Why Siri is Strategic for Apple

Now that I have had some time to work with the new iPhone, and especially the new Siri Voice technology, I have been able to form a couple of opinions about this products market impact.

As I mentioned in a previous post, from a big picture stand point, Apple’s use of voice and speech as a form of input marks the third time Apple has influenced the market when it comes to UI design and navigation. The first time they did it with the mouse and its integration into the Mac, and then with touch by making it the key input for the iPhone. Now comes voice, which I believe will usher in the era of voice input and will start to dramatically impact the future of man-machine interface.

While voice input is a significant part of Siri’s feature set within the new iPhone 4S, it is its AI and speech comprehension technology that really makes it unique. More importantly, the more I use it the more it gets to know who I am, where I live, what I like, who I am related to and the more info it gets on me, the better it gets as well. For example, with in a few searches for Italian restaurants it now knows that this is a type of ethnic cuisine I like and remembers that. So, the next time ask it to find me an Italian restaurant, it becomes more accurate in its recommendations. It now knows my home address and office address and I can give it commands that play off these locations. For example, I can say,“remind me to call my wife when I get to the office” and as I walk into the door of my office complex it reminds me to call her.

There are hundreds of ways that, once it begins to learn more about me, it can be quite useful and helpful. And as Apple has said, they will continue to link it to more powerful databases over time, giving it even greater reach to the information that I might need in my daily life. That linked with its continuing ability to learn about me makes Siri perhaps the stickiest application I have ever used. In the short time I have used it, it has become almost indispensable in a couple of areas.

First, I now mostly speak my tweets and messages instead of typing them in. Second, I use it to input short emails as well. Having the Siri microphone integrated into the keyboard makes it so simple to use and this is now my first line for data entry.

But the third way I use it is related to my business. As a market researcher, I have to do a lot of percentage comparisons when I look at various numbers. Over the years I have become pretty good at working out this math in my mind, but this method is not very precise. I normally come within one-to-three points of the correct answer and in a lot of cases that may be all I need for our predictions since these are based on known data and are informed projections. And in the past if I wanted precise percentages I would bring out the old calculator. But now when I want this number I just ask Siri and she does not guess. Her answers are always exact–and fast.

The other thing it does extremely well is deal with appointments. I just tell it to schedule an appointment and it is done. And if there is a conflict it tells me that as well. Think of it as a smart personal assistant.

BTW, this is not Apple’s first stab at this voice, speech AI concept. In fact, they pretty highlighted it in their Knowledge Navigator multimedia video they did in 1989. In this video it shows a professor interacting with a computer asking it questions and getting direct answers from it in ways that Siri does now. Ironically, this video and futuristic thinking was the brainchild of former CEO John Scully and former Apple Fellow Alan Kay, one of the most futuristic thinkers we have in the world today. But at the time, the technology was not there to do what was projected in the Knowledge Navigator. Even more impressive is the fact that while the Knowledge Navigator was apparently connected to a very large computer, Siri is being done in a pocket computer.

Now, as Siri develops a strong database about me and my likes and dislikes, it is quickly becoming indispensable as a mobile assistant. I suspect that the more Siri and I become closer and it gets to know me better, I am going to be highly unlikely to use something else by another platform. Thus, the stickiness. Something that makes it very likely that I will stay within the Apple ecosystem as long as they continue to innovate and make Siri smarter and even more useful.

Why We Witnessed History at the iPhone 4S Launch

While some people were disappointed that Apple did not introduce the iPhone 5, most pretty much missed the significance of the event and the fact that they were witnessing history.

In 1984, when Steve Jobs introduced the Mac, he did something quite historic. He introduced the Mac’s graphical user interface. But he actually topped himself with the introduction of another technology-the mouse. In essence, he introduced the next user input device that has been at the heart of personal computing for nearly two decades.

What’s interesting about this is that he did not invent the GUI. That came from Xerox Parc. And he did not invent the mouse. Douglas Engelbart invented the mouse. But by marrying them to his OS he reinvented the GUI and OS and gave us a completely new way to deliver the man-machine interface through the mouse. Until that time all computer input was done by textual typing.

Then, in 2007, with the introduction of the iPhone, Jobs and team did it again. He created the touch user interface and this time married it to his iOS. He did not invent touch computing. That technology has been around for 20 years via pen input or minimally within desktop touch UI’s such as those used in HP’s Touchsmart desktops. But he integrated it within iOS and gave the world a completely new way to interact with small, handheld computers. With the new touch gestures part of their laptop trackpad designs, they have even extended it to their core Mac portable computing platform as well. In essence, Jobs second UI act was to bring touch UI’s to mainstream computing.

Now, with the introduction of SIRI, integrated into iOS and a core part of the new iPhone OS, he and the Apple team have given to the world what we will look back on and realize is the next major user input technology-Voice and Speech. As reader Hari Seldon points out, the real breakthrough we will come to realize is in Siri’s “applied artificial intelligence.” It is its speech comprehension that will be its greatest advancement.

Again, he did not invent this technology. But Apple’s genius is to keep trying to make the man-machine interface easier to use and with each form, be it the mouse, touch, or voice, Apple has been the main company to popularize these new inputs and thus help advance the overall way man communicates with machines.

I have personally witnessed all three of these historical technology introductions. When the Mac was introduced in 1984, I was sitting third row center at the Foothill Community College’s auditorium. Then in 2007, I was at Moscone West, fourth row Center when Jobs and team introduced the iPhone with its touch UI. And most recently, I was at their campus auditorium, Building 4 of Infinite Loop, 5th row center, when Tim Cook and his team introduced the iPhone 4S and the new Siri Voice and Speech interface, making this their third major contribution to the advancements of computer input. (I make a habit of remembering exactly where I am when I watch history being made.)

Now here is another interesting point. Although Apple has had this touch UI in place and integrated in to iOS since 2007 and the Mac OS X since last year, only now is the Windows world starting to get serious about integrating touch into their phone and computer operating systems. Although Apple will continue to advance their various touch UI’s, they can rightfully say-been, there, done, that.

It is time to take it up a notch and for them their next user input mountain to scale will be the use of voice and speech as part of their future man-machine interface. It may start with iOS but like touch, I expect this UI to be in the Mac in short time as well.

Yes folks, for those of us at the iPhone 4S launch we witnessed history being made. Unfortunately, for a lot of people in at that event, they missed it.

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My Thoughts on the Passing of Steve Jobs

I have been asked by many in the media for my thoughts on Steve Jobs. I felt that I needed to write them out so that I could be succinct at this time. Please feel free to use them as quotes directly from me.

Steve Jobs will always be remembered as a pioneer and tech icon. While he will always be known for the great products he created, perhaps his greatest contribution was the creation of a new Apple that is one of the most valued companies on the planet.

Many tech executives would be thrilled if they had one major hit in their lives. Steve gave us the Apple II, The Mac, the iPod, the iPhone, the iPad and Pixar.

In a sense, Steve Jobs was part Thomas Edison, Walt Disney and P.T. Barnum. A modern technology visionary, focused in delivering products that are useful and provide entertainment and a masterful showman who really knew how to keep people on the edge of their seats wanting more.

His impact on the world of technology and American business can not be underestimated. His simple vision of creating products that he would want – ones that were elegant and easy to use, is what drove him and Apple to spectular success.

Under his leadership, Apple has become one the most recognized brands in the world. He created products that people line up for around the world.

Over 30 years of covering Steve Jobs as an analyst, I saw him at his highs and lows. But even in his lows he never took his eye off of the vision of creating products that were stylish and simple to use.

When he came back to Apple in 1997, I met with him on his second day on the job. At the time, Apple was $1 billion in the red and in serious trouble. So I asked him how he planned to save Apple. He said he would go back and meet the need of their core customers and then he said something that at the time puzzled me. He said he would pay close attention to industrial design when creating products. Not long after that he gave us the candy colored Macs that broke the mold of what a PC should look like. And as they say, the rest is history. From that point on, all of Apple’s products have bore the imprint of his eye for style and ease of use.

I am confident that Apple can move forward under Tim Cook and his executive team and that Apple will continue to be one of the most important technology companies in the world. Tim and his team fully understand Steve’s vision for Apple and will carry it forward and continue his legacy of creating products that will be elegantly designed, easy to use and that people will want as part of their digital lifestyles.

He was one of a kind and I doubt I will ever see anyone like him in my lifetime again.

Our thoughts and prayers go out to his family and close friends. So many of us in this industry owe much of our careers to Steve Jobs. He will truly be missed.

Why Apple Didn’t Release the iPhone 5

I have been fascinated by the various comments from people, Wall Street analysts included, that were disappointed with the new iPhone 4S. These folks have been having dreams of delusion trying to coax Apple to make each new iPhone conform to their imaginations. When I polled a few of them to see what they expected, they mostly tripped over themselves trying to explain their vision for a new iPhone. Common points were things like it should have been thinner, lighter, with a tapered designed to make it sleek and more unique.

I am pretty sure these folks who want this design don’t live in the world of engineering, manufacturing or even have a working understanding of physics. If you look at the iPhone 4 from an engineering stand point, it is already packed with more chips, batteries, antennas, radios, etc in order to give it the kind of features and functions it has today.

Now imagine that Apple decides that these folks are right. They make it slimmer, lighter and taper it at the bottom. That means they must use a smaller battery thus impacting total battery life. And it means they have to put in sub par or smaller antennas and chips on a smaller die, thus less functionality. And they would possibly have to change the kinds of radios they use to fit them in this new design, also affecting the quality of wireless voice and data signals.

Now, if I am a consumer and have the option of having a slimmer, sleeker iPhone but with less battery life, less power and less functionality, versus having Apple give me a similar physical design but with a CPU that is 50% faster than the one in the iPhone 4, a graphics chip with 7X the power of the one in the last phone, and better antenna and radios so that my voice and data connections are solid, the same size battery that is now tweaked with new software to give them even more talk time, music listening time, etc, which iPhone do you think they will choose?

While this is a key reason for Apple to stay with the “if it ain’t broke, don’t fixit” strategy for the iPhone 4S, there is another even more practical reason for staying with this design.

You may have noticed reports over the last two weeks from the channel that Apple was selling all of the iPhone 4’s they can make even though people were fully aware that a new iPhone would be coming out this fall. And we know that Apple can’t make these fast enough to even meet current market demand.

One thing it appears Apple concluded was that, after 16 months of making the iPhone 4, they actually do have the manufacturing of this phone down and in fact, are starting to ramp up even more production lines to meet demand. With this in mind, it made perfect sense to re-design it from the inside out, and still keep all of the manufacturing tooling and processes in place so that they could also make the new iPhone 4S in the kind of volume needed to meet market demands.

The manufacturing experts I know tell me that had Apple actually done a radical new design for this phone, they would have had to retool a lot of the production lines and that this would have been very disruptive, in a negative way. What people don’t realize is that this phone is not that easy to manufacture and Apple, in some cases, has to actually invent the manufacturing tools and machines just to make them in the first place.

Now, this does not mean that they could not have a new or even a radically designed iPhone in the future. But the process to ramp up a completely new manufacturing system takes time and is very difficult to do even on an annual basis. So while they are maximizing the current manufacturing lines for all the iPhone 4’s current physical designs, I am certain they are working behind the scenes to create perhaps a new form factor that can still have this level of functionality and designing the manufacturing procedures and machinery even now for when they will need it in the future. I suspect the next iPhone will be specifically designed to support LTE, a technology that is not ready for primetime because of modest US coverage but by late next year should be available in about 85% of the US.

I am also certain that once consumers really understand that this is a completely new phone even though it is in the same design package, they will flock to it in huge numbers. And Apple will not skip a beat.

Related:
Consumers Will Be Delighted by the iPhone 4S

But when people want to project their visions and ideas on Apple and hope that Apple responds to them, they need to look at the practical side of creating something as sophisticated as the iPhone. And in the end they need to realize that Apple actually does know what they are doing when it comes to designing the best and most powerful smart phone they can make and delivering something that customers really want and need in an iPhone, instead of delivering the design pipe dreams of over active imaginations.

Five Reasons to Upgrade to the iPhone 4S

 
While design enthusiasts may have wanted a smaller, lighter and even thinner iPhone, the fact remains that the current iPhone 4 design is about as thin as you can get a smart phone and still pack it with all of the additional new features that will make it the most powerful and best-selling smart phone on the market.

What disappointed people may have in the fact that it is identical in design to the last model, is made up by the high-powered A5 chip that delivers 50% more processing power, and a new dual core graphics chip that is 7X faster than the one in iPhone 4. It has a the new signal processor that makes it possible to deliver Siri’s voice command driven personal assistant, the new 8 megapixel camera with enhanced image sensor, the new video processor that delivers stunning video and the dual antenna system that makes calls and wireless sensitivity better than ever.

From an engineering standpoint, this is the most powerful iPhone Apple has ever made and should help them deliver their first 25-27+ million iPhone quarter this holiday season. With the 3GS being free with contract, this phone could finally attract the laggards who hesitated buying an iPhone because of cost. And the iPhone 4 starting at $99, with its dual cameras and capability to do Facetime, will also be in high demand. However, there are millions of users with 3GS contracts that are out of subscription hell and will gladly make the jump to this new phone in huge numbers. And many iPhone 4 users are close to being out of their contract and many of these folks will also upgrade as soon as they can.

From a consumer standpoint, there are five major reasons why a person should upgrade.

The first is the new 8-megapixel camera sensor at 3264 X 2448 which is 60% more pixels than in iPhone 4 that Apple has in the iPhone 4. This includes a new powerful image sensor and will become the gold standard for digital cameras in smart phones. The images are just stunning. They are 30% sharper.

The second reason is the new video sensor that delivers the best video recording on a smart phone available. The demo they showed of a video taken and actually edited on the iPhone 4 S has to be seen to be believed. It now shoots at 1080P. A user would likely now be more than happy to just use their smart phone to take all of their pictures and videos as the quality of this is beyond what most point and shoot cameras deliver.

The third reason to upgrade is for the SIRI voice assistant. This introduces a whole new way to interact with your iPhone. You can ask it things like, what is today’s weather and get an exact answer instantly via voice. Or you can say, set my alarm for 6:00 AM and it does that automatically for you. Or you can ask, what time is it in Paris, France and it reads out that time to you on demand. It can answer hundreds of questions and enact immediate commands to the phone as part of its design.

What’s more if you are driving and hear a message alert, you can just ask it to read the message to you. Or you can just speak it your message and who to send it to and it does that as well. It can also do dictation in messages, email, and in any app that uses a keyboard. Most importantly SIRI and its voice system only works on an iPhone 4S because of its use of this special signal processor that Apple has on this new iPhone.

And the fourth reason is because of the new antennas. Apple has employed a breakthrough in the way antennas work by making them handle incoming and outgoing calls and data signals differently. This enhances quality of service and it goes a long way to delivering a better voice and data experience. Along with their CPU boost and speed gains from the Antenna that let the iPhone 4S operate at 4G speeds even though it is still a 3G phone, should get it a lot of street cred with users.

And the fifth reason to upgrade is because it is a world phone. That means it can handle CDMA and GSM and can switch between networks when traveling in every country around the world. This is great for anyone that has to travel the world for work or pleasure.

Another hot feature for all IOS users will be the new iMessage system that provides free messaging to any IOS device, which now includes all iPod Touches with the new IOS 5 software.

Of course, iCloud and its amazing synchronization engine will be a godsend to those who want to keep all of their music, video and docs always in sync and up-to-date. In fact, I consider iCloud a most important Apple product and one that will actually help define what the cloud is for consumers and force all competitors to follow suit.

Lastly of course, iOS 5 with 200 new features, will deliver much more power and capabilities to all iPhone and iPod Touch users and make them even more indispensable than before.

iOS 5 and iCloud will both be release on Oct 12th.

The new iPhone 4S will ship on Oct 14th.
The 16 gig is $199. The 32 Gig is $299 and a new 64 Gig is available for $399 with contract.

In the US the iPhone 4S will be available on AT&T, Verizon and Sprint. By the end of the year worldwide it will be available in over 70 countries.

The New Kindles=Razor and Razor Blades with eBook Readers

The new Kindles, with prices at $79 and $99 finally introduces the concept of the razor and razor blade business model to eBooks. We are all familiar with the idea of razor companies creating very cheap razors and then getting people to come back and buy a never-ending supply of razor blades to use for shaving.

We in the tech world already have a product that fits a similar model with printers and the continual need for ink. Printer makers make next to nothing with the printer hardware and make all of the money on the ink.

Now Amazon is blazing new trails with their two new eBook readers at price points that are almost give away the hardware. This is quite an interesting turn of events in the eBook reader market. When the Kindle first came out it was $399. The only people who bought it at that price were what we call early adopters. However, they became hooked on this eReader and once the first Kindle established that this product category was not a fluke, the competitive market kicked in. Within two years of the Kindle’s release, the competitors undercut the Kindle’s price by as much as $200.

But as more and more people bought the Kindle, Amazon was able to get better deals from suppliers and their costs came down as well. Last year they lowered the Kindle’s price, with ads to as low as $129. But with the new Kindles they break the magical $100 dollar price barrier and in turn have basically introduced to the market the eBook equivalent of the razor and razor blade business model for electronic publishing.

This is especially important since they have over 1 million commercially published books for purchase as well as hundreds of thousands of free books to add to their overall eBook distribution. What this does is virtually assures that Amazon maintains its lead as the world’s top eBook publisher.

This move should not be too much of a surprise though. The basic law of manufacturing is that the more you make, the lower the prices of the product. Once Amazon was building a million units at a time, they started getting preferential pricing on every component. Over the life of the Kindle Amazon has sold millions of these devices thus making it possible to finally break the $99 dollar barrier.

Although some smaller brands had already broken $99 dollars, it is Amazon’s move now that changes the game completely. The end result is that the market will move even faster from physical books to electronic books, magazines, newspapers and more. Many more people will, at this price, be enticed to jump on the eBook bandwagon and you can bet that both of these models will be hot sellers for the holiday.

But the fact that Amazon is driving this razor/razor blade model into ePublishing is very important. It will set the tone and define the role of standalone eBooks and push the concept of ePublishing into the mainstream even faster than many of us had expected.

It is a very good move for their business and it solidifies Jeff Bezos’s overall goal to become the worlds #1 eBook publisher and it will more than jumpstart the next generation of electronic publishing by making book reader affordable to all.

Why China is Apple’s Land of Golden Opportunity

Last fall, when I was in Beijing, I noticed that Apple’s iPhones seemed to be just about everywhere I turned. I was on the campus of one of the major universities and an abundance of students there had an iPhone. While Apple’s iPad was still relatively new to the Chinese market, I saw a lot of these also floating around the campus and in the hands of quite a few students.

This week I headed back to China via Hong Kong and got to see the new Apple store that was opened just a week ago. It is 15,000 square feet, two stories and laid out pretty much like any of the other big Apple store in big markets today. In this case, it is right in the heart of Hong Kong’s Central district and connected to the International Finance Centre Mall. If you come over on the Star Ferry from the Kowloon side, it deposits you on the Hong Kong side just about at the foot of Apple’s new store. To say that this store is centrally located would be an understatement.

I am told it is just the first of at least two big Apple stores to be in Hong Kong. The second one will be in Causeway Bay and will open later next year. A week earlier, Apple opened their largest store in Shanghai which can handle 40,000 a day and along with another one in Shanghai near the telecom tower and the ones in Beijing. It is pretty clear that Apple sees China as a very large market opportunity for them.

Apple is taking advantage of the new emerging middle class in China, which over here is known as the consumer class. This is made up mostly of young people who work in factories or are two income families who have moved to these bustling cities and they like to flaunt their new-found wealth. For them brand is key as they are very status conscience. In China, any Apple product fits into that definition of status perhaps even more so than in America. I am told that if you have an iPhone or iPad, you are looked up to and envied.

I spoke with a professor in HK and he told me that nearly every young girl he knows has an iPhone. They make about $300 USD a month but they still have an iPhone. What’s more is that the iPhone in China is not cheap. They start at around $750. To them however them it is a status symbol. For those of us who travel to Asia a lot, especially Japan, we already know how status crazy some Asian youth can be. For example, when Michael Jordan goes to Japan, he is always mobbed and people want his shoes and anything with his brand on it.

But these Asian kids are not only status conscience. They are also gadget freaks who love their tech toys. So they gobble up iPhones, iPads and iPods in very large numbers. There are rumors that Apple will soon be on other carriers in China and that could triple their reach in China over the next two years.

Now, if you don’t believe that Apple has gotten to high value status, think about this. When I was on the Kowloon side of Hong Kong, I found a shop that had paper iPads and paper iPhones for the dead to give during funerals or days honoring ancestors. At first I thought these were just paper displays until the guy in the shop slapped my hand and told me they were sacred.

I also spoke with telecom execs who were at the same meeting I was at and they pointed out that we who follow Apple in the US are too myopic. We see them as just being a US and European focused company instead of what they really are, a world-wide technology force. They pointed out that Apple has their phones with 145 WW carriers today and are adding about 5 carriers a month around the world. And like in China, the iPhone is a hot product and in great demand with those who are starting to move into the middle class of their local economic bracket. To them the iPhone is not only a status symbol but the crème of the crop in smart phones.

Before I left the new Apple store in Hong Kong, I asked a group of young people who were in the store looking at Apple products if they were interested in Apple’s upcoming iPhone 5 announcement. I got a resounding yes and in fact, many of them will be glued to blogging sites covering the iPhone launch even though it will take place in Hong Kong at 1:00 AM.

Of course, there is a lot of competition in smart phones and tablets in Asia, but Apple’s products appear to be the one that this new consumer class really wants to own. While Apple has only 5 stores in China, I am certain that there will be more given the huge appetite for Apple products in this country.

So, if you look at Apple and think that their growth and future is limited, just consider the fact that they are just starting to tap into the China market. Not to mention the fact that these newly minted middle class consumers are becoming a major part of the new Chinese economy.

It seems to me that Apple has perhaps more opportunity to grow this market than any of us can imagine.

The Kindle Fire is a Game Changer

After months of speculation, Amazon finally rolled out the Kindle Fire this morning, their version of a cross between a super eBook reader and a small tablet. But make no mistake, this product is a game changer. And it has the potential of really helping refine the market for both future eReaders and tablets.

The first game changer is its price. At $199, it sets up a real battle with the other Android tablet makers and will give them serious headaches going forward. And even though it is a 7 inch color touch system optimized for reading, its use of Android’s Gingerbread OS (Android 3.3) gives it some serious OS power that lets it be a tablet in the true sense of that word. Especially since it supports full Flash and any other cloud based services.

The second game changer is its tie to their Prime Service. This is a huge deal. What it represents is a device (Kindle Fire) now tied to a full yearly subscription service. As you know, Prime was initially set up to cover shipping costs for all of the products one buys from Amazon. But it is now being extended to include their movies, music, etc. And it is being applied to any of this content that will be used on the Kindle Fire as well. What is interesting about this is that it is a subscription model masked as a much broader service fee that includes the coverage of all shipping fees of products purchased by Amazon. This is one of the great bargains alone and throwing in the other services like streaming media so that it is covered in this overall cost is brilliant. And consumers won’t think of this as a subscription service.

Third is the actual business model, which is very different from Apple and the other tablet makers. At $199, this device is clearly being sold under cost. My sources in Taiwan say that the bill of materials on this is somewhere between $229 and $249. But Amazon appears to be OK with this since they will amortize part of the payments that come from Prime, bought books, movie and music and perhaps other purchase to subsidize the actual cost. As I wrote in my PC Mag column about this in August, I see Amazon being perhaps the only one, besides Apple, that could deliver this type of model in which the device is sold under cost and future sales and services are amortized as part of their ability to cover costs and even have some profit tied to the device itself. (http://10.0.1.11:63651/)

The fourth game changer comes with their Silk Browser. This browser cache’s key content from a site like Time Magazine, such as its cover art, magazine format, etc, and then once connected only goes out and updates the new content that is available. The result is that the page itself can be loaded very fast. This is an amazing way to make a browser work with key content. This means that publishers and other Web content vendors can work with Amazon to make Web sites optimized for the Kindle FIRE and fully utilize Silk’s ability to balance its role as content mediator between local content and the cloud.
And software developers can also create special versions of their apps just for the Kindle fire as well.

Please note that the name of the device is the Kindle Fire. This is an important distinction. As Jeff Bezos has said on numerous occasions, if Amazon entered into this market it would be by making reading books and magazines the center of its design. And everything else they now have with it is icing on the Amazon Kindle Fire cake.

I believe the Kindle Fire will be a very big hit for Amazon. And it will be, along with the other 2 new versions of the Kindle, a very hot seller for this holiday season.

So how will this affect Apple and the other tablet vendors? For the Android tablet makers this is not good news. They have priced their products in the $399 and up price range which is designed to take the profit from the purchase of the tablet itself. And none of them, besides Apple, owns an eco system of content that can be leveraged and/or amortized to help keep the price of the devices down. This will only make it harder for them to compete with their current tablet designs and business model.

As for Apple, they do own an eco system of software services that they could use to offset costs if they want to. But I doubt that will happen. And while Apple does encourage book reading on the iPad, that is only one of the apps or uses for this device. From Apple’s viewpoint, the iPad is more an extension of the personal computing experience. Yes, it handles movies, TV and music well. But it also plays games with stunning graphics, allows for all types of interactive learning experiences and can be used for productivity in all levels of business. The Kindle Fire is not designed for these types of uses and instead is targeted more at the consumer market that wants a great reader and would also enjoy watching movies, TV shows and more entertainment driven apps as part of their “tablet” experience.

The Kindle Fire is not an iPad killer. In fact, as my son Ben pointed out in a recent Techpinion’s piece, there is no such thing as an iPad killer.

Rather, this is a worthy competitor to the iPad and will be of interest to a very broad audience who wants this type of device and can live with a small screen and a more focused entertainment edge it brings to a device like this.

Apple’s iPad will still be the gold standard for tablets and will always be in demand from a segment of the audience who wants their tablet to be more an extension of the PC experience. And both will do extremely well in this marketplace.

Is Meg Whitman the Right Choice for HP now?

If you have followed HP over the last 12 months, you know that they have had, should we say, some serious missteps in the marketplace. Investor confidence was down and consumers were confused about their strategies, products and future.

The way they communicated the potential spin off of the PSG or PC division only made consumers question whether they should even buy an HP PC if they were not sure they were going to be there to support it 12-18 months from now. They literally made PSG a lame duck division.

Executive Chairman Ray Lane, on the call this afternoon, pointed out that after Aug 18th he got an earful from investors and customers alike and from that point he and the board began to realize that they had to make changes at the top. In the end, they fired former CEO Leo Apotheker for lack of execution and pinned the communications fiasco on him. With that, they determined they needed not only a proven business leader but one that was a great communicator as well. Lane pointed out that they had fresh CEO research material from the last search and even with the prospects that were on that list still in their sight, they determined that someone from within, specifically Meg Whitman who had 8 months of being a board member under her belt, was the right choice.

While many may question her total skill set to run a company like HP, I don’t think HP had a real choice but to hire from within. The problems of the present was only setting them back in terms of short and long term execution and they could not wait even another quarter to right the ship. What she brings to HP is the ability to hit the ground running with little learning curves and make decisions that will help get the rank and file positive again and moving in the same direction. She is knowledgeable enough to quickly sort out the critical strategic issues before them and make the kind of hard decisions needed to get the company moving in the right direction, at least in the short term. She is also a very fast learner, with the ability to absorb a great deal of diverse information quickly.

I can’t emphasize enough how critical it is to get HP moving forward again now and not six or nine months from now.

Whitman made a commitment to deal with the question of PSG as a spin out as fast as possible. More importantly, Ray Lane explained that the intention of the communication about PSG on Aug 18 was to state that the big question about PSG was whether it could be a more nimble company capable of faster innovation if it was spun out. And if that were not the case, it needed to stay inside HP and continue to be a strategic part of their hardware business. Obviously, this is not what they said or what the investors or customers got from the way it was communicated on Aug 18, which is why all the confusion. But it is a priority for Whitman and the board to get this resolved quickly so as not to harm the PC business any further and I applaud her for making this a top issue immediately.

Only time will tell if she was the right one to take over at this time in HP’s history but she has the leadership and communication skills HP needs now to keep it from sinking any further and rallying the troops around a unified vision. And at the moment, I believe that is the real reason the board decided on Whitman. They need her to correct the problems of the present now and get them moving in the right direction as fast as possible.

How iWant drives iRumors

I got a kick out of an AllThingsD headline that said “No iPad until 2012.”

Serious Apple watchers know full well that Apple’s cadence with almost all of their products are done on a yearly basis and there is a reason for this.

A few years back, when Apple did release two versions of the iPod in the same calendar year, they got a serious jolt of unsatisfied customers who complained of buyer’s remorse. People who bought the new iPod right when it came out complained that if they had waited just a few more months they could have had the new version. Now, this type of multi-year release of new models in the CE world is normal and consumers have buyer’s remorse in spades in this diverse market.

Not long after that, stung by users criticism of Apple’s quick release of products, Steve Jobs basically told a group of analysts and media that from that point they would stay with a more normal release of products within a yearly framework. There of course are exceptions to this but they are rare. For example, when the new iPhone comes out it will be about 16 months between releases but I believe when it is launched, Tim Cook will explain why the extra length of time between iPhone releases where necessary. And any new Mac’s or MacBooks are almost always driven by Intel’s timetable of releasing the next generation of core processors used in the Mac’s.

But otherwise, this 12-month window or cadence as Apple likes to call it, is always in place. That is why the rumor of another iPad being released this year was just that, a rumor. However, it underscores what I call the iWant mentality of the media and over active consumers who project what they want into Apple product rumors. And this is especially rampant in tech gadgets sites. The people who write these gadget blogs are what I call the ultimate tech consumer. And they often project the features and product ideas they want in an Apple product on their site as “unconfirmed rumors.” They may even have a good source that has suggested these new features and start with that to write about what they think Apple will do.

Of course, this also makes good copy. Apple rumor’s and rumor sites are of great interest to consumers at just about every level of interest since Apple has become one of the most noted brand in the market and all of their products are hot and in great demand. And to be fair, some of these gadget sites often get the specs right, especially the closer we get to a product launch.

But most of the time when I hear rumors about Apple products I mostly see them more as an “iWant” list from users, rather than gospel truth. And as far as predicting when the new iPad will be announced? Most likely it will be 12 months from the last time Apple announced the last iPad. You can pretty much bank on that rumor!

Microsoft’s Windows 8-Deja Vu all over again

In 1994, Steve Balmer came down to San Jose and took me to dinner to show me an early version of Windows 95. Yes, in those days they valued analysts and actually came and met with a few of us often. As you probably know, this was their first full blown OS with a GUI after a rocky attempt at creating an OS with a new GUI in 1993.

As Ballmer was showing me the new user interface on top of a DOS shell, with its colorful icons and more graphically driven screen, I kept thinking to myself that I had seen this already. Of course I was thinking about the Mac’s GUI in which Apple pretty much showed Microsoft and others how to create an OS with a graphical interface and in fact, by 1995, Apple had their version of this on the market for 10 years.

Fast forward to 2011 and this time as I watched Microsoft show off a new OS for Windows at their Build Conference in Anaheim and as I saw the demo unfold and looked at the new Metro UI with its touch features and cloud links, I had that déjà vu experience again. As in 1994, I had already seen many of these features they showed and more from Apple two years ago as they began to show developers an early peak at Mac OS X Lion. And all of the gestures and touch features they showed in Windows 8 are already on the iPad. Yes, the Metro UI is different in its tiling approach to organizing data, but otherwise, many of its features are like Mac OS X Lion including in the way it moves the tiles from screen to screen and most of the gestures.

To be sure, both operating systems have a variety of advanced features and I will let the Windows and Mac aficionados slug it out as to whose is best and what is different from the others. But the bottom line is that Windows 8 is an impressive upgrade from the Windows of the past and it will finally bring the Windows OS into the 21st century.

The first noticeable thing in Windows is their tiling UI called Metro. If you have a Windows Mobile 7 smart phone or have seen one demoed you already know what this looks like since it quite similar. You assign various tasks and apps to a tile and pin them to your screen and you can pin as many as you want to and then move from screen to screen to find and launch them.

For the Mac users, it is very similar to how you go from app screen to app screen on and Mac or iPad. But on a Windows PC or even a tablet it is a most logical next step in Windows design and important to the Windows community. Also, since the Metro UI is fundamentally the same on a Windows PC and their Windows Mobile Smartphones, Microsoft is hoping to get more Windows 8 users to buy into their Windows smartphone strategy.

Another thing that is quite important is their seven-second boot time. This is something that Microsoft’s customers have been asking for since Windows came to market. And it is quite impressive. This alone should be a reason for people to upgrade to Windows 8.

And the demo they showed of their cloud links throughout the OS to their SkyDisk and apps in the sky are ground breaking for Windows PC users. Again, it mirrors much of what is in Apples iCloud offering coming this fall, but in reality, this is the future of cloud, OS and app integration for any OS in the future. More importantly, from the Windows 8 demo I saw, the actual integration seems very rich and if done as shown, is also one of the more impressive features of Windows 8.

And the other noticeable thing with Windows 8 is the fact that while it will run on Intel’s X 86 processors as is, there will also be a version of Windows 8 for ARM, aka Windows on ARM. This is quite important as the ARM processor is known for its ability to deliver long battery life and that too is one of the goals of Windows 8. It is designed to work well on tablets, where long battery life is key and on laptops where longer battery life has always been a demand.

From what we hear, all apps written for Windows to-date will work in Windows 8, but developers will have to modify them if they want their apps to use the Metro UI. But, it appears that Windows 8 with the Metro UI designed apps will need to be modified significantly if they are to run on ARM based devices as it has to be written to the ARM code, instead of Intel’s X86 core. That means that Windows 8 will first gain serious street cred on Intel based laptops and tablets, with Win 8 on ARM lagging a bit behind it. On the other hand, they showed some pretty impressive Windows 8 demo’s on nVidia’s Tegra 3, Qualcomm’s SnapDragon and TI’s OMAP processors and it would not surprise me to see development for Windows 8 on ARM accelerated in the near future.

You may think that Windows 8’s initial push will be to on laptops but I understand from my contacts in Taiwan that this is not a correct assumption. Windows 8’s first push will be to tablets. Microsoft is quite concerned about being so behind in tablets and they are really pushing their OEM’s to get Windows 8 tablets out as fast as possible. That will be the biggest push at first and I suspect that the first commercial version of Windows 8 will be on tablets. But I don’t expect the version for PC’s to be too far behind.

The one big question that Microsoft did not answer at their keynote was when Windows 8 would ship in either tablet or PC flavors. I have heard a lot of estimates and scuttlebutt behind the scenes about this, but we probably won’t see the first commercial version shipping until perhaps mid 2012 at the earliest. However, I know for a fact that they want to saturate the market with Windows 8 devices by the holiday season 2012.

Looking at Windows 8, it is pretty clear to me that this is a big an upgrade since Windows 95 debuted and will introduce Windows users to a great new UI experience. And just as they did in 1995 when that OS eclipsed the Mac, I suspect that barring any new surprises from Apple, this new OS will give Windows users at least a solid path towards keeping them in the Windows camp and Microsoft could have a monster hit on their hands in the very near future.

Google’s Purchase of Zagat Proves They Are A Content Company

As a serious foodie and a fan of Zagat’s Restaurant guides, I was rather intrigued by the fact that Google has decided to buy this popular product. Tim and Nina Zagat have worked tirelessly for decades to create what has become one of the best restaurant guides available. And to us foodies, they are rock stars.

Now, Google has bought them to presumably serve as the cornerstone of their local services and almost overnight they have become a serious competitor to the likes of Groupon, Yelp and Open Table in the local markets for offering specials for local dining.

But this move is important for another reason. For a long time, Google has denied that they had any interest in being a content provider. But this purchase suggests just the opposite. Sure, Zagat can be used as a vehicle for offering deals but Zagat content and the legion of personal restaurant reviewers becomes a powerful model for Google to add even more related content and tie it to their search engine and localized social services in the future.

In fact, it most likely will serve as a model for what else they do in content. What is interesting about the Zagat guides is that they, in a sense, were one of the first real social networking products. They started out only in print, but recently moved much of their guide online. They tapped into the interests of a particular crowd-people who wanted to review their meals and the eating experience and then allowed them to rate them using a Zagat dedicated rating system.

This same idea can be used anywhere there are people of like minds who want to connect. This can be applied to broad areas of interest such as sports, news and finance, but that may not be where they go with this. Instead, as the Zagat purchase may suggest, their content play may be a more focused vertical one for other areas of like-minded individuals, such as those with hobbies, specific things to sell around these hobbies and any other interest group where content and commerce can be applied to their search engine and a local scene.

While Google may somehow spin this to say this is not a content acquisition and that they are still not a content company, I beg to differ with them. To me this signals a strong interest in finding ways to add content perhaps in not conventional ways to their product mix and use “content” of various sorts to bring more people into their various Google properties.

Is there a market for Good Enough “Tablets?”

In April I wrote in my PC Mag column about Amazon Stealing Android from Google and argued in this piece that Amazon was most likely building their own proprietary approach to integrating their overall Android Store and a set of music, video and cloud services and integrate it into their future tablet offering.

Then, in August I wrote how Amazon Could disrupt the tablet market by creating a tablet that could sell for $249 even though it would cost $300 to build, but make it up by amortizing users purchases of books, music and videos over an 18-24 month period.

I suggested that if Amazon did this they could disrupt the entire market for tablets by introducing a new pricing model tied to their services that would make it very difficult for any hardware only tablet vendor to compete in this burgeoning market.

Now, in a most interesting post from MG Seigler at Techcrunch we get an actual hands on description of this tablet and it reinforces the price I suggested Amazon would sell it for. And he goes on to give actual details about it coming out in November including the fact that it has a color 7” screen but no cameras and no i/o ports.

If what Mr. Siegler says is true, then this Amazon tablet is more like a Nook on steroids then a serious competitor to Apple’s iPad. It will have very limited features as a multi-purpose tablet, but will excel in offering Amazon driven music, video and clouds services. And of course, we expect that it will have a browser so it would give people using it broad access to Web based content although apparently it will not support Adobe’s Flash.

But this brings up a very interesting question. Is there room in the market for what we would call a “good enough” tablet? Clearly, Apple’s iPad seems like it will be the Cadillac of tablets and to stay with the GM metaphor, the Amazon tablet is probably more like the Chevy Malibu of tablets. Both are very functional but what is inside and what they can do on the road are very different.

While there is always a market for full-featured products like the iPad, there is also perhaps an even larger market for “good enough” tablets like the first gen Amazon tablet might me. And Amazon, with this limited design and low price point, seems to be aiming at the “Chevy” market for tablets where bells and whistles are less important then price and basic functionality.

This concept of good enough computing has been bandied about in the industry for decades. It started with desktops where high end gaming PC’s ruled the gaming and engineering/graphics market, while lower cost PC’s with less horsepower and functionality took the lions share of the bigger “good enough” PC market. And the same thing happened with laptops. Gaming laptops powered the upper end of the portable market, while thin and lights went after the business crowd and value laptops with less power compared to the other two models took the lions share of the broader portable market. And they were good enough for a very large audience of consumers.

Could this “good enough” approach to the market be repeating itself again with tablets? There is no question that even though Apple’s iPad may be the Cadillac of tablets today, Apple was quite aggressive with their pricing so that it has appealed to much more than a more well-healed audience that normally buys upper end models of everything. On the other hand, there will always be a large audience who either won’t spend much on products or can’t for economic reasons and will opt for something in this value line of products or in this place, a just “good enough” tablet if it is available.

My sense is that as with desktop’s and laptops there is room for both and I suspect we will see tablets at a lot of different price points taking aim at the needs of all level of customers wants and needs. And if history is our guide, the products in the “good enough” category could be very large indeed.

Why Silicon Valley Needs a New Name

I was visiting with one of Silicon Valley’s bright thinkers last week, Kanwar Chandra the CMO of CSR and founder of Sirf, and he told me that Silicon Valley is really no longer Silicon Valley. In fact, he said it needs a new name. He went on to say that Silicon Valley has really become the Valley of platforms.

He astutely pointed out that it is the center of mobile and wireless development platforms with Apple’s iOS and Google’s Android platform driving major growth around the world. And with Intel jumping on the low voltage processor bandwagon, along with the many Valley companies building IP around ARM cores, it is also the center of platform development in mobile related processors for companies to build next generation mobile devices. The company he founded, Sirf, is the leader in GPS processing and much of the GPS and mapping platforms are being driven by Sirf and other companies in the Valley related to location based hardware and software.

It is now the center of activity in social networking with Twitter and Facebook leading the way with their various platforms that people can develop on. eBay and Craigslist were created to be major platforms for driving eCommerce and both companies are based in the Silicon Valley region. The Bay Area has also been at the heart of BioTech thanks to the pioneering work of Genentech and work at Stanford and UC Berkeley along with many Valley based biotech firms. The Valley’s VC’s are backing start-ups in green energy here in Silicon Valley in a big way that suggests that the Valley will become a hotspot for alternative energy platforms too.

Companies in the Valley are also leading most of the major cloud based projects and initiatives with SalesForce.com and Oracle’s Web based apps providing critical platforms for enterprise. And we will soon see the introduction of Apple’s iCloud and I am willing to bet that they will define how the consumers see and understand what the cloud is all about.

More importantly, Apple’s iCloud will become a major platform for innovation. And of course, Google’s cloud programs are already a big hit and as they make their cloud based business tools more robust and take on Microsoft with their cloud initiatives from an Open Source approach, they too will provide a major cloud based platform for business and consumers.

This shift from silicon being at the center of the Valley’s tech existence to one of platforms driving its future growth is actually quite significant and one that needs to be recognized. To frame our region as just Silicon Valley these days does it an injustice.

But here is the problem. If we see the Valley’s reason-to-exist moving from Silicon to platforms, what do we call it? Silicon Platform Valley does not roll off the tip of the tongue. Or perhaps Technology Platform Valley is the right name. Or how about Silicon Valley now Platform Valley? OK I admit that I am very bad at naming things.

So, I need your help.

If Silicon Valley has evolved beyond its core technology and is now becoming the center for broad technology platforms, is there a better name for it then Silicon Valley? I know the tendency will be to just leave it as it is, but somehow I sense we need to grab hold of this idea of it being the center of new and innovative platforms and embrace it wholeheartedly.

So, while the chance of actually changing its name is remote, I am still open to any good names you can come up with that perhaps we can push behind the scenes and at least get people seeing Silicon Valley for more then being just the center of the universe for silicon based chips.

Your comments and name suggestions are appreciated.

If you feel obliged please comment below or feel free to send me electronic mail at Tim@techpinions.com.

Here’s a Ridiculous Idea-Split Apple in Two

I saw a story earlier today that said that some on Wall Street have suggested that Apple should split their business in two- A Mac business and the more profitable iOS business.

I normally don’t criticize my brethren on Wall Street but I have to say that this is a very dumb idea and shows that some of them still don’t get Apple. Apple is growing because they have created a growth engine around their total ecosystem of hardware, software and services. And the devices, whether it is the Mac, iPod, iPhone or iPad, are elegant screens that are designed to tap into the rich set of apps and services and soon to be cloud synchronization that ties them all together.

Now, I kind of get their original thought, which is that the iOS business should stand on its own and the Mac business should not be allowed to impact the higher growth to their total bottom line. I am sure some are thinking about HP’s move to sell or spin out their PC business as their example. But this misses the beauty of Apple’s ecosystem and integrated device strategy. Yes, the PC market as we know it is not growing much anymore, but PC’s are not going away. Indeed, they will still be the workhorses in business, education and even in the home where they will be needed to do what I call heavy lifting tasks such as managing your music and video collection, handling personal finances and using it for long form documents and email, etc.

And in the Mac’s case, there is a huge audience for its rich OS, especially in graphics and marketing departments, Hollywood and for certain engineering tasks. More importantly, I believe that Apple still has some mind blowing products in both desktop and laptops in their bag of tricks-products that will drive even more users to the Mac platform. And if that is not enough, keep in mind that the Mac taps into all of Apple’s compete ecosystems of software and services. Once people really understand how iCloud works with the Macs and iOS based devices, they will see the folly of the suggestion of splitting Apple in two.

This is also why I believe they will not merge the Mac OS And iOS together anytime soon. Apple is very proud of the Mac OS and will continue to make it more powerful for those who need it. At the same time, iOS will become more powerful as well, but for use in the more consumer oriented devices in their line. iCloud will be the way they are all tied together in the end.

So Wall Street, get this idea out of your head. Apple won’t split the company in two and never will. They really do know what they are doing and how their entire line of hardware, software and services will work together under a single Apple company.

They have made a lot of money for their stockholders and will continue to do so with this integrated approach to making all of their products easy to use and work together as part of Apple, Inc.

Contemplating the Future of Apple Without Steve Jobs as CEO

Today’s news that Steve Jobs would step down as CEO came as a surprise to many. But I believe Jobs had been preparing for this day for at least 5 years. Apple watchers over that time began to see signs of Job’s putting more and more responsibility into the hands of his executive staff as he often had to step away for health reasons. And during that time Tim Cook, Phil Schiller, Peter Oppenheimer, and the rest of Steve’s executive team understood that they needed to be more in tune with understanding Steve’s vision, directions and ultimate thinking on the long term future of Apple.

While we may tend to be concerned about Steve Jobs the person, I am not concerned about Apple the company. Steve Jobs has in place a very deep bench of executives who really do know Steve’s long-term vision and Jobs’ 10-year roadmap for this very important company. And they are more committed then ever to carry it forward and to extend his legacy well into the future.

What people don’t realize is that Apple does not work like most companies that operate on a quarter-to-quarter basis or planning cycle. Instead, the products they have in the works now are designed through 2013 and the current roadmap extends well through 2015. In this time period, nothing will change for Apple. In fact, I expect Apple to continue to grow even more during this period.

Let’s also remember that while Jobs will not be CEO, he still is Chairman and as long as he can, he will be influencing their current and future product designs and roadmaps. My sources say that while his health wavers at times, he plans to be an active Chairman and to be deeply involved with major decisions and future directions.

But there are two other key reasons that I believe Apple can carry on even with Jobs in a more diminished day-to-day role. It is because Apple is no longer a device company alone. They are now driven by a vision that includes hardware, software and services. And more importantly, the devices they create are just elegant screens that give people access to their software and services. Although their main screens today are the Mac, iPod, iPhone and iPad, they have a lot of room to innovate around the TV, in-car navigation systems and who knows what other screens they may want to design that front ends their software and services. And more importantly, their software, apps and services are a solid foundation that they can continue to build on.

The other thing that makes me certain that Apple will continue to be a force is something Jobs said to me in one our discussions many years ago. I asked him what drove him. He told me that technology could be complicated to use. He felt his mission was to make technology easy to use so that everyone could reap the benefits of technology. He then said that making technology simple to use was hard work, but that this was at the heart of his vision for Apple.

If Apple’s current executive team has caught this vision, especially the one about making technology easy to use so that everyone can benefit from it, then Apple will be just fine. And given their rich integration of hardware, software and services, they still have a lot of room to create great product that people will want to use.

But Job’s Legacy will always be that of a pioneer who sits at the intersection of liberal arts and design and forever changed the way people think about technology. Most executives would be thrilled if they have one hit in their careers. Jobs has had the Apple II, the Mac, the iPod, the iPhone, the iPad, iTunes and Pixar. These technologies and more to come from his vision delivered through his team will keep Apple in the forefront of our connected world and a major player for a long time.

Why the iPad is Not A Tablet

It’s not a tablet, it’s iPad 2.

That statement is a subtle but powerful one embedded deep in Apple’s iPad 2 website. I challenge you to find Apple call the iPad 2 a tablet anywhere on their website.

So I also ask this question that others have posed. Is there a tablet market?

On the surface this is probably a dumb question. Apple is selling millions of iPads a month and tablet fever is all around us. Or is it? Is there tablet fever or iPad fever?

You will notice that when Steve Jobs introduced the iPad he never once called it a tablet. And since then, you have never heard anyone at Apple call the iPad a tablet.

The competition has. Analysts and media have called the iPad a tablet. But not Apple. There is a reason for that. It goes back to Steve Jobs overall view of a tablet. As Windows tablets came out, he looked at them and said “people don’t want that.”

He felt that Windows tablets were too PC like and while more portable it just delivered the same old PC experience just in a new form factor. (Are you listening Microsoft and the Windows 8 tablet team?)

Instead, he put his team to work trying to come up with something people would actually want and actually use. He concluded it would not be a tablet in the PC world’s definition but rather, something completely new and different. It is not his fault that we (competition and the media) keep calling it a tablet. Apple will try and distance themselves from this tablet concept and terminology as much as possible.

Software Is the Real Magic
What Apple has actually created with the iPad is just a portable screen that gives users access to what is Apple’s real genius – its apps and services. They just happen to make a portable screen that is elegant, beautiful and easy to use for accessing these apps and services. What is even more interesting is that if you really look at what Apple does in hardware, it is just to create stylish screens like the iPod, iPhone and now the iPad, that front-ends their apps and services. Hardware is only as good as the software it runs.

When Apple first introduced the iPhone, a Sr. Apple exec laid it down on the table and asked me what I saw. I told him I saw a device with a blank screen. He then said that is what he wanted me to see. When off, it has very little value. But once turned on, that is where the magic is- in the software and services. His point was that Apple is a software company and it is the software that makes this “screen” sing and dance. I fully expect Apple to deliver more elegant screens that front these apps and services in the forms of TV’s, in-car navigation systems, and who knows what else that they may feel is needed to serve as a front end to their software and services.

While Apple is creating these screens to serve as front ends to their software and services, most of the competition is stuck in the old line PC way of thinking about creating a tablet that has its roots in the tablets of the past. They take the typical hardware approach and at the moment are hoping Google will create the software and services that they can tap into. Or those waiting for Windows 8 tablets are hoping that Microsoft will deliver a world of apps and services that they can hitch their wagon to.

Stop Making Tablets
But to be competitive with Apple, vendors have to realize SOON that they cannot create a tablet if they have any hope of challenging Apple. In fact, I would stay away from the word tablet altogether as this term is pure death for them. Rather, like Apple, I would give my “screen” a name of its own and start working on my own software and services play that would allow me to also build more screens that front my apps and services. (By the way, when Amazon introduces their “tablet” soon, listen carefully to what they call it. It will probably have the Kindle brand but don’t expect them to call it a tablet. It is just another screen, like the Kindle, that front ends their apps and services.) Why A Tablet (screen) is Key to Amazon’s Success.”

Of course, the opposite is happening. Competitive vendors think that this “tablet” market will follow what has happened in the PC world and the smart phone world where Windows and Android have surpassed the Mac and IOS. But something tells me that this is different. Apple has not created a tablet. They have created a lightweight portable screen that is the gateway to their software and services. The iPad and its ecosystem will stand alone. In that sense, Apple has proven there is a market for iPads, not tablets.

Now it will be up to the competition to prove that there is another market for what they want to call tablets. And at the moment, considering what HP just did with their TouchPad and the slow adoption of any other tablet out there, it leaves one to think that at the moment there is really just an iPad market, not a market for tablets.

Is There Room for A New Mobile OS?

A couple of years ago, when various handset makers were looking for a mobile OS to back for their devices, they were given a proposition from Google that was hard to refuse. Google would provide an open source version of Android and with it allow the vendors to customize and add their own features so that they could differentiate their products from other Android licensees.

At first this worked well and Google got dozens of device makers to hop on the Android bandwagon. And for the most part, Android took off, especially in smart phones. But over time, many Android licensees found Google difficult to work with because of their design approach to Android, which was always a moving target. And while Google called it an open mobile OS, as time went on, it became much more controlled by Google and licensees have had less room to do things to help differentiate their devices. Even worse, they have found it more challenging to control their own destiny when it comes to many key services tied around their own offerings.

Now that Google has bought Motorola, many Android licensees believe Google will be exercise tighter control over Android and with Motorola develop a more vertically integrated approach to the market. This is similar to what Apple does through owning the hardware, software and services; integrating them tightly together to provide customers a seamless user experience. While Google has said that they will continue to develop Android as an open source product and work with licensees equally, none of the licensees I have talked to actually believe this. At the very least, they expect Motorola to get early code. Many believe tighter integration between Android and Motorola hardware is inevitable and doubt they will get a similar deal in any way. The various lawsuits against Android as well as the potential of having to pay extra royalties to Oracle and Microsoft should they win their legal cases against Android does not make them happy either.

Not long after the news that Google would buy Motorola, and that HP was going to ditch webOS, Microsoft started courting Android and webOS developers even harder. In fact Microsoft is offering free Windows phones to webOS developers and more hand holding if they jump ship and start developing for Windows Mobile 7and 8.

But what I am hearing from vendors and carriers is that the original need for a completely open mobile OS is what still they really want. Supporting Microsoft is equal to just supporting Android. Indeed, Microsoft would still control the OS and dictate the terms of use and development and give licensees very little room to innovate at either the hardware or software level.

It is also not clear where webOS is going. We don’t know who its owner will be yet. Does it stay with HP or go with the spinoff? We also don’t know if it will ever be an open OS that licensees of the future can freely customize for their own markets and customers. One thing that needs to be kept in mind is that in developed markets, complete ecosystems of hardware, software and services define the user experience. But that may not be the case in emerging markets.

In emerging markets, the need to have a truly open source mobile OS is very important since they need to be able to customize their offerings around a specific language and localized services. This is especially true for emerging market carriers. The fact that mature markets demand hundreds of thousands of mobile apps does not necessarily translate to the actual needs of smart phone users in emerging markets. There they need the dozens or hundreds of apps that are customized for their regions, customs and traditions.

Everyone knows Apple’s approach to their OS is proprietary. Even though Microsoft’s Windows Mobile 7 OS is freely licensable, it is fully controlled by Microsoft. And now that Google has bought Motorola, Android is looking more and more like it could become more tightly controlled as part of a vertically integrated offering. Unless HP quickly states that webOS will not only be licensable but also truly open (which I don’t think they will ever do), then I believe that there is serious room for a completely new mobile OS to emerge and especially give handset vendors targeting emerging markets an OS of their own to work with.

We are already hearing that even the big handset vendors who are backing Android are seriously looking for an alternative OS to back to hedge their bets and to help them go after emerging markets where giant app stores are less important for success. This leads me to believe that there is not only room for another mobile OS but a need for one that is truly open that will never be encumbered by big company agendas that drive the designs of their mobile OS.

5 Reasons Why HP Would Spin Out the PC business

There are various reports out today that HP will announce at earnings that they will spin out their PSG unit or their PC business. If they do this it is for a couple of major strategic reasons.

1-Leo Apotheker, HP’s CEO, is a software guy.
He understands software and services and knows that this is the most profitable tech business on the planet. Software and services have margins of 50% to 80% on average. This is the direction he wants and needs to take the company and put all of its energy on this focus. IBM came to this conclusion in 2005 and sold off their PC business to Lenovo for the same reason. And now, if HP is to really compete against IBM, Dell, Oracle etc, in this business it needs to put all of its efforts in this space.

2-They needed to get PSG off of their books.
Although PSG is still profitable, its profits are very small compared to HP’s other businesses. If they kept PSG on the books, even if their other businesses were doing well, it would continue to impact their total earnings numbers and threaten their overall earnings growth. This would be an important strategic move to keep their operating margins up and make sure they are more profitable in the future.

3-PSG would now have its own P&L.
This would allow them freedom to create other types of PC products as well as be more aggressive with the WebOS licensing. And they would still be the key supplier to HP for PC’s in any HP IT bids. But they would be free to sell their PC’s to IBM and others who need PC’s for their own IT projects as well. The PC business is a low margin cutthroat business and if PSG is to stay viable, it needed to be free to sell even to HP competitors.

4-The PC market is going through a great transition now.
PC’s are still viable for use as productivity tools. And we think that we still will sell between 350 and 400 million PC’s a year for a while. But they are commodity products now. They are almost all the same. HP’s PSG may need a lot of partners and different products that would not be in HP’s overall corporate thinking and this gives them more flexibility if they are unshackled from PC’s

5-Tablets will continue to dominate as consumer consumption devices.
While PC’s can still be used for consumption, they are not ideal for a lot of media consumption, especially since people are increasingly mobile these days. At the moment, there is an iPad market and we are not sure when a tablet market that will pan out. HP is already struggling with their TouchPad and they may need to focus on their webOS software as a key market product and as an alternative to iOS and Android, especially in light of Google buying Motorola as the Android vendors may start looking for an alternative. On their own, they could be much more aggressive with webOS, even if it meant not being in the hardware business.

It will be interesting to see what the details of the spin-out will be if it is announced later today. But there are a lot of good reasons HP’s board might have decided to let it go off on its on.

Once the formal news is out and we have reflected on the details we will publish a more formal analysis including the details of the announcement.

Why Microsoft WILL Buy Nokia

In a recent post on Why Google had to buy Motorola, I pointed out that both Ben and I had predicted that this would happen because we were convinced that in order for a company to really be successful in tablets and smartphones they had to own the ecosystem of hardware, software and services.

Today’s announcement that Google would buy Motorola’s Mobility Solutions group underscores this thinking. As Google studied the ingredients of Apples success, it became obvious that Apple’s ownership of the OS and then its ability to fine-tune the hardware to deliver a seamless user experience was critical to consumer’s strong acceptance of the iPad and iPhone. Apple uses this ownership to drive amazing innovation.

This allows them to deliver the upcoming iCloud service so that it can synchronize content and data between all OS devices and utilizes the hardware in special ways. And it gives them a platform for future innovation. For example, what if the next version of the Nano has Bluetooth on it and can be used in a wristband/watch option. Since it is IOS based, it would have the new alert system that will be in IOS 5. That means that technically, if you get an alert on your iPhone in your pocket, that same alert shows up on your Nano watch. This is just one example of how Apple can continue to drive innovation at the hardware, software and services integration level. Knowing Apple I am sure they have dozens of these types of things in the works.

Google clearly went to school on this and while they claim that the patents were a key part of the reason they bought Motorola Mobility, the other reason is that they clearly know that by owning the hardware and software they can now drive the innovation of Android from both the hardware and software level and take more control of their future. And while they want others to keep licensing Android, they basically threw their partners under the bus in order to insure Androids long term success. I predict you will see Android defections or at the very least, companies hedging their bets by endorsing a third alternative by the end of Sept.

Now, don’t think that this same thinking has escaped Microsoft. They have to have come to the same conclusion. Microsoft clearly wants Windows Mobile Phone 7 to become a worldwide hit and at this moment, Nokia is just another distributor of Windows Phone 7 in the same way HTC and other are. But if they decide to keep this OS as a pure licensed property and trust the hardware partners to innovate on their own, that boat has sailed. They too will come to the conclusion that if they want Windows Mobile 7 to be the third major alternative to Apple’s IOS and Google’s Android, they will need to own the hardware as well as the software and services.

Of course, this goes completely against their 30 years of history of being a software licensing company. Actually, they have precedent in hardware with the XBOX. But the rules have changed when it comes to mobile and I believe that Google’s move to buy Motorola Mobility has now forced Microsoft’s hand.

I now believe that it is no longer a matter of “if” Microsoft will buy Nokia but instead a question of “when” they will do it to make sure that Windows Mobile 7 can compete against Apple and Google.

Why Google had to buy Motorola

At the end of the year, when I made my predictions for the New Year, I stated that I believed Google would buy Motorola Mobile. And last week, Ben wrote here in Tech.Pinions about why he thought Google should buy Motorola. We had no inside information on this. But as we have studied how a complete eco system of hardware, software and services are critical to the success of a company bringing out tablets and smart phones, it became pretty clear to us last year that Google, at some point, was going to have to buy a hand set maker if they really wanted to control their destiny and the destiny of Android.

With today’s acquisition of Motorola Mobility group by Google, Google has now closed the loop on building out and controlling an entire eco system of hardware, software and services. With it they can now drive Android in the direction they see fit and innovate in all three areas. Like Apple, they now own the hardware, software and services and can become an even greater force in the future of mobile products.

In his comments on the acquisition, Google CEO Larry Page stated that part of the reason they did the deal was to also gain access to Motorola’s patent pool.

This could have an impact on the suit against Motorola as a starter.
And depending on the patents, it could also help them in the multitude of legal suit against Android out there as well, although it is not clear how much Motorola Mobile has that would related directly to these other Android suits.

But as important as this is for Google and Motorola, it is highly problematic for Google’s partners. Now HTC, Samsung and other licensees will be competing directly with Google/Motorola. And this leaves a lot of big questions on the table. For example, Google uses a lead partner with major new versions of Android. We assume it will now always be Motorola? If so, how does that affect the other licensees?

And, although they claim Android will continue to be open, just how much of an inside position will Motorola Mobility have over the competitors? I have already fielded multiple calls from clients who license Android who are, how do I put this, “concerned” about this news.

I believe that the major fall out from this is that there is now room for a third mobile OS to come out that would give vendors a broad solution they can use without having to compete with Google/Motorola. If I were Microsoft I would be touting Windows Mobile as an alternative.

However, here is a more interesting suggestion. If I were HP and Todd Bradley, I would immediately license the Palm Web OS as an alterative. This is by far the best Mobile OS besides Apple’s IOS on the market and it could become of great interest to Android licensees who feel threatened by this move by Google.

There are still a lot of other questions about this deal, like how will they deal with two distinct cultures and who drives the future of Android given Motorola’s greater experience in mobile then Google has?

But no matter how this turns out, we will mark today as the day that the mobile world changed forever as Google has begun to rewrite their history again.

Further Reading:
Why Microsoft WILL Buy Nokia

Also Read:

Google: Set Top Box King?

6 Ways Apple Has Influenced the Last 30 years of the PC Industry

On Aug 12th, the industry celebrated the birthday of the IBM PC and its impact on our world of information. But we would be remiss if we did not also point out some of the key technologies Apple brought to the PC industry and how some of their pioneering technology and decisions actually pushed the PC industry towards stronger growth.

Credit: Austin Computer Museum

The first technology was the Mac and its graphical user interface. When the Mac was introduced in January of 1984, the IBM PC had been out for three years already, and its UI was still text based. But Apple shook up the computing establishment by introducing the Mac with its GUI, mouse and voice feedback and forever changed the man-machine interface for good.

The second major thing they did is toss out the 5 ¼ inch floppy disk and move to what quickly became the next major storage medium for PC’s. Jobs and company decided that the Mac should have a 3 ½ inch disk. At the time, the computing establishment smirked at Apple’s bold move, but soon after realized that this smaller disk size allowed them to create smaller PC’s and by 1986 this smaller floppy became the mainstream industry standard.

Their third major decision was to introduce a Postscript laser printer at an affordable price. This was a huge industry breakthrough. Most laser printers at the time cost well over $50,000 and took up a large space in an office. Not only did Apple bring this laser printer in at a price under $10,000, but also their laser printer actually sat on a desktop. Then, they were smart enough to link Aldus’ Pagemaker to the Mac and this laser printer and desktop publishing was born. From a historical perspective, you cannot underestimate how much this desktop publishing solution has impacted the world of publishing, graphics and even movies.

The fourth major thing they did was introduce Mac’s with CD Rom drives. Again, this was a revolutionary move at the time and in fact, this ushered in the era of multimedia computing. I had the privilege of being a part of the first multimedia roundtable held at UCLA in 1990 that was co-sponsored by Apple and saw first hand the potential that a CD ROM would have on computing by allowing a PC, for the first time, to deliver a storage device that could integrate text, images, audio and video into a storytelling medium. Again, the traditional PC vendors smirked at Apple’s move and said it was just another unneeded expense. But within two years they got the message and started to integrate them into mainstream PC’s as well. And, with the CD rom in PC’s, for the first time, the PC garnered serious attention from mainstream consumers. If you know your PC history you know that it was multimedia computers that finally got the PC into homes and the consumer PC market was born as a direct result of the role the CD ROM played in bringing multimedia content to the PC experience.

The fifth major influence on the traditional PC market came with the introduction of Apple’s colored Mac’s not long after Steve Jobs came back to run Apple in 1997. In fact, this major move to make industrial design a cornerstone of all Apple Macs has, over the last decade, forced the PC industry to completely rethink what a PC should look like and again, it took Apple to lead the way and help them see the future of the PC.

And now they have introduced the iPad. While Jobs likes to say that this is product of the post PC era, I beg to differ with him on one point. If you open up an iPad, it has a motherboard, CPU, memory, IO’s, screens, etc. In my world, that is a PC. And in that sense, Jobs and team again is influencing the PC market in an even more dramatic fashion.

While over the 30 years of the IBM PC, Apple did not achieve the type of market share of the HP’s, Dells, Acer’s etc. And during much of this time, the company actually struggled to remain relevant. But nobody can deny their impact during this period and now, it is the Dells, HP’s et all who are all chasing Apple.

Celebrating the IBM PC’s 30th Birthday

I joined Creative Strategies the year that the IBM PC was introduced. In those days Business International owned Creative Strategies and IBM was one of their major clients. Business International is a WW global econometric consulting firm and IBM used them often to help them open new IBM offices around the world. And Creative Strategies was their technology-consulting arm so we were often drawn into these types of projects to help on technology related issues.

Image Credit: IBM

A side note to this is that the first time I had to visit the Business International Offices in NYC, not far from the UN, I met a black intern who was working there during the summer while he was in law school. I did not know it at the time, but the intern was Barack Obama who, as you know, has gone on to become the most powerful man in the world.

But I joined Creative Strategies at a most interesting and fortuitous time in my career as well as history. In those days, the world of computing was dominated by mainframes and mini-computers and at the time, that was the focus of Creative Strategies research and consulting. But with the introduction of the Apple II and release of the IBM PC in 1981, the company had decided to add PC’s to their research focus. And although I was working in the company’s marketing group at the time, with my background in semiconductors, I was asked to lead their first PC analysis group and in a sense and by default, became Creative Strategies first PC analyst.

And in a wonderful quirk of fate, my first outside project was with IBM’s PC group. Not long after the PC was launched IBM asked us to help them with their retail and consumer strategy. As a result, I got to work with Don Estridge’s team as they charted their future strategy for the IBM PC and got to see the evolution of the IBM PC from the inside.

Now, 30 years later, all of the people who were part of those early days of the PC and have watched the impact of the PC on business, education and consumers are marveling at the impact this product has had. It has changed the way we work, learn and play and has democratized information. And while we are entering the Post PC era, it is important to remember that the PC is not going away. It will continue to be an important tool in business and education and be at the heart of productivity based computing. In fact, we will continue to sell around 400 million PC’s a year for at least the next 5-7 years and while it may not be as sexy as tablets and smartphones, it will continue to be the workhorse for serious productivity.

For me, the PC has been at the center of my personal and business life for three decades now and I can’t imagine what life would be like without it. It has helped shape and define my career as well serve as an important tool for my own personal productivity, education and entertainment. And it has provided the livelihood and fortunes for millions of people who are involved with the PC industry and continues to be an important source for innovation in the Internet age.

There have been some wonderful retrospectives on the PC written by many colleagues and I list some of the one’s worth sharing below..

From Mashable- IBM PC History

From PC Magazine- a timeline- PC History Timeline

Tech icons reflect on the 30th anniversary of the PC

Ten Ways to Celebrate the IBM PC

IBM Marks PC’s Anniversary

How Important is the Design of the iPhone 5 to its Success?

I continue to watch with amusement the various pictures and speculative drawings for the iPhone 5. And the rumor mills are working over time trying to figure out what the iPhone 5 might look like. In fact, the folks at MacRumors have one of the best mock up drawings I have seen on the rumored iPhone 5 and, at the very least, it is cool to see what an iPhone 5 might possibly look like.

But how important is the new design really to the iPhone 5’s success? Yes, it could have a bigger screen and maybe even be a bit slimmer, but I contend that the iPhone momentum is already so strong that no matter what Apple does with the design of the iPhone 5, it will be a monster hit and could sell as many as 30 million in the holiday quarter. (Apple sold 20 million iPhones in the last quarter.) In fact, our research shows huge pent up demand from both ATT and Verizon customers in the US and very strong demand for this new phone around the world.

I know that the design of the iPhone itself will make the most news when it is launched but there is an even more important technology that needs to be factored into the iPhones future success. To understand this technology, let me relate to you something that happened when the first iPhone came out.

When the iPhone was launched, I had a briefing from the top executives at Apple responsible for the iPhone. After they showed me its design and specs, they did something very pointed and telling. They laid the iPhone on the table and asked me what I saw. I knew this was a trick question and I could have answered it a lot of different ways. But what I said is that I saw a device with a blank screen on it. They affirmed my answer and went on to say that this is what they want people to see. Although they were very proud of the iPhone design, they told me that by itself and when not turned on, it is just a dumb device. However, when you turn it on and the OS and apps get fired up, that is when the iPhone becomes an iPhone.

From the beginning, Apple built into the iPhone’s success equation an ecosystem of hardware, software, applications and services that together make it the iPhone. Yes, the design of the phone is important. But when turned off, it is not very smart. On the other hand, when it is turned on and the screen lights up, that is when the magic takes place. The hardware is only 1/3rd of the iPhones success equation. And while Apple may tweak the design of the iPhone on a yearly basis and add things like more memory, better communications features, better camera, etc, I would argue that what they do with iOS is much more important to the iPhone’s overall success and increased world wide demand. It is what you can do with the iPhone that matters.

So while you might be hyperventilating about the potential features and design of the iPhone 5, keep in mind that the iPhone itself is only part of the iPhone’s success equation. I believe that what Apple does in the next version of IOS and future versions of their mobile OS is actually much more important to the continued growth and success of the iPhone. It is the software that will determine the real future of this important Apple product.