Tech Predictions for 2014

For the last 27 years I have written an annual industry prediction column where I try to forecast what I see happening in the PC and CE markets in the New Year. To be fair, I spend thousands of hours each year researching these industries and their products and get to see inside the labs of many companies as well as peek into start-ups and garage shops all over the world. So what I predict has more to do with taking an intelligent guess about what I see happening in 2014 and less an actual prediction. So as I look into my crystal research ball, here is what I believe will happen in tech’s New Year.

1-Google will spin out Motorola

Google says they bought Motorola for their patents, but patents only go so far in allowing any company to keep the doors open and profitable. I believe that in 2014 Google will spin Motorola out as a dedicated company that creates great products around Google IP and have it be responsible for its own P&L. We have heard rumblings that they have some stunning and innovative products in the works and they could use these to become the branded arm for all of Google’s hardware related products. Having Google and Motorola products that are basically the same is just confusing to customers. Google will see that it makes sense to use them as their hardware arm and make them accountable on their own.

2- Larger tablets for sharing will hit market by mid-year

I recently wrote about how Dell’s 18” all-in-one was now being used as a kind of giant tablet in the home with people putting them on their laps for use in front of the TV or for tablet laptop games. The industry has seen the potential of a larger screen device that can be shared and instead of making them clunky all-in-one’s, we should see some sleek designs optimized as actual large tablets for use by two or more. The industry does not have a name for this but I have heard them called lap tablets or shared tablets for the home. Should be on market by mid-year.

3-Dual OS laptops and tablets

It is clear that Windows 8 is very slow to gain a large volume of software that can compete with IOS or Android’s Apps stores. So expect to see Windows laptops that will also have Android on them that taps into Android apps for use on Windows. The folks from Bluestacks have had a solution for this for years but in 2014 this will be a big issue for the industry and a lot of PC and tablet vendors will have dual OS products on the market starting in Q1.

4–Apple will release a ground breaking productivity device 

The iPad has become a powerful productivity tool in its own right, even without much help directly from Apple. As you know, Apple does not have an enterprise sales group. They don’t even have an enterprise services group. Yet, iPads have become the dominant tablet in IT and enterprises around the world. But there is stiff competition for the hearts and minds of business users coming from Microsoft and Google and some of their partners with tablets of their own aimed at this market. I can’t imagine Apple sitting still and letting these competitors gain ground on them so I believe Apple will create an iPad class product that will be unique and ground breaking focused on business and productivity. I have no clue about its design, although some think it might be what they call an iPad Pro while others think it could be some type of convertible. I am not sure what it will be but I suspect that whatever it is it will be a surprise to all. By the way, I do have one prediction related to this. Whatever Apple releases in this category will have a major negative impact on traditional Windows laptop sales next year and I think total sales of laptops could be off as much as 20-30 million units in 2014 over this year.

5-Smartphones and beacon-based sensors become a big deal

2014 will be the year when Bluetooth Low Energy beacons take off. These beacons can be placed around ballparks to communicate with smartphones and tablets to give users related information about game stats, deals from the concession stands, and coupons for discounts on logo’ed clothing. They can also be used in stores so that as a person goes by an end cap that has a beacon on it, it can send a short burst of information to their smartphone announcing a discount or deal on what is on the end cap if they buy it within 30 minutes. Apple is leading the charge in this space with their iBeacon technology but Microsoft and Google are working on similar programs. The marriage of Bluetooth Low Energy radios integrated into beacons and smart devices will start to take off next year.

6-Smartwatches are dead in 2014

All attempts at creating a smart watch for the masses have failed. The ones on the market today only appeal to male geeks and ultra early adopters  Although we may sell as much as 1.5 million smart watches in 2014, unless someone masters the issue of elegant design and style matched with non geeky technology, they are not going to be a product for the mass market anytime soon. Next year will still be an experimental year for smart watches. 
What will be hot will be wearable health related devices such as the  NikeFuel Bands, Fitbit, Jawbone UP, etc. These types of wearables along with Bluetooth related health devices such as wireless blood pressure kits, wireless blood glucose testing kits, etc. will see serious consumer interest next year. These health devices come under a category called Digital Health and there will be a lot of exciting new products along with health related wearables coming to market in 2014.

7-The PC market could actually grow in 2014

I know that this sounds contradictory given my statement in the Apple prediction that a new product from them could have a 20-30 million negative impact on current laptop demands next year. The discrepancy comes from something that is a bit of a problem for us market researchers at the moment. In the past when we counted computers shipped we had two distinct categories. 

We counted desktops and laptops separately but in final totals combined them. For example, we will sell in total about 300 million PC’s in 2013. However, 67% of these are laptops, the rest is desktops, which include all-in-ones, traditional tower desktops, etc. Enter now the 2 in 1’s and convertibles. Are they tablets with keyboards and should we count them as tablets, or are they tablets/keyboard combo devices and should we count them as laptops? At the moment some researchers are putting these in the laptop category and since they have not been huge sellers yet, they have not had a dramatic impact on our total PC sales in 2013. IDC now says PC sales overall will be negative 10% this year over last year. I believe that we will see a stronger uptick in 2 in 1’s and convertibles and whatever Apple releases in a new design will probably also be counted as a laptop. If this is true, then the overall market for PC’s, especially laptops, should stabilize or possibly even grow in 2014.

8-Internet of Everything goes mainstream

Cisco, Qualcomm, Intel and pretty much every major tech company is now focusing on the Internet of Everything. Basically this means that all tech devices get some form of connectivity, become smart, and can be connected to all types of devices and to the cloud. Although this often now comes off as a buzz word, the idea of IOE is a big deal and represents an important part of all tech companies’ strategies. I believe that in 2014 the industry will come up with a better definition of IOE and how this will practically impact business, consumers and education. 

9-Greater acceptance of Chromebooks

I was in a coffee shop in Santa Barbara recently and an elderly woman was sitting in the booth in front of me searching the Web on her Chromebook. On the way out I asked her why she bought this laptop and she said besides price, it did pretty much what she needed a laptop to do. I hear this story a lot in our research and understand that Google and their partners will become even more aggressive in pricing and marketing this in 2014. I expect this to help Chromebooks gain more ground in the new year. 

10-Digital Health will be a big focus in 2014

In a way this is the health arm of IOE. I have been testing the new iHealth Wireless Smart Gluco-Monitoring system, that allows me as a diabetic to test my blood sugars and transmit the results wirelessly back to my iPhone. Their Wireless Blood Pressure cuff also uses my iPhone to manipulate the cuff itself with all of the reading being done on the iPhone. There are dozens of other medical examples tied to smartphones and represent another key function that uses the smartphone as a personal digital hub. The recent Health Summit in Washington D.C. drew hundreds of people to their largest event ever and friends who attended it were excited about the growth of the products and services in this space. In 2014 Digital Health products will become more available to the masses and be its biggest growth year to date. 

11- 3D cameras and 3D Printers

At CES we will see the first 3D printers under $500. And we will see new desktops and laptops that will employ 3D cameras in them. While 3D never took off in TVs, it’s role in personal computing will be better accepted in the future. Although 3D printers are in the discovery phase with consumers, at prices this low millions could be tempted to buy them and begin experimenting with creating 3D objects. With the help of 3D cameras popping up in new computers, this will help these discoverers to be even more creative. It will still be a small market in 2014 but 3D printers and cameras could start reshaping the way we view our personal computers and what they can do for us. 

12- Jeff Bezos buys the US Post Office 🙂

This is a bonus prediction and I highlight here a tongue-in-cheek article Carl Schlachte wrote for Techpinions recently. It is a futuristic piece that imagines the implications should Jeff Bezos set his eyes on the US Post Office. Very provocative piece and well worth the time to read.

Did Samsung use Apple as an R&D Center?

Now that it has been proven in the courts that Samsung stole key intellectual and patented properties from Apple’s iPhone, I’ve been wondering if this move by them was actually calculated. Go back to the 2007-2008 time frame and we can see from this period that Apple pretty much over night reinvented the smartphone. More importantly, its impact on the marketplace was dramatic. Now imagine if you were a proven feature phone developer and had already been working on your own version of a smarter phone at the time. It would have flabbergasted these companies to see a virtually unknown entity in phones leap frog them with such a stunning product that had, in a very short time, created the defacto standard in smartphones. Even worse, these companies probably realized that their own efforts paled in comparison to what Apple had and were desperate to move quickly to become a competitive player lest Apple own this market by themselves.

We also know from the court documents that Samsung claims to have been working on their own smartphones very close to the time Apple was developing their version. However, I suspect that whatever they were developing was not even close to what Apple had created and had to drop those designs and refocus on creating a product that was equally cool and powerful as Apple had on the market. But doing so meant time and I believe that Samsung decided time was not on their side if they were to be a serious player in smartphones. Also, doing a dedicated R &D project not only took time but bucket loads of money to do so.

I remember seeing the first Samsung Smartphone and thinking at first it was an iPhone. You may remember it since it was a spitting image of Apple’s design. Yes, it had Android as an OS and a few other features, but a lot of us analysts who looked at it were extremely surprised to see that it was pretty much a copy of what Apple had in the iPhone. Now when it comes to R & D, many companies reengineer products and try and put their own IP into it and make it different so it does not come off as a direct copy. However in this case it appears Samsung did not reengineer as much as do a direct copy of it in hopes it could get away with it.

From this move the amount that Samsung will pay in damages to Apple currently is around $850 million. There are other suits still on the table but lets say that in the end Samsung pays Apple $1.1 billion overall in damages. Samsung would have shelled out at least that much in their own R&D costs and been years behind Apple as a competitor. Even worse, they might have never even caught up using their own designs and could have been left in the dust. Given Samsung’s position in feature phones they probably realized that in not doing something close to what Apple had created could lock them out of this multi-billion user market and probably decided it was worth the risk in order to guarantee they would have a place in the future market for smartphones.

The result of copying Apple and getting their own smartphone into the market fast has paid off. Samsung sells 50% of all Android phones and has begun beating Apple in market share in some markets. They now have record profits, much if it coming from their smartphone business. They have become one the top players in smartphones and over time have created their own IP and designs so that they are no longer using any of the copied technology or designs from Apple. To say that Samsung has become one the most powerful CE and smartphone companies in the world would be an understatement.

Now, I don’t think copying and stealing to get a product to market fast is in the play books of any MBA programs but this time what appears to be a calculated risk on Samsung’s part to copy Apple to get their own competitive product to market fast has kind of worked. It only cost them whatever they will pay in final damages to Apple and in the end that amount will probably be less than they would have paid in their own R&D expenses if they had built their own smartphone from scratch and would not have had any guarantee that those early versions would be a success.
Using Apple for R&D is a bad business idea and I don’t recommend trying it, but for Samsung, whether calculated or not, it seems to have worked out in their favor.

Smartphones are Becoming the Hub of our Digital Lifestyles

In 2003 I began a series of lectures at conferences entitled “Three Screens of the Digital Lifestyle.” Starting in 2000 I began researching how people were using various screens in their lives and made the assumption that over the next 5-7 years all of our screens would be digital and would have some type of an OS that made them smart. The three screens I focused on where the PC, TV and the feature phone at first and by 2007, after Apple introduced the iPhone, the third screen became a smart phone in my talks.

In these lectures I basically laid out how these screens would become the hub our digital lifestyles and at the time suggested that 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 sync with as the iPod music library was on the PC and was managed on the PC too. 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” as Jobs put it 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 then push them down to our devices. Consequently the data sync was now cloud based and the Mac or the PC played less of a role as our digital lifestyle hub. However, the idea of a digital device being a hub is still alive and in fact, in many ways the smartphone itself is becoming a very important hub in its own right.

If you have one of the current wearable health monitors you are already using it as an important hub in your own lifestyle. In my case my preferred wearable is the Nike FuelBand. I wear it 24 hours a day and it records my steps, gives me the amount of calories I burn and as designed, it pushes me to move more throughout my day.

At the end of my day I sync it to my smartphone where the data is compiled and analyzed and it keeps a running weekly tally of my movements so I can compare them against other weeks in the records. It uses Bluetooth Low Energy (BLE) radio signals for this synchronization and more and more devices of all types will rely on this important extension of the Bluetooth radio being used in a whole host of wearables and other devices that use the smartphone as the central hub of the data it collects..

My smartphone has become an important hub in a lot of other ways too. In fact, I point out in my column in Time magazine this week that the smartphone has become a “Swiss Army Knife of Gadgets.”

It now has become my GPS system, my digital camera, my flashlight, my voice recorder, etc. With the plethora of software and services available on my smartphone, its hub like nature makes it the most important digital screen in my life.

In the next few years, the smartphone’s role as a hub will become even more interesting. There is another function to these devices that when tied to sensor’s give them even more unique capabilities. The heart of this is embodied in something call beacons. Beacons are small sensors that can be attached to physical objects that use BLE to send short bursts of data to your smartphone. Apple is leading the charge with something called iBeacons but Google, Microsoft and others all are creating beacon’s for their platforms as well.

One interesting example of this is how Major League Baseball is going to use these in their stadiums. They plan to put iBeacons throughout a stadium and when a person comes in proximity of the sensor it can send them related info that could be of interest to them. That info could be stats about a player that is coming to bat, specials from a concession stand that will give them a discount on some sports item if the buy in the next hour or even specials from their food booths.

In retail stores a company could put a Beacon on an end cap holding Levi’s 505 jeans and as a person with the stores app on it walks by the display it can send an alert that perhaps says “get 20% of 505’s if you buy in the next 30 minutes.” Macy’s is about to do a pilot test using Apple’s iBeacons that would alert shoppers of specials as they walk by specific displays where an iBeacon is attached to it.

I am not sure that Steve Jobs really understood the impact of the iPhone when he introduced it but what he did understand is that it would be a platform for innovation and indeed that is what it has become. No wonder we are selling 1 billion smartphones a year now and by 2017 over 2 billion smart phones that will serve as hubs to digital lifestyles will be sold each year and feature phones will mostly be gone.

Although we will continue to see solid growth in tablets and they will also become a platform for innovation, it is pretty clear to me that smartphones will be where most of the real action will take place and its role as a hub will only be expanded over the next few years.

Tablets and the Decline of TVs

Not long after the iPad came out I began to wonder just how much of an impact the iPad would have on the PC market. For 15 years, much of our research at Creative Strategies has looked closely at what we call the “screens of the digital lifestyle.” In the 1990’s it became clear that the two major screens for most people were the TV and their PC’s. With the introduction of the Blackberry in 1997, for some a 3rd screen was added to their mix and when the iPod came out many added this screen to their lifestyles too. Of course, once the iPhone hit the market the smartphone revolution was on and for billions of people today, the full feature phone or smartphone has become the most ubiquitous screen in our lifestyles next to the TV.

But since the iPad has come out it has become clear that this versatile screen has had a major impact on one of the major screens in our digital lifestyles, that of the PC or laptop. In 2010, the year the first iPad shipped, we were selling about 390 million PC’s a year world wide. When we end 2013, we will be lucky if we sell 300 million. Most analysts attribute this decline in PC and laptop sales to the role tablets have played in replacing the need for a PC or laptop for many people.

There is another market that it has disrupted too. I recently received a very interesting press release from IHS that gives their forecast for TV sales. Here is their perspective and numbers on the decline of TV sales.

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TV Market Declines Again in 2013 as Sales in both Developed and Emerging Regions Decrease

Following a dismal third quarter, the outlook for global TV shipments appears even dimmer in 2013, with shipments now forecast to fall by 5 percent, marking the second consecutive year of decline.

Global shipments of televisions are set to slide to 226.7 million units in 2013, down from 238.2 million in the previous year, according to the latest Worldwide TV Tracker from IHS Inc. Every type of television will suffer a decline, including the major categories of liquid-crystal display (LCD), plasma TV, cathode-ray tube (CRT) and rear projection.

This follows a 7 percent decline in 2012, when shipments fell from 255.2 million in 2011, TV Systems Intelligence Service.

Screen Shot 2013-11-07 at 4.46.17 PM

Shipments previously were expected to decline by 2 percent this year.

“A wide range of factors are conspiring to undermine television shipments in 2013, from economic weakness and market saturation of flat-panel TVs in mature regions, to plunging CRT sales in developing countries,” said Jusy Hong, senior analyst for consumer electronics & technology at IHS. “This is all adding up to a second consecutive year of decline for the television market.”

The dominant LCD TV segment will see shipments decline by 1 percent. The smaller plasma segment will suffer a sharp 27 percent decline.

The moribund CRT segment will decline by 40 percent. Meanwhile, the already infinitesimally minute rear-projection TV segment will dwindle to nothing this year.

The third quarter’s not the charm

Shipments in the third quarter of 2013 declined by 7 percent compared to the same period in 2012. While shipments rose 12 percent compared to the second quarter, this came during a time when TV set shipments normally grow as the Christmas season approaches.

With shipments also having declined on a year-over-year basis in the first and second quarters, the third quarter decrease ensured the global TV market would drop again for the full year of 2013.

Mature markets slow down

The biggest reason behind the shipment decline this year is the continuing global economic recession and maturity of the TV market in advanced regions.

The Western European and Japanese TV markets have been declining for three consecutive years since 2010. The North American market has been shrinking as well, dating back to 2011.

Emerging markets are underwater

Meanwhile, the TV markets in Asia-Pacific, Eastern Europe, and the Middle East and Africa, which are regarded as emerging regions, have also been contracting since 2011—but for different reasons than the mature countries.

In the emerging regions, CRT TVs are disappearing from the market, causing overall shipment to decrease. Because CRT sets are the cheapest option, this disappearance is having a major impact on overall sales. Low-income consumers in these regions often cannot afford more expensive LCD TV sets.

Television vendors are increasingly reluctant to sell unprofitable, cheap sets, such as CRTs, or LCDs that use the older cold-cathode fluorescent tube (CCFL) backlighting technology. This is narrowing the choices for cheaper televisions among consumers in emerging economies. As a result, consumers in these regions are holding off on television purchases until pricing for other types of television sets decline to affordable levels.

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I am sure that their perspectives on the decline of TV sales is accurate. However, I would suggest that there is another reason too. I think the impact of the iPad and tablets as portable media players–and in some cases when using something like a Slingbox as an actual TV–that the iPad and tablets have played a role in the lower demand for TVs as well as PCs. We are hearing that for many who would perhaps buy a TV for their bedroom or even a kids room, an iPad or tablet is actually preferred.

People can lay in bed or sit in a chair and watch their favorite show via Netflix, Hulu, etc. And with more and more TV networks directly streaming their programs over the Internet or through dedicated tablet apps, these tablets will become more TV like in the future.

Homes used to have two or three TV’s. But more and more we are seeing a single large flat screen TV bought for the living room and the iPad or tablets are becoming the extra viewing screens for many that can be used anywhere in the house instead of putting another TV set in a dedicated room.

As for emerging markets, as the above report points out, vendors are pulling back on making cheap CRT’s in these markets and these folks can’t afford the flat screens TVs. So for many a tablet will serve as their PC and TV, something that has not really been factored into most PC and TV decline models yet.

Within six months of the iPad hitting the market, it became clear to many of us that it had the potential to disrupt the PC market and over three years this has proven itself out. I don’t think any of us saw its potential in disrupting the TV market back then, but if you look closely at the declines in demand for TV’s, it is hard not to consider the fact that the iPad and tablets are just as disruptive to this market.

Why Microsoft will regret not doing MS Office for iOS

I was rather intrigued by the comment made by a Microsoft executive after the iPad was announced that basically stated that Apple’s iWork is not for real work or productivity. For that, he says, only Microsoft Office is a true productivity tool. I took personal offense to this remark since I use many of the iWork tools for productivity and it meets the majority of my needs. In fact Keynote is actually a better presentation tool for us at Creative Strategies then Powerpoint. Pages has become a very robust word processor allowing us to do all of our newsletters and client Perspectives documents in this rich and graphically oriented word processor. We also do almost all of our charts in Numbers, the third product in Apple’s iWork tool kit. So if I read Microsoft’s executive’s comments correctly, I do not do real work–I apparently only do pseudo work or productivity since I use iWork.

Of course, his comment was just silly posturing and made him and Microsoft just look clueless. I continue to be amazed that Microsoft still does not give Apple the respect it deserves and from this comment it suggests that they still don’t take Apple seriously even if the iPad has taken close to 100 million PCs out of the annual PC buying cycles. Three years ago we sold close to 400 million PCs a year. In 2013 we will be lucky if we sell 300 million. That means 100 million less PCs are sold each year that could use MS Office than in the past. Yet, Microsoft has still not created a version of MS Office for iOS!

I believe that it is actually too late for them to do MS Office for iOS for three major reasons-

1-Apple’s new iWork suite of tools is now free. Knowing Microsoft, if they did do a version of MS Office for iOS I highly doubt it will be free. In fact it would probably be at least $60.00 to match the yearly fee of MS Office online. Perhaps 5-7% of iOS iPad users might be tempted but given the quality of iWork tools today, free always beats paid for software and if productivity on iOS 7 is needed, the majority will opt for iWork.

2-iWork will only get better. Apple never stands still when it comes to improving their software. You can expect that Pages, Numbers and Keynote will gain even more features and give users even greater controls over the next 18 months, trumping anything that Microsoft might deliver in an iOS version of MS Office. Also iWork in the cloud is so much better than Office in the Cloud already and it too will only get richer given Apple’s laser focus on apps and services.

3- I believe Apple has a killer productivity device in the works that could be even more disruptive to the PC market than the original iPad. If you think the iPad has had a detrimental impact on the PC market to date, just wait. Although Apple has not done any serious push for the iPad for use in business and the enterprise, the iPad has emerged as a very rich productivity tool in its own right. Add a Bluetooth keyboard to the iPad and in many ways it replicates the laptop experience in a much smaller, thinner and lighter physical platform. The iPad Air makes the iPad even thinner and lighter and is already in high demand in many IT accounts I have talked with recently.

There is a reason Apple named the new iPad the iPad Air. Some think Apple will do an iPad Air Pro and others think they will do some type of hybrid. They may be right but I suspect Apple has something else in mind that may have elements of these two ideas but in a different package. Of course I am just speculating here but I sense something big is up and if they do create an iPad that is optimized especially for productivity, I predict it could take at least another 30-50 million PCs and laptops out of the yearly PC pipeline by the end of 2015.

Had Microsoft brought out a version of MS Office for iOS 7 within a year of the iPad being on the market, it would have been a big success and serious money maker for them. Now it is too late. You also can’t count out more and more people moving to Google’s productivity tools. I recently found out that a major national newspaper just moved everyone over to Google Docs and away from Office. I have heard that same thing happening at other big firms and big government accounts too.

With a shrinking PC market and a looming larger iPad/iOS market continually growing along with new productivity tools from Google and others, MS Office will have a hard time attracting new buyers and I am afraid that this franchise will only recede instead of grow in the future.

Three Key Takeaways From Apple’s Fall Unveiling

When Apple introduced their new products today, it left little doubt that they are in an evolutionary period of their product cycles.

Yes, the new iPad Air is a great design, thinner, lighter and more powerful but still pretty much in the same basic form factor. The new iPad Mini now has the Retina display, a technology that has been in MacBooks and the iPad for some time but is a welcome upgrade to this popular tablet. They also now have Apple’s 64-bit A7 chip, making them the fastest tablets available this fall.

The MacBook Pro 15-inch breaks new ground by using Intel’s latest Crystalwell chips, the most powerful and energy efficient mobile processor on the market. The extended graphics in this model give it new powers that will make Apple’s high end customers drool.

The 13-inch MacBook Pro gets the newest Intel Haswell chip, which means both new laptops will get better battery life and still deliver very powerful solutions to business and consumers.

And OS X Mavericks, with its 200 new features and offered as a free upgrade to all Mac customers will be a big hit. With it being free there is no reason for anyone with a Mac to not upgrade and give themselves the immense power that OS X Maverick can deliver to them.

There were some strategic ommisions too. Neither tablet had Apple’s new fingerprint security technology inside although I suspect that this is more due to the fact that all of their fingerprint modules are going into iPhone 5S and getting enough units to use in their tablets was not an option yet.

Some had thought they would also do a special keyboard cover/case but I never thought that that would happen. The key reason is that there are dozens of those on the market already and unless they could do one that was spectacularly innovative, sleek and unique, they would not enter this space. Rather they would put more time and energy in advancing the technology and capabilities of the iPad and MacBook Pro’s this time around.

I also saw three very nuanced yet extremely strategic things shown at the event that are really worth noting.

1-Giving the new iPad the Air designation.

I don’t think this is an accident. More and more people are using the iPad like a laptop when they attach a keyboard to them. I use my iPad with the Logitech keyboard cover all the time and for all intents and purposes this has been my convertible or 2-in-1 like those now showing up on the Windows platform. While Apple has not embraced this convertible or 2-in-1 idea, it is clear to me they understand the potential of a product like this and could easily create their own unique branded version of this concept in the future. Giving the iPad the Air designation could set this up in the mind of consumers and business users by getting them to think of the iPad Air more like a laptop in the sense that it can be used for productivity as well as consumption. This leads to the second point worth noting.

2-The iPads now have PC class processors in them.

Putting their A7 64-bit processor in the iPads can also be seen as strategic. While both tablets are still skewed towards consumption, the new iPad Air, like the other larger iPads, will be of greater interest to business and IT given their faster speeds and overall upgraded performance. This could be a big deal when it comes to IT purchases. While refreshing tablets has been rapid compared to laptops, the upper end tablets with LTE and 64 gigs of memory are pricey and are now looked at for longer life cycles in the enterprise. With the fastest processor and the great software that will be written for 64-bit IOS 7, the new iPad Air will be even more attractive to IT directors that want to future proof their tablet purchases. Even with the lower system memory, the 64-bit processor will be viewed by business users much more positively than the current crop of 32-bit processors in all other tablets being considered by IT today. At the very least it will get Apple even more attention in these markets and help them grow the iPad business in the enterprise.

3-Software was almost more important than the hardware announcements

OS X upgrade is free. Updated apps like Garageband, Pages, Keynote, Numbers and many more Apple suite products are now free. And many of the apps look and act exactly the same and are synched in the iCloud identically so that users can’t even tell if they are using a Mac app or a IOS app unless they look down and see what device their are using. All of these push Apple’s software prowess into the forefront and give them an even greater edge over Android and Windows 8.1 especially when it comes to tablets. Don’t underestimate how important the software announcements made today are to Apple’s over competitive position. This is a big deal for them and their competitors.

While some people will be disappointed that these products are evolutionary, not revolutionary, keep in mind that Apple does advance products as part of their upgrade cycle and this is a key year for that. However, given the rumors that they are working on an iWatch, a new Apple TV and perhaps one other disruptive product I am hearing might be in the works, I suspect that 2014 will be an even more interesting year for Apple.

Could Apple be Reinventing The Hybrid Notebook / Tablet?

I was quite intrigued by an article in CNET that shared a research report from Barclay’s Equity Research that speculated on the idea of Apple creating an iPad with a larger screen and using their new 64-bit processor in it.

The CNET article states that “In a note to investors Tuesday, the firm laid out why it believes the new 64-bit architecture paves the way for a 13-inch model of the iPad that would be aimed squarely at replacing laptops for both casual and business users. That includes some of Apple’s Mac portables with more productivity features.” It went on to suggest that it would “Pack more RAM than current iPad models thanks to the newer 64-bit architecture; Sport a Smart Cover with a built-in keyboard and trackpad along with a battery pack to add additional running time.”

On the surface (pun intended) it would be hard to believe that Apple would create a Microsoft Surface-like device given the fundamental failure of that product to date. And while the concept of 2 in 1’s is the next big thing Intel and Microsoft are pushing to try and reignite the demand for laptops, it is too early to tell if consumers really want this type of product given the lower cost of tablets that are being used as companion devices to existing or even new laptop purchases.

If you look at Apple’s history, they normally don’t jump into a market until they see it as really valid, and then they do so by adding their design expertise, great software and services and a rich ecosystem that together delivers a better solution than any other versions already on the market. They did this when they reinvented MP3 players with the iPod, reinvented smartphones with the iPhone and reinvented tablets with the iPad. And then with each iteration of these products they made them better and rely on economy of scale to lower prices yet add more bang for the buck.

While the Barclay Equity Research Research report states that this idea is speculative, I believe they are actually on to something. While Microsoft’s Surface has been an unsuccessful product, the idea of adding a keyboard to the iPad is not new and in fact dozens of companies now create third party Bluetooth keyboards for the iPad and they actually sell pretty well. In fact, when I go to meetings I no longer take my laptop anymore. Instead I use the larger iPad and the Logitech Ultrathin Keyboard with it and using a cloud based note taking app like Evernote, Notes or even Pages I create my notes in this manner. This has worked for years and interestingly I have often thought that an even larger screen iPad with even more powerful apps would be nice, especially where true mobility is important. Surely Apple has seen the attach rate of keyboards for use with the iPad as more than a small trend and must have learned much about how people value a keyboard with the iPad.

When Apple introduced the new iPhones in Sept, they had one of the game companies show off a game they modified for the iPhone that took full advantage of Apple’s new 64 bit processor. According to them, they were able to make it work with this 64 bit chip and iOS in only about 2 hours. After the event I asked an Apple executive how they were able to do this so quickly. He said that the game itself was created for the Mac and its 64 bit architecture, but with their software developer tools, all they had to do was modify their system calls for iOS and since iOS was now 64 bit compatible, it was quite easy for them to make a Mac app work on a 64 bit iOS iPhone. Also, iOS and OSX use the same code base that underline each operating system.

For some time many Mac observers have suggested that iOS and the Mac OS were on a collision course. The fact that a Mac app could be easily and quickly adapted for iOS is quite telling. While I do think that Apple will continue to create more powerful versions of Mac OS, especially for use by their high end customers who need its raw power to handle graphics apps, engineering and other complex tasks, it would not surprise me if the Mac Apps and iOS apps are the ones that collide and delver a new type of mobile computing experience suggested in the Barclay’s report.

One could imagine a 13″ iPad/Macbook combo device that runs both Mac apps and iOS apps. Or for that matter this could work in reverse too. A 64 bit Mac OS based MacBook could easily run all iOS apps that could be modified for use on a traditional OS X MacBook. If one thought that adding 64 bit to the iPhone was a gimmick, they would be proven wrong quickly. Clearly Apple’s move to 64 bit was much more strategic than many may have thought and if this scenario is even half right, it shows that Apple has a much greater and longer vision for both of these products that could be designed in many ways, shapes and forms.

If Apple were to reinvent 2 in 1’s in this creative way, especially if the apps become cross OS and for use on all devices Apple creates, Apple could develop a whole host of new types of laptop/tablet combos that could be tied to their rich eco system that is already pretty much cross platform and deliver some rather innovative and powerful mobile computing devices in the future. Apple clearly wants the iPad to become more focused on delivering productivity as well as consumption and this could become part of their design guidelines and goals for all iPads 9″ inch’s and above. In fact, given Apple’s design chops they could even create various tablets, laptops and keyboards that could be compatible and fully interchangeable. Keep in mind, iPads are already invading the enterprise in big numbers and making them laptop like could only help them gain more ground in IT.

If this should happen, the ramifications for the industry could be very interesting. At the very least, it would validate Intel and Microsoft’s 2 in 1 designs but at the same time it could become a highly competitive product that could hinder the Windows 2 in 1’s from gaining ground in IT. And for the Android in enterprise crowd, it too would become a powerful product that could keep Android at bay for some time since Android could not even come close to delivering the same type of cross OS capabilities. And this would impact Intel if more and more of Apple’s mobile devices, including a potential 2 in 1, uses Apple’s own 64 bit processors instead of theirs. While Apple will probably never drop the MacBook, a 2 in 1 that favors Apples processor could be where the real volume will be.

Like Barclay’s, my analysis is also speculative. But given the indicators we have seen, especially how easy it is now to take Mac apps and put them on iOS, it would not surprise me at all of Apple does have various types of 2 in 1’s in the works and could try and reinvent this category of devices even if the Windows 2 in 1’s are still in the early stage of adoption by the enterprise and consumers.

How the Paradox of Choice Will Impact Holiday Tech Sales

The concept of buyer’s remorse in the world of technology is not new. For decades companies have rolled out new TVs, stereos, PCs, laptops and more recently tablets and smartphones and as soon as a person bought one a new model or something better came onto the market.  One of the reasons Steve Jobs moved his product launches to a full year apart was because of this issue. When he updated products every six months, he got highly negative feedback from customers who were mad that the product they just bought would be obsolete so quickly.  PC and CE vendors still hear this lament all the time as the world of technology has become so competitive they feel compelled to update their products often, thus creating some buyer’s remorse within their user community. 

I suspect we are about to enter a period where the number of choices in laptops, laptop convertibles, 2 in 1’s and tablets will offer so much with new models coming out almost monthly, we may have perpetual buyer’s remorse for at least the next six months if not longer. For the first time in my memory, when a user goes out to buy a laptop or a tablet, the amount of products they will have to choose from will be enormous. I believe it will make the decision even harder for consumers to figure out what to buy during this heavy tech buying season and cause a lot of buying confusion.

In the past, if a person were going to buy a laptop, the key criteria would be screen size, processor speeds, hard disk space and price.  Except for Apple laptops, brand loyalty was low on the buyers list as they all pretty much looked alike. It was a clamshell with screen and keyboard and not much more. But this year users will also have a plethora of products called convertibles or 2 in 1’s to choose from. These are products in which the laptop screen can either be folded under or used as a tablet or it will be a clamshell design where the screen pops off the keyboard base and can be used as a stand-alone tablet. 

At the same time users will have access to new lower priced Ultrabooks which are laptops that are very slim and lightweight. Also up this year will be products called Ultra-lights, which are similar to Ultrabooks but are much cheaper and not as high powered. And, consumers will now have non-Windows based laptops called Chromebooks to pick from. Bottom line is that there will be dozens of new designs to choose from when buying a new laptop. 

It gets even more interesting if you want to buy a tablet. The 7″ tablets will be as low as $79 but the bulk of the really good ones will be $139 to $249. Some will be WiFi only while others will have 4G wireless radios in them. Some will have screens with medium resolution, others with very high HD resolution. And the 9-10″ models will be more powerful than ever, something that suggests they could be used more as an alternative to a laptop or PC. In fact, one thing we see happening with a lot of families is that the tablet in most cases has now become their primary computer in the home and the laptop is relegated to being used less often usually just for tasks like paying bills, long emails, document creation, media management and long form writing.

There is a great book on the market called the Paradox of Choice-Why More is less Written by Barry Schwartz. In the book’s description it says:

“We assume that more choice means better options and greater satisfaction. But beware of excessive choice: choice overload can make you question the decisions you make before you even make them, it can set you up for unrealistically high expectations, and it can make you blame yourself for any and all failures. In the long run, this can lead to decision-making paralysis, anxiety, and perpetual stress.”

In the tech world, it could mean perpetual buyer’s remorse as the product a person buys may not actually meet their needs. It may also be a new, updated version could come out just weeks after they buy it. I have talked to a lot of people who need to upgrade their laptops but are actually dreading going out and buying one given the amount of choices they face and the fear they will buy the wrong thing.

We are also seeing concern from folks about how they use these products in their work/home lifestyles. At work they can’t get away from using a PC. But at home they can now do about 80% of what they used to do on a laptop on their tablet. So the question that comes up is “should I buy a better tablet and a cheap laptop, or even consider one of the new convertibles or 2 in 1’s that will be out this holiday?” On the other hand, consumers are weighing another scenario in which they buy a cheap tablet and an updated but cheap laptop or Chromebook.

What I see happening this holiday season is a lot of consumer perplexity when it comes to what to buy. While price is always an issue with consumers, how they use the products in their lifestyles is becoming equally important. What I suspect might happen is that consumers will have a lot of choices, which may cause some confusion in the buying process and we could see the highest return rates of original purchases of PC’s we have ever seen.

What could happen in some cases is for people will get whatever they buy home and quickly realize it does not meet their need. They then take it back and try something else until they find the exact product that fits their digital lifestyle. While this may happen with a only a minority of buyers, it still could be a real problem for all PC vendors since any amount of returns for any reason is a big headache to them and their retailers and hits their bottom line.

While tech products will be high on consumers shopping lists this holiday, this is the first time they will have to consider a huge amount of products coming out in a whole host of shapes and sizes with new features and functions rather than in the past just having to figure out what the best laptop, iPad or basic Android tablet was to buy. I see the paradox of choice being a huge issue this holiday season, something that could especially impact PC/laptop sales while cheap and mid-priced tablets will probably be the big winners in this next quarter.

How Mobile Can Impact the Future of Healthcare

I recently received a very interesting info-graphic sent to me from the folks at Greatcall with a lot of stats explaining something called mHealth. mHealth or Mobile Health is a term used for the practice of medicine and public health, supported by mobile devices.

Last year, when I had my triple bypass and was in the hospital for almost two weeks, during the times I was conscious I would often see the doctors and nurses come in to my room with smartphones, tablets, and various other mobile devices used to monitor my vitals as well as look up info related to my condition. In fact, I observed many doctors carrying iPad Mini’s in their white coats and was told that the # 1 application they used on their tablet was the Physician Desk Reference, which is their medicine reference bible of choice. In their world, mobile devices have become quite important to their practice.

Here are some of the numbers from the report that stand out:

-There are 97,000 Mobile apps related to health and fitness

-52% of smartphone users gather health-related information on their phones

-40% of Physicians believe mHealth technologies can reduce the number of visits to the doctor’s office

-More than 25% of physicians are using mobile technology to provide patient care

-80% of physicians use smartphones and medical apps

-93% of physicians find value having a mobile health app connected to Emergency Health.

-Mobile Health Apps generate up to 4 million free and 300K paid downloads a day

-By 2017, 50% of all smartphone users will have downloaded mobile health apps

-Top mHealth downloads are Weight Loss, Exercise, woman’s health, sleep and meditation, pregnancy, tools and instruments

At the moment, the top selling dedicated mHealth devices are products like the Nike Fuel, Jawbone’s Up, Fitbit, Misfits Shine etc. They are being used by people of all ages to monitor things likes steps taken, sleep patterns, calories burned and depending on device, you gain points the more active you are and the goal is to get as many points per day as close to your goals.

The Role of Wearables in Health and Fitness

I have found wearable health monitoring devices invaluable during my recovery and they will play a major role in my continued quest for better health. In fact I wear the Nike Fuel, Misfit Shine and Fitbit all the time in order to keep a close eye on my progress. In essence they have become important motivators as I take seriously their points programs and continue to try and beat my records as often as I can. While a lot of people run and play very active sports, I am afraid that my running and active sports days are pretty much over. I use to run 5 miles three times a week but many years ago my knees gave out and that is not an option any more. So, I walk.

The app I use for this is an app called MapMyWalk. I wish my wearable devices recorded my walking distance but they only handle steps walked and to be honest, the amount of steps recorded on the three wearable devices I use are all different. But the MapMyWalk app is tied to my phone’s GPS radio so it precisely records my distance as well as time per mile run or walked, which is also a great motivator. I also use an app called Heart Rate that uses the camera on my smartphone to record my pulse during my walks.

While fitness based mobile monitors are a good first step in mHealth devices, the promise of mobile connected devices to assist in all types of medically related issues is where the real promise lies. We are already seeing Wifi based blood testing monitors being designed that would send a running tally of daily blood sugar readings for diabetics to their doctors or nurse practioneers so that they can monitor the numbers and adjust insulin or oral medicines as needed.

Mobile Implications for mHealth

All of the mobile smart phone device makers and service providers see mHealth as a major opportunity and have various programs in the works to make sure their devices can be used for mHealth purposes. But there are two developments from Apple that I am the most interested in. The first comes with Apple hiring Jay Blahnik, a fitness expert who advised Nike on the Nike Fuel Band. While details of what he will actually do at Apple is sketchy, it is most likely that he is working on adding the fitness component to Apple rumored iWatch. The Nike fuel is unique among fitness trackers in that while it handles steps and calories burned, it also tells time.

The second major development is the introduction of the M7 chip in the new iPhone 5C. In a meeting with Apple execs, they pointed out that this chip continually monitors motion data. It has an accelerometer, gyroscope and compass and will enable a new generation of health and fitness apps. It has a new Core API so that developers can take full advantage of chip, which includes tracking users ID measurements and optimizations based on contextual awareness. Techcrunch did a nice piece on the M7 and over at GigaOM Chris Brandick suggests it is Apple’s Trojan Horse for future wearable devices.

Interestingly, I would not be surprised if Apple even releases a dedicated mobile fitness device using the M7 ahead of any iWatch since Apple CEO Tim Cook has become a real fan of the Nike Fuel Band and I am sure he has had some ideas of his own on how to improve on it as a dedicated device in its own right.

According to a new study from Transparency Market Research the “global mHealth market is expected to reach USD 10.2 billion by 2018 from USD 1.3 billion in 2012 at a CAGR of 41.5% from 2012 to 2018.” If they are correct, growth in this market will be strong for at least the next five years. The report also states that “The most impactful trend witnessed in the mHealth market is the growth in remote patient monitoring. Remote monitoring of patients can help reduce costs significantly by reducing the amount of time the patient spends in hospitals and also by lowering the frequency of follow-up visits to the physician. In addition, quick service and ease of use functionalities, and rising healthcare expenditure are supporting faster adoption of mHealth applications. Moreover, increasing demand for independent aging solutions and post-acute care services are also aiding the mHealth market growth.”

Any market with $10 billion potential is worth watching but this market has more than a financial appeal tied to it. The mHealth market represents a most important way to deal with health issues and makes mobile technology highly strategic to our overall well-being too.

A Suspicious Angle to Microsoft’s Acquisition of Nokia

Not long after Microsoft and Nokia did a deal for Nokia to back Windows Mobile and Microsoft exec Stephen Elop moved over to become its CEO, I mentioned to some of my colleagues that I thought this was a set up. In fact, I wrote a Techpinions piece on Aug 15th, 2011 that literally said Microsoft WOULD buy Nokia in time.

If you look back at this period in which Nokia was Microsoft’s major Windows Mobile vendor and Elop got serious experience being a CEO of a multi-national company, one has to wonder if there was not some type of grand plan put in place between Ballmer and Elop from the beginning. Surely Ballmer knew even then that his days might be numbered and that while Elop was a natural successor to him then, he needed responsibility as a CEO before he would be seriously considered as a successor.

I have known Ballmer since 1985 and over the years have watched as he has aged and the pressure of running Microsoft was catching up with him. During this time his kids have all grown up and I am sure he looks back on the missed times he had with them during their most formative stages of life. Regardless of his performance at Microsoft, I have felt for a couple of years that he was ready to step down and allow someone else to try and bring Microsoft into the post PC era.

While it is true that Elop’s tenure cannot in itself be considered a success, let’s be honest. He was handed a highly wounded Nokia from the beginning and he gets street cred for just keeping them alive and competitive given the beating they were taking from Apple, Google and Samsung. And Nokia became the #1 vendor of Windows Mobile phones and, as research stats have shown, Microsoft actually gained ground in a lot of international markets where Nokia already had a large place in those parts of the world.

While Microsoft and Nokia have no chance of rising above Apple, Google and Samsung in terms of units sold, together they can clearly become the third option in a smart phone market that is still in its early stages of growing and will sell at least 1 billion units per year for the foreseeable future. And even at #3 there is a lot of money to be made if they execute well and aggressively at a competitive level.

If you read many of the news stories about the Microsoft/Nokia deal, most of them suggest that Stephen Elop is now considered the #1 candidate to replace Ballmer as CEO of Microsoft. At the moment, he will be running Microsoft’s recently announced device division and will focus on helping Balmer in the short term achieve Microsoft’s One Vision goal of being a hardware, software and services company.

I believe that this will be a short-term role. I doubt that Ballmer will stay the full year and would not be surprised if Elop is in place as the new CEO by Dec 1, 2014.

But the neatness of Microsoft now buying Nokia to anchor their device division, at a discount no less, seems to me to be less happenstance and rather part of a grand scheme hatched a couple of years back. And if Elop does become the new Microsoft CEO, it would come full circle and be looked at as one of the more interesting premeditated corporate purchases of all time.

The World Has Gone Mobile

I very seldom recommend a conference to my friends and colleagues but a note about a special mobile conference came to my attention recently that I highly recommend to our industry readers.

One of the smartest guys I know covering the world of mobile is Chetan Sharma. I had a chance to speak at an event with him a few years ago and was highly impressed with his knowledge and perspective on all things mobile.

I recently received a promotional note from him about his Mobile Future Forward event, which will be held on Sept 10 in Seattle.

In his opening note to potential attendees, Chetan made a statement that pretty much sums up the future of mobile. He said:

” It is very clear to us that we are entering the “Connected Intelligence Era.” These two operative words are going to define the next phase of human evolution and is going to dramatically change every industry vertical from the ground up. Welcome to the Golden Age of Mobile.”

Chetan is right on the money with this perspective. Connected intelligence in mobile devices will be the next major force behind mobile innovation and it appears that the mobile industry sees this vision and is preparing to drive it in this direction. I recently called Mr. Sharma and asked for clarification on his vision and he told me that he believes that technology evolves in 50-year cycles. In the call he pointed out that this cycle can been seen when it comes to steam engines, electricity, cars etc as during those 50 years the core technology is established and innovative products are created while the underling technology becomes the backbone for even more innovation as the years go by. He says that the PC innovation started in the mid 1970’s and that we are approaching the 42nd year of that cycle. During that time PCs, tablets and smartphones have been created and the backbone technology has been laid to drive new innovation. He expects that the next big wave will come with connected intelligent devices using IP networks and new wireless technologies that will, in context, drive a whole new ranges of products and services. He also pointed out that “we could be entering a new space that takes advantage of the technology from the last cycle and drives great smart mobile applications and new innovations for the next 10 years.”

One other key point he made during our conversation is that while connectivity is one element, he says that:

” intelligence that emanates from the data that can be programmed is what is different now.” This gives new meaning to connectivity and “connectivity with intelligence will define the next wave of computing.”

According to Chetan Sharma, this next wave will in essence be “connecting the dots with intelligence.

His conference will focus on this idea of “connected intelligence” and with speakers like Ralph De La Vega, CEO of ATT Mobility, Rick Osterloh, SVP products, Motorola and Google, Steve Elfman, President of Sprint, Danny Brown, Chief Sales and operations officer, Samsung and Tom Nagel, SVP strategy for Comcast, this will be a high powered event that will help industry folks gain a much better grasp of the future of mobile connected intelligence and what it means for mobile market growth.

If you are following the mobile market and are highly interested in its future, I highly recommend you attending and learning from these key leaders that are at the forefont of our mobile future.

Samsung’s Dangerous Smart Watch Gamble

Next week, just before the IFA consumer electronics show opens in Berlin, Samsung is expected to introduce their first smart watch apparently called the Samsung Galaxy Gear. By my count, this will be at least the 14th smart watch introduced in the last 18 months. I have had a chance to work with and review at least six of these so far and members of my staff have reviewed at least two more recently.

One thing to note about all of these watches so far is that they are all rather big, not very stylish and to be truthful, aimed mostly at male geeks. I can’t even imagine any woman clamoring for any of these early models and suspect that Samsung’s version will be just as geeky as the others given the technology available today for use in building this first generation of smart watches.

Most of these new smart watches are focused on being an extension of our smart phones and delivering glanceable data or information tidbits from our smartphones on a wearable screen. After using a couple of smart watches with this feature I can attest that this is a very cool idea and in fact, the watch will most likely become the #1 wearable computer in the market over the next few years, trumping things like Google Glasses that may take a decade before it hits consumer stride.

Although I think Samsung’s smart watch may actually be cool in functionality, one thing I am pretty certain is that it will not be stylish and be attractive to anyone but male geeks. While Samsung has created stylish smartphones and tablets, let’s be honest here; this design basically copied Apple’s iPhone and iPad designs and literally rode Apple’s coattails into these markets.

This is where introducing a smart watch now is a real gamble for Samsung. I fear that they are rushing this to market so they can say they beat Apple to the market but their model will be very similar to the smart watches already available. Sure, they have a strong marketing machine and big bucks to try to drive this into the mainstream but Samsung’s track record in creating ground-breaking designs in any product is historically weak.

While creating a product for male geeks is not bad in itself if these male geeks buy them, there is one very key issue about watches that will prove problematic to Samsung and that is “stylish” designs. Watches are fashion statements and very little about functionality to most people.

I believe that this will be at the heart of Apple’s eventual smart watch in which functionality will be important but stylish design will be equally important to whatever they finally deliver to the market place. And it is doubtful that Apple does not understand the difference in style design between men and women and will factor this heavily in their actual product designs.

Notice that Apple is not rushing a product like this to market just so they can have skin in the game. If you look at Apple’s history, they usually wait to see if a product takes off and then, and only then, do they re-invent the product with an eye on form, function, design and eco system that lets them control and drive their products into a broader mass market. Apple did not invent MP3 players. They reinvented them. Apple did not invent smartphones. They reinvented them. And Apple did not invent the tablet. They reinvented it and along with their iPhone launched the post PC era.

I suspect that Samsung understands this and is taking a calculated gamble by introducing the Galaxy Gear now. However, I think it is a dangerous gamble. While smart watch functionality is cool, in watches, style and fashion play a key role in its ultimate success. By introducing something before Apple does it runs the risk of not even coming close to what Apple will deliver and in the end, Apple will do the Apple thing and reinvent the smart watch that transcends the geekiness of todays models and be the one that drives the smart watch wearable revolution to the masses.

Now they have to wait for the other shoe to drop from Apple and if history is our guide, copy Apple again if they really want to be a player in the smart watch wearable revolution for the masses.

Ballmer is Retiring. A Look Back and A Look Ahead for Microsoft

When I first went to visit Microsoft, the company had only 28 people. In the early days of the PC industry there were no official PC analysts. I happened to be one of the first by default since I was covering mini-computers for Creative Strategies and was asked to cover the IBM PC introduction as well. This put me at the center of the PC industry from the beginning and after a trip to visit IBM I was asked to go see Microsoft too since their OS was on the IBM PC.

From the start, Gates hammered home that Microsoft was a software company. That was the core of his vision and it is what drove him during his tenure as CEO. This helped Microsoft become the dominant player in PC operating systems, server software and PC applications. While the PC was the major tool for all things digital for most of their existence, by the mid 2000’s the market began shifting to new platforms like smartphones and tablets. The irony is that Microsoft got involved with tablets in 1991 and smartphones as early as 1995. In fact in the late 1990’s Gates even predicted that the tablet would be the next major computing device for the masses.

But with the PC market booming, these other platforms turned out to be more hobbies for them than products that they would bet the company on. From my viewpoint their tablet and smartphone projects not only got low priority but also were really mismanaged during those days. With the world moving to mobile, and PC sales slowing down dramatically, Microsoft is at a crossroads and it is clear that Ballmer and Gates truly understand it. More importantly, they and the board now realize that it is now time for a new leader to grab the reigns and take them back to their roots and only concentrate on software but this time with a focus on mobile.

Business schools will do dozens of cases studies over the next few years on what went wrong at Microsoft under Ballmer’s leadership, but at the heart of it I suspect that they will discover that Microsoft’s dismissal of Apple as a competitor early on will be top of the list, along with their lack of proper priorities and management of their mobile projects over the years. Also, their deviation into hardware, outside of XBOX, has been disastrous. Microsoft recently wrote off over $800 million on the Windows RT project and their decision to do software has wounded their partners with all vendors.

Finding a new leader to take Microsoft into what my friend Chetan Sharma calls the “Golden Age of Mobile” will be difficult. Demand in PCs will stabilize as it continues to be a key tool in business, education, and even in homes, but it will never grow again. Instead, smartphones and tablets will continue to drive this golden age of mobile and become the dominant platforms for innovation, commerce and what Chetan Sharma calls “the connected intelligence era.” We are entering an age where devices are not only connected but will also be highly intelligent and manage contextual information and even have what I call anticipation engines that perceive what we need in context and provide intelligent links before we can even ask for them.

A new leader for Microsoft not only has to forcefully manage their past but intelligently manage their mobile future with an understanding that mobile software must be at the center of their future. That means that the new CEO they bring in to be their next leader has to be driven by a powerful mobile vision for Microsoft and make this the focus of their next generation of R&D.

Ballmer managed with an eye on the PC. That was the past. A new CEO has to manage Microsoft with an eye on mobile. This is their future. Let’s hope that Microsoft’s board understands this and it is not too late for Microsoft to still be a major player in this golden age of mobile.

Why Larry Ellison is wrong about Apple

In a recent TV interview with Charlie Rose, Oracle CEO Larry Ellison raised a few eyebrows when he suggested that Apple best days are over since Steve Jobs is no longer there to be its guiding light. When asked about Apple’s future, Ellison said that we saw Apple once before when Jobs was not there and suggested that without him at the helm, Apple will most likely have the same fate.

I am sure that this view comes from his deep relationship with Jobs and the great loss he still feels now that Steve is gone. However, his view on Apple after Jobs was ousted in 1985 vs. Apple without Jobs now is just plain wrong. When Steve was with Apple up to 1985, everything Apple did revolved around Jobs. He was young, brash, egotistical and an extremely poor manager.

I witnessed first hand Job’s maniacal behavior just before he was ousted when I was asked to meet with him and then CEO, John Sculley at Apple’s HQ. Jobs and Sculley were going to push the early desktop publishing concept and wanted my feedback on something since I did a printer report three years earlier where I predicted “if laser printers could be placed on desktops, we could someday see people publishing documents from the desktop.” At that time laser printers were room sized but I had seen Canon’s desktop printer laser engine in the labs four years earlier and saw its potential impact on personal publishing.

As we were talking a senior level engineer knocked on the door and told Steve about a problem he was having. Jobs was not pleased with what he said and called him stupid and an idiot. Both Sculley were very embarrassed as he berated this guy right in front of us. But when the guy left, Jobs went back to being himself and kept on talking as if nothing had happened.

Two months later Sculley and the board fired Jobs and Sculley took over as its only leader. Under Sculley Apple actually made some important strides. They introduced desktop publishing and the Mac became a serious business tool. He integrated CD Roms into the Mac and launched the multimedia revolution in the early 1990’s. In fact it took the PC crowd two years to catch up and Apple’s early lead in multimedia. This was a key feature which finally brought the Mac to consumers as they saw multimedia content as key learning tools for their kids.

Eventually Sculley was fired and Apple then went into its dark period under CEO’s Michael Spindler and Gil Amelio. Ellison was right in the sense that even though Apple stayed afloat under Sculley for a time, Apple without Jobs at that point was clearly in decline.

We all know what happened when Jobs came back in 1997 and started revolutionizing the market with the iMacs, iPods, iPhones and iPads. But unlike the last time Jobs left Apple, this time he was much more aware of his human frailties and starting in 2002, began preparing Apple for the day when he could no longer lead the company. That means that this time he began pouring himself into Tim Cook, Phil Schiller, Peter Openheimer and their top leaders to make sure they understood his vision, ideas, management spirit and philosophy as well as pouring his vision and design skills into Johnny Ive.

While Apple cannot be the same without Jobs because he was one of a kind, the Apple he left behind is nothing like the Apple he left behind when he was fired in 1985. This is why Ellison is just plain wrong about Apple. This time Apple is in much better shape financially, motivationally, and under Jobs directed and inspired leadership. Apple now has a Steve Jobs trained team to carry on his work and vision and I have no doubt that Steve Jobs left them well equipped to keep Apple moving forward and delighting their customers for many years to come.

The 1980’s are nothing like 2013 and beyond and the Apple Jobs left back then is nothing like the Apple he left in tact today. If you buy the narrative that history will repeat itself and Android will do to Apple what Microsoft did to them in the 90’s then I suggest you read Ben’s analysis on why history will not repeat itself.

Dear Industry: Why History Won’t Repeat Itself

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I want to also make note that we encourage insightful and thoughtful feedback from our readers. When Techpinions started, there was a person who often commented on our columns and we marveled at his insight and the thought provoking feedback he would make on the columns he commented on. Although he was a retired lawyer and not even from our industry, his understanding of the economics of the PC market and how business works really got our attention. So we invited him to do a column or two and they were so well received that we decided to give him a weekly spot on Techpinions. John Kirk now regales us with his thoughts each Thursday.

We know through our feedback from many Techpinion readers that they are a highly educated bunch, prone to strong opinion and full of great feedback about the content and/or logical reasoning stated in many of our columns. We truly appreciate it and welcome these comments that extend the spirit of the column and make it multi-dimensional in a good way. We are also pleased that in most cases, the comments are thoughtful and very seldom stray from the topic or become personal attacks on the author as we see in a lot of other sites where comments are all over the map. As our readers know, personal attacks make no sense when instructive and sometimes constructive dialog should be at the center of the overall discourse.

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Why Netflix Already Won at the Emmys

I had the opportunity of going to the first Cable Show that HBO showed their product at many years ago. In those days, the big networks were ABC, CBS and NBC. While cable was gaining as a TV delivery medium, most of the channels available were also available over the air. However, some channels were beginning to be created just for cable, such as the Food Network and HBO was proposing something very interesting at this time in what they called premium programming. This meant that along with paying for the cable feed, a user would need to subscribe to get their special HBO services, which in those days was just movies.

HBO popularized the premium channel concept and literally laid the groundwork for other premium programming. Now there are dozens of premium channels to subscribe to and well over 75% of the US households are cable subscribers today. In fact, in these passing years, cable companies have become the most powerful medium for video and TV content distribution and have become a big player in Hollywood and the movie industry.

At this cable show I got to meet with HBO execs that shared their vision of being the go to service to watch movies. While their early offerings were minimal they already had their sights on acquiring movie content from all over the world and establish themselves as the primary premium channel in the US. I remember distinctly them telling me that what they had was groundbreaking and could change the way people view TV content in the future. However, I am pretty sure that even in their dreams they did not envision a day when they would actually create original programming and become an actual television production company as well.

Industry Firsts

As the Emmy nominations approached last week, there was buzz in Hollywood and Silicon Valley that Netflix’s two shows that are now originally produced for them, Arrested Development and House of Cards, could become the first shows designed specifically for on-demand and over-the-air content distribution to receive an Emmy nomination. Up to now this has been the purview of dedicated production companies who created content just for the networks or the cable networks and an upstart like Netflix, with its OTA approach to content delivery was not supposed to have the skills or wherewithal to do anything other then just be a medium for OTA content delivery.

You have to give Netflix CEO Reed Hastings a lot of credit for the kind of visionary thinking that drove him to create original programming just for Netflix. It is ironic that less than two years ago he was considered evil because he split the subscription prices for mailed DVD’s and Online content into to separate services and industry execs and users alike complained to high heaven that this move was bad and unfair to their subscribers. But clearly Reed knew what a lot of us insiders knew that the days of DVD’s being mailed for viewing were numbered and delivering the same content OTA and on demand was the future of this type of content delivery. 

With House of Cards and Arrested Development, Reed and Netflix has raised the stakes and as many insiders understand, OTA on demand services like Netflix, Hulu and others are really the future of many types of content delivery and with this move Netflix in essence has become the HBO of this new age. Of course, HBO has their own version of OTA services called HBO Go and more and more dedicated content providers are following suit with similar services since they all understand that OTA on demand on any device is the true future of content delivery. But Netflix’s leadership position at this time in history cannot be underestimated since Hasting’s has emerged as the elder statesman of OTA services and Netflix has to be perceived as a direct threat to the cable companies as the primary provider of TV and video content someday. 

The Clear Future

With the Academy of Television Arts and Sciences Emmy nominations for House of Cards and Arrested Development, Netflix is now officially recognized by the TV industry and it confirms that they are a legitimate medium, capable of delivering original content through a brand new delivery system. I also believe it signals that the folks behind the Emmys actually understand that with these nominations they are actually giving their blessings to this new era where broadband delivery of Internet content and OTA services will be the norm and expect services like Netflix to be a part of the TV and movie industry framework from now on.

Regardless of whether House of Cards or Arrested Development actually win any Emmys, Netflix has already become a winner at this years show by nature of this giant endorsement of their labors and vindication that Netflix’s bet on creating original programming was on the money. This nod from Hollywood allows them to play with the big guns in the cable world and more importantly cements their position as the industry leader in providing OTA services that will eventually change the way most of us will receive our TV and video content in the future. 

A side note: Over the weekend I got a chance to watch the first two episodes of House of Cards and now see why it received various Emmy nomination. Well scripted and acted, the story of Washington insiders is addictive and gives people a fascinating look at the inner workings in our nation’s capital. If you enjoyed West Wing, you will really love House of Cards.

Why Apple Should Not Create a Low-End iPhone

For a while now Wall Street backers of Apple have wanted them to create a low priced iPhone and use it to gain more marketshare. They seem to think that market share will drive up profits and expand their reach. A Tech.pinions colleague has done a great jobs dealing with the issue of marketshare vs profits so I won’t go into that here and suggest you read his series on this since it lays out a very good argument that profits are much more important than marketshare.

But if Wall Streeter’s really want to understand why this is a bad idea, all they have to do is look back at Apple’s history and see that Apple tried that once before and it nearly destroyed them. Not long after John Sculley was pushed out of Apple, Michael Spindler was brought in as CEO to try and make Apple more competitive. At the time the Mac had become a niche product, mostly used for desktop publishing, graphics, and engineering. On the other hand, the PC was outselling Macs at least 20 to 1 and pressure from Wall Street pushed Spindler to try and do things to help the Mac gain market share.

So what did he do? First, he made the Mac Look like a PC in design. Second, breaking major tradition, he licensed the OS to a special group with the idea that if there were more companies offering the Mac, it would sell more. And, Apple and the licensee lowered the prices and tried to compete with the PC head on. There was only one problem. The PC clones had access to tens of thousands more apps then was available for the Mac and IT and consumers took the safe route and stayed with PCs. Even the lower prices could not help Apple gain any ground in the PC market.

During this side trip to try and be all things to all people, Apple lost a lot of money and was in the red to the tune of almost a billion dollars when Spindler was forced out. They then brought in Gil Amelio who tried to stem the losses but by that time, it was too late to save Apple. That is when Jobs came back and took it back to its roots of selling the best product they could to their core customers. As he told me in a meeting with him the second day he had come back to Apple, he would lean on industrial design and innovation to try and grow the company again.

If you look at the low-end of the smartphone market, it is becoming a wasteland. First, as long as a smartphone has an OS, some memory and access to apps it is called a smartphone. However, low-end smartphones are now around $99 in China and well over 50% of the smartphones selling in China are white box phones that are sold off the street, in cell phone flea markets and through channels we as market researchers can’t even track. But nobody in that price range is making any money.

The same goes for other markets where these phones cost $99-$139. BOM costs alone make it very difficult for them to have any margins when they sell these products and at these price ranges, profits are slim or next to none. For Apple to try and do a low-end phone for the emerging market might help market share but at the cost of any serious profit. I trust they have learned the lessons from the last time they low balled products for the market and never go after this side of the business.

On the other hand, there is precedence from the past for mid-range priced smartphones. While the Mac for the graphics, DTO and engineering worlds became premium products in their line, Steve Jobs introduced the innovative, candy colored iMacs at prices well below their upper-end Macs. To this day Apple still sells a lot of premium priced Macs but the bulk of their sales comes from mid range priced iMacs and MacBook’s selling well under their premium lines. But what they have not done is chase the low-end of the PC market and with the is strategy they still have solid profits in their Mac Line.

There are rumors that Apple will soon introduce lower priced iPhones, but don’t expect them to priced to compete at the really low-end of the market or be aggressive with pricing in emerging markets. From History, Apple knows that they can still make some good profits with mid ranged priced products and if these rumors are true, Apple new iPhones would be following a proven formula that has continued to help them stay one of the most profitable companies in the world today.

Why Softbank buying Sprint is a big deal

Last week, the FCC gave their blessing on the Softbank purchase of Sprint. I consider this a very big deal and one that could have dramatic ramifications for the Wireless industry in the future. The leader of Softbank is a brilliant thinker and is never lacking in vision.

I have had the privilege of interacting with their founder and CEO, Masayoshi Son on numerous occasions and in fact did Fireside chats with him at two conferences in the late 1990’s. At that time, he became prominent because he bought Comdex, the largest PC show in the world in those days, and for his statement that he had a 300 year business plan for Softbank.

I got a chance to understand a bit about his business acumen and tenacity during one of our fireside chats. It took place at the Phoenix Technologies Conference at Spanish Bay in Monterey. Mr Son explained that in Japan, the telecom industry, which was basically controlled by the Japanese Govt. needed shaking up. It was controlled by NTT and the Japanese Govt dragged their feet when it came to open competition. This led to very low bandwidth Internet connections as well as a wireless infrastructure that, in his mind, was going nowhere.

So he approached the telecom Minister of the Japanese Govt, which regulated the telecom industry, and kept pushing him to present a plan that would open up the their telecom laws for more competition. He went to see this person at least 4 times and each time he was either rebuffed or was told he would look into it but nothing happened. So, on his 5th visit, he barged into this telecom Minister’s office with a full can of gasoline in tow. He told the Minister that if he did not agree to take his proposal to their ruling body that he would pour the gasoline over himself and light it on fire.The telecom Minister got the message and agreed to start the process of discussing opening up their telecom industry to competition. Because of that push by Mr. Son, Japan’s broadband and wireless industry began to explode. Softbank was the first to give users 50+ megs of download speed and I hear his goal is to get them to 1 gbps in the very near future. Softbank is now the #2 wireless company in Japan.

When I first heard that Mr. Son and Softbank had bid for Sprint, I had a vision of him walking into the offices of the FCC with his gas can in hand. However, given his success in Japan, everyone I talked to about this took his bid for Sprint very serious and knew that he would be tenacious in his desire to own this American Wireless company. However, his ownership of Sprint has to be watched very closely. He is not content with the status quo. One thing he could do is try and bump Sprint to 5G sooner than later and leapfrog ATT and Verizon. He could also utilize these assists, which includes Clearwire’s wireless spectrum, to create some type of mesh networks that blend wired and wireless in some areas to boost speeds for their customers.

Bottom line is that Mr. Son will not be a conventional wireless CEO. He is likely to be a firebrand within the wireless industry and do things that will irk and frustrate the competition. He wants to win, not just be a bit player in the US wireless market. Look for him to shake things up at the govt and industry level and perhaps surpass the competition and delight his customers along the way.

Why ICAHN is a Bad Fit for Dell

I have had the privilege of following Dell from its inception. I became a PC industry analyst in 1981 and have tracked the PC industry from its beginning. In the process I have had the privilege of interacting with every one of the PC and CE companies at the highest levels for 32 years. Those who have followed my current writings in TIME’s online Tech section, PC Magazine and our own publication called here as well as my commentary on all of the major TV and radio networks and business publications know that I have been chronicling the tech market for decades.

I have watched PC companies come and go and understand well how the industry developed and what it will take to compete in the future. I have seen the market for PCs grow exponentially and become the heart of Information Age. Although the role of PCs has changed over these decades, it is still a key component of any business and consumer’s life, even if some of those computers are now called tablets and smartphones.

I have been watching closely the competing bids to take Dell private and am quite concerned about any outside plan that would not guarantee that Dell remain whole and execute as a single company with all divisions contributing to its success. While I have respect for Mr. Icahn, I am not convinced he really understands the dynamics of the tech market and what it takes to compete in this fast changing marketplace. The tech industry is not like the oil and gas industry where things change slowly. I believe that for Dell to compete and grow it must be run as a single unified company where all divisions work together to achieve their vision and goals. But if history is our guide, keeping Dell intact is probably not in the plans of Mr. Icahn and his team.

One Company, One Vision

A few months back, Dell held its annual industry analyst days in Austin. Like all of my colleagues at the event, we went to the conference to see first hand how Dell saw the market, what role it would continue to play in a technology world that is rapidly changing and how they planned to grow as a company in light of the increased competition and shifting demands from business users and consumers alike.

I sat through two days of speeches and dedicated divisional information sessions and in the end, came away with a picture of a company that was much more in control of its future than I had suspected. I found that they had diligently laid out the necessary building blocks that, when tied together, could give them the ability to weather the changing dynamics of the tech market today and had a solid vision that can drive it forward in the future. One that includes being a hardware, software, and services company offering the whole package for many key growth segments.

One very important thing that I came to understand from these meetings is that in order for Dell to navigate these choppy industry waters, it needs to be able to execute this vision in a measured and strategic way, which will take time. It is clear to me now that this is the main reason Michael Dell wants to take the company private. Trying to rush these things would be difficult given the need to make these changes to Dell’s future business models so that it can be done properly and executed without the pressure of always having to keep the investor community happy each quarter.

The building blocks of powerful server hardware, software and services, world class security, expanded IT services and even their PC business that, as we were told, drove 50% of all of their enterprise sales, are key components that when woven together as a single unit gives Dell the opportunity to remain a major player in the world of technology. We were also told about new tablets and other mobile products in the works that, when they come to market later this year, will make Dell very competitive with Lenovo and HP as well as other PC and CE vendors that are all targeting the same business and consumer customers.

I have one key observation that is quite important to this discussion. When I look at Dell, its building blocks and its competitive challenge ahead, I am convinced that they can only remain a powerful player in the tech market if the company competes as a whole, with all of these building blocks they have put into place working in harmony. Every one of their divisions needs to be connected and walking in lock step if Dell is going to succeed.

Servers, PCs and mobile devices need security. IT needs servers, software and mobile device management tools all working together to meet the needs of their mobile users. The future of software distribution is in the cloud and all of Dell’s divisions deliver key parts of a cloud solution that can work together seamlessly if executed properly. Consumers want a company that delivers solid products that they stand by and look to as PCs, tablets and smartphones become more engrained into their digital lifestyles. From what I saw while at the analysts meeting, Dell finally has all of the pieces in place that, when working together, will sustain the company and help it grow if executed well in the face of a tech marketplace that is constantly changing.

I cannot stress how important I feel that Dell operate as a unified entity in order to compete and grow. I have spent many years understanding the machinations of a successful tech company and monitored the shifting winds of business and consumers whose needs and wants constantly change. I can tell you without a doubt that for a company like Dell, HP and Lenovo, all of their divisions and executives have to be on the same page, working and collaborating closely together to provide all of the key components of hardware, software and services if they are to succeed given the current and future market conditions I see ahead.

For the record, I don’t own any Dell stock. I am an independent market researcher with 32 years of experience examining the tech market and this perspective comes from decades of studying how this industry works. In my opinion, if there was ever a time when a company needs to operate as a unified force, it is now.

Providing powerful technologies across hardware, software and services that are all interrelated and interconnected is the key to success in this globalized tech market where vision, order and collaborative leadership is vital to a PC company’s ability to remain competitive and thrive. Any attempt to break up that kind of synergy will only lead to failure.

Why Apple’s New Designed in California Ads are Strategic for the USA

There was a recent report that Apple’s current “Designed in California” ads were not a hit with consumers and various writers who reported on this urged Apple to change them and to start bringing out cool ads again.
While the ads may not seem cool to some, for Apple these ads are very strategic and will run as long as it takes for Apple to hit home the message that the fruit of Apple’s labor starts here and regardless of where they are manufactured, these are American bred products.

Apple has always been proud of the fact that they are an American company and more specifically, a major force in the growth of Silicon Valley that for decades has been and still remains the epicenter of all things tech. This ad helps reinforce the idea that Silicon Valley is not going away and in fact will continue to be a major tech design center well into the future.

But I also believe that Apple has been reading the tea leaves and has seen how Congress and many of the American people are going down a track to try and bring more manufacturing back to the US. They also understand that creating US designed products will be more strategic to the USA’s long term vision of making the US much more relevant in a time of globalization.

You may think that I am crazy suggesting this, but even Apple’s competitors are seeing that if the products are designed and manufactured over here that they may be seen more favorably by consumers. More importantly, it could give them favor with the US government and the American people who are getting more and more concerned that the US is loosing its edge, especially to S. Korea and China.

The Japanese car makers have been doing this for years. Besides doing a lot of actual manufacturing in US cities, a lot of the actual design work is being done here as well. They just don’t tout it like Apple is doing with the “designed in California” campaign.

Interestingly, Samsung, who is Apple’s biggest competitor these days, is moving more and more development to California. They are adding a huge extension to their San Jose Campus and building up their research center in Palo Alto. They are expected to hire more than 2000 hardware and software engineers in Silicon Valley to populate these new facilities over the next two years.

If US consumers, the US government, and US companies start emphasizing the new battle cry “designed in the USA” to bolster their position in the face of the globalization challenge, Samsung could soon say that their products too are “designed in California.” But this is where Apple has a gotcha for Samsung.

Not only is Samsung a S. Korean company, but as a S. Korean company they are very nationalistic. Can you imagine Samsung US trying to convince their top corporate execs to launch a Samsung ad campaign stating “Designed in the US or CA” and getting their OK for this ad? Not happening.

Google is also following Apple’s lead and taking it a step further and through their Motorola division, just started running ads that say that your smartphone can even be designed by you and will be made in the USA.

Neither of these companies are doing this because they recently caught some nationalistic fever. Both realize that globalization is a much bigger threat to the US and their own markets and that is time to be very clear that the USA is still top dog when it comes to its role in the tech market and that people from around the world need to value this fact. Apple is also leading the charge to bring at least some of their manufacturing back to the US and will make the new Mac Pro in Austin, Texas.

With these ads, Apple is positioning themselves as a leader in this “USA Designed” category of products that I am hearing Washington is quite fond of. I also expect these ads to influence more US based companies who design products in the US to soon emphasize this fact too. Apple is just ahead of this trend and leading the charge.

Android Apps on Windows PC’s via Dual Boot- Are they DOA?

We are hearing from a lot of vendors that the idea of dual booting Windows and Android is a hot topic of discussion these days. Asus and Samsung both have laptops on the market that include Windows 8 and Android and the thinking behind this is that Windows Metro apps have less than 100K in their store and by using a dual boot of both operating systems, vendors can deliver Android apps on Windows machines to make Windows laptops and PCs more desirable. Remember, they only want to push hardware and they think this will help their ability to do so.

Asus gives users a toggle switch like key to go between operating systems while Samsung switches seamlessly between the two and even pins Android apps to the Windows 8 start screen. “Users will not only get access to Android apps via Google Play but will also be able to transfer files to share folders and files from Windows 8 to Android, truly marrying the mobile and PC experiences,” Samsung said in their launch press release.

The Need to Stand Out

Let’s be clear what is going on here. Vendors have gotten desperate to differentiate since all PCs and laptops pretty much look and work the same these days. Everyone is trying to find a hook to get his or her new product into the jaw of the consumer. This is especially true with the PC crowd where competition between the big PC vendors are coming in contact with no name brands, especially in emerging markets, and in some countries causing a real decline in demand of name brand products. But, the history of dual boot systems has been littered with failures. The only one with legs so far has been the Parallels solution of delivering Windows on Mac’s. While it works and has done well, their audience is by no means a large one and much of their demand has come from business users.

Another thing that is going on is that demand for PCs on a whole is down. IDC and others believe demand for PCs and laptops will be off 7% over last year and down at least another 7% -9% the following year. PC vendors are becoming desperate to find new form factors and if possible, software tweaks to drive demand for their products that are core to many of their company’s survival.

But perhaps the bigger issue behind this Windows/Android dual boot idea is the failure by Microsoft to get the software developer community excited and incented to write Metro Apps in large numbers. With such a small offering of Windows Touch based apps, no wonder users who have Win 8 systems would even consider finding ways to get Android apps working on Windows machines.

Truth be told, users can do this already without the need of a dual booted OS. Bluestacks has offered a way to put Android apps on Windows for almost two years now and in fact they already have over a million users doing just that. Many vendors have had the chance to put the Bluestacks Player on their systems but there has been a question of whether Bluestacks violates a key element of the Android anti-fragmentation license so most have opted to not piss off Google. A similar problem exists with Microsoft. One vendor told me that if they put the Bluestacks player on their PC’s, Microsoft would cut off any future marketing funds. While I understand Microsoft’s position and that they would rather try and boost the development of their apps for their own systems, the fact is that getting any serious momentum for developing Windows 8 apps is lagging far behind and it is folly to think that they can scale up their store offerings anytime fast, let alone ever really compete with IOS and Android touch based apps stores.

It seems crazy that both Google and Microsoft would veer away from Bluestacks given its potential help for their market goals. In Google’s case, they could offer Android apps and get millions of Windows users acquainted with Android as well as tap into the ad potential they would get from these new users. For Microsoft, it would give their users access to hundred’s of thousands of apps that they will never get as Windows 8 Metro apps and bring them into their own fenced in Windows environment and find ways to leverage these for their own ad and search links.

This heightened interest in putting Android on Windows machines seems to be quite a serious movement at the time. And at the moment, the vendors are choosing dual boot over Bluestacks’s approach, something that adds cost to their system and threatens user pushback if this approach taxes the system and makes these dual booted PC’s and laptops preform sluggishly.

I am not sure if these dual boot systems will be DOA or not. History has shown that dual booted operating systems on a single device platform do not do well and I suspect that these hardware implementations could have only minimal interest with consumers.

But Microsoft should learn from this dual boot push that users want hundreds of thousands of apps to use on Windows machines and if Microsoft can’t give it to them, users may look elsewhere to get them. Microsoft needs to see that this does not bode well for them, especially if Android and Chrome merge as we expect them to do in the next few years and Chrome OS based system with Android Apps on them deliver much more than Windows 8 could ever give them.

You should keep an eye on this area of dual booted Windows/Android systems. Whether they are successful or not, it shows that vendors and consumers want more Apps for their PC’s and Microsoft is not delivering.

Why the Microsoft/Best Buy Relationship is a Big Deal

Since Apple introduced their retail stores, Microsoft has been amazed at the success of the Apple’s stores and watched somewhat in horror as people flooded Apple’s retail establishments while stores like Best Buy and others that carry PCs languished by comparison. Microsoft also went to school on Apple’s stores and realized that creating a store dedicated to the sales and support of a product is becoming more important today as more and more digital gadgets come out and consumers need some hand holding in the purchasing and support department.

Microsoft has literally copied Apple’s store idea and over the last two years have started to open stores of their own, often times in eye-shot of Apple’s stores in some of the bigger malls. However, opening stores, paying for the retail space and populating them with sales people is a very costly effort. Even if they had wanted to scale up to meet their needs, it would take time. This is something that Microsoft does not have a lot of these days as their PC world is starting to decline in lieu of people buying alternative devices that use iOS and Android instead of Windows.

Microsoft decided to work with Best Buy to create what many saw as a store-within-a-store section inside Best Buy similar to the ones that Best Buy already has with Samsung and Apple. While Apple’s presence in Best Buy stores is more like a dedicated section, the Samsung store is literally an actual store-within-a-store like program that is even staffed by Samsung employees who service customers in their concierge area which is kind of like an Apple Genius Bar.

Given this frame of reference, most people who saw the announcement about this Microsoft and Best Buy relationship figured that it was a deal similar to the one Samsung had with them. And given the fact that Microsoft wanted to replicate their own stores quickly, it makes sense that they could use Best Buy to make this happen faster.

But the deal is much more than this. The truth is that Microsoft will now actually take over the PC departments of 500 Best Buy stores in the US and 100 in Canada and actually run them. They will decide what products are carried, how they are sold and serviced and be able to even limit what the competition can carry in this PC section. Best Buy will still keep the Samsung and Apple sections separate, but any PC or tablet apparently now will come under the scrutiny and discretion of Microsoft as to its placement within the PC section of Best Buy that Microsoft will now run.

This is a big deal. On the surface, it looks like a good deal for Microsoft since it does give them total control of their Windows franchise within Best Buy. But imagine if you are one of the OEMs. You now have to negotiate floor space with Microsoft, who by nature has to support all vendors who use Windows OS in their products. This begs the question then of how Microsoft handles this. Do they give preference to the big players and totally shut out smaller players who have bet their future on Microsoft products? How do they sell one vendors product over the other if they want all of their partners to be successful? While this is a big deal, it also has the potential of being a disaster if Microsoft cannot balance their partner’s demands with the reality of a finite floor space for Windows products.

So, why would Best Buy be willing to give up control of their PC department to Microsoft? As you know, Best Buy has been struggling of late and with the decline in the PC demand and shrinking margins, this part of their business was really hurting. In fact, there have been a lot of rumors that Best Buy would have to close even more stores if their overall store sales continued to decline.

This is speculation on my part but I suspect that this move by Microsoft can be likened to the investment Microsoft made in Apple when Steve Jobs came back in 1997. You may remember that Microsoft gave Apple $400 million, which included some cross licensing deals as well as stock. At the time, Apple was weeks away from declaring bankruptcy and this cash infusion from Microsoft literally saved Apple from this fate and bought time for Steve to turn the company around. This was actually a cheap cost for them since they needed Apple in the PC business to keep the Justice Department off of their back given the monopolistic problems they were already having with the US govt at that time.

Best Buy moves a lot of PCs for Microsoft, even if their own profit in PCs continued to decline. If Best Buy continued to close stores and even potentially go out of business it would have a huge impact on sales of Windows PCs and Microsoft could not let that happen. In a sense, this most likely buys Best Buy time to concentrate on improving sales of their other products, things like TV’s, refrigerators, etc that in most cases still have healthy margins and lets Microsoft deal with a business inside Best Buy that is set to decline every year going forward. I don’t know the fine details of this deal but it probably guarantees them a minimum in PC and related sales that at the very least keep each PC department even regardless of PC sales, something that really would really impact each stores financials.

This relationship needs to be watched very closely as it could be a make or break deal for Best Buy and if Microsoft fails in their stewardship of the PC department of Best Buy, it could have serious ramifications for the PC industry in the US going forward.

How Windows RT could Thrive

Microsoft’s decision to create a Windows 8 version for use on ARM processors called Windows RT has become a bit of an enigma in the industry. Windows RT based tablets were launched with much fan fare yet sales of RT based devices has fallen way short of predictions.

In fact, Microsoft is selling their Surface RT to schools now for $100, something that suggests that the Windows Surface RT experiment is pretty much dead. Microsoft has its own self to blame for this. Their decision to include Office minus Outlook was a serious blow for these early models. While newly created Windows 8 apps worked on RT, the fact that it was not backward compatible with existing Windows Apps really added to its lack of allure for most customers

Also their TV ads didn’t help either. Instead of showing people the virtues of Surface they decided to show hip young people dancing and jiving holding RT Surface tablets, something that makes no sense to anyone who wanted to know what Surface really was and why they should even consider buying it. These ads were a waste of money and a big mistake in my book.

Our research suggests that Windows RT in 10-inch tablets and laptops probably will never take off. Mostly because of lack of backward compatibility with current Windows apps, which to a lot of people is still a big issue. While it is true that Windows 8 apps work on RT devices, the lack of Windows 8 apps, especially those long tail apps, will continue to hurt it in these types of models too.

However, there is one device, or area, where RT could be quite welcomed. One of the things you may have noticed is that 7” or 8” tablet prices have come down in price. Over the weekend I saw a 9” tablet for $99.00 at Fry’s. Sure it was a no-name brand but it had Android Ice Cream Sandwich on it and was more than serviceable as a basic tablet. What we are seeing is a race to the bottom with smaller screen tablets and it is becoming harder and harder for any tablet players to compete when prices get this low and they are all pretty much alike.

Gaming and Media

What is needed in the small tablet space is differentiation. Just using a mainstream processor will not cut it if the goal is to be heard above the crowd. It is true that being tied to a rich ecosystem like Amazon and Apple have for their smaller tablets helps them differentiate but for others, especially those betting on Windows 8 for tablets, they have no edge against this onslaught of race to the bottom low-end tablet space.

While CPUs in smaller tablets are important for delivering long battery life, the need for an upscale processor is somewhat minimal. However, one area of content that is important–even in small tablets–is games and video. For games, the GPU will become an important part of differentiating these smaller tablets. Especially since the use case for many of these smaller tablets will lean toward media and entertainment.

This is where RT could be on somewhat equal footing. In smaller tablets, backward compatibility with existing Windows apps is not important. Rather, it just needs to run Windows 8 apps and do them extremely well. But games and video built for Windows 8 could have an advantage when running an ARM processor like Nvidia’s Tegra or Qualcomm’s Snapdragon. Both processors which, for the time being, are likely to have a graphics advantage over their lower cost x86 counterparts. ((We can debate all we want the degree of which “good enough” experiences exist, but graphics is still an area where we will continue to observe clearly better visual experiences))

Nvidia has made the GPU a key part of their mobile processor known as Tegra and to date, Nvidia has had some pretty big wins in tablets because of the robustness of Tegra’s CPU and GPU. Qualcomm, with Adreno, and Intel as well, both realize that the GPU is becoming much more important in mobile and they too have been working hard on developing more powerful graphics processors for use with their mobile SoCs.

Most of Nvidia’s tablet wins have been for use with Android but vendors wanting to do Windows 8 ARM based tablets need to look closely at the role a GPU will have in driving greater differentiation with these smaller tablets. From our research we are finding that smaller tablets are mostly used for content consumption and games and not productivity. Making these smaller tablets exceed consumer’s expectations, especially with games, could allow Windows RT to be taken seriously. An SoC with an emphasis on graphics added to deliver a great gaming experience could help deliver on this use case. And if the graphics and media experience is objectively clear, consumers will pay a premium for this if the tablet is to be used for HD games and video. ((Obviously there are many variables to this, including rich applications and games being developed for Windows RT))

It will be important to watch what happens at Microsoft’s Build conf in SF next week and see how much emphasis they make on creating games for Windows 8. If this is a major part of their strategy, then RT based small notebooks and tablets could thrive in this space even if they are not a bargain based prices.

Apple’s Next Technology Move to Drive Industry Direction

I have been told that I am the analyst with the longest history of professionally covering Apple. I think this is a polite way of saying that I am old. I started covering Apple in 1979 and began covering them professionally as Creative Strategies’ first PC analyst in 1981. Interestingly, when the PC industry kicked in with the introduction of the IBM PC in 1981, there were no PC analysts. The four of us, which included someone from IDC, Dataquest and Forester were actually drafted or forced to cover PC’s along with our current job of researching the role and impact of mini-computers for our respective companies.

From this position I have been able to watch the PC industry grow from the inside and got to deal with all of the major PC executives in person from the beginning. All this to say that over these 32 years I have developed a pretty broad understanding about what makes the tech market tick and the leaders and technologies that have driven the tech industry to what it is today.

Although Microsoft, Lotus, Software Publishing, IBM, Compaq and Dell along with many other software and hardware companies lead much of the PC’s direction over these 32 years, there is one company that actually had perhaps the greatest influence on the direction of the PC industry and tech market that exists today.

A Look Back

Apple was the first to introduce a commercial PC with the Apple I and II but it ultimately influenced IBM to get into the market. In 1984, Apple introduced the Mac with its graphical user interface, which of course drove Microsoft to follow suit with their eventual Windows OS. But with the Mac they also introduced another key technology that the industry adopted rather quickly. When PC’s came out, they had a 5 and 1/4 inch floppy disc for storage. Apple bucked this trend and put a 3 and ½ disk reader in the Mac and within two years, all PC’s adopted 3 and ½-inch floppy drives.

While still at Apple, Steve Jobs became very interested in laser printers and private labeled the first desktop laser printer from Canon. After he departed in 1985, Apple execs, lead by John Scully, married a piece of software from Aldus called Pagemaker to the Mac and along with Apple’s laser printer birthed desktop publishing. Within three years, the IBM PC compatibles had a similar solution and became a big part of the desktop publishing revolution.

Around 1989, Scully got really interested in the impact of desktop publishing on storage and took the bold move of introducing CD ROM drives in the Mac. While its initial impact was to give desktop publishing content, which included text, images, and even some video, a larger storage medium for DTP distribution, this move also birthed what was known as the multimedia PC. Apple owned the desktop multimedia PC for about 2 years but by 1991 most PC’s were also being shipped with CD Rom drives in them.

In 1998, after Jobs returned to helm Apple he turned his eye on industrial design and created the first popular all-in-one desktops PC’s with his candy colored iMacs.
By 2001, All-In Ones that were IBM PC compatible started coming out and are still a key part of desktop PC sales today.

While he did not invent the MP3 player, he reinvented it with the iPod. He did not invent the smartphone, but reinvented it with the iPhone. And he did invent the tablet; he reinvented it with the iPad. In all three of these cases Apple has taken a leadership position and drove their competitors and the industry forward in leaps and bounds.

Where to Go From Here

So, what is the next big technology that Apple will make popular that the entire industry will need to follow to be competitive? About 4 years ago I was asked to go and meet with the senior execs of an east bay company that very few people had heard of. I was only aware of them because when IBM still owned the PC division, they had looked closely at this company and in my work with IBM and eventually Lenovo who bought the PC division from IBM, I had to work with this technology as part of my role in testing products for them.

The company was AuthenTec Inc. They were a hardware security firm whose crown jewels was a fingerprint reader that many PC companies had embedded into laptops to provide an additional layer of security by means of fingerprint identification. Late last year, Apple bought AuthenTec for $356 million dollars and has brought them in house to work on various ID authentication projects in the works.

While I suppose Apple could include their fingerprint reader in new Mac laptops, I believe their real goal is to bring second and possibly even third levels of ID authentication to the iPhone and iPad. While laptops can be left behind, iPhones and iPads are even easier to lose and misplace and securing these more mobile devices is becoming paramount in the eyes of Apple’s iPhone and iPad customers.

However, trying to put a fingerprint reader on small mobile devices is difficult to do in a way that it is easy to use and foolproof. Apple has only owned the company for 10 months or so but I am convinced they are working overtime to try and get this technology into the next version of the iPhone. The most logical way to do this is to put the fingerprint reader in the “on” button on the bottom that when touched with the proper finger allows you to securely open the scroll bar. But since people also hold the iPhone in one hand and at least one or two fingers touch the back of the screen to hold it, it is plausible that the fingerprint reader can be on the back.

I have no doubt that when Apple eventually introduces their much rumored TV or even an iWatch, these moves could drive the industry in new directions. But as in the past when Apple introduced key technologies in their products and the industry followed, my bet is that the integration of a fingerprint reader in the iPhone and iPad, will actually have the greatest impact on the future designs of all smartphones and tablets in the future.

TV and Killer Apps

The Financial Times recently released a special report titled “Digital and Social Media Marketing.” The folks at Social Commerce summarized the lengthy release and drew out several bullet points I find especially interesting regarding the state of television:

  1. The average American still spends about five hours a day glued to TV; the smart money in digital is being invested in making TV advertising better
  2. TV is not dead, it is just evolving into a two screen experience, the TV display and a tablet or smartphone. “Lean-back” TV experiences, passively consumed from the comfort of the couch, are giving way to “lean-in” TV experiences, where viewers multitask viewing and interacting on smartphones and tablets
  3. A survey by Time Warner’s Medialab found that 65 per cent habitually multitask with a digital device while watching TV. Much of this activity is in social media discussions of TV shows (tripled in the last 12 months), stimulated by TV networks to sell TV advertising space by showing their content is more engaging
  4. This report only confirms what I had previously suspected: multitasking is now widespread. I used to think only younger demographics multitasked but it seems that these days people of all ages use tablets or smartphones while doing other tasks. It’s done by business execs but also by those in the home. People use their smartphones or tablets while talking on the phone and while watching TV.

    Since the late 1990s I have used a laptop while sitting in front of the TV. I now often use a tablet, but until the devices came out, I was the only one in my house who took advantage of a second screen. Now my wife and the grandkids play games or surf the Web on their tablets while watching TV. In a sense this qualifies as part of the two-screen living room experience but I believe this model has enormous potential when the device is intrinsically tied to TV viewing itself.

    There are currently a lot of apps designed to enhance the TV viewing experience. I have Comcast’s XFINITY TV app, which lets me record programs remotely; the IMDB app, which gives me info on movies, TV shows, actors, and entertainers; the TV Guide app; and more. All better my TV experience but I believe that this is only the tip of the iceberg when it comes to the future of two screens in the living room.

    When the Apple II came out in 1978, Visicalc, the first PC spreadsheet, was developed for it. It became the killer app that moved the machine from hobbyist stature to the business world and it quickly became a tool that even large businesses started using to manage their financial forecasting. When the IBM PC came out, a product called Lotus 1-2-3 became its killer app that caused the IBM to take off like wildfire in a short time. The key for both of these products’ growth was what the industry calls an SDK, or a software developer kit, which provides tools for developers to write applications for the machines. In fact, tens of thousands of apps fueled the growth of the IBM PC and PC clones as well as the Mac and to this day remain an important part of their software ecosystems.

    Various companies have been creating smart TVs, Web browsers, and their own apps but what is missing is a dedicated SDK that can work on one or multiple PC platforms and encourage the development of apps for the TV. More importantly, this SDK focus should be more on the tablet or the smartphone and how they connect to the TV to deliver a richer viewing experience. I think we will soon see a model in which the TV is just a smart screen with apps designed to work with it via tablet, smartphones, and perhaps PCs or laptops.
    There has been a lot of talk about an Apple TV and I actually have a bet with my son on this. I think it will make a physical TV as well as a new souped up set-top box that gives all digital TVs access to its program. My son, on the other hand, believes the real magic will be with the SDK and a new Apple TV box. He says it doesn’t make sense for Apple to make an actual TV at this time. However, we both believe that the Apple TV focus will be on the iPhone and iPad; the TV will be more of a screen that is tied to and interacts with an ecosystem. It could ultimately change the way we view television and, in true Apple fashion, redefine the second-screen concept.

    Just look at what Google is doing with Google TV. It too has a similar model in mind. Android TV apps are already popping up but the platform needs a dedicated SDK that just focuses on the TV to give developers the ability to create products that make the two-screen experience fly. Microsoft is also trying to drive a two-screen experience, albeit through the Xbox at the moment. I expect the company to flesh this out further in the near future.

    It will be very interesting to watch what happens in the coming months with this two-screen concept. Google, Apple, and Microsoft all have their big software developers’ conferences within weeks (and miles) of each other. (Google I/O begins on May 15, Apple’s WWDC on June 10, and Microsoft’s Build 2013 conference on June 26.) They will all likely announce big news around their new operating systems and development tools for their core products, but I also expect that they will make clear their plans for a future TV.
    The connection between smart TVs and mobile devices is still in infancy. This could be the year however, when these mobile devices take on a more interactive role within the TV viewing experience. By July we may finally get a real glimpse of what the two-screen TV future will actually look like.