Author: Tim Bajarin

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

Google Glass and Segway: Early Adopter Lore

In 2001, the Segway hit the market. VCs like Kleiner Perkins’ John Doerr fawned all over it pre- launch. Even Steve Jobs and Jeff Bezos were enthralled when they saw it. To its inventor, Dean Kamen, it represented the next breakthrough in personal transportation. His boldest claim came when he predicted in Time magazine that the Segway “will be to the car what the car was to the horse and buggy.”

Kamen is a true renaissance man and when he speaks, it is best to listen. He has had the ear of at least two presidents and is highly respected in the medical field for his invention of the all-terrain electric wheel chair. Perhaps he is best known for inventing the insulin pump.

I had the privilege of sitting next to Kamen at an event at the San Jose Tech Museum just before the Segway came out. I was already aware of his accomplishments and I was (and still am) in awe of him. Regis McKenna, the legendary PR vet who handled PR for Apple and Steve Jobs until the mid-1990s, was also sitting with us. I clearly remember how McKenna, who is a type 1 diabetic and had used an insulin pump since it came on the market, took this opportunity to thank Kamen for creating this medical wonder and to explain how it affected his life. It was a very touching moment and, in turn, Kamen graciously thanked McKenna for his kind remarks. At that moment it really hit home that technology was not just something that I work with but rather something that has the potential of improving lives.

The Segway, however, had a lot of problems from the start. To begin, it cost more than $3,000 and had a short battery life. There was also serious pushback as local communities banned it on sidewalks, malls, some streets. Many people were not pleased to share the roads and aisles with Segway riders. In 2009, Time magazine named it one of the 10 biggest tech failures of the last decade.

Although the Segway was a bust at the consumer level, it has been embraced by vertical markets such as police departments, private security in malls and entertainment parks, and tour companies. This isn’t surprising given that most new technologies are often flushed out in vertical markets before ever getting cheap enough to find broader consumer demand (if they ever do).

Now that Google Glass has come onto the scene, I see some similarities between it and the Segway. The rhetoric, for one, is parallel. Google CEO Larry Page talks like it will be the next big thing to revolutionize the world. After spending two weeks with the glasses, noted technology blogger Robert Scoble wrote, “I will never live a day of my life from now on without it (or a competitor). It’s that significant.” My company will be getting a pair of the glasses to test in the next month and perhaps we will have the same reaction.
There’s certainly a lot of hype, but Google Glass isn’t even commercially available yet and pushback has already started. People worry about invasion of privacy and distracted drivers. It’s being barred in movie theaters, casinos, strip clubs, and bars and a recently introduced bill could ban the use of the device while driving.

I have no doubt that early adopters will shell out the $1,500 at first but some of my tech friends express concerns. How will they look in public while wearing them? Will others think they aren’t engaged in conversation, but rather searching for things? I compare it to wearing a Bluetooth headset; when speaking to a person, I take it off lest they think that I am not listening to them but instead to something coming through the headset.

Tech You Can Wear

It will be very interesting to see how the first generation of users will evaluate its worth given that only 8,000 testers will receive them. These early testers, however, should give us a good sense of whether these glasses have staying power. I suspect they might conclude that Google Glass is not really ready for consumer primetime.
Like the Segway, it will likely get the most attention from vertical markets where its real value can be exploited even at its high price, which is not aimed at consumers anyway. It must drop to around $300 before it gains any traction in the mass market. Even then, there will probably be a steep learning curve in functionality and social norms before it is accepted for everyday use.

I may be wrong about the Segway comparison since they are clearly two very different technologies. Still, I can’t help but see the likenesses between them. I fear that once the novelty wears off, unless there is a killer app, Google Glass could lose steam and potentially go the way of the Segway.
On a personal note, I strongly believe in the potential of wearable devices, regardless of the reception of Google Glass. It will go down in history as one of the products that helped define wearable computing. Wearable devices give us a digital sixth sense and we are just scratching the surface of how they can provide enhanced information that will impact all aspects of our personal and professional lives in the future.

Should Apple Make a Larger Screen iPhone?

One of the things that has become very clear about the smartphone wars is that one size does not fit all. People want choices whether it be a particular smartphone OS, the size, or specific features they want or need on the specific phone they buy. For many, a choice of devices at different price points is also important. Because most smartphones in the US come with a 2 year carrier subscription, the up front cost to people matters. During the last year I have gone to the showrooms of Verizon, AT&T, Sprint and T-Mobile and eaves dropped on people buying smartphones and concluded from these adventures that the variety of needs and wants of people buying smartphones varies greatly.

One common denominator I observed while watching folks talk to sales people about buying a smartphone is that the screen size was actually quite important in their decision of what product they purchased. Here again, one size does not fit all. Some people are quite happy with a 3.5-inch screen, while many opt for a screen in 4 inch to 4.3-inch range. And a lot had heard about smartphones with screens in the 5-inch and even 6-inch range and wanted to see these as well.

This issue of smartphone screen sizes has become a very big research question when I talk to most of the smartphone vendors. In Samsung’s case, they have screen sizes from 3.5 inches to 5.5 inches while Apple has settled on just one 4 inch screen for all of their new iPhones. With the Galaxy S4, and quite a few others sporting screens much larger than the one on Apple’s 4-inch iPhone 5, some media and consumers have been asking why Apple has stayed with a one size fits all strategy vs giving their customers more choices in screen sizes like many of their competitors do.

A Tale of Two Screens

For the last month I have been carrying an iPhone 5 and the new Samsung Galaxy S4 with me at all times to try and get a sense of my on preference in screen sizes. The iPhone 5 has a 4-inch screen and the Galaxy S4 has a 5-inch screen. One is based on iOS and the other is based on Android. I have also used smartphones with Windows Phone on them but for this exercise I focused on the two market leaders and their very distinct and different screen sizes.

Both are exceptional smartphones. Samsung has done a great job of making Android better on their devices and in certain cases I found the larger 5-inch screen very welcome (especially for my not-so-young-eyes). This is especially true when using news based apps like Flipboard, Zite, and Pulse as well as when surfing the Web. But the downside of a 5-inch screen is that for those of us with small, or relatively normal hand sizes, it is quite difficult to use a 5-inch smartphone with just one hand.

Until using the Galaxys S4 I had not really paid attention to the fact that most of my use of the iPhone was dominated by one-hand operations. The reason, at least for me, is that I tend to naturally use my right thumb to navigate and even type messages and emails one handed. In fact, I have become so skilled at this that when I tried using two hands to navigate and type on the Galaxy’s S4 screen, which included my left thumb, it surprised me how clumsy I was with my left thumb when using two hands to operate the larger screen.

Apparently I am not alone with this problem. My friend and colleague at PC Mag, Sasha Sagan wrote a great piece on this exact issue recently in which he stated that he just had to much trouble doing one handed operations on screens much larger then 4.3 inches.
I encourage you to read this piece when you have time as he gets more granular about the one handed operation issue and feedback he has gotten on this topic.

With the Galaxy S4 selling so well, it appears that for a lot of people a 5-inch screen is not a problem. However the iPhone is selling even better in the US, which says that a lot of people are fine with a 4-inch screen as well. In talking to quite a few friends and family it seems that one hand operation of smartphones is quite prevalent and is a real consideration when buying a smartphone for many.

But if the smartphone wars are based on one size does not fit all, why has Apple been so rigid on their screen size?
When the iPhone 5 was introduced last year, Apple’s EVP of World Wide marketing Phil Schiller told me that one of the things Apple observed with people using the iPhone up to then was that the majority of them used them with one hand. They had studied screens larger and smaller and while the original 3.5-inch screens worked well, many customers had told them they were interested in a larger screen in new models. In moving up to a new screen size, they looked very hard at what larger screen sizes would still allow for optimal one hand usage and settled on 4-inch screens for the iPhone 5. One handed operation is clearly at the heart of their design philosophy. And I suspect that even with Samsung gaining customers with a 5″ screen, Apple will stay true to this goal of creating a great smartphone that is optimized for use with one hand.

Could they possibly change their minds on this in the future and create multiple screen sizes that would meet the need of anyone who wants an iPhone? Given their strong conviction that the best usable experience on a smartphone is when it can be optimally done with one hand, I doubt they would even consider a 5-inch smartphone. Interestingly, during this time I started testing a 4.3-inch smartphone and while it was a bit of a stretch to use my relatively smaller hands for one hand operation, it is more than possible for most people to do one handed operations on this slightly larger screen. Perhaps Apple has discovered this as well and if I was a betting man, I would bet that if Apple does decide to introduce an iPhone with a larger screen it would be no more then 4.3″ diagonally.

The good news for consumers is that their are so many choices offered to them when buying a smartphone that they can pretty much get a smartphone with any size screen on it. But if you are waiting for Apple to copy Samsung and bring out a 5-inch iPhone, I suspect the odds are pretty much against it.

Why Google is Not the New Microsoft

My history with the PC industry is very long. I got to work on the original IBM PC with Don Estridge’s team in Boca Raton and saw up close and personal how the PC industry developed and how the value creation for the industry came about. I also got to work on early marketing programs for the Mac as well as programs for Compaq, Dell, HP, Toshiba, DEC, and many others as the PC market was hatched and eventually became an almost trillion dollar industry. Perhaps the most interesting fact from the early days of the PC is that IBM created their PC from off the shelf parts and never even considered developing a proprietary design at first. By using an open approach to the PC architecture it did not take long before others created IBM PC clones and took IBM on soon after the IBM PC hit the market in 1981.

Most industry folks know that when IBM sought out an OS for their PC, they first visited Gary Kildall and his company Digital Research Inc. as they were interested in his CPM OS. But when they arrived, Gary was not there and more or less snubbed them and they instead went to see Bill Gates and as they say, the rest is history. I did many Computer Chronicle shows with Kildall and he refuted the idea that he intentionally snubbed them; regardless, the end result was that IBM ended up using MS-DOS and it became the heart of their and many PC Clone’s operating system for almost a decade.

Over the years Microsoft has become an industry behemoth and has gotten into many different businesses to help extend their Windows franchise. But from the beginning, Microsoft did have one important goal and focus. It was to give PC OEMs an OS and actually help them make money with their PCs. Microsoft licensed MS DOS and then Windows to PC makers and continued to refine it and upgrade it along the way. The PC vendors could then create hardware optimized for these operating systems and add value through hardware and software add-ons. With each new version of Windows, Microsoft helped their PC partners grow their business and as people upgraded from one version of the OS to the others, many people along the value chain were greatly enriched. Besides PC companies making money, VARs, retailers and value added service providers all benefited from an ecosystem in which they could build new designs and services around Windows and keep all of that money for themselves.

When it comes to money and value creation for their partners, Google’s goals are very different and this is what really sets them apart from Microsoft.

A One Sided Relationship

While they too have an OS that companies can license, the real goal of their licensed OS is to bring users of these devices into direct contact with Google’s ads and services. Google says they really want their partners to be successful and while that is probably true, what they really mean is that if partners are successful in distributing their OS, than Google can reap the majority of the financial benefits. Sources tell me that a company like Samsung, who is literally their largest partner and almost single handily making Android successful, gets only a 10% commission on any of Googles ads or services they bring to Google. That same 10% commission applies to a giant like Samsung as well as any other companies distributing Android on their smartphones and tablets, except for Amazon and Barnes and Noble. In these two cases, Amazon and Barnes and Noble have forked Android for their own uses and can keep all proceeds from products and services sold through their devices. This works because they have an ecosystem of books, music, apps, and services that are their own and don’t need Google’s content to be successful. But most of Androids partners, such as Samsung, HTC and others, must rely on Google for music, video and apps and must pay this very large tax to Google if they want to use Android.

This is not to say that Microsoft’s OS licensee fee is not a tax in its own right. However, once that fee is paid, Microsoft gets no extra revenue from their partners regardless of what they sell in way of their hardware and services. And even if they tap into Microsoft’s ecosystem of apps or services, I understand their revenue cut to their partners is much more than Google gives their partners. This is why there have been rumors that Samsung has not been happy with Google since they do all of the hard work in creating a device, optimizing Android’s OS and delivering a value added UI to it as well as managing the channels and pay to make their own ads. Yet Google treats their cut of the profits the same as a small player that sells a much lower volume of devices than Samsung does with their products. No wonder analysts are looking closely at Samsung’s recent decision to fold their own mobile OS called Bada into Tizen and suspect that if Samsung wants to control their own destiny and keep more of the app, ads and services for themselves, that they might move more and more to Tizen as their mobile OS of choice.

While many rag on Microsoft as being a 900 pound gorilla lording their wares over their partners with a heavy hand, they at least let their partners make and keep as much profit as they can from any products and services they offer their customers. Not so Google. They too are a 900 pound gorilla but in their case these vendors are just a front end distribution medium for putting Google’s ads and services before their customers and ultimately reap the lions share of most of the profits made at the expense of their partners. And in this sense, the difference between Microsoft and Google is glaring indeed.

Samsung’s Real Threat to Apple

When the iPhone was introduced, a Sr. Apple exec put the iPhone on a table in front of me and asked me what I saw? I replied by saying that I saw a black piece of glass on the table. He pointed out that what I saw was correct and then added that the real magic of the iPhone was the software. Over the last five years, smartphone vendors have continued to increase the size of the glass, put more physical bells and whistles on the hardware in areas such as audio, cameras, etc., and tried to make the hardware the real gem of their new smartphones.

If you look at the iPhone, the physical design has pretty much stayed the same. In fact, some could say its design is minimalist compared to the newer smartphones hitting the market today. Of course, that is not true. Apple has made it sleeker, put faster processors and higher resolution screens and better cameras and audio in every next generation of the iPhone. But as far as I am concerned, its crown jewels are iOS and the total ecosystem behind it that makes the iPhone sing and dance.

All of Apple’s competitors understand this but most are saddled with a core mobile OS like Android that, while getting better, is the same OS that all Android licensees have access to as well. While that is good for most, to really be competitive against Apple, vendors also know that differentiating around hardware, software, and services is what will ultimately make them competitive.

Separating From the Pack

HTC was one of the first to add its own UI layer on top of Android. Amazon and Barnes and Noble also use specialized UIs on top of their Android OS in order to make them easier to use with their own software and services. While basic Android is the same to all, one key thing that Google does allow is their partners ability to add their own UI on top of Android to enhance their devices and differentiate them from other Android vendors. This is one of big mistakes Microsoft has made with Windows Phone. All vendors can only use the Microsoft Windows Mobile UI and so all of their partners devices look and work the same (this is true of Windows 8 as well). [pullquote]While hardware may differ, the magic is in the software and from the start Microsoft gives their partners a real disadvantage when it comes to allowing them to differentiate in the area that counts the most–with software.[/pullquote]

It’s no wonder that Apple has 57% of all of the smartphone profits and Samsung 43% of smartphone + feature phone profits for the quarter. Incredible, really, when you think about it.

I have been watching Samsung very closely for many years. In fact, from 1990-1998 I consulted with them on their US retail strategy and always saw them as a major player in tech, even through their PC business in the US struggled. One of the things I understood, even back then, was their vertical integration. This means that for the most part, they make their own components that go into their devices. This gives them a real advantage over other vendors who have to outsource all or most of their components for their products. This is one area that continues to be a threat to Apple as Samsung’s vertical integration gives them quite an edge.

However, when it came to software and services I saw that this was an area that they were very weak at. This remained true until about three years ago, about the time they started going to school on Apple’s successful model. Like all of Apple’s competitors, they now know that for them to succeed they have to deliver very competitive hardware, software, AND services. To Samsung’s credit they have really taken the software challenge to heart and have been expanding their skill set and expertise in software design and development in a big way. In fact, we hear that a big part of Samsung’s facility expansions in San Jose, CA will be focused on software development.

This is really evident in the new Samsung S4 smartphone. I have been testing one for the last week and am very impressed with their software prowess. It is clear to me that while Apple’s software skills, expertise, and ecosystem is still much stronger then Samsung currently, in my opinion, I have no doubt that Samsung is serious about software innovation and is building up the team to give them the skills needed to compete with Apple head-on at the software level. They are still weak and tied to Google when it comes to services, but even here there is a chance Samsung could enhance their service position in the future.

Going Down Their Own Path

Two features really stick out among the dozens of new UI enhancements in the S4. The first is called Air View, which allows you to hover your finger over an email or message and the first 5 lines with the subject and email or message pops up so you can see the gist of the email without opening it. The other feature is called Air Gesture, which allows you to just wave your hand to answer a call or turn a page. Both of these new features tell me that Samsung understands the need to innovate at the software level and that they racing forward to do it. Regardless of how you feel about these features or whether they are gimmicky, strong hardware + software chops were required to execute.

On a side note, Samsung’s recent decision to integrate their own OS called Bada, into Tizen, an open source mobile OS backed by Intel, is also strategic. For Samsung to be successful over the long-haul they must control their own destiny. By using Google’s Android as a core OS, they are still beholden to Google for their OS directions. I personally think that over time they will eventually migrate completely to Tizen but only time will tell if this will actually happen.

Although reviews of the Galaxy S4 have been mixed, I believe that this phone starts a new chapter in Samsung’s strategy in which software is now seen as the crown jewel and for Apple and all of Samsung’s competitors, this becomes an area to watch closely as they try to use it to really set them apart from Apple and the rest of the Android vendors they compete with.

The biggest threat Samsung poses to Apple, and others for that matter, is their goal of further becoming a software company. Only time will tell if they can forget their own software path but regardless they are going to try.

The Strategic Importance of Intel’s New CEO

This morning Intel finally announced the successor to current CEO, Paul Otellini. Otellini steps down later this month and new CEO, Brian Krzanich, who is currently their COO, will then become CEO.

Here is a short background on Krzanich:

Brian M. Krzanich is executive vice president and chief operating officer for Intel Corporation. He is responsible for Intel’s global manufacturing, supply chain, human resources and information technology operations.
Previously, Krzanich was responsible for Assembly Test from 2003 to 2007. From 2001 to 2003, he was responsible for the implementation of the 0.13-micron logic process technology across Intel’s global factory network. From 1997 to 2001, Krzanich served as the Fab 17 plant manager, where he oversaw integrating Digital Equipment Corporation’s semiconductor manufacturing operations into Intel’s manufacturing network. The assignment included building updated facilities as well as initiating and ramping 0.18-micron and 0.13-micron process technologies. In 1996 and 1997, Krzanich was the Fab 6 plant manager in Arizona. From 1994 to 1996, he was a manufacturing manager for Fab 12 in Arizona. He also served as a process engineer at various Intel locations. Krzanich joined Intel in 1982.

Krzanich was presented an Intel Achievement Award in 1999. He holds one patent for semiconductor processing.
Krzanich received a bachelor’s degree in Chemistry from San Jose State University in 1982.
They also named Renee James President of Intel.

So what does this new leadership change mean for Intel’s future?

We believe this move is quite strategic and sets up an important new phase in Intel’s history. Brian’s strong role in running manufacturing will help Intel drive even more aggressive research and potential partnerships to keep their fabs running at full capacity. Intel is moving fast from 22 nm to 14 nm process designs, which fundamentally says Intel is doubling down in mobile and see’s this as their real future.

It is important to note that Brian’s role is to drive Intel’s strategy and be responsible for what R&D focuses on and anticipate future demands of their partners and what consumers will want in the future. This is what Otelinni has been doing and this top focus will now be in the hands of the new CEO. However, Brian’s intimate understanding of manufacturing and what makes the fabs tick is just as strategic.

We have heard that with the slowdown in the PC industry, most PC semiconductor fabs are not running at full capacity. However, from a bottom line standpoint, fabs need to run at full capacity if they are to be profitable. Intel recently announced the Intel Custom Foundry, which they offer fab manufacturing to fabless companies and has already started doing work for some small fabless design firms. However, Otellini has said that over time they could do work for big companies. I believe Intel’s top priority is filling the Fabs with their own chips, but one possible reason for this move is that over time Intel’s Custom Foundry could become even more strategic to Intel’s future.

Intel has also been criticized for not have a strong succession plan in place. I believe naming Renee James as president is also strategic. Intel has to deal with the possibility that if anything happened to Brian, Renee James could step in and a transition to new leadership in this situation would be seamless. One could decipher from this that James could be the next Intel CEO when Brian leaves the office (Intel has an age cap on CEOs) but I don’t think this necessarily so. I suspect her role as president could set her up for this but strategically speaking, this is in probably in place to protect a line of succession for the immediate future.

We are entering a new era in personal computing and quickly moving to what Steve Jobs called the post PC era. While PCs are not going away, mobile and embedded processors need to be the future of a company like Intel. Brian will have a daunting task to migrate Intel from its PC past and into a new era of personalized computing. I believe this move is the right one for Intel and naming someone with a long history at Intel and a strong manufacturing background is best for Intel at this time.

The Next Evolution In User Interfaces

With the introduction of the iPhone, Apple introduced the touch UI and literally changed the way people interact with their smartphones. When they extended the touch UI to the iPad, it set in motion an industry stampede to create PCs, laptops, tablets, and smartphones with touch based interfaces. In the world of technology, this was a real milestone. For decades the way we navigated through our PCs was through a keyboard, mouse or Trackpad. While Apple was not the first to bring touch to tablets or smartphones, they clearly get credit for commercializing it and making it the defacto standard for next generation user interfaces.

But there were two products released recently that I have tested that I believe gives us an early glimpse at the next evolution of user interfaces. These, perhaps, will be just as ground breaking as the graphical user interface and touch UIs in the market today.

Touch Freedom

The first is a couple of gesture features that are in the new Samsung Galaxy S4 smartphone. The first is called Air View. If you are in the email application on the S4, you can just “hover” your finger over the email you are looking at and the subject line and first 2 or 3 lines of the email pops up. It hovers over the actual email line so you can see what the email is about at a glance and decide if you need to read it or just move onto the next to check it out. The Air View gesture only works on the email app now but the software community will likely get the tools to be able to use it on other apps shortly. This gesture alone is a game changer in that it takes limited information on a small screen and blows it up in context so-to-speak so you can gain more info on the item you are looking at.

The second feature is just as cool. It is called Air Gesture. Have you ever been working in the kitchen with a recipe and gotten your hands dirty yet needed to go to the second page of the recipe to get the rest of the details? Well with Air Gesture, all you do is wave your hand in front of the tablet and it moves to the next page without ever touching the screen. I often take my tablet with me to restaurants when I am alone on the road and catch up on the days news, or even read a magazine or book while chowing down. Often my hands are full with knife and fork and today I actually use my knuckle to touch the screen to open a page or turn it.

To be fair, Microsoft has had gesture based user interfaces on the Xbox for almost two years, but to date it has only been designed for game consoles and has not transferred over to PCs or mobile devices yet. Both of these features on the Galaxy S4 smartphone represent the first major shift to making gestures an integral part of a mobile UI. While these two gestures are only on the S4 today, I’m sure it will eventually find its way to Samsung’s Galaxy tablets perhaps later this year.

The other gesture-based technology introduced recently comes from Leap Motion. This pad like device is used on a PC and sits in front of the monitor and between the keyboard and turns Windows into gesture based UI for supporting software. It can also be used with a laptop via a USB dongle with the device sitting in front of a laptop keyboard. Leap Motion has seeded over 10,000 developers with SDKs to make their apps work with their Leap Motion Controller. After it ships this summer, we should start to see a good amount of leap motion enabled apps later this year. HP has considered this so important that they did a major deal with Leap Motion recently and HP has committed to using it in their products in the future.

Similarly with Kinect, what is appealing about Leap Motion is the way you can interact with a game in 3D. Just use your hands as the controller, or use it to add hand controls to manipulating 3D objects. However, with support from the software community you can imagine eventually being able to just wave your hand and turn Web pages or use your hands to mold pottery on the screen, etc. The key thing here is that the Leap Motion technology is an enabler and once the software community gets behind it, it could become the next major step in making a user interface more friendly and even easier to use then it is today.

The reality is that Apple, Microsoft, Intel and others are all working on gesture based UI technology and believe that gestures represent the next significant evolution in computing interfaces. In fact, Intel has a human factors project around gestures and while not much is known about it, I would not be surprised to see the controller for gesture UIs even part of the SOC in the future.

While many had hoped voice would be the next big thing in user interfaces, there is still a lot of work in this space to be done to bring it into mainstream computing. I have no doubt that voice commands, such as the one HAL used in 2001: A Space Odyssey will eventually be the main way we interact with computers. However, for now, the next evolution will be gesture based. The technology used in Samsung’s Galaxy S4 smartphone and Leap Motion will most likely help define how gestures may soon become a major part of the interface we have on all of our computing devices.

The Revenge of Steve Jobs

steve-jobs2Steve Jobs’ original vision for Apple was to own the PC market. When he and Steve Wozniak created the original Apple PC, they fully expected to be the company that brought the PC to the masses. However, once IBM came into the PC market the game changed. By 1983 the IBM PC was the defacto standard in personal computers and Apple was pretty much left in its dust.

When Jobs introduced the Mac in 1984, he was convinced that his new Apple PC would be considered easier to use than the IBM PC and as a result leapfrog the IBM PC and become the PC for the masses. But at that time, the masses could not afford the price of the Mac or the IBM PC and the real growth in PCs was driven by the business market, a market which IBM compatibles helped define and continues to be the top selling PC even today. Even more galling to Jobs was the fact that Bill Gates, with the intro of the Windows UI, basically took Jobs’ implementation of a GUI and put it onto all PCs and in essence made GUIs the defacto standard in how a person navigates the PC experience. Up to now, Gates and team reaped most of the financial benefits from the growth of the PC market.

Although Jobs introduced the first commercial version of a PC as well as commercialized a radical new UI, the PC market under the leadership of IBM compatible vendors and with Gates’ software, fundamentally has been at the center of the PC revolution and even to date, IBM PC compatible products dominate the market overall for personal computing and Jobs never realized his goal of Apple owning the PC market.

The PCs Run is Over

Earlier this week, IDC updated their forecasts for Q1 of 2013 and gave some guidance about the future growth of PCs throughout this year. In late 2012, IDC forecasted that the PC market would see a negative growth of 7.7% in Q1 of 2013. But in their updated report on PC sales for the last quarter, PC sales were actually down 13.9%, the worst quarterly decline since they began tracking PC shipments.

All Things D published both the IDC and Gartner numbers for Q1, 2013 and wrote about both companies guidance for PC sales for the rest of the year. Even though the IDC numbers and Gartners numbers are a bit different, they both conclude that demand for PCs is in a real decline and that the likelihood of them recovering is slim.

In this article, Arik Hesseldahl of All Things D states “At this time, it has to be said that much of the blame for the damage being done to the PC businesses of all the companies around the world can be laid at Apple’s feet: Sales of the iPad, the world’s leading tablet brand, have a lot to do with the collapse in PC sales.”

When Jobs introduced the iPad, he clearly stated that this product would drive the post PC era. I think he knew that his tablet was finally the reinvention of the PC he had longed to bring to market and that it would actually cause the decline of PCs, even if it meant eating some of his own children (the Mac). More importantly, by the time he introduced the iPad, he had in place all of the hardware, software, and services needed to connect the iPad to his ecosystem and even with any decline in the Mac business, he was fully insulated from the impact any downturn in Mac sales would have on his business. On the other hand, HP, Dell, Acer and other PC OEMs who were totally PC driven are feeling the shock of the decline in their PC businesses and are not any where insulated like Apple to withstand the impact of these sharp declines in PC demand. Their only hope is that Microsoft can deliver key software and services that they can use on tablets and convertibles of their own. But it may be too late for them given the strong position in tablets Apple already has and from strong competitors like Samsung, Amazon, and others who are in many ways better insulated through their own ecosystem of products and services already up and running.

While Steve Jobs is no longer with us, I think he knew that this would happen. Perhaps his last major act was to give us the iPad and finally have revenge for the years of toil in the PC market where he always ended up #2, even though he was first with many of the innovations that actually drove PCs to the masses. If he were with us today I suspect he would not shed any tears to see the decline of the PC market and instead revel in the role the iPad played in bringing his PC competitors to their knees.

The New Era of “Good Enough” Computing

good enough phrase in wood typeA few weeks back I was one of the first to write about Windows Blue and in this column I discussed how Windows Blue could be used on tablets in the 7” to 10” range as well as in clamshell’s up to 11.6 inches.

We are now hearing that this particular version of Windows Blue will be priced aggressively to OEMs and could go to them for about $30 compared to the $75-$125 OEMs pay for Windows 8 on mainstream PCs.

But to use this low cost version of Windows Blue, we understand there are some important caveats that go with it. For this pricing, it can only be used on Intel’s Atom or AMD’s low-voltage processors. These chips were designed especially for use in tablets and as I pointed out in the article I mentioned above, this would give Microsoft a real opportunity to get Windows 8 tablets into the market that could go head-to-head with Apple’s iPad Mini and most mid level 7”-8” Android tablets as well.

Netbook 2.0?

As for clamshells, they too need to use these processors from Intel and AMD to get this pricing for Windows 8 (Blue). What’s interesting about these clamshells is that we understand that they will be fully touched based laptops with very aggressive pricing. In some ways, these clamshells with these lower end processors could be looked at as Netbook 2.0, but for all intent and purposes, these will be full Windows 8 touch laptops only with processors that are not as powerful as the ones using Intel’s core i3, i5 or i7 chips or similar ones from AMD. They will also be thin and light and could easily be categorized as Ultrabooks as well.

Windows 8 Blue is one way to get Windows 8 into more products and make it the defacto Windows OS standard across all types of devices, especially the 7” to 8” tablet segment that we predict will be as much as 65% of all tablets sold by 2014. We also hear that Windows Blue RT version will also take aim at 7”-8” tablets, which means that the ARM camp will have a play in this market as well. However, its use in an x86 clamshell could have a dramatic impact on the laptop market and have unintended consequences for OEMs and chip companies as well.

The ramifications could come from a major trend in which tablets are becoming the primary digital tool for most users. The smaller tablets are used more for consumption but the 10” versions can handle both consumption and productivity in many cases. This translates into the fact that tablets are now handling about 80% of the tasks people use to do on a laptop or PC. That means that traditional laptops or PCs now only handle only 20% of the needs of these users, which are mostly used now for media management, handling personal finances, writing long documents or long emails.

New Price Segments

When we ask consumers that have tablets about their future laptop or PC purchases we are told that for many, if the laptop is only used for 20% of their digital needs, then they will either keep what they have longer or if they do buy a new laptop or PC, it will be a relatively cheap one. Consumers, who are not interested in Macs, tell us that the top amount they want to spend on these products is $599. This suggests two key things for the PC industry that could be quite disruptive. The first is that there would be a bifurcation of the laptop and PC market into distinct sectors. One focused on the consumer where all PC products have to be under $599. The other is what we call the premium market for laptops and PCs which are willing to pay $999-$1499 for their computing tools because of more advanced computing needs. This premium segment is mostly tied to enterprise and the upper end of the SMB market. In fact, the price for PC products in this upper premium price range has proven to be quite resilient.

The second key thing means that the mid level priced laptops and PCs could end up in a no mans’ land. PC products in the $699-$899 could take a pretty big hit while demand for products $599 and under could skyrocket. We believe that this trend would usher in an era we call “Good Enough” computing; a term we became intimately acquainted with during the first Netbook phase. To some degree, the robust sales of Chromebooks already suggest this era has already started. But it would pick up if users could get full touch-based clamshells that look like Ultrabooks and are priced well under $599. We are actually hearing that when these come out in time for back to school they will be priced from $499-$549 and the target price would be to get them around $399 by early next year.

At Creative Strategies we are in the early stages of analyzing the potential impact of these Windows Blue low-cost clamshells but our early take is that they could be huge hits and have a serious impact on demand for laptops or PCs in the mid range, which has been a very important segment for the OEMs and CPU companies in the past. If this happens, the OEMs would need to bulk up on their premium products since these have solid margins and actually bring them significant profit. It also means they need to be creative and innovative in products under $599 and find ways to squeeze profit out of these types of laptops as well.

This does not mean that OEMs will stop offering value notebooks that are bulkier and in some cases use processors more powerful then Atom or low-volt chip from AMD. However, if their Netbook 2.0 like clamshells are thin, light and touch enabled, it could even cause demand for these low end bulkier laptops to dry up too. It will be very important to watch the development of this market over the next 6 months. If our assessment is correct, we could see a rather significant bifurcation of the PC market this fall, something that could have a real impact on all the players in the PC world.

A Killer App for Google Glass

Screen Shot 2013-03-14 at 9.53.50 PMThere has been a lot of talk and excitement about Google Glass. This product has caught the imagination of the Technorati and has even garnered feedback from the mainstream media by way of reports that Google Glass would be barred in some restaurants and bars. Clearly this product and product concept is fascinating and who knows if it will catch on or even be successful beyond early adopters who love gadgets.

It is true that there could be some solid use cases that develop in vertical markets for something like Google Glass, possibly for use in medical, transportation, public safety, etc. However, at $1500 it is hardly a consumer device. The fact that it could take pictures, record video, deliver speech to text, and put you into hangouts or even get directions is interesting but it would have to do a lot more than that for consumers to even pop for it at this early stage.

I realize that this is the price of entry for these early versions of Google Glass and that over time they could get into more consumer friendly pricing. In fact, most major technology products start out quite expensive and then eventually come down in price over time. Part of getting the price down comes from the early adopters helping to pay for the early R&D costs of developing the product and with greater demand the vendors, in this case Google, will get better price breaks on components as well as help pay down initial equipment and manufacturing costs.

While I don’t think it can get down into consumer prices anytime soon, I do think there could be a consumer friendly app tied to these glasses that could have appeal for some vertical users as well as a group of consumers that could actually drive high demand for these glasses even if the glasses are a bit pricey.

By nature of my work, I am what you might call a reluctant world traveler. Over 35 years I have traveled close to 4 million miles and visited 55 different countries because of my work in the tech field. I was born in the US and my first language is English. I took Spanish in high school and on the side have tried to learn French very unsuccessfully. Ironically, my dad was Filipino and my mother was German and both spoke their respective languages fluently. But I grew up in a time when making sure your kids spoke English well was a priority and they did not see the need to teach us Filipino or German.

So, like any person that goes to another country where they speak a different language, getting around these cities and understanding the various directional signs and printed text is next to impossible to comprehend for people who don’t speak the native language. I have been to Europe so often that I have come to recognize key words and signs in the various languages spoken there, plus they use a Roman alphabet. However, when I am in Japan, China, or any other Asian country where they use pictographical images in their writing, I haven’t a clue what they mean or are trying to tell me. That is not completely true. I have learned to read the local signs for “the toilet” in just about every country I go to.

There is an amazing app on the iPhone that I use today to try and decipher words, sentences and even signs in German, French, Spanish or Italian when I am the country’s where these languages are spoken. It uses the iPhone’s camera and when in the Word Len’s app, it literally translates the local language into English in real time. But because of the size of the iPhones screen it only delivers a small portion of a sign or documents message and you have to hold the iPhone pretty steady over the words in order to get the true gist of the message.

Now imagine if I was wearing Google Glass and it is tied to my iPhone or Android phone and a special mobile app version of Google Translate. In theory, I could pick up the local paper in Paris and start reading it as the glasses scans the words and it instantly translates them into English for me. Or I may be walking down a street and see a sign on the wall of a building and I just look at that sign and it is translated on the spot. Or I go to the underground subway in Japan and look at the signs that give various directions and I get those signs translated for me as I scan them with my Google Glasses. Imagine how much it could help any world traveler get the most out of a trip abroad.

Perhaps the biggest adopters of this type of application though could be diplomats, politicians and anyone dealing with International relations, including the military. One of my assignments in the past was at the EU offices in Geneva, Switzerland and during my time there I was dealing with documents from dozens of countries that all had to be painstakingly translated for us to even work with them. Imagine if I had had Google Glass back then and could just take one of those documents and read it in real time. It would have changed my work-flow dramatically. However, I know a lot of world and business travelers who would gladly pay the price for a tool that can do this type of job for them also.

The big question is whether Google is even working on an app like this? It is hard for me to believe that they do not have this in the labs since marrying Google Glass and Google Translate makes for a perfect marriage. From what I know of the technology, it is also more than possible to deliver this type of application since the mobile processors are getting more powerful and so is the translation software.

I see Google Glass as a great product, but using it for real time translation would make it revolutionary. And the technology is here now that could make this a reality quite soon. If so, I will be one of the first to buy it with this specific app in mind.

What Microsoft Needs to Do With Windows Blue

windows-blueBy now you probably have been hearing about a major update to Windows 8 called Windows Blue.
Various tech sites have written about it after Win8China wrote about it and suggested it would have tighter integration with Microsoft’s search engine Bing. Some news sites suggest that this version is a major upgrade to Windows 8. There is no doubt Microsoft needs something to inject life back into the ecosystem for their hardware partners. The real question is whether Windows Blue is what the doctor ordered. We think there could be two specific ways Microsoft can address needs in the market.

Low Cost Tablets

Ben wrote a column here last week titled “the invasion of cheap tablets” and pointed out that we are about to see dozens of cheap tablets hitting mature markets this year, making it possible for people to own many for use in their home and businesses. He also pointed out that low cost or cheap tablets, mostly in the 7” to 8” range, should dominate the tablet market going forward and that Microsoft has no answer for this form factor. To date all of their “tablets” are in the 10.1-inch range and the version of Windows 8 on these tablets cannot be scaled downward for use on screens below 10.1 inches–at least in current specs.

If Microsoft were smart they would allow Windows Blue to help fill this gap. To do so Microsoft would need a new pricing strategy for screens in the 7″ and 8″ size range. It should be priced low enough so these new lower cost Microsoft tablets can be priced in the $199-$349.00 range. Most Windows 8 tablets today start at $499. If Microsoft does this, they could finally have a competitive product to Google, Samsung and Amazon. Mind you, however, they would still not be competing for the ultra low end of the 7” tablet market that is now in the $89.00 to $129.00 price range. News of late suggests they will offer a $20 discount to OEMs for devices below 11.6 making these price points possible.

Low Cost PCs

If that is true and they do offer this lower price point on devices under 11.6-inches then it could also be used in some type of hybrid or clamshell offering for the lower end of the tablet and notebook market. We are hearing from OEMs that there is interest in using Windows 8, and in this case it would be Blue, in an ultra-thin Netbook like device priced well under $399 to be in the market this holiday season. For that price I doubt it would have a touch-enabled screen in a clamshell style device but if it were a tablet with detachable keyboard it would have a touch screen as part of the design. A well designed clamshell with touch screen could possibly be in the $499-$549 range.

If what I am hearing is correct, this could be a very interesting holiday season. While really cheap tablets will drive much of the tablet growth, there is still big demand for robust tablets with multiple cameras, more memory, faster processors, all priced in the $249-$349 range. At the moment Apple, Samsung, Google own this market, especially with tablets in the 7.9 “ to 8.1” range.

With Windows Blue it would give Microsoft a fighting chance in this low-end tablet space as early as this holiday. If they do make it possible for OEMs to bring out an ultrathin clamshell using Windows Blue at consumer friendly prices, it could also be a solid product for the consumer market even if it is netbook-ish in nature. This is because of the Windows 8 app ecosystem that is starting to finally grow, which would make a clamshell like this much more acceptable to the low end consumer market. And of course, it would be able to runs the tens of thousands Windows applications already on the market.

What is interesting about some of the conclusions I have made with regards to the Windows ecosystem is that we are talking about success being needed in the low end. This is not a game every OEM is positioned to succeed in, but it is unfortunately the road it looks like Microsoft needs to go down.

I suspect we should be hearing more about Windows Blue in the next coming months. If Microsoft is smart with Blue, it could boost their partners volumes, help turn around their struggles in tablets, and inject some needed life back into their ecosystem.

Does the World Need Another Mobile OS?

All-mobile-OS-logos

There has been a lot of news about mobile operating systems lately. In the news of late has been the launch of the Firefox Mobile OS, LG’s purchase of webOS and Samsung’s renewed focus on Tizen. Given the fact that we already have two mobile operating systems, iOS and Android, which dominate the market, and a third with Microsoft making a go at it. This news causes me to beg the question of whether we really need a new mobile OS and if so, how would it fare against these two operating systems that reside on the majority of all smartphones and tablets today?

It is pretty clear that Apple’s iOS will be their only mobile OS. RIM has their Blackberry OS, but other smartphone and tablet vendors have the option of Android, Windows 8 or Windows 8 Phone. Another option is to create their own version of Android (known as a fork) as Amazon has done with their Kindle Fire HD tablets. Now OEMS have the option of the Firefox Mobile OS, Tizen and mobile Linux as well.

Given the strong market adoption of Android and iOS with the rich ecosystem of software, apps, and services tied to both, even Microsoft and Blackberry will have a tough time gaining any ground on them. On the surface, these new mobile operating systems have a bigger problem. In their case, there is not a solid ecosystem of software and services directly tied to their new OS offerings.

Leverage

However, at the competitive level, I believe that these new mobile OS options may play an important strategic role, especially against Google, whose market position is exploding. Google receives the main monetary benefits of Android running on vendor’s devices and they give their partners a paltry portion of any ad revenue that comes through their partnerships. It is true that some of the smaller handset makers may continue to back Android no matter what. However, if a vendor has a lot of clout, the option of a new mobile OS could give them some interesting leverage against Google to try and gain more favorable terms. If they took this tact, one of these new mobile operating systems could become a strategic weapon for them.

The one company where this could become a real issue is Samsung. Today, Samsung gets only 10% of any ad revenue that Google gets from their devices. Samsung is by far Android’s biggest customer and in fact, many now think of Samsung when they hear the word Android. It is pretty clear that Samsung is now in a place to have a lot of clout with Google and if they are smart, they try and leverage this in their favor. Of course, Google would have a hard time giving more of the ad revenue to any partner and even with Samsung’s strong position, and reach, they could balk at any push to give them more advertising revenue lest it set a precedent for other Android vendors who would want similar terms.

Samsung’s decision to fold their mobile OS, Bada, into Tizen could be a first volley in a strategic dance with Google. I have heard from a few other handset vendors that while they make Google and Android more successful, their return on the investment of Android is minimal to them. Although Android is technically free, they pay through the nose in terms of ad revenue they have to give Google as part of the licensing deal. At the same time, word on the street has been that Google is getting very concerned about Samsung’s great market penetration with their smartphones and tablets. Google fears that Samsung could come back to them and ask for a larger share of the advertising revenues.

Interestingly, should Samsung decide that working with Google on their terms is just too onerous, it is not too far fetched that they could do their own version of Android like Amazon does and keep all of the advertising revenue for themselves. Given Samsung’s new push with Tizen, they could threaten to drop Android and over time migrate all of their customers to Tizen. They could conceivably even develop some form of virtual emulator that would allow Android apps to work on Tizen. I just can’t see Samsung becoming this great powerhouse in mobile and not at some point take control of their entire ecosystem. This would include owning and controlling the mobile OS. Without doing that, they just continue to feed the Google bank and leave a lot of money on the table that should go into their pockets.

While there may be some emerging markets that could use the Firefox Mobile OS, or mobile Linux, I find it hard to believe that any of these mobile operating systems will gain any serious traction in mainstream markets in developed countries. On the other hand, these new mobile operating systems do provide all vendors an interesting option should any of them continue to be concerned that Google is getting to powerful.

The History and Role of Analysts

men-in-suits-hi

Analysts often take a beating by the new media generation. Many simply look at the term analyst and wonder what in the world this community does. More importantly, many in the media use the term analyst liberally and don’t understand the difference between financial and industry analysts. I was one of the first “analysts” that were called computer analysts when I first started. The firm that I am the president of, Creative Strategies Inc. has a deep history in the technology industry as a market intelligence and computing research firm.

Many have come through our company and gone on to bigger and better things. Trip Hawkins was an intern at our company before he was hired away by Steve Jobs and then later started Electronic Arts. One of the founders of my firm went on to start Dataquest, which was later purchased by Gartner. Analysts have and always will play an important role in this industry. Since I often get the feeling that the analyst community is misunderstood, I thought I would take time in this week’s column to explain the history and the role of technology industry analysts.

Doing this job for 31 years has been fascinating. It has allowed me to literally watch the PC industry develop from its birth and chronicle, as well as analyze it, through its major growth phases.

The Early Days of Computing

I joined Creative Strategies in 1981, the year IBM introduced their PC and became one of the first PC industry analysts in the market place. In fact, in 1981 there were no PC analysts when I first started and the few of us who got the title of PC analyst were given this because most of us were mini-computer analysts or IT researchers and were asked to include PCs in our analytical and research coverage.

The first IBM “analyst” event I went to in Boca Raton, FL was not even actually an analyst’s event, as we know it today but could be consider one of the earliest personal computer analyst events. All of the analysts invited, who were 5 in total, were from major market research firms who covered computers in general and all were professional analysts newly saddled with covering the Personal Computer. The event was designed to show us how their PC could help business’s with the goal of us being better informed to help our industry and IT clients understand what a PC was as well as its current and future potential.

Two years later, when Compaq introduced their PC, I was invited to their first analyst event in Houston and six of us analysts were asked to join them at an extremely private event with their president and co-founder Rod Canion, and Compaq’s major financer, Ben Rosen. It turned out to be an intimate discussion about why they decided to build a PC and take on giant IBM and to help us explain to our IT customers why Compaq should be taken seriously.

During the next five years the PC gained momentum and demand for information from research companies like ours rose. During this time I started traveling around 100K miles a year to meet with just about everyone in the PC supply chain, specialized PC sales outfits like Businessland, and even early IT customers using PCs, with the goal of understanding the role and impact of PCs in the market. During this time I also authored industry reports on hard disk drives, desktop publishing, portable computing and multimedia as part of our work to inform our customers about the role of PCs in the overall marketplace whether it be used for business or by consumers.

The Analysts Role

Traditionally, the job of being a PC analyst was defined by professional researchers who were drafted to add PCs to their research portfolios and are today represented by companies like Creative Strategies, IDC, Gartner, Forrester, Strategy Analytics, NPD / DisplaySearch, to name just a few. Our role as analysts is to study the industry and all of its parts. We seek to understand markets, products, solutions, adoption cycles, trends, and core strategies that impact the current and future market. We use this data and information to generate market intelligence and forecast trends related to the overall computer industry. However, we do not recommend or attempt to influence stocks. In fact, most of us on the industry analyst side can’t and won’t hold tech stocks in order to maintain our objective positions on companies we study.

Many tech companies subscribe to the services of industry analysts in order to keep a wide view of the market. Most companies are knee deep in heads down execution. An industry analyst’s job is to always keep their head up, looking and researching everything they can that is related to their core areas of expertise and focus. Their job is to be as informed as possible so that when called upon, they can use their data and research to help customers who need clear and concise analysis related to the markets they care about. This data is often used in companies internal planning process.

The job of researching the market and recommending stocks goes to another important analytical community known as financial analysts. Most of these analysts are also professional researchers whose job is to study specific companies and determine their strategy and growth potential and if their customers should buy or sell stocks in these companies. They play a key role in the overall stock market and are very important to the investment community as they provide the kind of data that is needed to make smart and calculated decisions for those who put money into the stock market. An interesting side note to this is that financial analysts often query all of us industry analysts and they use some of our research and data in their final reports and recommendations.

Analysts seem to get referenced more often in todays times and not always in a positive light. I myself have read some pretty “unique” things financial analysts say out loud but let’s understand one thing about them; some of what they say publicly is a game to throw off competitors at other investment firms. If you read their research notes to the fund managers, many times they are largely different than what is said publically.

Analysts at their best offer insight, perspective, and critical dialogue about key topics in the industry. When done right, this comes from rich experience and a depth of understanding about the areas they are called to shed insight on. This is why the established media outlets often quote industry and financial analysts. The media has often utilized both groups, which have separate roles in the market, as a resource to help add shape, context, and proprietary research to their story. Industry analysts, financial analysts, and journalists will continue to play an important role in the market place. The technology industry keeps getting bigger. The world is moving from an analog one to a digital one. Technology is destined to touch just about every aspect of our business and personal lives. We are all along for the ride and we all have a role to play.

Is Apple Finished Disrupting Markets?

bulb-disruptionOne of the things Apple has demonstrated over its lifetime is that it has become the great disruptor. When the Mac came on the scene in 1984 and introduced computer users to the graphical user interface, it shook up the text based DOS OS market so dramatically that it forced Microsoft to follow their lead quickly in order to stay relevant. Now GUIs are the norm on all PCs.

18 months later, Apple pushed the Mac as a disruptor to the publishing market with the introduction of desktop publishing. Marrying the Mac, a desktop laser printer and Aldus’ Pagemaker software, Apple championed a desktop publishing solution that completely changed the publishing world by letting people create content on demand and publish it without the help of big publishing’s big iron solutions. Today, personal publishing at the desktop or on the Web has its roots in Apple’s disruptive Desktop Publishing blitz.

In late 2000, Apple upended the music market with the introduction of the iPod and its radical and easy way to access, buy and play music on the go. While pirating music was the real disruptor to the music industry back in the late 1990’s, only the tech literate went online to get MP3 files. While early MP3 players came out to make digital music playback more portable, it took Apple with iPod and iTunes to really disrupt the digital music market and bring it to the masses.

Then in 2007, Apple disrupted the cell phone market with the iPhone. While Apple did not invent the smartphone, they reinvented it in ways that completely disrupted the carrier’s way of managing and controlling their own programs and added the element of a truly intelligent OS and apps to the smartphone landscape. The iPhone has literally redefined what a smartphone is and has dramatically disrupted the entire world of telecommunications around the world.

In 2010 Apple introduced the iPad. They did not invent the tablet. They reinvented it and in the process reinvented the personal computer. Now the iPad has become a major disruptive force in changing the dynamics and fortunes of the traditional PC industry. Thanks to the iPad and tablets overall, PC and laptop sales were off around 10% in 2012. Our estimate is that PC and notebook sales will be off at least 10% in 2013 and it could see an even steeper drop as tablets gain more ground in business and consumer markets. A more interesting projection is that for the first time, tablets will outsell notebook computers worldwide in 2013.

The disruptive nature of the iPad was not predicted by anyone except perhaps Steve Jobs, who clearly understood the impact the iPad would have on the market. To all PC makers chagrin, they too did not see tablets coming and were not prepared to make the transition from a high volume PC business to the next big personal computing device for the masses. Although they are trying to play catch up with Apple and Samsung, the Wintel crowd is behind in tablets and I am not sure they will ever really gain ground against Apple and the Android crowd.

Has Apple Peaked?

While Apple continues to deliver record sales and record profits, the financial community seems to think that Apple is done innovating and disrupting markets. Their demands for outlandish quarterly profits have sunk Apple’s stock over the last 7 months and I have heard some even suggest that Apple has peaked and it’s downhill from here on in.

However, if you study Apple’s history, especially since Steve Jobs returned to the company in 1997, Apple’s actual cycle of creating innovative and disruptive products is around three-to-four years on average. In the case of the time span from the iPod to the iPhone, it was actually 7 years. This suggests that Apple is not driven by time clocks or stock price when it comes to innovation. Rather, they take their time and think things through. They focus on the fusion of the hardware, software, and service ecosystem aspect of new and innovative products, before they bring them to market.

There is a key reason for this attention to detail. Apple has an internal mantra that when they introduce a new category of product that has the potential of shaking up or disrupting a market. It must be done so that Apple will have a two year lead at the very least over their competition. If not, they won’t touch it. That is why they did not just deliver a new MP3 Player, but rather an entire hardware, software and solution approach when the iPod was launched in 2000. The same goes for the iPhone and the iPad. In both cases, from time of launch to time competitors come even close to catching up, Apple always has at least a two-year lead.

What’s Left To Disrupt?

So, is Apple done disrupting markets? Don’t bet on it. Most likely the next market they will disrupt will be the TV market and while we don’t know exactly what they are doing, given their track record I am pretty sure that this product will have a dramatic and disruptive nature on the television industry when it does come out. If done in dramatic fashion, competitors may need more then two years to catch up with them this time.

Another industry Apple could disrupt is the auto industry. Although cars are getting smarter, they have a lot of room for innovation around embedded screens that are popping up in cars even in the mid price range. Imagine if Apple and one or two major car-makers get together to write the next chapter of intelligently connected automobiles that marry dedicated applications, an eco system of services and always connected automobiles and what its potential impact could be on the future of road travel.

Another industry Apple could disrupt is the watch industry. Many people are watching closely the Pebble Smart Watch that is just now shipping to see if its connection to iPhones and Android phones takes off. This particular product is an interesting first step in marrying the smartphone with a watch but it mainly brings smart phone alerts and calling info to the watch’s face. While I really like the Pebble smart watch idea, what I really want is Dick Tracy’s watch and I am betting that Apple is the company that will eventually give this to us.

Could our homes get smarter too? Of course they can. It is not a coincidence that former head of hardware at Apple, Tony Fadel, has created the Nest thermostat that is connected to the Internet and is smart enough to watch your heating and air conditioning habits and adjust them automatically. You can control your thermostat over the Internet too. This suggests to me that the concept of the smart home was in the works when Fadel was with Apple and that Apple has been working on this internally for some time. I am convinced that Apple will be the company that eventually disrupts the home automation apple-cart so-to-speak and makes it another prime market to disrupt in the near future.

Controlling the Smart Screen

In each of the examples I state above, you may have noticed that a “screen” is involved. Screens are mostly necessary for managing, viewing and even controlling content. In the case of Apple TV, there is a possibility of Apple actually doing a physical TV, but if so, think of it as mainly a giant iPad in that it could have the same guts and intelligence of that which is in an iPad. However, if I was a betting man, I would bet that the heart of Apple’s true TV product lies in the way the iPhone and iPad interacts with their giant iPad or any other TV via a smart box and that the real disruptive products comes in the way they marry the iPhone and iPad into the next generation TV viewing experience.

All smart cars will have screens in them too. Imagine if a dedicated iPad is embedded in a car that doubles as the cars map as well as the vehicle for a whole host of auto-dedicated apps. As for the smart watch, what if Apple could create an iPhone or iPad that is 2 inches square and could be worn on our wrists. While it may have some touch screen features, the real way you would interact with it is via Siri ala Dick Tracy. As for the smart home, imagine iPads integrated into appliances, the kitchen or even bathroom mirrors that turn them into highly intelligent devices within the home as well as being the center of a whole homes automation system.

If any one thinks Apple has stopped innovating then I have a bridge in NYC that I would like to sell them. Apple is a very smart company run by some very futuristic thinkers that have a toy box of integrated products and services to work with. To think that they will not take this and use it to disrupt other markets is short sighted. It might take time, but Apple is more than capable of continuing to innovate and drive markets in new directions.

Why I Hope Blackberry (a.k.a RIM) is Not Doomed

hero.png.originalAbout 6 months before the original Blackberry email pager was introduced, I got a call from RIM asking if I would be part of their beta testing program before they released it. At the time, which was late 1998, the concept of mobile email was foreign to all. Businesses used email but their primary way of receiving and responding to email was via a PC or laptop. Consumers also were into email thanks to AOL’s and Compuserve’s dial up programs but they too mostly used desktops or laptops to do their email.

We almost forget the role of the pager back then but this was the best we could get in mobile devices, which primarily sent a phone number to the pager to tell the person to call back ASAP. Mostly used in medical, military and emergency services initially, by the mid 1990’s they were cheap enough for most business professionals to use and even some consumers who had need to be available at a moments notice.

By this time I lived and died by email. It became my main link between my clients and myself and was a major vehicle for how I got my work done. No longer a slave to the phone, my early Blackberry pager gave me my email anywhere I happened to be and allowed me to respond in real time. Like many Blackberry users in the late 1990’s, my Blackberry changed my business life and had a real impact on my family life too.

Over the next 10 years RIM created a powerful and secure email platform that was adopted in droves by businesses, government, military etc. Although they evolved the BlackBerry form factor significantly, they paid little attention to enhancing their OS exponentially in order to keep up with the major trend of smartphones and smart operating systems that came on the scene in early 2007. At first, RIM did not feel threatened by Apple’s original iPhone and even when it started getting some minor attention in business, the company was still clinging to its old OS and business model believing that their entrenched position in business, military and government was unshakeable.

But as history records, RIM did misjudge the impact of the iPhone on the entire smartphone market and to their chagrin, began unseating them in hundreds of business, military and government accounts, causing their fortunes to wane considerably. Up until the announcement of the new BB 10 OS last Wed and the new smarpthone designs they introduced in NYC, RIM was perceived by many as too late to now compete with Apple and Google/Android since together they own about 85% of the current smartphone market.

This fact is still true. Apple and Google’s market position in smartphones continues to grow and makes it hard for another smartphone OS to compete even if it is an innovative and solid offering. That said, I do believe that if a third or fourth mobile OS could compete it could be BB 10 and the market needs this extra competition for three reasons.

Competition is Healthy

First, competition is good for consumers since it sits at the heart of innovation. Although RIM will always be playing catch up, the fact that there is another OS that is really solid and competitive will only force Apple and Google to try harder and to innovate faster.

Second, it makes it more difficult for government officials to ever go after Apple or Google for monopolistic practices. While Microsoft and Nokia helped take some of the regulatory pressure off of Apple and Google, RIM only broadens the competitive landscape even if they only get a small share of the market in the future.

The third reason we need RIM is that there is a segment of the market that needs ultra secure devices and specialized email servers that RIM or Blackberry excels in. Apple and Google/Android has shown significant progress in providing secure email and an app environment but in some accounts they are still considered too weak for some with ultra secure email needs.

My Tech.pinions colleague, John Kirk, wrote a brilliant piece Thursday that lays out why Apple has won so much territory in the smart phone wars. He concludes that for Blackberry to be considered even remotely successful it had to be superior to what Apple and Google already has offered the marketplace.

Here lies my real concern for Blackberry and their new OS and phones. For all intent and purposes, it is a me too product that is barely equal to Apple’s iOS and iPhone offerings, and brings nothing new or superior to the smartphone table. When I saw the demos and looked closely at especially the BB Z 10, it looked pretty much like an iPhone 5 or a Samsung Galaxy SIII.

While the new OS is excellent and runs some existing Android apps and will most likely get some support for native BB 10 apps, it brings nothing really significant to the table other than its reputation for providing highly secure email.

I don’t believe BB 10 has any real chance of catching up with either Apple’s iOS or Google’s Android. In fact, I suspect that if they have any success it will be in a niche area where extremely secure email tops the list of things needed in a smartphone platform.

Personally, I hope they do become competitive and over time deliver some innovations that set them apart from the competition. But I am willing to bet that when we look at the charts that layout smartphone market numbers later this year, Apple’s iOS and Google’s Android platforms together maintain at least 75-80% of that market. That leaves Microsoft and Blackberry to duke it out for the other 20% or so and a combined marketing effort from Microsoft and Nokia in 2013 could tip the balance in their favor.

I applaud Blackberry’s commitment to stay in the smartphone game given the beating they have taken over the last five years. However, if anyone thinks that their new OS and their new smartphones will cause Apple or Google any real headaches, they would be mistaken. At best, Blackberry can continue to compete in a market that is dominated by Apple and Google and their partners but I am very doubtful that they will have the kind of success they hope for in light of the momentum their competitors have in today’s smartphone market.

Smartphones Become the New Hub of Our Digital Lifestyles

Screen Shot 2013-01-21 at 7.14.36 AMIn the winter of 2000, Steve Jobs took the stage at MacWorld and laid out what we now consider a very forward thinking idea. He said that the “Mac would become the center of our digital lifestyle.” We did not know it at the time, but he and his Apple team were secretly working on the iPod and a music store that used the Mac to side load downloaded music to the iPod. Jobs literally made the Mac a hub connected to a “spoke” or cable that was then connected to the iPod.

For most of the last decade, the idea of the Mac working as a hub that side loaded content to products like the iPod, iPhone and the iPad played itself out well and made it very easy for consumers to buy digital content and download it on these devices. Over the last few years, Apple has refined this vision and starting making the iCloud more of the hub and wirelessly connecting their online stores to download content directly to their iDevices via the cloud.

While making the cloud the hub in this scenario is still the best way to think about this idea, it became pretty clear to me while at CES last week that in many ways, smartphones are really emerging as the hub of our digital lifestyles. Yes, smartphones are still connected to the cloud in terms of accessing data and transmitting information and even digital commands, but it seems to me that the smartphone in many ways is becoming the one device that is sitting at the command and control center of our lives and is working more like a hub in its own way.

A good example of this is the role my smartphone plays in my connected car. My smartphone uses Bluetooth to connect to my car’s digital display, which has channels for music, data and of course voice. When a call comes in to me, the phone serves as the hub that connects to my cars screen and tells me who is calling and even allows me to use the cars screen to answer the call. My smartphone also is the hub that sends music to the cars audio. At CES, GM showed its Malibu Eco connected to a smartphone that actually started up the car remotely.

In smart homes, the smartphone in many ways serves as the remote control. We can now turn on and off the lights in our home even if we are thousands of miles from where we live. Thanks to the Nest Thermostat, we can use our smartphone or connected tablet or PC, to adjust our thermostat to a higher temp so the house is warmer when we get home. If a burglar trips a motion sensor, a person could be instantly alerted of the break in and immediately call the police. Comcast even has a system that puts cameras in homes and ties it to their network, which lets users see what is going on in the house on their smartphones while sitting at a restaurant or in the office.

Interestingly, CES could have been called the “sensor” show for the hundreds of devices shown that had sensors embedded in products that tied them to the Internet and apps downloaded to a smartphone to remotely control these senor based devices. This was especially evident in the special health exhibit on the CES show floor where 74 companies had various sensor-based health monitoring products tied to smartphones.

One health product that really interested me as a diabetic was iHealth’s wireless blood glucose meter called the Smart Glocometer. It lets diabetics determine their blood sugars and then sends that data to a smartphone app for reading and storing so that they can monitor their daily progress. This product is before the FDA for approval but could be on the market soon.

A small start up named AliveCor has created an iPhone case that, when grasped, records an electrocardiogram on the iPhone screen via its app. And the folks from Nike, Jawbone, Omron and FitBit, to name just a few, were in this smart health area showing off their various health monitoring devices which all have sensors for recording things like steps, sleep patterns, calories burned, etc.

When Jobs introduced the Mac as the hub of a digital lifestyle, I doubt that at the time he envisioned the cloud becoming the big hub in the sky or the role a smartphone could play in becoming a “hub” in our pocket. However, it is clear that Apple has played a major role in defining the concept of a digital hub and allowing other major players to learn from their original vision and expand on it exponentially.

Over the next two or three years, I believe we will see thousands of sensor-based products tied to apps on our smartphone that will make it even clearer that the real hub of our digital lifestyle may actually be our smartphone. It is the one device we have with us at all time and given its increasing power and capabilities, it could emerge as the command and control center of our digital activities and become even more indispensible than it is today.

Would I Buy A Phablet?

img_img01One of the more unique smartphone designs in the market are ones that sport a 5.3″ to 6.1″ screen and are called Phablets by some in the industry. We call them tweeners as they are a cross between a large smartphone and a small tablet but in a single package. Samsung popularized this form factor with its 5.3″ Galaxy Note that was released last winter and they sold about 10 million in 2012. Some analysts believe that Samsung is on track to sell around 20 million Galaxy Note 2’s in 2013. Up to now, the market for these Phablet’s has mainly been in Korea and other parts of Asia and while available in the US, the market for it over here is quite small compared to its demand in Asia. 

At CES, Huawei upped the ante in phablets with the introduction of their Ascend Phablet that sports a 6.1 inch screen, the largest screen used in products in this category. It seems that Huawei is trotting this out to see what the market response will be to it and once they determine if a smartphone this large might fit in the market. Depending on the market response, they could either back it big time or adjust the screen size downward if the sweet spot for Phablets is with screens more in the 5.3″ to 5.7′ range. Like Samsung, Huawei believes there is a market for Phablets and seems committed to building smartphones in this larger size going forward. 

To date, most smartphones have screens under 5 inches and we don’t see that changing anytime soon. Smartphones with smaller screen sizes will have the lions share of the market for many years to come. What is interesting to me is that when I actually held Huawei’s 6.1 inch smartphone in my hand at the Huawei booth at CES, I could actually see myself using it, but not as Huawei might expect. To me this was a small tablet that just happened to have a cell phone radio in it. I would never hold this up to my ear as a phone and if I had one, I would only use it with a Bluetooth headset (this is how I primarily use the iPhone now, paired with a BT headset).   

Since getting the iPad Mini, with its 7.9″ screen, it has become my go to tablet. While I still use my original iPad, it is with a Bluetooth keyboard and I use it more as a mini-laptop in this configuration. What I have learned though is that the iPad mini, or a smaller tablet, is ideal for content consumption but not as ideal for content creation or productivity. While I do appreciate the 7.9″ screen in my iPad Mini, I was just as comfortable with Huawei’s 6.1 Ascend if I used it mainly as a small tablet. 

Markets Driving Phablet Demand

There are two market dynamics emerging that could actually make these phablets important products in various markets. The first one is emerging markets. We in the west would be fooling ourselves if we think that masses of people in emerging markets could afford both a smartphone and a tablet. Even with grey market tablets going for cheap prices, the issue of carrying two devices with them all of the time is just not reasonable. Apparently, Samsung saw this trend early on and has taken aim at the emerging market with their phablets, hoping that the desire for a single device that serves as a smartphone and tablet resonates with them. Indeed, the reason for a forecast of 20 million Galaxy’s Note II’s in 2013 is that most of them will start finding their way into emerging markets and filling a real need, especially if Samsung gets the prices of this product into price ranges acceptable to this market. In these markets, one is better than two.

The second market developing has broader implications for us in the west. If you sit back and try and visualize our digital future, it is pretty easy to see that most of us will have many screens in our digital lifestyles. We will have a screen in our smartphone, tablets, PC’s, TV’s, Car, appliances, etc. If they are all connected to our digital stuff in the cloud, then the screen that is closest to us at our time of need is the one we will most likely use.

In most cases, the closest screen is our smartphones. However, when desiring to access our digital “stuff” or the Web, many of us who have tablets often to go to our tablets for one major reason, it has a bigger screen and is easier to use especially when surfing the Web or reading docs and email and getting other forms of content.

However, this implies that we now carry with us two devices at the very least, a smarpthone and a tablet. What if we could get both in a single device that is highly portable? It that were the case, perhaps a smartphone even with a 5.3-inch screen would be too small; but one with perhaps a very pocketable one at 6.1″ might be just right. I was easily able to put the Ascend 6.1 in my back pocket as I do now with any spare smartphone I happen to be testing at any given time.

One Size Doesn’t Fit All

One other thing we are learning from our research is that one size does not fit all. Based on individuals needs, they may actually need a larger screen on their smartphone because they would be easier to read due to age, eyesight problems, individual choice, etc. As a small tablet, this larger screen size also works well for the same reasons, along with its ultraportablity. We believe it will start to be pretty clear to all device makers that one size does not fit all and that they may need a range of screen sizes in the smartphone and tablets to meet new user demands in the next 12-18 months.

If both of these market trends play out as I suggest here, and the concept of a two-in-one device catches on in emerging markets and demands increase in mature markets, all smartphone vendors may have to seriously consider doing phablets of their own. As strange as this may seem to us western thinkers, there is a real possibility that a market for phablets could actually emerge and become quite important in multiple markets around the world. Yet if we take a step back and look at the vast array of sizes and forms of our current automobile market, then we understand the role personal preference and they need to have a lineup of products to cover a wide range of uses. So in fact vast variance in smartphones and tablets actually makes sense due to mature market characteristics.

Big Thinkers, Disruptive Technologies at CES

This will be my 10th year moderating a Super Session at CES called “Big Thinkers, Disruptive Technologies.” Anyone going to CES can attend any Super Session’s as these are the only major conference sessions open to all attendees. http://cesweb.org/Conference-Program/SuperSessions.aspx

Each year I get to look at a whole host of technologies that are considered disruptive and chose 3 or 4 to present in our super session. That’s the good news. The bad news is that since the session is only an hour, I can only choose 3 or 4 and deciding which one’s to include is one of the most difficult things I have to do each year.

This year I was asked to add a gaming emphasis to our session, although all of the technologies represented on the panel can be deployed across the board in our digital world. Over the last year I got to see a lot of things in the labs that I consider very disruptive, but most cannot be shown publicly at this time. And this session’s emphasis has to be on products that are in the market or close to release impacting our world of tech in the next 12-18 months.

With that in mind, here are the three technologies that we will discuss in our session.

1. The Future of Displays

Jams Clappin, the president of Corning’s Glass Division will be talking about their advancements in next generation displays. Last March, Ben and I went to Corning’s HQ in Corning, NY and got to see first hand some of the things Corning is doing with displays. Below are links to two videos we saw that gave us a glimpse of the future of glass displays.

http://www.youtube.com/watch?v=6Cf7IL_eZ38

http://www.youtube.com/watch?annotation_id=annotation_424843&feature=iv&src_vid=6Cf7IL_eZ38&v=jZkHpNnXLB0

He will be giving us an update on these new glass technologies that can be flexible, rolled out and seen through to deliver a whole new way to view our digital content and interact with and collaborate with friends, family and business colleagues.

2. Augmented Reality

Casper Thykier, the Managing Director of Zappar, will be showing how augmented reality will soon be impacting how we use technology to get access too much more info and content that is already shown on our mobile screens. In my TimeTechland column a few weeks back, I profiled Zappar and shared how they are working with game companies, movie studious and consumer brands to make our mobile devices indispensable in the near future.

The links in this column will give you a good idea of what AR is, but you really need to see these demo’s and similar one’s from Aurusma (http://www.aurasma.com/#/explore) in person to really understand how this technology will be disruptive.

3. Using Android Apps on Windows PCs

Rosen Sharma, the CEO of Bluestacks, will be showing how their technology allows a person take any Android app and run it on Windows PC’s as if it is a Windows app. This is a really cool technology that while on the surface makes Window’s products better but the underlying technology behind what Bluestacks offers suggests a day soon where any app can run on any OS using their core architecture. What they have could finally deliver on the promise of write once, run anywhere and could by quite disruptive for the future development of applications for all digital devices.

4. The Wrap up

After these three presentations and demo’s, Brian Cho, a partner at Andresson Horowitz, who handles their research into investments in gaming and related technologies will share what he sees as being disruptive in this space.
(http://www.crunchbase.com/person/brian-cho)

A former executive at Ubisoft, Brian is well versed in the world of gaming and can share a lot of light on what he technology he sees impacting the future of games, video and digital entertainment.

If you are at CES, please come and join us as I believe this will be a most interesting and provocative session.

Tuesday, January 8, 11:00 AM at LVCC…room N255-N257.

If you’re not attending CES feel free to share what next generation technologies you are excited about that could be coming in the next 10 years.

Should Apple Make a Hybrid or Convertible PC?

In a Tech.pinions piece I wrote a few weeks back, I stated that in our talks with IT directors they have been sharing with us their interested in the hybrids or convertibles that are just starting to get into the marketplace. Products like Lenovo’s Yoga or HP’s Elitebook Convertible are attractive to them for various reasons, but the main one is that instead of having to support a separate tablet and laptop, these converged products give them both in a single package.

An IT capable tablet might cost $600 or $700 and an IT grade laptop might cost upwards of $900- $1300 depending on configurations. These convertibles or hybrids are priced around $900-$1300, which is cheaper than buying a separate laptop and tablet combined. Thus, cost of support and cost of ownership is reduced and with IT budgets being stretched these days, lower priced, yet highly functional devices like these hybrids or convertibles makes a lot of sense to them.

We are also seeing some real interest in hybrids and convertibles with SMB and some consumers as well. The compactness of having a 2-in-1 device seems to be of real interest to them as well. At a personal level, I have used a Bluetooth keyboard with an iPad for over a year and in many cases, this has replaced my laptop. However, I still need my laptop to handle what we call heavy lifting tasks like managing my media, doing large spreadsheets or complex documents.

Looking to the Future

In my 2013 predictions column last week, I suggested that hybrids and convertibles could be a sleeper product next year and could catch on with business users in a big way. However, in this same column I made a bolder prediction that Apple would create something I called the AirPad or iPadAir that possibly would be ultrathin like the current MacBook Air and be more like an actual laptop but the screen would detach and become an iPad. Since I made this prediction I have had a lot of calls and emails from people who today have iPads, but tell me they would love to have an iPad/laptop combo device and they would be first in line to buy it.

There is one big problem with my prediction of an Apple hybrid though. Apple CEO Tim Cook has gone on record saying that Apple does not believe this type of device makes sense. They appear heavily opposed to this idea and seem to stand strong around the idea that a laptop is a laptop and a tablet is a tablet. At the moment, you can’t argue with their logic as they are selling a record numbers of MacBooks and iPads, and they may be right. Hybrids and convertibles from the PC crowd have only been out for a short time. Microsoft’s Surface product being the poster child for hybrids also clouds this issue since it acceptance in the market has been lukewarm at best.

Given the type of work we do at Creative Strategies, we get to see a lot of products behind the scenes before they ever hit the market. Over the last three months, we have seen about a dozen hybrid’s or convertibles that will hit the market in Q1 or Q2 of 2013 and some of them are stunning in their design and functionality. On some of them, the screens stay attached and either slide down over the keyboard to become a tablet, or they twist and fold down to also become a tablet in its own right. In our work, we define these types of products as convertibles.

We have also seen a lot of what we call hybrids, in which the screen completely detaches from the keyboard and becomes a much lighter stand-alone tablet. In both cases, some of these are ultra-thin and extremely well designed and I can’t help but believe that when these products hit the market interest by business users and consumers will be piqued. Hybrids dual functionality as a full laptop as well as a real tablet, along with lower pricing than if you bought the tablet and laptop separately, will resonate with many people.

I have also been hearing that the PC side of the house is very bullish on these two-in-one designs and since most of them fall under Intel’s ultrabook designation, they will be heavily promoted next year as part of an increased campaign to get people to buy Ultrabooks. Because of the innovative designs in hybrids and convertibles, which are really eye catching with most priced under $1000, this duality of design and functionality should get a lot of attention next year.

What if the Market for Hybrids Takes Off?

If our prognostication that hybrids and convertibles are correct, and they really take off, Apple will have to look harder at possibly creating a similar type of product for their customers. Today they just let them go out and buy a third party keyboard and force their users to piece together their own hybrid solutions. We have talked to a lot of people who have done this and just love the fact that in a very small package the iPad becomes a powerful productivity tool as well as one that they can use for consumption of media, pictures, etc.

There is strong precedent as well that a product Apple said they would never do they eventually bring to market anyway. Steve Jobs said Apple would not get into phones. And he also said he believed 7” tablets were worthless. However, market dynamics have a way of changing Apple’s position on products they dismiss as not being viable for them to do.

That is why I believe that if hybrids and convertibles really strike a chord with consumers, Apple will have to respond to this possible threat to them, especially in business markets where these types of products are garnering a lot of interest now. Imagine a MacBook Air like design with an iPad tablet that detaches. Given Jony Ives brilliant design acumen, I could imagine an Apple hybrid that would not only be competitive with the PC crowd, but one that would re-define the market for these types of products in the future.

We are in the very early stages of bringing hybrids and convertibles to business users and consumers, so it is too early in the cycle to predict with any certainty the level of adoption of hybrids. But our early research in this area continues to point to the fact that these types of products could be attractive to a large amount of users, and if they do take off and become a threat to Apple, it would not surprise me if Apple responds in kind and creates a product that could turn this market upside down.

My Tech Industry Predictions for 2013

Each year, about this time, I put out a list of predictions for the coming year. I have been doing this for 23 years and over that time have I have had a reasonable level of success with these predictions. I have had some spectacular failed predictions too, like the year I said Microsoft would buy RIM. Because of our work and research, we get to see a lot of technologies in the works behind the scene as well as look at the data and numbers and make some educated deductions about the tech trends for the new year.

With that in mind, here are my top predictions for 2013.

1: Augmented Reality will go mainstream in 2013

Companies like Zappar and Arusmus have some great technology that adds an AR touch to published content, posters, and physical places. AR technology has been in the works for many years, but the demos I have seen from these two companies have me believing that 2013 is the year that AR becomes very important to the mobile world. More importantly, many of these AR companies have created great relationships with movie studies, game makers, publishers, and more, and their technology is already showing up in many of their products. I wrote about these two companies recently (http://www.pcmag.com/article2/0,2817,2412990,00.asp) so check out some of the examples I have at the end of this column to get a visual sense of why I think AR will be big in 2013.

2: US Power Grid hit by Hackers

Call me paranoid but the more I read about security hacking from China, Eastern Europe and the Middle East, the more I am concerned about the safety of our various networks. While IT networks of all types remain a main target, U.S. Defense Secretary Leon Panetta warned recently that successful attacks have been made on computer control systems of American electricity and water plants and transportation systems. Security experts point out that many of these water and electricity plants have old architecture that is not tied to networks but many of them do and could be a target. Those impacted by Superstorm Sandy already know how the lack of power and electricity could impact their lives. So imagine if a power grid is taken down in large metropolitan areas and the impact it would have on individuals and businesses. I applaud our security experts on their diligence in combating all security threats and really hope that if our power grid does come under attack, they can head it off. By the way, this is one prediction that I hope I am very wrong about.

3: Google’s ChromeBook gets more consumer attention-Chrome laptops will gain traction in 2013

Acer and Samsung’s Chromebooks are priced around $250 and has become an attractive alternative for consumers as price continues to be a real issue with this market segment. I know that this only works when it is connected but the proliferation of public WiFi makes this less of an issue going forward. We all know that an HTML Web browser as an OS will someday happen and the Chromebooks are a good first step. Buyers of these laptops will also serve as an important testbed for us industry watchers in 2013 and could give us important hints about how this market will develop over the next five years.

4: Hybrids and convertibles get high interest in IT

In our discussions with IT directors recently we have heard that they are quite interested in hybrids or convertibles aka laptop and tablet combo devices. Today, with tablets part of the BYOD trend, as well as their own purchases of tablets for specific internal use, these IT managers are now forced to support three devices-PC, Tablet and Smartphone. The idea of just having to support a convertible or hybrid, instead of a separate laptop and tablet, is quite attractive to them. The first generation of these products, such as Lenovo’s Yoga, HP’s Elitebook convertible and Dell’s XPS DUO are being bought in good numbers from IT types who are starting to test them inside their organizations and newer models that are even more powerful will be out by Q3. All this points to potential growth of hybrids and convertibles within IT beginning in 2013.

5: Mobile Malware will be up 100% on consumer devices

For decades, the PC was the only real target for malware, security breaches, and targeted attacks. But with mobile devices soon surpassing the amount of PCs shipped each year, these devices have become major targets for all types of malware. In fact, we believe mobile devices will become the biggest target for hacking by the end of the 2013 because all of these devices are tied much more closely to personal identities and personal information then PC’s.

6: Intel Becomes a top 3 Foundry

There have been various reports from Asia suggesting that Intel’s current fabs are not operating at full capacity due to reduced demands for computer chips in 2012. Although there are others from the semiconductor world who feel demand for chips will increase next year, they believe the biggest benefactor of this growth will be foundries that produce chips made by ARM. If it is true that Intel’s fabs are under utilized, it would not surprise me if they move to extend their fabs to the likes of Apple and others who wish to leave Samsung and may be concerned that TSMC cannot keep up with their needs in the future.

7: e-Book sales over take the amount of physical books sold in retail

The move to eBooks is in full swing. One key reason is that tablets have become the #1 eBook reader and we will sell close to 230 million tablets in 2013. Amazon’s Kindle Reader app is on just about every tablet available, this there is no lack of digital e-books readers already in the market with more coming in the future. The ease of purchasing and keeping libraries up to date on all of your digital devices is the big draw. Plus the fact that about 1000 books can fit on and average reader. This is why you can see e-Books becoming the largest growth area in book distribution next year.

8: 7″ tablets dominate tablet sales

Given the price of the 7″ tablets, which can be as low as $79 but most hover around $199, it is not a surprise that these sized tablets will dominate the market in 2013. But what is not obvious is how they will impact the PC market. The problem for consumers with 10″ tablets is that with a cheap Bluetooth keyboard, it is almost a mini-laptop. Also, since many consumers can do about 80% on a tablet that they can do on a PC, many consumers are either extending the life of their current PC, or if they buy new ones, they purchase cheaper models since they see them sitting idle most of the time. The traditional PC does not go away because they are still needed for heavier computing tasks like managing their media, creating digital movies, etc.

However, if consumers begin to adopt 7″ tablets in big numbers, they may go back to buying new laptops since 7″ tablets are mainly for consumption and are not good at all for traditional productivity tasks. Many industry execs hope this theory is right since it could actually help laptop sales grow in 2013 instead of subtract as many have suggested it will. I believe that next year consumers will sort out which tablet is best for them and in doing so will finally determine the role the PC will handle for them in the future.

9: Apple creates a Hybrid tablet/PC with iOS

I am going out on a limb with this last prediction. But one of the more interesting developments with 10″ tablets is that if you add a Bluetooth keyboard, it becomes a mini-laptop. The Android and Windows side of the tech market are moving quickly to create tablet/laptop combo devices and business and consumers alike are showing interest in these kind of products. If these types of products gain serious traction, I believe Apple may need to respond to this growth threat in the same way they have now entered the 7″ tablet market despite the fact that Steve Jobs told everyone that Apple would never do a 7″ tablet. But imagine a sleekly designed hybrid that perhaps has the design lines of the MacBook Air but the iPad screen detaches from its ultra-thin keyboard. For lack of a better term I call it the Macbook AirPad or iPadAir. I know Tim Cook has denounced this type of design suggesting it is like attaching a “toaster to a refrigerator.” But a sleek and elegant iPad/keyboard device designed by Apple would be of interest to a lot of people, me included.

Why IT buyers are Excited About Convertibles and Hybrids

[dc]W[/dc]hen Steve Jobs introduced the iPad in 2010, he went to great pains to emphasize that the iPad was mainly for content and media consumption. Interestingly, he never even suggested that it could also be used for any form of productivity. But in a subtle way, he did push its role in productivity. That came via a very short announcement handled by Apple’s Sr. VP of marketing, Phil Schiller when he stated that Apple would also create versions of Pages, Numbers and Keynote for the iPad when it launched.

From the iPad’s entry into the marketplace, consumers immediately determined that they would like to have productivity apps and business related programs, along with their music, videos and basic email. Within two months of its launch, companies like SAP, Oracle, Salesforce.com and many others started to buy iPads and began writing business related apps as a part of their pilot programs. Also, many IT managers anticipated quite correctly that the iPad would be added to the list of consumer devices they would need to support based on the BYOD trends that started with smartphones.

Of course, the key to supporting smartphones and tablets in IT is MDM (mobile device management) software. Apple was smart enough to put hooks available for most 3rd party MDM programs thus making it possible to adopt iPads within IT programs relatively quickly. Surprisingly, Google and its Android OS did not architect these hooks in early releases of this OS and consequently, it missed the early stages of IT integration of tablets into their programs. Only recently has Google addressed this issue and we should see more Android tablets being modestly accepted into IT deployments in the future.

Once the iPad got into business settings, the work-flow of a user changed. In the past, they would take a laptop to meetings and use it to access information they might need for that meeting. But once the iPad came out, the laptop stayed on the desk and instead they took the iPad with them. This is especially true for companies who wrote their own programs so all of the key data a person might need in a meeting was available now on their iPad too.

But there is one technology developed for the iPad that I don’t think Apple anticipated. Almost from the beginning, Bluetooth keyboards designed specifically for the iPad started showing up. Over time, companies like Logitech created keyboards that even look like a cover for the iPad in its design as they did with their Logitech Ultrathin keyboard cover. In fact, the addition of a keyboard to an iPad virtually assured that an iPad could now be a real productivity tool in its own right.

But there is an 80%-20% rule that is in play here that makes life for IT managers more difficult. This rule states that 80% of what you can do on a laptop can now be done on a tablet. However, that 20% is tied to what we call heavy lifting tasks, such as graphic design, large spreadsheets, data management, creating major reports or documents, etc. The bottom line is that business users still need a laptop or desktop even if they have a tablet to supplement more of their mobile computing needs during the day.
This means that they now have to support a laptop, tablet and/or smartphone, and with many of these coming in the back door via BYOD (bring your own device).

New Corporate Hardware

In our research discussions with some IT managers, they have told us that they would like to minimize the amount of products that they support and are seriously eyeing what we call hybrids or convertibles that can do heavy lifting, yet serve as a truly mobile tablet in a single device. We define convertibles as a tablet/laptop combo where the screen does not detach, such as Lenovo’s Yoga. Hybrids we define as tablet/keyboard solutions where the screen does detach and serves by itself as a pure slate tablet. At the moment the industry interchanges these definitions but that should sort it self out in the near future.

The Good News and the Bad News

The good news is that the PC OEMs also saw this demand and consumer/IT interest in these types of products and are all moving forward with innovative designs. Lenovo, HP, Dell, Acer and others all have solid offerings in place that give the IT directors an option to have a single device that works as a full PC as well as a stand alone tablet. Given IT managers desire to streamline the amount of products they have to support, we believe that hybrids and convertibles are a sleeper device that will be in great demand next year by business users of all types, including SMB. It would not surprise us if consumers who want to do more productivity on their laptops increase the demand for hybrids and convertibles as well.

The bad news for these OEMs is that this could impact demand for traditional laptops in the future. The PC market has declined this year and its growth going forward will be anemic at best. Tablets have been a major disruptor in many ways. For example, consumers tell us if they can do 80% of what they do on a laptop now on their tablet, they may just extend the life of their current PC or laptop since it mostly sits idle. Or, if they do buy a new laptop or PC, they will buy a cheap one with updated processors and memory knowing full well it will be used less and less as tablets meet most of their needs.

But for IT managers, merging the two into one has a lot of merit for them, especially if the hybrids and convertibles have enough power and battery life to handle the heavy lifting tasks that will continue to be important to a business user. The fact that these products will be serviced as a single device, instead of two, is a key reason that we believe hybrids and convertibles will become a major growth segment in IT sales. It would not surprise us if savvy consumers move in this direction too since a dual-purpose product in many ways can be attractive to them to for similar support and economic reasons.

Verizon, Nokia and the Quest for Differentiation

My first portable cellphone was the size of a brick and weighed almost 2 pounds. And it was dumb. All it did was make calls. By the mid 1990’s Verizon started creating what we now call a feature phone and created its own mini OS, which allowed Verizon to create dedicated apps of their own as well as give third party software developers the tools to also create apps for these phones. This was important since it gave Verizon a controlled eco-system of hardware and software that allowed it to significantly differentiate their cell phones over the competitors.

Of course, the apps they had back then were primitive compared to today’s smart phone applications but they did offer their customer’s games, better contact information and simple calendars, etc. But this was a pioneering move in cell phones and helped Verizon grow this business exponentially. However, in this mode, Verizon had complete control of their eco-system destiny and that made it difficult for third party software vendors to break into Verizon’s apps world in any meaningful way.

The new era of smartphones wrestled control of Verizon’s closed ecosystem away from them and other competitors doing similar things since these phones had an open OS and more importantly, an open approach to creating and selling apps directly to the customer. Some think that Apple’s ecosystem is closed but it really is a pretty open program in that third party software developers can and do create a plethora of iOS apps and Apple freely pays them directly for these apps when consumers buy them. Yes, Apple does veto some apps mostly for inappropriate content, but theirs is a very open approach compared to what Verizon had back in the heyday of feature phones.

One of the big problems with an open approach, whether it is with the Android OS or the Windows OS, is that both of these operating systems go to the vendors with identical user interfaces, thus creating what we like to call a sea of sameness. That means that an Android phone or a Windows Mobile OS phone all look the same since they use the same user interface. At the hardware level the handset vendor can try to innovate, but in most cases the OS GUI is untouched. This is especially true with Windows Mobile phones, although companies like HTC, Amazon and a few others have added their own UI layer on top of Android’s GUI to try and distinguish themselves from the competition.

Not to be undone by this turn of events, Verizon is working hard with some of their handset partners to make their phones more unique and add more value to the users. A good example is the way they have worked with Nokia on the new Lumia 822. Verizon went to Nokia and asked them specifically to do a special version of the Lumia that could be sold for $149 and had features only available on this phone.

Nokia worked hard with Verizon to accommodate this request and has added three key features that help this low cost smartphone stand out. The first is something called Nokia Drive. This is a turn-by-turn voice navigation service that uses their stellar Navteq maps to deliver a rich navigation solution to Lumia 822 owners. It will work in 89 countries and while in beta now, it will be released officially soon. This service also has something called My Commute that, over time, learns the directions to your office or workplace or any other heavily trafficked route and automatically gives directions to these places with its voice navigation feature as needed.

The second special thing Nokia brings to Verizon with this phone that is not available to others is something they call City Lens. This is an augmented reality application that works with the mapping program that overlays specific information about a place, restaurant or landmark to give users a richer mapping experience. Verizon sources say that this is first step in their augmented reality software and will make it even better over time to give users all types of data or information about locations they are visiting.

And the third thing that is specifically for the Lumia 822 is a new Nokia streaming music service called Nokia Music. It is subscription free and has 16 million tracks or 10 times more tracks then Pandora. Also no account is needed and works right out of the box. You can listen up to 12 hours of music free. You can also just tap and scroll in something called the gig finder, which seeks out the gigs or details of a your favorite band’s concerts schedule and locations.

I have been testing the Nokia Lumia 822 for a while now and am pretty impressed how much is packed into a $149.00 smart phone. The core of the OS is Windows Phone 8 with all of its new features such as live tiles and the special protected area for family’s and kids. But these new special features from Nokia add a richer dimension that gives customers a great experience that comes close to equaling what is available on more expensive smartphones.

What Verizon is doing with Nokia is significant. In a world of smartphones where the OS and UI are identical, doing things that help differentiate the phones and services over the networks will be an important key for success.

Microsoft’s Retail Gamble

Over the weekend, I went to Microsoft’s large store that is in the Westfield Shopping Center in San Jose. Like a few similar Microsoft stores, it is across from an Apple store and I suspect that Microsoft is hoping to lure some potential Apple product buyers away from Apple with this strategy.

Luckily, there are seats right outside Microsoft’s store, so as I waited for my wife, who was off shopping, I planted myself in these cushy chairs the mall has and just watched people come and go through Microsoft’s doors. The first time I did this was mid week, three days after the store opened to much fanfare. I watched the store for 45 minutes that day and in that time frame, Apple hosted about 130 customers while the Microsoft store had only about 12 visitors. Even more troubling at the time, the 12 that did go in, came out empty handed, while well over 20 people left Apple’s stores with iPads, Macbooks, and even two iMacs were sold.

This was before the launch of Windows 8 and Microsoft’s Surface tablet. So this time I assumed that the Microsoft store would have a lot more customers, and they did. I counted about 40 in the store this time. However, during the 45 minutes I sat out front of the store, I saw nobody leaving the store with any Microsoft product at all. But across the way at Apple’s store they had about 120 people inside and a line of 30 outside waiting to pick up preordered iPad Mini’s and the new iPad 4. And I counted at least 35 people carrying Apple products out the door while sitting there.

The good news for Microsoft is that people who were in the store were checking out the Surface, Windows 8 and many of the laptops and touch based ultrabooks that were on display. But the bad news is that most of them were Looky-Lou’s, drawn in mostly to see the new Windows 8 touch OS and the much advertised Surface. Also, while every salesperson in Apple’s store was engaged with a customer, I counted 6 Microsoft store employees standing around trying to look busy.

The Changing Retail Frontier

Now, I realize that Microsoft is new to the retail game, while Apple has been perfecting their store concepts for over 10 years. And my “research” was not scientific in any way and was just observations by me, a pretty seasoned market researcher trained to observe consumer buying patterns and usage models. I am sure that Microsoft sold many products of various sorts during the day, but by comparison with the Apple store across the way, I doubt it was even close to the daily sales Apple had in that store or any other store Apple has around the world.

Regardless of what Microsoft made that day in products sold, having their own retail stores is critical to them given the competitive landscape. I understand they will open at least a dozen new stores world wide in 2013 and more in the future. Of course, the competitive reason for doing so is because of Apple’s extreme success with their stores and how it has affected Microsoft’s fortunes. More importantly, Apple’s stores have reprogrammed how consumers think about buying tech products and getting personal service once they buy an Apple product.

In fact, I don’t think we can underestimate how the Apple stores have impacted retail in general. The idea of having a sales person standing there with an iPhone payment device and instantly checking a person out is revolutionary. And if you have the new Apple Store software app on your IOS device, you can even check yourself out now.
The man behind Apple’s stores, Ron Johnson, is now CEO at JC Penny’s and is trying to apply this same kind of store experience to a very old retail model. While he is having trouble getting this company to move quickly to be more user friendly, I have no doubt that he will eventually be successful in changing JC Penny’s retail model with new store designs as well as how people are eventually serviced.

Microsoft’s retail stores are important for them and the industry for another reason. All of their partners, except Sony, don’t have the money and the wherewithal to do their own stores and need to rely on Microsoft to become not only a dedicated retail outlet for their products, but to also serve as trained sales people who know the products and can intelligently sell them.

This will always be a problem for Microsoft retail since they carry dozens of different laptops, tablets and smartphones making it more difficult for their salespeople to know the products they sell intimately. This in fact has proven difficult in many big box retailing organizations as well with a highly diversified and fragmented product offering. In Apple’s case, they have key products with iOS and key products with the OS X and while they have many products in their mix, that mix is 10 times smaller than what Microsoft can sell through their stores. Consequently, Apple’s staff knows their products in and out and I am often surprised that even the non-genius staff can answer tough questions when I have gone into their stores and needed an answer about a problem I might be having at any given time.

When it comes to retail, Microsoft has no choice but to keep these stores going and expand their potential reach. And for most of their partners, they need Microsoft to serve as the only Windows focused retail outlet that can represent them properly. I have no clue when these stores will break even and be profitable, but Microsoft’s retail gamble is in full swing and they can not turn back if they plan to gain any ground on Apple and Google.

How the iPad Mini Could Impact Future PC Sales

[dc]N[/dc]ow that the iPad Mini has been out for a while and many of us at Creative Strategies have been testing them, it is becoming clear to us that this 7.9” form factor or most 7” inch models will literally become the most important tablet for consumers in the future. There are a lot of reasons for this, but the main one is that it is light, thin, and in the iPad’s case, delivers a best in breed tablet experience. Also, these smaller tablets will always be cheaper than larger tablets because the BOM cost for a smaller version will always be less than the bigger models.

But as I have personally used the iPad mini for some time now, I have begun to see my usage patterns with tablets change significantly. Before the iPad Mini, the tablet I used the most was the original iPad. Although I also used my Kindle Fire HD often for reading and media consumption, the iPad was my real go-to device. And it became even more important to me once I added the Logitech Ultrathin keyboard to it since it now was used for content consumption as well as productivity.

However, there is an 80/20 rule with tablets that is becoming an important metric when it comes to tablets and PCs. It turns out most consumers can do about 80% of the most common tasks they do with a PC on a tablet, and any other key tasks, such as media management, large spreadsheets, music server, etc are designated to the laptop. But once I started using the iPad Mini, I found that it now became my go-to-device because of its lightweight, small size and literal duplication of everything I have on the iPad as well as the full iPad experience.

But there is an interesting twist to this. When my only tablet was my iPad, I defaulted to my laptop for heavy lifting tasks. But once I started using the iPad Mini, I found myself-defaulting to the 9.7” iPad with its keyboard as my main productivity device and found that in this case, a 90/10 rule kicked in. That means that I spent 90% of my time on these tablet solutions and only about 10% on my laptop.

Now I realize that this may not be a broad trend, but we are hearing the same type of storys in our consumer interviews. Although fresh and not fully completed research, many people who have an iPad Mini and are sharing similar stories. Almost all that we talked to told us that the role of the laptop has diminished for them significantly since they got the iPad, and were now using the iPad Mini more frequently than their larger iPads.

When I asked them if they were interested in buying a Windows 8 PC, their comments were pretty consistent. They said that if the PC were only used 10-20% of the time, they would most likely just extend the life of their PCs or laptops instead of buying new ones. And if they did buy a new PC or laptop, it would be the cheapest they could find, as they could no longer justify a more expensive and powerful version if it mostly sat at home and used for such a short time for more data or media intensive apps.

I suspect that this scenario with consumers may play out a lot more in the future, and at the very least, their tablet does handle the majority of their daily digital needs. The PC as we know it today will continue to lose its primary role in the home given its lack of use more often than not.

Even yesterday on a call with analysts Nvidia CEO Jen-Hsun Huang made a key point. He said:

consumers realize “a great tablet is better than a cheap PC.”

If this trend does play itself out as I have suggested, the impact on the traditional PC market could be dramatic within two-three years. As consumers buy lower cost and small tablets that will only get better in performance, screen clarity, and apps, it supersedes their PC use and demand for PCs and laptop will decrease significantly.

As my colleague Steve Wildstrom stated on Wed, PCs will not go away, but will soon play a different role for consumers than they have in the past. But if tablets increase their role as the dominant device for consumers to access the majority of their digital needs, than the impact on PC demand has to be impacted down the road. In fact, some key industry insiders call this the PC Cliff, suggesting that we could see a time in the not-so-distant future where demand for PCs fall by a steep amount, giving way to tablets that will take over their role as the major growth segment and primary of the PC industry.

Interestingly, there could be a silver lining for traditional PC vendors if they innovate quickly. In my comments above, I mentioned that the iPad Mini has now become my go-to tablet while the original iPad with the Logitech keyboard is now my cross over device handling consumption and productivity. And my use of my laptop has declined as a result of this. But for me, the iPad with a keyboard has become kind of a laptop replacement. It is touch based, lighter than any laptop I could ever own, and has an average 10-hour battery life and runs most of the apps I need, as well as giving me a very rich Web browsing experience.

But my iPad with keyboard is really what we call in the industry a hybrid, which has a touch based tablet tied to a detachable keyboard. Microsoft’s Surface falls into this category as does HP’s Envy X2 that they call a convertible. The nomenclature for this seems to be ever changing but we define a convertible as a tablet/keyboard combo that does not detach and a hybrid, a tablet with a detachable keyboard.

The interest in the hybrids as we define it is extremely high, although the demand for Windows RT based hybrids like the Surface is somewhat muted since it does not have backward compatibility with existing Windows apps. Instead, the hybrids we are seeing great interest in, both with consumers and business users, are Windows 8 devices that use an x86 chip and has full backwards compatibility with existing Windows software like HP’s Envy 2 Convertible. But if the scenario I suggest plays out, it will be these hybrids that drive “laptop” sales in the future, while demand for more traditional laptops will wane considerably.

I believe that the iPad mini and smaller tablets will be even more disruptive to the traditional PC market than the iPad has been to date. We can envision a time soon where a user has a 7” tablet mostly for content consumption, email and Web browsing, and a hybrid to pick up any productivity slack they may have. The bottom line is, the more consumers use tablets of either size, the more they realize that the laptop or PC in the home is overkill, and decide to either just keep the one they have longer or buy the cheapest PC they can for any extra computing needs they may have that a tablet cannot do.

I fear that a PC cliff is not far off and we are urging all PC vendors to seriously consider the ramifications of what these smaller tablets will mean to their future PC and laptop demand.

Buyers Remorse is a Way of Life in Tech

[dc]H[/dc]ave you ever bought a tech gadget and two weeks later, a better version of it comes out? Or purchased one of the new HDTVs with high resolution and then seen a new version with even higher resolution come out just weeks later for the same price? It may be relatively obsolete after CES in January as all TV makers will introduce their 4K or Ultra HD sets with 4 times the resolution of today’s HDTV’s.

Whether consumers like it or not, buyers remorse is just a way of life in the world of technology and that will never change. How come you ask? Well, there are a lot of reasons but the basic answer lies in the fact that no matter what product a tech company puts out, it is in its DNA to make it better, faster, thinner, lighter or develop a whole host of other tech related advancements that enhance the product further. I have been covering the tech market for 35 years, and this cycle never changes. However, the pace of tech advancements today is faster then I have ever seen in my years of covering technology professionally.

When Apple introduced both the iPhone and the iPad, they pretty much committed to a year long cycle before new models came out. This was because as early as 2003, Apple was updating the iPod every 6 months and consumers were squawking about this pace of upgrades and their buyer’s remorse. So Jobs said at one MacWorld that they were going to start this yearlong cycle to help alleviate those concerns. And this has been the case from then until last week.

So, why did Apple introduce a 4th gen iPad just seven months after the 3rd generation iPad hit the streets? My educated guess is that once Apple perfected the A6 chip, which they introduced in the iPhone 5 and doubled the speed of iPhone, they really wanted to upgrade the iPad as soon as possible so that both products performed at these new processing levels. Having both equal in performance makes a lot of sense because once you use the iPhone 5, you clearly want that same speedy performance in your iPad too.

Keep in mind, Apple does not do R&D then put things into manufacturing over night. The fact that they were going to put an A6 chip in an iPad was probably put in place at least 18 months ago and while they could have held it off until next March, the performance gains they had with the A6 chip was just too good to hold off releasing it until next year.

But this same logic drives much of the tech vendors thinking about product releases. Many Android backers and PC vendors update smartphones, tablets and laptops in 6-month increments. And if a consumer service has new features, it usually gets upgraded even faster, even if it means offering a new device with more advanced features to handle the new services.

When I was a kid, I remember getting a hand held transistor radio so I could listen to baseball games. And I saved up my money to get this particular model that was small and very portable. I literally scraped pennies and dimes together over a period of time so I could buy this particular radio I had seen advertised in the back of Popular Science.

Well, guess what happened. As soon as I got the radio, the newest model was released and as a kid, I had my first bout of buyer’s remorse. And even today, that happens all too often for me even today. But at some point I just have to say that this product will meet my immediate needs and pull the trigger and buy it.

While Apple releasing a new iPad may have come quickly, the same will happen with the Nexus 7. Google is likely to introduce not only a new 10” model soon but also an updated 7” version too, even though the current one hit the market just 4 months ago. And given the pace of technology advancements, I will not be surprised if Amazon upgrades their current Kindle Fire HD six or seven months after the current model came out.

So, the fact that Apple introduced a new iPad not long after the last one came out should not be that upsetting to people. The opposite would be to tell Apple to slow down the pace of innovation and as a technology buyer that is the last thing I want Apple to do. The same goes for Google, Amazon and any other company who delivers innovative products. The key is to understand that what you buy today will meet your needs today since you may not even know what your needs will be tomorrow. That is the job of the tech companies; to anticipate users future needs and drive their R &D in that direction.

Windows 8: Back To The Future

[dc]D[/dc]ue to scheduling conflicts I could not be in NYC yesterday for the Windows 8 launch but watched it intently as it was streamed around the world from Microsoft’s Web site. But what I saw was both impressive as well as confounding for many reasons.

Let me start with the confounding issue first. Once Microsoft CEO Steve Ballmer took the stage with his bubbly personality, he expressed “excitement” about Windows 8 and he was right to do that. Windows 8 will always be known as the version of Windows that ushered in the age of the touch UI to the Windows world. And just as Windows 95 solidified the GUI in PC users mind, Windows 8 will burn into people’s conscience the fact that touch should be a key addition to the Windows User Interface. And before he spoke, other Microsoft executives showed off a plethora of laptops, all-in-one touch PCs as well as tablets that are already touch enabled so they can take full advantage of Windows 8 touch features.

But as I listened to Steve Ballmer speak, I could not help but think that his message was one of “welcome to the past” instead of “welcome to the future.” We all pretty much know that we are well into the post PC era and demand for traditional PCs are stable, stalled, or even in decline in many areas of the world. In fact, while we still expect to see between 300-350 million P’s sold WW annually for a few more years, the hard fact is that traditional PC vendors are having a tough time making any money on PCs anymore and some of them may get out of the consumer PC business completely in the next 12-24 months.

Smartphones and tablets are quickly supplanting a need for a full-fledged PC. User surveys show that tablets especially can handle as much as 80% of the tasks they used to do on a PC and that consumers are spending less time on their PC than before. This is not good news for the PC vendors as well as Microsoft and Intel. As more customers are ushered into the world of tablets by cheaper models from Amazon and Google, as well as Apple’s new entry into smaller tablets with the iPad mini, tablet unit shipments will outnumber the amount of PCs sold annually WW by 2015.

We also sell 1.4 billion cell phones a year and by 2013, 65% of the cell phones sold in the US will be smartphones. And by 2015, 60% of all cell phones sold WW will be smartphones. In fact, instead of the post PC era being used to describe where we are today, a more accurate terminology could be that we are finally entering the age of truly personal mobile computing, with smartphones and tablets leading the way.

But I also viewed the Windows 8 event as impressive and important due to the demand for new traditional PCs will stay stable or decline, there are well over 700 million PCs still in use today and Windows 8 represents an important step or bridge to the future of PC UIs and the role touch will play in these devices. Also, millions of PC customers are already familiar with touch through their purchases of tablets and smartphones, Windows 8 has to be considered an important evolution of the graphical user interface for existing and new PCs and laptops.

While I view Windows 8 as important, the one area that I think it will have its greatest impact in will be with devices that are truly touch enabled. This includes new hybrids or combo laptops and tablets that can take full advantage of Windows 8’s new touch interface. However, I am less confident it will be a huge success with existing PCs where the only input is a mouse or a touchpad. Current input devices were not designed with touch in mind and therefore do a rather poor job with navigating through a rich touch based user experience. The exception to this may be when Synaptics’ new ForcePad is installed in new laptops. This is a trackpad that maps the touch UI interface and mirrors some of the touch UI features through this innovative new trackpad optimized for Windows 8. Apple does this already with their Magic Trackpad. Interestingly, Apple does not believe their laptops or desktops should be touch enabled as they view the use of the hand or finger having to move from keyboard to screen as an unnatural way to navigate these types of devices.

There is also another key issue that may keep Windows 8 from being adopted faster and that is the added cost of laptops that sport touchscreens. At the moment, putting a touch screen on a laptop adds about $150-$200 to the cost of the laptop. That is why we still see most of the laptops sold at least through 2014 having non-touch based screens as consumers are inclined to buy on price instead of features in most cases.

While I see Windows 8 working well with touch based devices and see it having a harder time being adopted by users whose laptop or desktop is not touch enabled, Still, Windows 8 will be important to the collective PC market today. And it represents the next major evolution of the user interface for PCs, even if the market for PCs will not be a major growth market in the future.