a rich mobile platform in its own right that could help them expand their presence in the era of mobile and its staggering growth curve.

Interestingly Microsoft already had a precedent of creating a dedicated OS that was not Windows based. They did that with the Xbox. That group fully understood it was not a PC and delivered a rich OS that focused specifically on the gaming experience but was smart enough to design it as a platform so that its use could eventually be expanded. Today it serves as a front end to a TV and delivers OTT programing from Netflix, Hulu, etc. It can also be fine-tuned to be a set top box if necessary.

In my blueprint piece, I suggested that this group, or division, also be given the connected home program and let it integrate Microsoft’s cloud apps and services into their products and services.

At the upper end of the market–mostly the commercial market–Microsoft still has to focus on Windows, Office and servers. Even though demand for PCs is declining, the industry will still sell between 280 to 300 million annually for at least the next 3-4 years. At the very least they will have to support the installed base of PCs for many years to come. Also, while demand for Office in consumer markets is also declining given the competition they have from Google, Apple and other SAS office like tools, Office 365 still has potential. This group oversees their cloud program and would have to work closely with the mobile and entertainment group to make sure things like Bing and ActiveSync is fully integrated.

As for Mobile, as suggested above, this group would also need to have a laser focus and not be forced to push any form of PC centric thinking that would influence their vision for mobile. It has to have the ability to create the greatest mobile platform regardless of its legacy links to Windows. While I don’t propose they adopt Android, as I stated in the blueprint article they should be free to create a rich mobile OS that uses the look and feel of Windows mobile but also be free to virtualize Android apps to run on Windows Mobile devices to help them gain access to the long tail impact of mobile software apps. As it stands now , they are not going to convince enough mobile app developers to create apps for Windows to make them truly competitive with Apple and Google’s Android ecosystems. This group should also spearhead any wearable products Microsoft would create for this market that is poised to grow exponentially over the next 5-7 years.

Microsoft’s cloud apps and infrastructure are critical to Microsoft’s future and need to be tapped and integrated deeply into all of these three groups or divisions. I suspect the best way to do this is not to spin each out but by creating three distinct divisions that will be empowered to have dedicated goals, focus and autonomy.

More importantly the mobile and entertainment group has to be free to move completely away from the PC centricity of the past and to a world in which the platforms for each group are designed to be best of breed without any legacy baggage. In my viewpoint this is the only way to deliver a One Microsoft vision that will keep them competitive and relevant.

My Blueprint for the Future of Microsoft

As an analyst I have covered Microsoft close up and personal since 1981. When I first went to visit Microsoft in 1982 they were in their red brick buildings in Bellevue, WA and had less than 100 employees if my memory serves me right. I remember being able to walk down the halls and see Gates, Microsoft co-founder Paul Allen and other top executives in their offices as I was shown the operations. If it weren’t for Microsoft, I don’t think we would have had the kind of PC business that exists today and its overall role in driving our industry has been enormous. Over the years, I have watched them grow to become one of the most important and profitable businesses in the world. I have seen Gates become a billionaire 55 times over and see friends I got to know in the early days become billionaires or multimillionaires as they steered Microsoft to software dominancy.

However, as they grew and diversified their business, they have had many challenges over the years. In this day and age when computing is going mobile and their past cash cow of Windows and Office suite software is under attack, it became clear to many that the company should to change its leadership from the top down. More importantly they needed to re-architect themselves for a world of computing that is much different than the one they have known over the past 30+ years. 2014 will become the pivotal year for Microsoft and how the new CEO guides them will determine their success and relevance in the future.

The choice of Satya Nadella as the new CEO of Microsoft is very important to redesigning this pioneering software company. I believe it underscores that Microsoft’s board understands the core of their future lies in business and enterprise. They looked for a leader who could keep them moving forward in this growing segment of their business and Nadella was their choice. In fact, servers, Cloud and IT software represent an area that Microsoft already has a powerful position in. They must innovate within this segment if they are to stay relevant. On the other hand, the PC business is now in stability mode and will never again be a growth market for them or anyone in the PC industry again.

Demand for PCs declined by 10% last year and although we do see some increased demands for PCs in the next 1-2 years due to IT refresh rates starting this year, the fact remains that demand for PCs will stay steady at about 280-300 million a year going forward and most likely will continue to decline in importance over the next 5 years. In fact, even with refresh rates in play over the next two years we believe that overall demand for PCs will still be down by 2-4% over last year’s unit shipments. Also, most IT refresh OS demands will be Windows 7 related, while Windows 8.1 will continue to be slow to garner any serious market share within the enterprise as well as consumer PC markets. Although we know very little about Windows 9, if it pushes a touch based UI to IT and Enterprise accounts, it too will get a poor reception as touched based systems are really not suited for the precision like functions you need with spreadsheets, databases and even word processing where a keyboard and mouse are a key part of the user interface. Also touch screens just add to the cost of the PC or laptop and that serves as a deterrent for upgrading to Windows 8.1 or even a touch based Windows 9.

Where Microsoft is really challenged is in mobile where the growth of smartphones and tablets continues to be strong. Competition by Apple’s iOS and Google’s Android, which together dominate 95% of this mobile market, makes it hard for Microsoft/Nokia to gain the kind of software and channel support they need to grow real strong demand for their mobile offerings. Although smartphones and tablets do cross over to business via BYOD, the role of mobile devices and especially its growth will be driven by consumers and Microsoft’s position in mobile for consumers is falling farther behind their competitors today.

With this in mind, here is my blueprint of how I believe Microsoft should deal with these challenges over the next two years.

Microsoft’s Trinity

Within 18 months I believe the company needs to be broken out into three distinct divisions or possibly separate companies. One division should be focused on IT, Enterprise and Business, Cloud Software, business focused OS and services. The second division or company should be focused primarily on mobile, which includes smartphones and consumer tablets. The third company should be focused on entertainment and games and includes the Xbox, smart TV and the living room.

As for the IT company, this group would have the charter of moving all of Microsoft’s software to the cloud, stabilizing their Windows OS PC business, innovating within server software and establish a set of software as a service solutions primarily for enterprise and SMB. I could see them even acquiring a dedicated services organization to enhance their current software services and consulting practice. This group would be responsible for evolving their Windows OS for enterprise, consumers and education but with full knowledge that the PC as an OS vehicle will never be a growth market again. This group would also oversee the Surface Pro business although if they were smart they would get out of the PC hardware business altogether and let their remaining PC customers handle that part of the business. Bing should also be run out of this group since it is cloud service.

The mobile division or company would be solely responsible for smartphones and consumer tablets. However, this group would have to understand that the Windows PC OS does not serve their mobile agenda going forward. Like Google with Chrome/Android and Apple with iOS, which have distinct operating systems for PC and Mobile, this group should scale Windows Mobile OS up for use on tablets and optimize this OS for various size tablet screens instead of trying to push a PC OS down for use on smaller mobile screens. However, even if they do this they need to fix a huge problem Windows has when it comes to software apps. Windows Mobile OS and Windows 8.1 will never have the long tail software apps that IOS and Android have today and in the future. This puts them at a huge competitive disadvantage. I believe that this group has to bite the bullet and find a way to bring Android apps into Windows mobile, thus giving them a fighting chance to compete with Apple and Google and their partners.

There are various ways to do this although Bluestacks Android on Windows solution is the best of breed that I have tested to date. Of course, the Nokia acquisition would be critical to this division and their hardware which could run Windows mobile as well as Android on smartphones and tablets could help this division gain serious ground against Apple and Google and their Android partners. This group could also become involved in wearable devices and any other mobile based hardware and software that shows market promise.

The Entertainment division or company would be highly consumer focused and take aim squarely at the living room. The new Xbox ONE already serves as a set top for OTT streaming services like Hulu or Netflix as well as delivering games, but they could and should expand its role as a set top box in the living room and tie it closer to their various consumer online services such as Bing and future consumer cloud apps. They could really kick this into high gear if they bought Roku and integrated it not only into Xbox one but push to get the Roku box and technology into actual TV sets like Roku is doing today and make an even broader play to get Microsoft software, apps and services into the home. This group could also oversee future work on the connected home and other IOE consumer related hardware, software and services.

I suppose this is a rather simplistic view of how I think Microsoft should proceed in insuring their future, but to try and do all of this under a single Microsoft umbrella I just don’t think will work. By creating three distinct divisions or setting them up as separate companies each would have a clear set of goals, charters and roles with a tighter focus, thus giving them more of a fighting chance to compete especially against Apple, Google and Samsung that today are dominating the world of consumer technology and have strong desires and goals to become powerful players in IT and enterprise over time. I have no idea if this new CEO will go down this path but I do believe that if they don’t do something drastic along these lines, Microsoft’s overall business will continue to decline and their relevance in the future will be seriously in doubt.

Why Apple Does Not March to the Drumbeat of Wall Street

I just saw an absurd Fox headline that says “After iPhone: Pressure mounts on Apple to unveil the next ‘insanely great’ product.” Had these guys been following Apple even for a short time they would know that Apple does not release products under pressure and especially just because some Wall Street Analysts want them to rush a product to market so they can make more money off Apple.

All throughout Apple’s history the release of a product is driven by when all of the hardware, software and services align properly; then and only then will they release a product or service to delight their customers. Apple does not do vaporware. And as Tim Cook consistently tells reporters and analysts who ask probing questions knowing full well that Apple will not answer them, Apple lives to surprise and delight their customers and that will not change.

However, the idea of pushing Apple to create the next Insanely great product is redundant. Apple shook up the market with the original Mac. They introduced the first all in one’s followed by the iPod, iPhone and iPad. All of these were insanely great products and to think that Apple can’t do that again is short sighted. Cook has even hinted that they have some revolutionary things in the works and before Jobs died he even gave of some hints around TV and suggested Apple would “nail” the TV of the future.

Calling for Apple to move faster is just folly. Insanely great products take time. Sure they continue to evolve current products to advance them within their individual categories but before they enter any new category that could be disruptive Apple’s smart enough to get all of their ducks in a row first. An Apple official told me years ago that when Apple breaks new ground they want to make sure they have all the pieces in place to not only create a new market for a product but also to give them at least a two year lead on the competition so that they can secure their leadership position in any new category they enter. That has been the mantra since 2000 and I don’t believe that has changed.

Apple does not nor should not ever march to the drumbeat of Wall Street or media types that think pushing them to get the next insanely great product out fast just to appease their agenda is smart. Insanely great products take time and thankfully Apple is much smarter and wiser than Wall Street and the media combined.

I completely understand Wall St and all investors desire to see Apple grow. Growth is possible within Apple’s strategy but it will also require patience. Something I know many investors do not have. Ultimately, Apple did not meet the expectations of Wall St, a group that understand financial markets but not the trends in product markets. Apple is less interested in meeting investors expectations of them but more interested in meeting, and exceeding, their customers expectations of them.

Lenovo’s Goal of Tech World Domination

You may not know it yet but Lenovo has grand ambitions to become one of the most powerful tech companies on the planet. Their original move to buy IBM’s PC business set this goal in motion and has become the cornerstone of their tech reach into enterprise and consumer computing markets world wide. With that move they have achieved one of the most difficult tasks in business by successfully integrating two very different companies and cultures under a new set of owners and done it quite well. Within weeks of Lenovo buying IBM’s PC business I was privileged to be invited to Beijing to meet with Lenovo’s top management and get their ideas about merging these two companies and try and understand their long term goals.

Personally I was highly skeptical about this marriage as I was very close to the IBM PC group from its birth. In fact, my first major project for Creative Strategies in 1982 was to work with IBM’s new PC division on market research projects and channel development. One of my most interesting projects was to actually review the strategy and designs of their original laptop that debuted in 1986 and have continued to follow their developments in laptops ever since. During that time I watched IBM become a powerhouse in PCs and perhaps more importantly, develop a world class sales and service team and become one of the most trusted computing brands in the enterprise. This is where I had most of my doubts about the merger. How could a Chinese company gain the trust of IBM’s IT customers and be assured that Lenovo would continue to advance products and provide great service and support. While in Beijing I was assured that Lenovo would be careful with this issue and work hard to keep IBM’s PC customers happy.

To the credit of Lenovo’s Sr. management they took a hands off approach with IBM’s PC division and let them do what they did best. They were slow to integrate Lenovo’s own corporate strategy into this US business and let the former IBM PC management team run things from their Raleigh, NC headquarters. While their were some big Justice Department hurdles to get through initially, once the US governing agencies cleared the deal, the merger of IBM’s PC group and Lenovo was in full swing. Since the purchase of IBM’s PC division in 2005, Lenovo has leveraged both their own business agenda with the skill set and operational excellence that they got with the IBM PC group and have become one of the most important tech companies in the world.

When they recently became the #1 PC vendor in the world Lenovo really got the attention of the business and consumer public and are now considered a powerful brand in computing throughout the world. The market also took note when they got into the smartphone market in China and went from zero market share to being the third major handset vendor in about 18 months. This is a company on a mission and it seems to me that they have grand ideas of becoming one of the most dominate tech companies in the world. After watching the progress over the last 9 years I have a sense that they may eventually achieve this goal.

The reason I feel this way is the based on a couple of observations over this time period of following them closely.

The first is thing is the management team in place both in China and the US. This is one of the best group of PC executives I have dealt with and they all are highly committed to the overall Lenovo vision. They also have one of the smartest marketing minds in David Roman in any tech company. David is their CMO and came to them from HP where he was integral to HP’s “The PC IS Personal” campaign. Over the years I have met many of their executives from China and North Carolina and am pretty confident with their ability to execute this grand vision.

Second is their robust R&D and Design groups. While Dell, HP, Acer, Asus and Samsung have solid R&D divisions my personal exposure to Lenovo’s design and R & D teams have me convinced they have the best group of this nature among these companies. Also they have a very large budget for these divisions and I continue to be impressed with the way they create and innovative with their PC’s of all shapes and sizes these days. This is a real competitive advantage for them and only Apple has a team in this area that I consider better than the Lenovo teams.

Third thing that impresses me is that they have a very clear vision of what they want to do and how they will get there. Adding IBM’s Server group to their portfolio expands their business opportunities significantly and the Motorola purchase gives them a foot hold in the US cell phone market. Late last year I was talking to some Lenovo execs out of Raleigh and they confirmed that Lenovo wanted to bring their smartphones to the US. When I heard that I silently whispered to myself “good luck.” But by using Motorola as their US arm and more importantly leveraging Motorola’s R&D and carrier relationships, I no longer doubt that Lenovo could become a powerful force in smartphones even in the US. This was a win-win for Motorola and Lenovo even if Google had to take a huge loss on the deal.

In an interview with Fortune, Lenovo CEO Yuanqing Yang says that his company seeks to replicate its ThinkPad success with Motorola. The Fortune reporter asked “ With Motorola, Lenovo will be the No. 3 smartphone maker worldwide. Do you think your company can catch up with Apple or Samsung, who are still far ahead of you? And how long will it take?”

Yuanquin Yang replied “Definitely, over time. Our mission is to surpass them.”

Achieving that goal will not be an easy task given Samsung and Apple’s powerful position in the market today. Yet, given their track record and the goal to become the top tech company in the world, I have to give YY as he is called by the Lenovo team, the benefit of the doubt. Lenovo is on a mission and they have achieved much in 9 short years. With a few other acquisitions and a committed team of executives it seems to me that at the very least Lenovo is on a path to becoming a power house in smartphones and tablets along with having continued success with PC’s and it will be interesting to see how much more they can accomplish over the next decade.

How The Internet of Everything will Impact Healthcare Insurers

If you have been reading my columns over the last few years you know that I have had some serious health problems. In June of 2012 I had a triple bypass and have spent the last 18 months recovering and trying to stay healthy and fit. One of the things I started doing once I had the strength was to start walking. For the first month I could hardly get to the end of my street. But over time as I gained strength I started walking longer distances and even started to do some serious hiking. I credit my walking exercise with helping to build strength and endurance and it has clearly impacted my overall recovery.

I also credit my Nike Fuelband and its technology to help me monitor my progress and it became a very helpful motivational tool. I was told by my doctors that I needed to walk at least 10,000 steps each day as part of my recovery process. Although I had initially used a basic pedometer, I found that Nike’s Fuelband points system as well as its tracking of steps and calories burned gave me more data points and as a result this data become part of my motivational focus. I especially used it to try and beat my points scores or at least equal them on a daily basis. I also bought a watch that could monitor heart beats, which turned out to be important since I knew that even with walking I needed to increase my heart rate to get more benefit from this exercise.

At CES there were dozens of new health monitoring devices introduced and most of the existing ones, such as the Jawbone UP, Fibit health bands and others got updated. We researchers put these devices in the wearables category as well as the iHealth sector and I see them as the first wearable technology to gain mass market acceptance. It will be many years before smart watches, smart glasses and other wearables go mainstream but for now health related wearables will be the biggest segment of devices sold in the wearables category.

When I met Cisco’s CEO John Chambers at CES he told me that the IoE will have a big impact on healthcare. He was referring to big issues like larger networks and more data related infrastructure since that is Cisco’s sweet spot, but he also referred to the role of “end point” devices such as wearable health monitors and out patient testing devices connected to a Dr’s office or clinic too. The back end has to be able to support the potential of millions of these devices connected to the internet and medical facilities in real time in some cases.

However, I see the IoE’s impact on healthcare being much more personalized and interactive in the future. In the iHealth section of CES, United Healthcare actually had the largest booth in this section. They had 6 stations showing off things like Web sites with nutritional info and other sites for preventative healthcare as well as backing two or three wearable health monitoring devices. I have had discussions with some healthcare providers over the last six months that helps me understand why United Healthcare was at the show. All of the major healthcare insurers and providers know that if people stay healthy they stay out of Dr’s offices and the hospital and their costs are reduced. So they are making a major effort to push illness prevention and are very big on keeping people well.

This is where their backing of things like the Fitbit, Fuelband and other wearable health monitors come in. They know that if a person stays active the chances of getting ill is minimized. They suggest taking walking at least 10,000 steps daily, burning more calories, keeping pulse rate up during exercise, etc. They know that these wearable devices can help monitor and motivate and can use these data points to help people stay active. But one person suggested that they could use these to also help keep their costs down. The idea would be for a person to use these wearable devices daily to track activity and opt into sending that data to their insurers. This could be done a number of ways weekly, daily or monthly but it would allow the health insurers to know if they are keeping active, thus minimizing future health problems. To get people to opt in they could tie it to their actual insurance costs. Let’s say that a person is healthy and uses these devices to monitor that activity which goes a long way towards keeping them healthy. If the insurers can monitor that they could tie it to lowering their health insure premiums. Or even you have been ill and are recovering, being active

Although this idea is in its early stages and is frought with a lot of security, privacy and fraud issues, if they can solve these problems or at least minimize the threat, I personally would be glad to send my monitored activity data to them if they reduce my health costs. Health insurance premiums are going up and any way that I can reduce them is interesting to me and suspect it would be interesting to many people also. The people in the health industry I talked to about this are looking at the cost benefit analysis of these type of wearable devices impacting their bottom line but if they can show major health cost reductions by a program like this they will be aggressive with it. Either way, they are highly committed to helping people stay healthy and their current online programs and other digitally driven IOE solutions that help people stay healthy is now a real priority for them.

Google and Nest: Why Now and Why Not Apple?

After spending many days at CES and perusing the show floor it was clear to me that the big theme at this years CES was The Internet of Everything. I was also struck by the fact that one trend many have been tracking for years, home automation, was up front and center in IOE and this was the first year I saw new products for automating the home that convinced me that we are really close to seeing the home automation dreams of many finally come to fruition.

Nest itself is the darling of home automation at the moment as their Nest connected thermostat has reinvented how a thermostat should work in a connected home and their connected fire alarm adds a new dimension to a very important device that should be in very home. While these products in themselves are great, the genius behind them is Tony Fadell, long time Next and Apple executive who is one of the smartest guys I have met in tech. More importantly, Fadell and team are zeroed in on creating easy to use, powerful home automation platform and devices and surely must have had a powerful roadmap in the works to garner a $3.2 billion cash buyout from Google.

While Google has not said much to date about IOE, their Android OS is at the software center of many IOE related devices and while they had an internal team working on their own version of home automation, buying Nest jumpstarts a major push into home automation Google style. This gives them a powerful platform to build out Google branded devices connected to a host of current and future Google services.

At first, Nest will continue to run generic Linux but you can bet running Android is not far behind. Nest’s platform and future products will also help Google become a powerhouse in home automation faster than if they tried to build their own solutions from scratch. Buying them now gives them the core platform to build on and helps them move to a strong position in IOE that will drive much of the next generation of Internet infrastructure, networks, devices and services over the next three years. Nest delivers them the framework for Google’s Home automation solutions.

So, why Google and not Apple?

Apple is the only major player that has the entire framework to build all types of IOE devices at any level. They have infrastructure, devices, software and services and I believe that they have had an advanced team of engineers who have been working on their own home automation products for years. You will notice that they did not bid for Nest. Nor had they invested in Nest. They had no interest in Nest since they are probably pretty far along in their own home automation roadmap. I believe that this will just be another significant area for them to connect to Apple’s iOS, devices and services and will have their own dedicated home automation devices in the future that helps give them an even stronger Apple and iOS solutions approach to the market.

What is fascinating about this move is that is highlights the reality that our connected homes, and our personal devices will run a number of different operating systems. In essence a consumers connected lifestyle will consist of a heterogeneous mix of operating systems rather than a homogeneous one. Some level of interoperability and standard supports will be key for this to take off in any meaningful way.

The Next Big Challenge for the PC industry

By all accounts there are about 2.8 billion people on the planet that use technology and in various ways are connected to the Internet. One third connect via PCs while the other two thirds use smartphones, tablets and other connected devices that have sprung from the Post PC Era. What is quite interesting is that for the first 30 years of the PCs existence there was little innovation in user interfaces. PCs used mice and keyboards to navigate and interact with digital information. But by 2004 touch had been introduced in some very early tablets and smartphones and it took Apple’s introduction of the iPhone in 2007 to move touch into mainstream of user interfaces. Today all mobile devices use touch for navigation and input and with the introduction of Siri and Google Now, voice has entered the scene as another form of input.

As we move forward, the goal of the tech industry is to bring the next 1 billion on line by 2017-2018. But there will be a big difference this time when it comes to delivering new devices and services to this new crowd. This new age of users will not be burdened or even tied to legacy UI’s and apps from the past. While mice and keyboard will still be optional UIs for some, the majority of the new user will enter the connected world via new UIs that include touch, gestures, voice and even bio-senors that will be used by them to navigate the next Internet age. More importantly, I estimate that at least 80% of these new users will come in through some form of mobile device and that the PC and laptop will have very little interest to them.

The ramifications of this for the tech industry is huge. PC vendors of the past will have to adapt or they will die. I see Microsoft having the greatest risk in that they are so PC centric with so much legacy baggage that making this transition will be difficult. The problem with Win 8 is not the software, but users ambivalence. Unless you are a business user tied to their apps, Win 8 and its lack of apps has little appeal to the mass market. Also, Android and IOS more than deliver what most people need and will continue to rule the OS world of this new digital era.

The biggest challenge though is two fold. The first is related to user interfaces. Mice and keyboards will have minimal interest to these next billion users. The majority of these folks will come in through mobile devices of the Post PC era. That means touch is the new “keyboard” and perhaps gestures is the new “mouse” for these folks. We also see voice playing a more important role in UI’s for the next billion users although perfecting this by 2017-2018 is not very likely. Siri and Google Now show voice’s functionality today to a point but for voice to be integral to the mobile experience it will need better speech to text recognition and more powerful voice accuracy for it to be really useful as a future UI.

The second thing that will need to be in place is a powerful service’s engine that ties these next billion users devices to the cloud and makes interacting with the cloud and their devices easy to do and seamless. Of course, the cloud based apps, synchronization, storage and communications layers have to work harmoniously too. Apple, Google and Amazon have a huge lead in this space and it will be difficult for others to keep up. On the other hand we are talking about a billion new users throughout the world and there is great opportunity to create regional versions of these services as well as deduced devices just for these regions too. The idea of one size fits all won’t work for the next billion users who will want variety in hardware and services.

I see the next two years as pivotal for all of the major players in the PC and CE industry. For the PC vendors, they have to move on and think of their PC business more in terms of a mature market that needs to be kept steady. There is still room to make money and innovate in PC’s and laptops but it will never be a growth market again. Instead they need to focus on mobile products and services that meet the actual needs of these next billion users and put serious R&D into innovating around these new computing paradigms. For the Telecom industry, breadth will be important. They too need to keep investing in building out networks, making them faster and secure to stay competitive but also expand their reach. Sprints move to buy TMobile is a good example of this. They also need to bulk up their services offerings. As for the CE companies, they have to add Internet connections to the majority of the devices they make. Gone are the days when most CE devices are islands unto themselves. They need to think connectivity and sensors and move to make most of the products they make smart. This goes for devices for the home, cameras, TV’s and even toys.

Also, all of these industries need to invest heavily in new user interfaces for their devices in the post PC era. The next billion users will demand a whole host of new ways to communicate and interact with their digital products and ultimately I see this as one of the tech industry’s biggest challenges in the near future. The good news is that there are at least another billion people clamoring to become part of the digital revolution. However, for them to come to the digital party the tech companies have to readjust their thinking about what it will take to interest and reach these new users with their brands and services and invest accordingly if they want to be a company that interests the next billion people who will come online in the next 3 to 4 years.