Category: Featured Tech.pinions

Though we’ve started to see a small bit of retrenchment from the most extreme examples, it’s clear the BYOD (Bring Your Own Device) phenomenon in the workplace is here to stay. Younger and older workers alike have become accustomed to using their own devices to do their work, particularly when it comes to smartphones and tablets, and IT departments continue to refine policies and procedures to adjust to this new reality.

But one of the remaining debates within BYOD is determining what, exactly, IT needs to manage. Traditionally, IT focused on the management of the physical device, especially with PCs, doing everything from tracking the actual location and status of corporate-owned PCs, to ensuring all the latest OS, anti-malware and application patches were installed. BYOD adds several new twists to that equation, however, with a significantly wider range of device types and platforms to support, as well as potential differences in ownership. Toss in the increased mobility of many BYOD devices, and the growing usage of all devices for personal applications and you have the recipe for a very messy situation.

Not surprisingly, many IT departments, and vendors serving those communities, initially fell back on the types of solutions they were comfortable with: tight management of the device and everything on it. Large numbers of companies built MDM (mobile device management) solutions to essentially bring the kind of strict management policies commonly associated with PCs to the world of smartphones and tablets.

But several problems popped up fairly quickly. First, people change their smartphones and tablets more often than they do their PCs, making it virtually impossible on any given day for a corporate IT department to really know what types of devices were walking in and out of their doors (let alone what kind of information was getting copied onto those devices). Second, the need for more granular control became readily apparent. The notion of remotely wiping devices of all data on them—particularly those that may have been purchased by the employee—surprisingly (cough, cough) did not sit well with most people. In addition, many employees discovered they could use other types of mobile applications to open, edit and/or use their work-related data, making the range of applications in use tremendously more varied than it had ever been. This situation also created the need for yet another type of management tool: MAM (mobile application management). Topping things off is the fact employees have now become much savvier about how to work around any limitations IT might impose.

The end result is the somewhat chaotic mess we find ourselves in today. In fact, things have gotten so out of control in some environments, there are increasing reports of companies starting to reign in at least some of the BYOD freedoms they previously doled out to their employees. After numerous refinements to existing tools and a multitude of new products and concepts—including the appealing idea of separate work and personal “containers”, each of which can be separately accessed and managed—things do seem to be moving in a better direction.

I would argue however, that the real problem stems from looking at this challenge from the wrong direction—at several different levels. Instead of looking from inside IT out to these devices, the real answer is looking inward from the individual employees and whatever set of devices they happen to be using at a given time, to the corporate data and applications rightfully controlled by IT. The keys to the kingdom, so to speak, are access to the data and applications employees need to get their work done. By essentially assigning different “keys” to different levels of data and access, and then doling out those “keys” to the appropriate people, IT can focus specifically on the assets they really need to manage, while still giving the freedom to employees to use whatever devices they want in order to get their work done.[pullquote]The keys to the kingdom, so to speak, are access to the data and applications that employees need to get their work done.”[/pullquote]

Both vendors and IT have quickly learned that adding friction to a process employees feel they need to be productive is an open invitation for those employees to work around them. So, rather than creating unnecessary and unproductive tension between employees and IT, both solutions vendors and IT departments need to create solutions that keep things clear to everyone — it’s not about the devices, it’s about the data.

For the past week I have been using the Samsung’s Galaxy S5 and the Gear Fit health and fitness wearable. Both the Samsung GS5 and the Gear Fit highlight some of the ways Samsung is continuing to evolve. The biggest point to be made is how they are continuing to get better at software. But the other element of interest is how, as they ship hardware like the Galaxy Gear and now the Gear Fit, it allows them to learn and refine based on feedback they get. “Learning by shipping” seems to be something that is benefiting Samsung across the board.

Galaxy S5

With regard to the Samsung Galaxy S5, there are a few points I want to make.

Software
Samsung has dramatically scaled back the amount of customization of Android they have done in the past. This current version, running Android 4.4, is very clean and much closer to stock Android than Samsung has released before. While the UI itself is highly refined, much of Samsung’s software customizations are subtle and feel like features of Android more than anything else. In Android 4.4, Google has adopted some new user interface themes. For example, the main application menu is available from an icon on the left in plain view. Samsung adopted this same menu UI for all of their apps allowing for a consistent feel across all the applications.

Overall the software is very clean and highlights again an observation I have been making — Samsung is getting better at software.

Hardware
From a hardware standpoint not a lot has changed with the GS5 from the GS4. The screen has gone from 5 inches to 5.1 inches. The display is a super AMOLED display that is dust and water resistant up to 1 meter for 30 seconds. The 5.1″ screen confirms for me a screen somewhere in the 5″ range is the sweet spot for smartphones. It is pleasantly large, but not too large, yet also still usable with one hand in most key situations.

Camera
The camera on the GS5 has a few new features worth noting. The first is real time HDR. It allows you to preview your scene in HDR before taking the picture or video. Since not all pictures are needed or should be taken with HDR on, this was a nice feature to help gauge how to get the best photo. The other feature worth mentioning was phase detection auto-focus. This is usually found in high end DSLRs that focuses the lens extremely fast. When most consumers rely on the smartphone as their primary capture device, speed and consistency in quality photos are top priority. Most Android smartphones I try have terrible cameras yet Samsung has delivered a quality camera experience. I’ll add using a 5.1″ display as a viewfinder for photos and videos is extremely nice.

Battery
Samsung added a co-processor which is dedicated to controlling the display. This allows them to have several new power saving modes. One is a general power saving mode which puts the device into black and white to save battery. The other is ultra-power saving mode which brings up a custom UI with only a few applications available like web, email, phone, etc. and manages the radios much more intelligently. The use case for this mode is when your phone is literally about to die but you will not be able to charge it and need it to last. Samsung stated a phone 100 percent charged can last 12.5 days in this mode. This is likely to be a handy feature for the traveler or conference goer who frequently finds when they travel their phone dies much faster. Samsung also added a larger battery, going to a 2800 mAh battery compared to the GS4’s 2600 mAh battery. The key evidence for me? I have been using the GS5 for a little over a week, including a three day business trip, and the phone’s battery never went below 40%.

Lastly, I need to mention the fingerprint scanner. The iPhone 5s easily sets the bar as far as fingerprint scanners go. Other solutions I have tried barely work at best. The fingerprint scanner on the GS5 was more consistent than most phones I used if you operate it in a way most folks will not — with two hands. In trying to register a thumbprint while holding the phone in one hand, I had quite a bit of trouble. After a while I got it to register my fingerprint while trying it in one handed mode but it didn’t unlock often and was extremely inconsistent. However, if you registered a fingerprint while holding the phone in one hand and using your other hand to slide down the screen and over the home button, the consistency went up. It is much more efficient to unlock your phone with one hand so I consider this a necessity with fingerprint scanners on smartphones.

Samsung shared that their research indicated several key purchase drivers for consumers were the smartphone’s display size/resolution, camera, and battery life. Samsung met the bar with all three.

The Gear Fit

The Gear Fit is the best health and fitness wearable I have used so far. I say this for several reasons. First, it has a heart beat sensor that actually works and can track your heartbeat at a high BPM rate. Most heart rate sensors I try (that are not dedicated heart rate monitors) fail to track me over 120 bpm.

The other reason I say the Gear Fit is the best is because it also has built in notifications from the smartphone. Up to now, consumers have had to choose getting smartphone notifications via a smartwatch or a getting the benefits of a health and fitness band separately. The Gear Fit integrates the two of these nicely and I can see folks who value and desire the data of a health and fitness wearable liking the value of having notifications from there as well.

The Gear Fit also has the highest resolution screen of any health and fitness wearable on the market. I have a thing for bright, high resolution screens, so this was a nice visual addition to the health and fitness wearable solution.

When it came to the Galaxy Gear, Samsung’s smartwatch, I had always found several things interesting. The high resolution screen and the touch screen UI. By integrating both of these to the Gear Fit, I found one particularly interesting use case I had yet to experience on a health and fitness wearable. While it is convenient from time to time to be notified of something on your wrist device, it is even more valuable in many situations to have the ability to take action with that notification. For example, when an email comes in I find important enough to take action with, I can select the email and choose to show it on the device. Selecting this option brings the email up on the smartphone. By the time I pick the phone up or get it out of my pocket, the email was open and ready for me to take action. This was quite nice. I also like the ability to respond to text messages or incoming calls with quick message presets. Both those features exist on the Galaxy Gear but I found them to more valuable on a health and fitness focused device given the more common situations I was in, like exercising, where responding was useful.

Lastly, Samsung has built in some coaching techniques designed to help you meet your goals. Say you want to keep your heart rate above a certain BPM. The device will let you know if you need to speed up. Or say you want to keep a certain mile pace while running or walking. The Gear Fit offers many coaching options and is one of the more interesting features I used I had not encountered on another health and fitness wearable.

Conclusions

As I used the GS5 and the Gear Fit I felt a theme emerging. These two devices were better together. The tight integration between a health and fitness wearable and a smartphone was much more compelling than I previously thought. Because of this, I feel the Gear Fit is better viewed as a feature of the smartphone, which happens to exist as piece of hardware. The software working together on the phone and the wearable was very slick and I can see many who will use it will have a similarly pleasant experience.

I’ve also made a firm conclusion about wearables in general, both health and fitness ones and smartwatches. They must have a touch screen. Perhaps it is just me, but this was the single feature that increased the wearable’s usefulness overall. While I still struggle to see the killer application for both smartwatches and health and fitness wearables, I am convinced the touch element of the devices will play a role in whatever the killer application becomes.

[Update]
Late tonight Samsung released some updates to the S Health app and the Gear Fit. The latest updates to the Gear Fit offer the option for it to be viewed in portrait mode, which was an issue with landscape view given how the device fits on the wrist. It also will do sleep tracking now and has some new watch faces for portrait mode. I haven’t had enough time to write about the experience but will follow up after more time with the updates.

Gerald Ford was clumsy, Jimmy Carter was out of touch, Mitt Romney was a flip-flopper. All these characterizations (and many more) were the result of what have been called political “narratives” – stories the media tell about politicians and candidates to make sense of isolated incidents and create stories they can sell to voters. Like one person stereotypes, these narratives are rarely fair, but often vaguely grounded in some sort of truth. They dominate coverage of politics in the US and elsewhere, to the point where a candidate’s every action starts to be seen through the lens of this narrative. Designed to be helpful – to assist voters to make sense of the news – these narratives more often distort the truth and have sunk the campaigns of many an aspiring politician. But much the same may be said of the narratives we’re beginning to see told in the world of technology.

Like political narratives, the stories the tech media likes to tell are intended to put events in context and to help readers make sense of them, while also making for good copy and lots of clicks. But like political narratives, they’re often misleading and, like most political narratives, these stories are typically negative in nature. Here are some examples:

• Apple can’t innovate anymore
• Google is evil
• Facebook wants to end your privacy
• Microsoft is irrelevant
• Amazon isn’t interested in making money
• Samsung just copies everything Apple does

The problem for companies seeking to dispel these narratives is the same as the problem faced by campaign managers in the political sphere: you can’t simply kill a narrative – you have to replace it with one of your own. People like story lines that provide a golden thread for the disparate events that happen in the life of a company – which helps explain the popularity of the misguided narratives the media provides. So, in order to get people to let go of the narratives they’ve embraced, you have to give them a new story to latch onto.

Perhaps this explains why Microsoft has recently promoted Mark Penn, a former political operative who’s been working his way up the ranks inside the company’s marketing department. He was apparently responsible for the strategy behind Microsoft’s Super Bowl ad this year, which was definitely more about a narrative than a product. When you’re on the receiving end of so many negative narratives, you have to go on the offensive and start telling your own story. That’s what Microsoft now appears to be doing.

Apple of course, is the master of telling its own story. But even with Apple, we’ve seen a real uptick in narrative rather than product-focused advertising over the past year or so. There was the Designed by Apple in California video that debuted at WWDC 2013 and was followed by an ad along similar lines, the 30 years of Mac video and the 1.24.14 film that went with it. People have wondered why Apple was doing this and even criticized them for doing it, but I don’t think Apple has a choice – when the media’s narratives start to trump your own, you have to go out and tell your story more aggressively to regain control.

Google is one of the few companies on my short list which seems to have been able to get the media to adopt its narrative, even without appearing to try to do so explicitly. Its Google[X] organization, and more specifically its self-driving cars, Google Glass and acquisition of various robotics companies all appear designed to create the impression of a company shooting for the moon in pursuit of new and wonderful inventions. If you’re trying to shrug off the dominant narrative of an evil corporation intent on selling you as its product to advertisers, what better way than to wax quixotic and aspirational, and talk about making the world a better place?

Amazon and Facebook have their own stories to tell, too. Interestingly, Amazon both suffers and benefits from the dominant narrative, among different communities. Among investors, of course, its consistent failure to make profits may be seen as a drawback, while of course to ordinary consumers that’s the appeal of Amazon. Jeff Bezos has also used his own personal investments to bolster Amazon’s image, investing in literal moon shots with Blue Origin and saving the newspapers with his purchase of the Washington Post. Facebook, meanwhile, seeks to demonstrate its altruistic side through Internet.org, connecting the world’s unconnected and only incidentally increasing the addressable market for Facebook.

As an analyst, my job is to see through the narratives and to separate the facts from the spin – both the narratives spun by the media and the stories the companies themselves tell. The challenge is the answers are often far less black and white than the narratives – it’s not possible to conclusively quantify Apple’s innovativeness or calculate Google’s evil quotient. But it is possible to understand and describe what’s really going on at these companies, in their financials and in the markets in which they operate. There are still stories to tell my clients, but they’re often more nuanced and less sensational than the narratives fed to us by these companies and the media.

When I first started doing industry analysis in 2000, my focus was heavily on mobile computing. Our firm has a legacy of PC industry analysis and, at the time I joined, we were embarking on the major shift from desktop computing to mobile computing. Mobile computing in those days was defined as a notebook or laptop, which were really nothing more than portable desktops. That era set us up for the massive global mobile computing era we are now entering into where the shift is from notebook computing to truly mobile computing with tablets and smart phones. Reflecting on these paradigm shifts helps me appreciate not just how much has changed over the past 10 years but also how much will again change in the next 10 years. Mobile changes everything.

What’s Changed?

Mobile ended Microsoft’s dominance. The once near monopoly on desktop and laptop computing was completely broken by mobile computing. Along with Microsoft’s monopoly ending, so have the old guards of PC computing been challenged by mobile. Intel for example is still struggling to be dominant in the mobile computing era, while Qualcomm has taken their place. Once dominant PC vendors like Dell and HP now only serve a small market while Apple, Samsung, Lenovo, Xiaomi, Huawei, and ZTE are the hardware darlings of the mobile era.

Mobile saved Apple. One could argue the iPod was a key player in ushering in the mobile computing era as it paved the way for key technologies to miniaturize and commoditize. That served as a catalyst for smartphones to become possible. The iPod led to the iPhone, which is the business that drove Apple’s recovery.

Mobile could upend Google. Think about some of the most recent data from Flurry that shows how apps have overtaken the mobile web in terms of engagement. Who does this impact the most? Google. Google’s business is heavily built on the web and a web browser. Declining usage of mobile web browsers and web browsing in general is not good for Google’s core and largest business. I’m fond of the observation that Google de-emphasizes apps because time spent in an app is not time being spent using Google’s search engine. In fact, this observation explains quite clearly why Google is not pushing tablet apps the way many believe they should. Tablets still drive significant web browsing time as the usage of tablets more closely resembles that of PCs than smartphones. If Google was to emphasize tablet apps, which could possibly cause web searches from the platform to go down in favor of app usasge over web usage, then again their biggest business is hurt.

Mobile made Facebook. Facebook in the desktop era was nothing compared to Facebook in the mobile era. Facebook will be a key part of bringing the next billlion consumers into the online conversation. These customers will be mobile first and mobile only. It’s conceivable by the end of 2015 and almost certainly in 2016 Facebook could have over 2 billion mobile users. Facebook’s present and future hinges on mobility.

What’s Next?

These are just a few of the dramatic changes mobile has enabled. Many more are to come over the next two years. Will the current dominant players in mobile survive the shift from one primary mobile connected device to multiples per person? Apps took over the mobile web but what will overtake apps in the near future? What is the role of an OS or a platform in the future? Or is there one? Do apps move to the cloud or stay native? Do operating systems move to the cloud or stay native? How many modems driving connected experiences will we have per person? How many touch based interactive glass screens we will have on our person, in our homes and in our cities? All these and more are questions I like to think about.

I’ve been working in this industry since 1997. I’m also related to one of the foremost technology industry historians. I’ve been taught to view this industry as a journey. On a journey the scenery changes. Mobile has been a driving force of disruption causing sweeping changes in the dominant players from yesteryear. “Post mobile” will bring about many new changes. Crystal balls are not necessary. The only sure way to survive is to recognize paradigm shifts and embrace them when they happen. Innovation brings about change. Both are constant.

Analyzing and discussing a product category from afar is always a fun exercise, but for me, the pedal doesn’t really hit the metal until I put together a market forecast. As an industry analyst, building forecasts is part of what I do and the process helps me crystallize my thoughts about the direction I believe a market is taking. To do it well, you need to think about definitions, categorization, key component trends, new technologies, consumer trends, big vendors, small vendors and more.

I’ve put together many forecasts for PCs, tablets and smartphones over the years, but recently completed the task of building my first forecast for the smart wearables market. Doing this one was a particularly interesting exercise because of the relative newness of the category and the rapid speed at which it’s evolving. Of course, it’s also a very hot topic now—witness all the recent columns written here on Techpinions—so that made it fun as well. But the other reason it was interesting is because of how wide ranging the existing forecasts are—they are truly all over the map, which simply confirms how dynamic a marketplace it currently is. In fact, because of this, I also built three different forecast scenarios with three different sets of numbers that represent where the market could go: a baseline (most likely) scenario, an optimistic scenario and a pessimistic scenario.

But enough preamble…onto the numbers.

Despite all the hype, my expectation is the worldwide market for smart wearables (my baseline view) will be decent but not as large as many have predicted, at least in the near term. Specifically, I’m forecasting the combined total of the wearables market—and I’ll explain exactly what I mean in just a bit—will be about 9.9 million unit shipments this year, generating just under $2.1 billion dollars in worldwide revenues. The US market will represent a large majority of worldwide shipments and revenues with 7.7 million units in 2014 and $1.7 billion in revenues.

I define smart wearables as “intelligent devices worn somewhere on the human body that generate and/or display and/or communicate digital information.” To be clear, that digital information may be no more than a vibrating notification that a new text message has arrived on your phone, but it is information nonetheless. In order to make sense of the market, I chose to break it up into six subcategories that are determined primarily by where on your body the device is worn: “headworn” wearables, such as smart glasses; “wristworn” wearables, broken up into two separate categories for smart watches and smart bracelets; “earworn” wearables, such as smart headsets; “fingerworn” wearables, such as smart rings; and a tiny catch-all “other wearables” category for things like necklaces, pins and other non-standard (at least at present) form factors.

By 2018, the end of the five-year forecast period, my baseline forecast has worldwide wearable shipments across all six categories totaling just over 70 million units and generating approximately $12 billion in revenues. For the US, the numbers are about 37.1 million units and $6.2 billion in revenues. The chart below graphically depicts the worldwide shipment numbers split by category.

As you can see, I expect the “wristworn” categories of smart watches and smart bracelets to be the most successful by far, with the lower cost smart bracelets owning the largest portion of the wearables market throughout the forecast period. Of course when it comes to wearables, there are still more questions than answers, but it’s going to be an interesting market to watch.

If you are interested, a complete 49-page forecast report on the US and WW smart wearables market is available for purchase through my company, TECHnalysis Research.

With the release of Android Wear, we now have a pretty good idea of how Google intends to target the smart-watch space, and it’s very much about extending a subset of smartphone functionality to peripheral devices. Although today these new devices will offer a very thin layer on top of the smartphone, it’s easy to see in time they could subsume more and more of the functions of the smartphone and eventually act independently with their own cellular connectivity. As such, Android Wear can be seen as positioning Google for a future beyond the smartphone.

We don’t know yet what Apple has planned for wearables, but from the rumors around Healthbook, it certainly looks likely it will be taking almost the opposite approach – namely, adding value to the smartphone experience through peripheral devices. You can think of Google’s approach with Android Wear as being “smartphone-out” – i.e. extending smartphone functionality out to wearables, and Apple’s rumored approach as “wearables-in” – i.e. using wearables to add functionality to the smartphone. This makes good strategic sense for each company – Google’s interests are best served by extending its services to all possible categories of devices, while Apple’s are best served by making its devices in key categories as compelling as possible.

Opportunities in aggregation – in wearables…

Interestingly, there are no credible rumors so far about a wearable device from Apple, though there is no shortage of interesting thinking about the topic from various people in the industry. But I continue to think it’s possible that Apple won’t release its own wearable device at all – at least not yet. I think its major play here may be acting as the glue to bring what is presently a very disparate and fragmented set of wearable ecosystems together. Note how many fitness and health devices Apple already sells in its online store. Many of these sync in some fashion with companion iPhone apps, but they all do it separately. Some of the vendors have their own ecosystems, which offer limited integration between their own devices and third party devices for analytics purposes, but they’re largely islands today.

Bringing the data supplied by all these sensors into a single app which would make sense of it all would be hugely more powerful and Apple is one of the few companies that could do it. Its ability to do so would, however, be somewhat hampered if it decided to enter the market itself – it would then be competing with would-be partners, and its position as a hub would be significantly less attractive to them. Meanwhile, the wearables market is made up of so many small niches that it’s almost impossible to imagine how Apple could drive significant revenue (in the context of its existing $174 billion a year business) without launching at least a handful of different products.

… and beyond

But this approach needn’t be restricted to the wearables space. There are at least a couple of other areas where Apple could offer the same approach of unifying a fragmented ecosystem and the most obvious one is the home. At CES this past year, the most obvious trends aside from 4K TVs were wearables and smart home. But the smart home space is at least as fragmented as the wearables space, with players from the home security, broadband router, appliances, mobile services and other industries all vying for a slice of the action and ahough there are some attempts by both vendors and third parties to bring elements together, no one has yet cracked the unified home experience. But Apple is in an excellent position to do so, with both routers (the Airport line) and controllers (iPhones and iPads) already in place, and a huge user base to start with. Apple’s position as an aggregator will be much stronger if it isn’t itself trying to build smart home products, which also seems unlikely given the broad variety of devices it would have to make.

The other obvious area for Apple to apply the theme of bringing order to chaos is payments, where there’s at least as much fragmentation at present. We currently have at least three separate domains today when it comes to payments – classic credit cards, online payments providers such as Paypal, and a plethora of players in the mobile payments sector, from mobile terminals such as Square and Paypal Here to Google Wallet to the US carriers’ Isis initiative. None of these has so far thrived, and fragmentation is again a big reason. Apple’s huge user base and the installed base of Bluetooth LE-capable devices it has in the market are an enormously strong starting point. But the play here would be a different one: creating its own payment system rather than aggregating third-party efforts. System-level integration would be a huge advantage over any third-party app, as iMessage and FaceTime have demonstrated. And Apple’s unique leverage over carriers would allow it to do things Google wasn’t able to with Google Wallet. Tim Cook has already indicated that with hundreds of millions of credit cards on file and the Touch ID system introduced in the iPhone 5S, Apple already has a great starting point for payments.

The big question then becomes, how does Apple make money from any of this? If it doesn’t enter the wearable device space, how does it get revenues growing again? The answer is twofold: firstly, and in some ways most importantly, Apple will strengthen its ecosystem and the appeal of the iPhone, driving more iPhone sales. Conversion, not capturing first-time smartphone users, will be the key driver of growth in the premium end of the smartphone market going forward and Apple has to do all it can to cement the position of the iPhone in that segment. Secondly, these aggregation efforts can each yield revenues in their own right, through licensing (the Made for iPhone program is an existing example of this sort of thing) and in the case of payments through taking a cut of revenues, which could be enormously lucrative in its own right. Neither of these requires Apple to create a new hardware category of its own, and I’m increasingly convinced Apple’s new product categories in 2014 may not be hardware at all.

Last week I talked about health and fitness wearables and my failure to see how they appeal to a broader market. This week I want to talk about the potentially lucrative category of smart watches. If we count Microsoft’s Smart Personal Object (or SPOT watches) as a smart watch then I have been using these kinds of devices for many years. However, even the current (or soon to be shipping) crop leaves me puzzled. I still question how big of a market the smart watch category could be but honestly, I’m on the fence.

To dive deeper, I think it would be helpful to look at a few current and future value propositions related to smart watches. We have to start with the question, “What is the value of a smart, easily viewed, small screen on my person?” Answer this and we are getting somewhere. The key is the smart watch screen is always in view. Unlike other screens – my smartphone, tablet, PC, TV, etc. – this smart object on my wrist is easily viewable throughout the day as long as I’m wearing it. To answer my question, we have to look at some things I may personally care to be notified of regardless of whether I am looking at any other screen. The key to this is context. [pullquote]Smart watches and notifications need to get a lot smarter if they are to be found useful on the wrist.[/pullquote]

Context

When am I not looking at my smartphone, PC, tablet, or TV? When I am driving, at a lunch or dinner meeting, walking around the mall, city, park, etc. There are many occasions throughout our day when we are not staring at our smartphones, PCs, tablets, or TVs. These are the times a smart watch must deliver value beyond keeping time. Currently the proposed value is in notifications. The smart watch will notify me of an email, text or Facebook message, twitter mention, incoming call, and more. Any app that pushes a notification to my phone can and does push a notification to my wrist. More often than not I find this more distracting than helpful. I get a lot of email, text messages, twitter mentions, and calls throughout the day. My wrist buzzes quite a bit, mostly with notifications that aren’t useful to me. The reason? The watch, or even my phone for that matter, does not know my context. I may not want to see all the emails but if I am waiting for an important response from a client that would be useful. I don’t want to be notified of all phone calls but only ones that are urgent – say, from my wife. This goes beyond a filter. It is all about context. The device needs to know more about me and my situation to be useful. Smart watches and notifications need to get a lot smarter if they are to be found useful on the wrist.

For example, when I am in a meeting I don’t want to look rude as I check my watch 15 times over the course of an hour every time it buzzes. But what if my phone/watch knew where my next meeting was and would alert me of any traffic issues I should be aware of that may change the time I need to leave in order to not be late for my next appointment? This is what makes some of the proposed use cases of Android Gear somewhat interesting. Google Now does a decent job of focusing on contextual data that is useful at a glance. This could be location data, traffic data, and a host of other things that can equip us to take action and make decisions. Ultimately, this type of contextual data, useful in helping us make choices, is where the value of a wrist worn smart screen may lie.

My biggest misgiving is we will experience notification overload. Even though I test some smart watches that have useful filters for which apps notify the watch and which don’t, I still suffer from notification overload. My concern is, if we open the wrist screen to notification from solicitors – trying to get our attention with deals, discounts, and coupons – we again suffer from notification overload. There will have to be an intelligent way for much smarter notifications to reveal themselves if the smart watch category is to go mainstream.

A part of me feels a smart watch is still a solution in search of a problem. Part of me also feels there is value to be found on a screen that is more easily viewed than a screen in a pocket or a purse. Many seem to believe this may be the next hot category. I still have my doubts. Mass market appeal and convenience is what the smart watch needs to find. Until then it will be a niche market.

The wearables market continues to capture the imagination of the tech industry, press, and investment community. (A few actual customers also seem interested, although they almost seem secondary at this point…) Even early on, it seems clear that the wearables market is going to be significantly different from other device categories that have preceded it, such as smartphones, tablets, etc.

By definition, wearables are devices you wear on your body. Doing so creates a more intimate connection between an individual and a device and that in turn drives a more personal perspective on those devices. Plus, I believe it drives a significantly greater need for individualization and differentiation in the product. In essence, wearables become akin to fashion accessories. Just as it’s unlikely you’ll bump into two people wearing the exact same set of clothes or the same jewelry—thanks to the enormous variety of different clothing and jewelry designs and manufacturers—I believe you’ll see demand for an unusually wide range of different wearable designs and “looks”.

From a manufacturing and supply chain perspective, this represents a tremendous challenge to the traditional tech market approach. A successful tech product SKU (that is, an individual model) sells in the millions of units and typically leverages a shared set of components with a few other related SKUs from the same vendor. With wearables, however, success is likely to look radically different. Instead of a few units doing millions, there’s likely to be hundreds or even thousands of SKUs, each selling thousands of units. That is a dramatically different business model than what the tech industry has had to face and one that’s likely going to create big supply-chain headaches for companies both large and small.

Having spoken with a number of up-and-coming wearable companies over the last several weeks, it’s becoming clear this challenge is something many of them are already facing. A few have talked about developing strategies to deal with this new reality, but all acknowledge it’s a tough problem to solve.

For big companies, this could prove to be very difficult. While I’m certainly not naïve enough to think we won’t see a few big hit products follow the more traditional model (iWatch, anyone?), I do expect even in those cases, the demands for customization and personalization are going to be significantly higher than previously experienced. It might be OK if all your friends and colleagues have the same phone as you, but do you really think everyone’s going to want to wear the same watch? Even now, arguably, the “coolness” factor of having access to some of the early wearables like Google Glass and even the Pebble Smart Watch makes a bit of a statement, but how long will it be until too many people have them and they’ve lost that edgy style?[pullquote]It might be OK if all your friends and colleagues have the same phone as you, but do you really think everyone’s going to want to wear the same watch?”[/pullquote]

And this leads to yet another challenge bound to plague wearables—the fickle nature of fashion. Is that device or design in style or out of style this season? Laugh now, but my guess is, that’s going to be another completely new problem wearables will introduce to the tech industry.

Concerns aside, it’s clear there’s a lot of excitement around the wearables market, and I’m confident we will see some pretty amazing new things over the next few years. But, for those who are eager to jump into the latest new thing, I really think you need to look before you leap.

Many books have now been written about how globalized our world is, so it’s easy to sometimes forget how local aspects of our digital culture still are. Nowhere is this more obvious than when looking at digital content stores, the disparity in the availability of different content around the world, and in the differences between demand for content in different countries.

Figures from the International Federation of the Phonographic Industry (IFPI) released on Tuesday include a useful reminder of how different tastes in content can be from country to country. One of the tables in its report on digital music showed the percentage of the top ten albums in certain non-English-speaking countries by domestic artists:

In these 13 countries, the range is from 50-100%, with a significant majority in each being local content. Also in the past few weeks, the BBC released its iPlayer Stats for January 2014, including the top 20 TV episodes watched on the service – all are British television programs, making the domestic rate 100% (source: BBC iStats):

What does this mean for players in the consumer technology industry? It means in order to be relevant in providing content services in various countries, you need to not just have stores in each of those countries, but you need to secure local content. The chart below shows the number of countries in which four major players offer various content services (music downloads, movie downloads, TV show downloads, ebook purchases, app downloads and music subscriptions):

There’s a huge variety here, with Apple having by far the largest number of countries for music downloads and movie downloads, Amazon (predictably) offering the largest number of countries for ebook purchases, and Microsoft leveraging its long-standing developer infrastructure to provide app stores in the most countries. Google comes out on top in Music subscriptions, where its All-Access Pass is now available in 25 countries, but otherwise lags its competitors.

Building up a set of international stores for content takes significant time, and it’s easy (especially for those of us in the US) to forget how few countries some of these providers offer content in, especially Amazon. That’s partly a question of acquiring the appropriate rights for distributing more global content such as apps and movies, but it’s also critically about securing the rights to relevant local content. Then there’s the infrastructure required to make all this work, preferably either in-country or somewhere close by. Building all that takes time, commitment and significant financial investment. It’s an easily overlooked part of Apple’s competitive advantage today (not to mention providing almost $10 billion in annual revenue).

In addition to geographic availability, all of the iTunes stores combined have the largest library of content, with 650,000 movies, 250,000 TV shows and 37,000 songs as of the last data released, and in most cases multiples of the catalogs available from other providers. As far as the iPhone and the iPad are content consumption devices, Apple has built a significant edge in allowing consumers to acquire content easily and legally and making it simple to get it onto devices.

Apple’s competitors also need to learn from its example. In other words, to the extent Amazon is serious about digital content, it has to not just launch new streaming services and new streaming devices, but extend its content catalogs in terms of both size and geographic reach to be competitive. The same is true for Microsoft as it pursues its Devices and Services strategy – tablets in particular are still content-centric devices, and it badly needs a better story around its content stores to make the Surface more appealing. And Google, too, appears to be investing in improving its content catalogs, announcing new countries for some services just this week. But all three still have a long way to go.

I’m as early an adopter as they come. I have about every health and fitness wearable on the market. However, if you ran into me on the street today I wouldn’t have a single one on me. Why? I simply don’t find them valuable. The question I keep circling back to is, “Why I should care about these products?” When I first started using them it was novel to see how many steps I had taken or how much sleep I had the night before. But after a few days the novelty wore off. The data was simply not useful or actionable. There was no value in the data. Everything I put on my body is intentional. There is a reason it is there. This booming wearable market everyone keeps talking about has yet to produce a product I value enough to keep on.

What is strange about my conclusion is it seems as though I am the target for many of these products. I am extremely active and I am conscious about my diet. My health and wellness is a priority for me, and I look to tech to play a role in all aspects of my life. But nothing on the market appeals to me in any way, shape, or form. Oddly enough, I hear often from folks who find value in their health or fitness wearable who do have health issues. It seems if you have specific health issues that wearables address you would find some of these products more valuable than a generally healthy person–at least for now.

Perhaps it is less an issue with the product category and more about the data. What I find lacking in the data is its weakness in helping me take action with the findings. So I know how many steps I took, how does this help me? What can or should be done to change my behavior? So I know how many calories I burned. What changes should be made to burn more?

Recently, I ran into this issue with the Fitbit Aria Scale. This particular scale tracks your weight as well as your body mass index. I got this scale just before the holidays which, in retrospect, was maybe not the best time to be tracking my weight. Post holidays, I set a goal of getting back to my “tennis season” weight. I watched my weight go down and in some cases my BMI go up. I had no idea what that meant or what steps I should be taking to both lose weight and BMI – but I would have found that information valuable. All of these products lack a follow-up step to help us make sense of the data and recommend action based on our goals. This will need to be addressed before these products have mass market appeal.

Apple and Healthbook

Can Apple or Google address this? In some ways yes and in some ways no. One of my driving convictions about the wearable market is it is not a one size fits all segment. There are many different things consumers will want in these devices. It will be nearly impossible for some time to address all the needs of this market with one single product. In Apple’s case, the only way they could address this space is to make many products — all with specific appeal to parts of this segment. This is why I think the Healthbook concept, if real, could be very telling of Apple’s strategy. What if they are hiring experts in the health and medical hardware business in order to understand the vast complexity of sensors so they can support any number of configurations from third parties so these third parties can create meaningful hooks into iOS? In short, what if Apple is preparing to enable and empower an ecosystem of wearables, made by third parties, but with unique and proprietary hooks to the iPhone. Healthbook would simply serve as a mechanism to work with third party hardware, along with specific APIs, and display key data for the consumer. This makes the most sense to me. Apple would encourage and enable third party hardware companies to build value around the iPhone and make the platform stronger. Should Apple make a glucose monitor? Probably not. Should they enable the company who wants to make the glucose monitor extend the value of the device in a meaningful way to their ecosystem? Yes. This is what I think Apple is up to. Let Nike, Fitbit, Adidias, iHealth, or whomever go after market niches in the health and wearable ecosystem — but make sure they work best with iOS.

In the case of Apple and Google, this will be an ecosystem battle. Both are now looking to address complimentary points of their ecosystem in areas they may not have much control over. Some experiences may decentralize from the smartphone and some may not. Apple and Google are in uncharted territory from a platform level. However, embracing and extending their ecosystem with the help of third party hardware is a key strategic element for them both.

In addition to wearables, the other hot topic in tech these days is the Internet of Things, or IOT. The concept behind IOT is certainly an intriguing one—in the future, there will be tens of billions of devices (about 10x the current installed based of PCs, smartphones and tablets combined) all connected to the Internet and, at least to some degree, to each other. Most of these devices are expected to be relatively simple sensor-based gadgets or components that generate vast amounts of data that needs to be stored and analyzed in the cloud.

Of course, if you’re a company that sells networking equipment, connectivity solutions or storage, this is a particularly grand vision because it says, “Hey, don’t worry if the sales of traditional computing devices is slowing down, there’s an even bigger opportunity coming down the road.” Not surprisingly, companies like Cisco, Intel, Qualcomm and lots of others are very gung-ho on IOT and its potential.

To be fair, much of their enthusiasm is justified. We’ve already started to see a number of intriguing and cost-saving implementations of IOT technology being deployed today. For example in the transportation business, delivery trucks and tractor trailers are now loaded with sensors to deliver data over wide-area network connections and, post-analysis, can deliver important feedback to the drivers that help better plan their routes, saving gas, time and money. Similarly, some auto insurance companies are using devices installed in cars which spit out a stream of information on the customer’s driving habits including speed, location, etc., to help deliver lower-cost premiums to good drivers—or, at least those who fall within the prescribed rules they’ve set up to identify lower-risk drivers.

As compelling as these examples are, however, the problem is they (and others like them) are relatively modest-sized and essentially isolated implementations. Now, that’s not a problem for these specific vertical niches, but to reach the kinds of numbers being bandied about for IOT, it will literally take a million of these different deployments to be made and that just doesn’t seem feasible in the near-term future.

The real challenge is there isn’t a common language for all these different devices to speak. If the industry wants to reach the scale it believes is attainable (and, for the record, I believe the numbers are possible as well—just not sure of the time frame), it needs to figure out ways to get both more and larger deployments. Right now, it’s essentially like a Tower of Babel where you have lots of types of devices, each speaking their own language—both in terms of data types, definitions, and protocols used to send those messages. Heck, we can’t even get all the devices in our homes to talk to each other, despite decades of trying. So how are all of these other devices possibly going to communicate with one another?[pullquote]Right now, the Internet of Things (IOT) is essentially like a Tower of Babel where you have lots of different types of devices, each speaking their own language—both in terms of data types, definitions, and protocols used to send those messages.”[/pullquote]

While it’s unlikely all the specific needs for potential vertical industries can be determined by a single set of standards, there’s no question in my mind that to even start the process of reaching millions of new “things” (let alone billions), significant industry-wide standards efforts around communications protocols, data structures and more need to get started—and soon. We have seen a few interesting efforts—including the Qualcomm driven AllJoyn initiative—but we need to see other larger players either join this organization or drive the creation of alternative or preferably, complementary initiatives that can start to build the links necessary to fulfill the dream of IOT.

If not, the next several years could lead to nothing more than some interesting, but isolated islands of things that fall far short of the industry’s expectations.

Even though the surgery won’t be until tomorrow afternoon, they have me all prepped. Those funky dots are some sort of MRI positioning indicators–I’m not sure what their precise function is, but they have to do with increasing the surgeons’ already incredible accuracy.

The doctor is extremely hopeful my brain won’t be too much the worse for wear when he is finished. The good news out of extensive MRI testing is the tumor is located a bit further away from critical speech centers, reducing the risks of damage. If all goes well, I should be home by the end of the week, though I figure it will take a while for my brain to clear before I can do any truly useful work.

Meanwhile, I have nothing but the deepest gratitude for the kind words from dozens of friends. And nothing but the highest praise for everyone at Johns Hopkins Hospital, truly one of the world’s greatest medical institutions.

Keep track of my progress on Facebook, and I’ll be back soon.

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

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

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

The Digital Era

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

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

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

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

Video in the First Person

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

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

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

Over the last several months, we’ve seen moves by the US carriers to introduce a new model for paying for devices in addition to the traditional subsidy model. The new model allows customers to pay for their devices over a period of time in monthly installments. It began at T-Mobile in May 2013, and the other carriers quickly followed over the course of the ensuing months. There are still significant differences in the details of these plans: T-Mobile has done away with service contracts (though you’ll still sign one for the installment plan), and T-Mobile, Sprint and AT&T offer service discounts for customers who are paying for their own device either outright or through installments, whereas Verizon Wireless stubbornly charges the same service fees regardless of whether it is subsidizing the device.

What the T-Mobile, Sprint and AT&T plans have in common is they separate two things that have historically been intertwined: service fees and device payments. Carriers traditionally charged about a third of the retail price of high-cost devices up front, recouping the rest through service fees over the course of a two-year contract. Many customers didn’t really understand the true cost of the device as a result, and the model also meant customers who held onto a device beyond the standard upgrade cycle were paying the carrier far more than the cost of the device. As such, the switch to installment plans is a good thing for consumers, because it introduces transparency over the relative costs of service and hardware.

It’s also good for the carriers, because they can slowly reduce the costs of subsidizing handsets while being more competitive on service pricing. Sprint is the only carrier that’s really broken out its costs of subsidy explicitly, and the impact in the first few months was significant, as shown in the chart below, which illustrates the cost of subsidies (i.e. the cost of equipment not paid for explicitly by customers) and the percentage of the total cost of equipment sold that’s covered by equipment payments from customers.

As you can see, the total subsidy cost, which normally spikes hugely in Q4, when carriers sell many more handsets than in the other three quarters, didn’t spike nearly as much in Q4 2013, partly because Sprint sold fewer smartphones than it usually does in Q4. But the key thing to note is the line, which shows 41% of Sprint’s cost of equipment was paid for by customers, significantly up from 34% a year earlier, and also significantly higher than in any other recent quarter. The strategy worked, reducing subsidy costs and passing more of the cost directly on to consumers. It’s likely other carriers, especially those actively pushing customers towards the installment model, are seeing similar or even greater positive results. So this shift is good for carriers too.

What are the other implications of this move? Well, one that I’ve already mentioned is consumers will become much more aware of the true cost of a device (i.e. $649 for an iPhone 5S 16GB, and not just the $199 most carriers charge up front on a two-year contract). But to me the bigger implication is consumers will start to wonder why they should pay the carrier for a device at all. If the service fees and hardware fees are separate, even though the service fees are logically paid to the service provider, why shouldn’t the hardware fees go to the hardware vendor?

The answer today, of course, is carriers are offering zero percent financing on these devices – there’s no additional cost to paying for a device in installments over a period of 12-24 months instead of up front, and that’s a lot easier to swallow for most consumers. But what if hardware vendors started offering interest-free financing too?

The challenge to the direct sales model for hardware has always been multi-faceted. For example, hardware vendors lacked direct distribution in the form of retail stores where consumers could try out devices. But the biggest challenge was consumers in most countries simply aren’t accustomed to paying up front for devices, and even if they did, the service fees they paid to carriers would still implicitly include subsidy repayments, making it a really unattractive proposition. But now that three of the big four carriers are pushing reduced service fees in return for consumers paying for their own devices, that equation changes. And if hardware vendors started offering installment plans instead of forcing consumers to pay up front, that would be pretty attractive. If the hardware vendors threw in free annual upgrades too in return for giving back the old device (as some carriers do), that might make it even more attractive.

Consider this: Samsung offers you the option of always owning the latest member of the Galaxy S family for a flat monthly fee of $30. For consumers, this would offer far greater flexibility in their choice of carriers. Instead of being forced to stick with a carrier until their device was paid off, they could switch whenever they wanted to, using either contract-free postpaid plans or even prepaid plans. Their loyalty would be to the device vendor and not the carrier (though they might choose to stick with a carrier that worked for them). Device vendors would enjoy the benefits of eliminating the carrier middle-man, which would give them the option of reducing the price of devices on these installment plans, and develop direct relationships with their customers.

What are the downsides here? Well, for the carriers, this would be a step in the wrong direction: they’d lose the direct relationship with a consumer around their device, and potentially become much more expendable. At present, the device and service contract cycles, often out of sync especially within a family plan, create a perpetual lock-in which helps keep churn low. Remove the device upgrade cycle from the equation and suddenly it becomes much easier to switch when the contract is up (or at any time, if there is no contract).

What’s the downside for vendors? Well, the obvious answer is that, instead of getting a big payment up front they’d get the payments spread out over a period of time. That’s much less attractive from a revenue recognition perspective. And it also creates a massive potential bad debt problem, in that customers might fail to make their payments. This risk is one of the reasons for Verizon’s caution on installment plans, and it would be a big risk for any device vendor adopting this approach, without the benefits of a service contract to hold over the customer as leverage.

Which vendors would be most likely to take this approach? Well, since many device vendors struggle to make money as things stand, most of them are not likely to pursue this strategy. Those best placed are those which already dominate the market, namely Apple and Samsung. Both make very healthy profits from smartphones and have deep pockets to fund such an initiative. Both also have something of a retail presence, Apple a significant one with its retail stores, and Samsung a small but growing one with its stores-within-a-store at Best Buy and some standalone retail outlets. Two other players who don’t currently make smartphones but could afford to do something interesting with this approach are Google and Microsoft. Microsoft, of course, is acquiring Nokia, and so will shortly be in the handset business, and given its struggles to get carriers to support Windows Phone it might find the direct route appealing. Google already sells phones direct through the Google Play online store, and this might finally offer a way to get mass-market interest in Nexus and Play Edition phones, something it hoped (but failed) to stimulate when the first Nexus phone launched.

Beyond these big players, the Chinese vendors might also find the approach attractive. They have struggled to get tier 1 carriers in major western market to carry their devices under their own brands, but might use the installment approach as an alternative route to those markets, improving their name recognition and perhaps helping to bring the carriers around too.

There are significant barriers to this approach, but thanks to the carriers’ moves to get out from under the burden of subsidies, several of the barriers that existed in the past are slowly being removed. I would expect at least one phone maker to begin experimenting with this model in the coming months, and I wouldn’t be surprised if others followed.

In our fascination with tablets and smartphones, new paradigms have drastically simplified the way we interact with our daily technology. But have we forgotten how much of the growing capability is based on soaring computational capability on the back end? Just the existence of ubiquitous computing clouds, from companies such as Amazon Web Services and its competitors, has brought oceans of low cost capacity to startups. And rapidly growing analytical abilities can draw large insights from readily available data.

There may not seem to be an immediate connection here, but those of you who have been following my medical saga over the past couple of weeks know I have quickly become a bit obsessed with the benefits an explosion in computation has brought to neuroscience. It wasn’t long ago brain surgery, vastly skilled as it was, remained somewhat crude and mechanical. Surgeons depended on good hands, good eyes (well, they still do) and sometimes probes that could distinguish tissue based on the reactions of the patient during the operation.

No radiation, but no pictures. Magnetic resonance imaging (originally called nuclear magnetic resonance, but “nuclear” was dropped because it sounded scary) uses magnetism to stimulate weak radio emissions that are then read. Unlike CT scans and other x-ray based technologies, it requires no potentially harmful ionizing radiation. But it also produces no natural pictures. The term “imaging” is actually a bit of a misnomer – it depends entirely on computation. MRIs are used extensively for soft-tissue examination – they are particularly helpful for examining sports injuries – but may be at their most important for sensitive brain imaging. I have had the good fortune to go significantly beyond standard MRI exams thanks to the extraordinary capabilities of Johns Hopkins Medicine in Baltimore.

While a standard MRI does very sensitive imaging, a functional MRI (fMRI) can detect brain activity in real time. The goal in my case was to determine as precisely as possible the very fine boundary between a tumor in the left temporoparietal lobe of the brain (near the skull, just above the left ear) and normal brain tissue. I have been extremely fortunate. I’ve been on pretty high doses of corticosteroids, and while it has some nasty side effects, the brain swelling that was the original problem very quickly resolved and my language skills returned to normal (I’m hoping for a surgical miracle that will improve my poor typing skills, but I guess that’s too much to ask for.)

Exhausting experience. So the bottom line was I was in good shape for the fMRI, which turned out to be perhaps the most difficult and exhausting experience of my life. The process requires extremely fine measurement to differentiate between oxygenated and de-oxygenated blood within the brain. The Center for Functional MRI at the University of California-San Diego gives a through, if somewhat technical explanation:

The discovery that MRI could be made sensitive to brain activity, as well as brain anatomy, is only about 20 years old. The essential observation was that when neural activity increased in a particular area of the brain, the MR signal also increased by a small amount. Although this effect involves a signal change of only about 1%, it is still the basis for most of the fMRI studies done today.

In the simplest fMRI experiment a subject alternates between periods of doing a particular task and a control state, such as 30 second blocks looking at a visual stimulus alternating with 30 second blocks with eyes closed. The fMRI data is analyzed to identify brain areas in which the MR signal has a matching pattern of changes, and these areas are taken to be activated by the stimulus (in this example, the visual cortex at the back of the head).

It is not because the MR signal is directly sensitive to the neural activity. Instead, the MR signal change is an indirect effect related to the changes in blood flow that follow the changes in neural activity. The picture of what happens is somewhat subtle, and depends on two effects. The first effect is oxygen-rich blood and oxygen-poor blood have different magnetic properties related to the hemoglobin that binds oxygen in blood. This has a small effect on the MR signal, so if the blood is more oxygenated the signal is slightly stronger. The second effect relates to an unexpected physiological phenomenon. For reasons we still do not fully understand, neural activity triggers a much larger change in blood flow than in oxygen metabolism, and this leads to the blood being more oxygenated when neural activity increases. This somewhat paradoxical blood oxygenation level dependent (BOLD) effect is the basis for fMRI.

What this means in the real world is you are required to lie absolutely motionless – for nearly three hours in my case – inside this extremely uncomfortable and rather claustrophobic machine. The tests are, in their own way, fascinating. In the first series, for example, a voice reads text to you. It was difficult enough to hear, given the assortment of beeps and strange noises an MRI generates nearly all the time, but the reading began in a nonsense language that sounded vaguely but not quite Scandinavian, something like a totally deranged Swedish Chef. Then the language would abruptly shift to English (though the text was an oddly northern scene read still in a vague Scandinavian accent) and I was supposed to concentrate on what I was hearing. Then it would change to nonsense, then again, repeatedly, to that chilly English. At no time did I speak, merely thought. (I don’t think the machine is capable of telling what you are thinking, just that you are thinking, where your thoughts are occurring, and the intensity of the thought.)

Projected tests. Some tests were visual, projected on a not very good-quality screen above my head. I was shown pairs of words and was supposed to press a button – the only time I was allowed to move at all – when I identified the pairs as rhyming. This proved a lot more difficult than expected, since there were lots of near-rhymes that would depend considerably on specific, individual pronunciation. Mixed in with the words were patterns of lines. I was supposed to press the button when the patterns matched, and, again, it was made a bit tricky by close but not-quite matches.

I was shown a series of nonsense squiggles, which I was supposed to ignore, intermixed with a series of cartoony images of hearts or cars or birds, which I was supposed to concentrate on and identify. Then there were the word patterns. Something like
Ghhe fpet Smrgy gjtj mrogy Quen _______
would appear on the screen. This and a few more “sentences,” with or without blanks, would pop up and I was supposed to ignore them all. Then I would see a sentence like
There is no school on Saturday or ________
and mentally fill in the blank, followed by a few more valid sentences. Finally, I was given more squiggles intermixed with letters, and when I saw a real letter, I was supposed to think of a series a words that began with it.

None of this sounds all that difficult, but done under noisy, uncomfortable, and stressful conditions for several hours and I felt my mental acuity sapping away. I think I finally fell asleep at the very end, fortunately just for the part where they needed me to be perfectly still while a contrast dye was injected.

The data collected by an fMRI is extraordinarily complex and the machine doesn’t just spit out results (and I don’t yet know just how well I did; I will probably get a more detailed report just before the surgery next week.) In fact, a key technology that has made the fMRI possible is the use of extremely power general-purpose graphics processing units (GPGPU) from companies such as Nvida and AMD. These are super-parallel processors with vast numbers of simple but extremely fast processors that use single-instruction, multiple-data (SIMD) architecture. In this case, the goal is not traditional imaging at all but very intense statisitical processing.

There’s an awful lot going on here that’s on the cutting edge of computation. The data may be even bigger than the analytics that play a growing role in the the cloud operations behind business computing. But there is no doubt that behind the pleasantly simple facade of our app-based computing, there is an awful lot of truly deep work going on.

Like many new industries, the smart wearables market is filled with lots of startups looking to create interesting new products and build a successful business. Unlike previous hot trend markets, however, the launch of the wearables market also happened to coincide with the rise of crowdfunding sites like Kickstarter and Indiegogo. It’s a fortuitous combination at many levels, because several of the unique characteristics of the wearables market—including the need for lots of experimentation, small production runs, modest price points, strong interest in personalization and customization, and the cutting-edge technology aspect of the devices—are a perfect match for individuals who peruse those sites, looking for the latest thing. Several of the more successful, or at least more interesting, wearables have indeed been launched on these sites, including the Pebble Smart Watch.

But having done a fair bit of digging around for new smart wearable devices on some of these sites, I’ve also come across a few products that have stretched credibility too far. I suppose that’s probably true of virtually anything that’s being showcased at these sites—it’s definitely a buyer beware type of environment—but I’m more sensitive to and cognizant of the tech-related products.[pullquote]Having done a fair bit of digging around for new smart wearable devices on crowdsourcing sites, I’ve come across a few products that have stretched credibility too far.”[/pullquote]

I’ve seen images and watched videos of supposed product demonstrations that were—to my eyes at least—pretty “doctored” up. I’m not going to name any specific names, but there are some tell-tale signs to be on the lookout for. In my case, being an analyst who has covered display technologies for many years and as someone who continues to follow those developments very closely, it was the displays that were the dead giveaways. For example, no one is mass producing a high-resolution, bendable color display that will wrap around even a good portion of your wrist. So, when I saw very attractive images of smart watches/smart bracelets that essentially consisted of exactly that, I knew that was a big red flag. In one case, the company representatives acknowledged that their prototypes only had black-and-white displays and seemed to imply they were lower resolution—which was likely true—but you had to read through a fair bit of material before you got to that rather important detail.

Similarly, some of the demonstrations I’ve seen of smart glasses show resolutions that are clearly much higher than current microprojection displays can achieve. The LCOS (Liquid Crystal on Silicon) display in Google Glass, for example, is only 640 x 360, which is less than good ol’ VGA resolution.

The challenge is that there are lots of great low-cost tools for doing high-resolution, lifelike 3D rendering and video special effects that even Hollywood specialists would have killed for just a few years ago. With enough time and talent, creative people can create their own “Minority Report” views of the world and the products that fit in them. Think about how many impressive “artist renditions” we’ve seen of forthcoming Apple or Samsung or Sony products, which sprang entirely from the minds of their creators with the help of some useful software.

I’m certainly not trying to imply that all, or even a large percentage, of the cool new products you see on crowd-sourced sites are a bit “juiced,” but as my mom and your mom probably used to say, “If it looks too good to be true, it probably is.”

Samsung is introducing a new Internet Radio service called Milk. I had the opportunity to get some hands on time with the service and speak with Samsung executives about the new product and strategy. There are a number of important observations from my perspective.

The first is the quality of the software. Samsung is not exactly known as a software company. The primary public facing software work to date we can look it is their software on the TVs as well as the UI they have developed for their Android devices. Over the past few years, Samsung has added core apps incrementally to add value and to differentiate their hardware in the marketplace. S-Pen apps are a good example of some of these. However, to date, the Milk application and experience is one of the better Samsung applications I have used in terms of software and execution.

The app itself is leveraging the Slacker Radio service. However, Samsung has implemented it uniquely for a streaming music experience that is different than any I have used. The concept tries to make the experience much closer to an actual radio experience. Just in case you think traditional radio is a thing of the past in the US, let me offer a few statistics.

The following chart from Pew Research breaks down media usage of US consumers by type. Note the time US consumers spend listening to traditional radio.

What is interesting about this breakdown, is the time spent using a smartphone vs. the time spent with radio. I wrote a few days ago about the challenge competing in the mobile market. My key point in that post, is that the challenge for anyone competing in mobile is that mobile apps are competing for time. In the case of the US smartphone owner, mobile applications are competing for just a little over an hour according to this recent data. Since smartphone screen time is limited, and divided up between a number of tasks, the challenge is be relevant during the short bursts of times people use their phones. Radio experiences are one of the the things that could potentially increase smartphone usage time.

In terms of raw numbers, let’s look at Nielsen data from their State of Media report.

As you can see from both charts, radio is alive and well and consumers still value the experience of radio. I believe a key reason for this is that radio is produced. There is value in curation. This is the logic Samsung used Milk. The service itself consists of 200 radio channels. Each curated by a taste maker. The app itself has a dial interface and as you move the dial around the circle each station starts played instantly. If you scrub quickly around the dial, you hear the station briefly, sounding just like what happens as you change radio stations quickly.

In between each genre, as you scrub to the right or the left of it, is a series of other channels. Each category contains around 15 stations in my approximations.

The execution of this service is well done. I’ve been using it frequently over the past day and have been very impressed. The app and the service itself is free and ad free. The latter is something I think is the bigger point. I try many different Internet radio services, some free and some paid. This service from Samsung is competitive with all of them and I found the lack of ads to be quite nice. I am a paying iTunes Match subscriber and for the most part default to iTunes Radio as my preferred service. However, a few months ago, I turned the iTunes Match service off to see what ads were like in in iTunes Radio. Over the past month I noticed a sharp increase in iTunes Radio ads, sometimes being as often as every 4 songs. Listening to a number of free Internet radio services, I’d estimate the average number of ads to be 10 per hour. The Milk experience was refreshing both in its curation of each channel along with the lack of ads at no cost.

Samsung has checked an important checkbox competitively with the Milk app and service. I’ve concluded Samsung’s future in mobile lies in them being able to compete in the higher end of the smartphone segment in every market. Adding value and differentiating their hardware with software and services are key to them competing in the high-end.

Given the beating Apple’s cloud services often take, I am sure you will be surprised at what I am about to say. I like iCloud. I rely on it quite a bit. What’s more, I trust iCloud. My expectations for iCloud have always centered on synchronization. This has always been the killer cloud value proposition in my mind. Even during the days when many in the industry stated with confidence that the killer app of the cloud would be backup, I was confident it would be synchronization.

I was convinced of this from the first time I used Microsoft ActiveSync for email. Whenever I would get a new PC, or PDA (remember those personal digital assistants), all I had to do was input my email credentials and magically all my email would appear and stay in sync across all my devices. This was when I knew what cloud synchronization would do for documents, media, and all forms of digital data. Since 2004, I told any major player in the industry who would listen that we needed a consumer version of ActiveSync. Today, the closest thing I use is iCloud.

The thing that is interesting about the cloud and synchronization, is that it is only truly valuable when you have multiple devices you want to keep in sync. When all one owns is a single device, there is no need to keep things in sync. All the content you own and produce resides on the device and the services that device connects with. As you start acquiring more personal computing devices you begin to spread time and data across them all. Keeping things in sync is an essential part of the multi-device experience.

Most of the ways I use iCloud regularly is to keep my documents in sync. This may be one of best aspects of the service to date. Having the ability to work on a new presentation, and have it auto save to iCloud, then pick up right where I left off on any other iOS or OS X device of my choosing is refreshingly convenient. However, the other day I realized just how much I trust iCloud and this realization raised an important question.

Trust, Questions, and Possibilities

I gather and generate a significant amount of original data on the tech industry. I also present this data in the form of presentations to dozens of companies on a monthly basis. Without realizing it, I have been slowly transitioning all our data to iCloud. I use Numbers and Keynote for our spreadsheets and our presentations. As I have been creating data in both programs, I have been storing them all to iCloud. It was simply the most convenient process since I rely on that data on any number of devices. I probably have well over 100 documents of original and proprietary data, presentations, and models, that are stored in iCloud. When it hit me that I was storing all this valuable data in iCloud, I asked myself whether or not I should back all this data up. This data is extremely valuable to me and more importantly recreating it would not be impossible but would be a gigantic undertaking.

Given this data is so important to me, can I trust it to iCloud? I have had no issue yet but what if an issue comes up? Are these files recoverable if something goes wrong? What if I accidentally delete a file on iCloud? Can I get it back? These were things I started thinking about. Apple does give instructions and recommend that you make copies and archive things stored in iCloud, however, this is a relatively tedious process and could be much more seamless. Suffice it to say, I did this just to be safe.

iCloud is certainly not perfect. I’d still love to see walls get broken down between iCloud accounts so families could have a more powerful synchronization engine. I wrote about this recently and called it a “framily cloud.” I’d love to be able to start making a movie on my iPhone and pick up where I left off on my iPad or Mac. I’d love a better way to keep photo libraries in sync across my devices and my families. The same with music.

Without question, iCloud still has a long way to go. However, I still believe it is one of the more encompassing multi-device synchronization engines I have used in some time.