I Love The App Store. I Hate The App Store. I Love The App Store. I Hate The App Store.

Apple’s App Store is a bloated, visually appealing, industry-shifting revolution. Forget tales of Google Glass, the Internet of Things or talk of HTML5. The App Store — the home of the humble app — has only just begun to completely re-make computing, user interface and hardware design.

The App Store has permanently altered the fortunes of iPhone, which has permanently altered the fortunes of Apple, which has  upended the personal computing industry yet again. The App Store binds Apple products with one another and with every user.

I both love and hate it.

The App Revolution

I love the App Store, first and foremost, because I am so in awe of it. For those of us who lived through the dark times, when Microsoft ruled over all, it wasn’t even imaginable that it could ever be easier to have more and better and cheaper software available for Apple products than Microsoft products, no matter how far into the future we dared look.

Thanks to the unerring vision of Steve Jobs, we now barely give this once-unfathomable reality a second thought.

We have nearly a million apps to choose from: well-designed, tightly-focused, highly intuitive software programs constructed for all manner of activities, and offered at amazingly affordable prices. From my iPhone or iPad, with a few swipes of my finger, I find, review, buy, download. Takes maybe ten seconds.

Again, this is all once-unfathomable.

Apps that make my work more productive, my free moments more fun, my decisions better informed. Apps that connect me with my friends, my colleagues, and my self. I know with absolute confidence that every single app I purchase will work just fine on my iDevice. It just works.

But, damn, I can also hate the App Store.

Attention App Store Shoppers

More than half a decade in and Apple insists upon offering search options that wouldn’t pass muster on the world wide web in the 1990s. Given Apple’s loathing of Google, I fear a remotely workable solution may be years off. The “genius” service is a joke. Unless, of course, Apple actually believes that because I have purchased the Weather Channel app that I want half a dozen other weather apps on my phone.

There is no trial period, no money back option. Reviews are a jumbled mess, and I never know if an angry review is over the very latest release of an app, or from year’s past. If there are methods to filter an app quest – from the phone – I have yet to discover any. Nor are there any usable methods of ‘bookmarking’ an app for later reference, as Apple apparently believes that every app purchase is an impulse buy; now or never.

Plus, my God, forget the flat vs skeuomorphism debate. Who do we need to get fired so Apple will stop with the whole 99 cents nonsense?

And speaking of firing people, how is it even possible that there is still almost no social integration with the App Store? Whose app reviews should I most trust? Which of my friends have recently purchased what apps? I’m at a baseball game, which apps are most popular with this crowd? Which of the “hot” apps are just right for me? I will never know. Fact is, they are “hot” at this particular moment in time because Apple’s user base is downloading them right now, for inexplicable reasons. By this logic, my favorite cereal is the unbranded Cheerios sold at WalMart.

I am hopeful, however. As I wrote a few months ago, the upcoming iPhone (5+) AirDrop feature could enable one-to-one and one-to-group sharing of apps and other content. This would be a great way to trial an app, and a clever workaround to Apple’s failed search and recommendation functions.

Billions And Billions Served

The smartphone is how we connect to the world. The app is how we connect to the smartphone. Apple’s App Store leads the way, and has from the beginning. Yet for all the App Store has done, for all it has wrought, Apple can do better. Much, much better.

Apps are software and services, deconstructed. The App Store, however, is the reverse. This strikes me as a disaster waiting to happen.

For more than a generation, Windows dominated the personal computing landscape. It was an intensely popular, global standard — and a  hideous, ungainly mess. Until it became largely irrelevant. Windows worked for everyone yet was optimized for no one. Apple is now in a similar position with its App Store (and iTunes). The company has hundreds of millions of users, soon a billion, spread across iPhone 4, 4S, 5 and next, iPhone 5S, 5C and beyond. Plus, multiple iterations of iPad. Is it even possible to please — to delight — so large a user base? I’m not so sure.

Yes, Apple controls both hardware and software, unlike Microsoft. But, doing right by a billion people may simply be a hopeless endeavor, even for Apple. See also: Facebook.

The App Store helped Apple achieve what I once thought impossible. All I’m asking for now is that Apple do so again.

The iPhone’s GOLDEN Opportunity in China

This is a free preview of a Tech.pinions Insider post. Learn more about the Tech.pinions Insider analysis service here.

We are at the point in time with relation to Apple’s September 10th event that we have to start taking many rumors very seriously. In that light, we have heard whispers of a gold colored iPhone option. I have to admit when I first heard this rumor I discounted it immediately. I even stated on Twitter that I was extremely confident there would be no iPhone. Then our friend at iMore, Rene Ritchie, wrote this on the gold iPhone. I talked with Rene a bit about this on Twitter and was forced to reconsider my position. Then today M.G Seigler wrote this article on TechCrunch. After much thought we must seriously consider this rumor. And even if it doesn’t happen, which is possible, then this will at least have been an interesting discussion and scenario analysis.

Very early on in discussions I have on this subject I added this caveat to my opinion. Although, I personally don’t like the idea of a gold iPhone I can see it being big in certain markets and namely China. In M.G’s original column he did not mention the idea that a gold iPhone may be big in China. In fact, many have missed this point. After M.G tweeted his column, myself and apparently many mentioned to him on Twitter that it may be a good strategy for China. He then proceeded to update. But this point about a gold iPhone being potentially large in China is worth analyzing.

I tend to gather a lot of data on China and usually it is only technology focused. However for the past few month’s I have intentionally begun collecting data on China’s luxury goods market. I’ve done this specifically because although most technology products and brands are not considered ‘luxury brands or items’ in China, Apple’s happen to be. So any peripheral data related to China’s luxury goods market became interesting.

The luxury goods market has seen some ups and downs in China last year and this year due to issues in China’s economy. ((China’s luxury market grew just 7 percent in 2012, compared to 30 percent in 2011.)) Yet all the research I have gathered suggests that China luxury goods market has not necessarily been slowing but it has been shifting. Consumers in China are maturing and gaining more affluence at a rapid rate and markets are maturing in near real time. From data I have read from many management consulting firms and marketing firms from the region recommend a change in tactics to capture this shift in China’s consumer market for luxury goods. One report specifically contained this point that I found interesting:

consumers are putting a lot more emphasis on quality & function, not just the label, with brands focusing increasingly on memorable customer service and exclusive products.

Another key point that stood out in a similar report on luxury goods in the region specified this about Chinese consumers:

“brands will have to bring luxury back to basics, which means providing a unique experience, backed up by high-end quality and service,”

All things that Apple does well.

Why gold? Of course every region values gold, but some certainly more than other. Gold sales have historically done very well in China and even in high parts of this year the sales of gold jewelry have jumped anywhere from 17%-35% year-over-year in certain regions. Gold in china symbolizes wealth and also happiness. One can also argue that gold is similar to yellow and thus could also symbolize the Earth element which is the storage money element (wealth) in Four Pillars of Destiny. However, that may be reading too much into the symbolism.

Now, another bit of interesting data is that it is clear that luxury brands in China are targeting millennials. Estimates are that the luxury goods sector in China is poised to grow 40% over the next 10 years, driven largely by China’s millennial generation. It is estimated that China has about 270 million people aged 18 to 30, according to the National Bureau of Statistics. Of those 270 million millennials 92% own smartphones.

When we take a step back and look at a global picture, we can see a stronger case for a gold iPhone. It could get even more interesting if this product was exclusive to China, but that is pure speculation as is most of this discussion at this point. This could get even more interesting if a gold iPhone is unique to China AND only available on China Mobile, who is yet to carry the iPhone and has over 700 million wireless customers.

Apple is and has always positioned itself as a lifestyle brand and many would even argue a lifestyle brand. I pointed out with the release of the iPhone 5 that this was the first time I thought a smartphone was as elegantly designed as a luxury watch. If this design trend continues, Apple may easily be able to position the iPhone in China as a luxury item even more than it is today.

Some other key stats relevant to China:

– Chinese represent 25% of the global luxury market. However, only 13% is consumed in Greater China (China, Hong Kong, Macao and Taiwan). The remaining 12% is purchased in Europe (representing at least half of average tourist spending), North America and the Middle East. The main driver of nondomestic consumption remains the price difference: Import tax and luxury tax inflate Chinese prices by about 30%.

Why Larry Ellison is wrong about Apple

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

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

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

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

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

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

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

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

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

Dear Industry: Why History Won’t Repeat Itself

The Limits of Cloud Encryption

Revelations of National Security Agency snooping on email and other internet traffic has inspired long-overdue concern about privacy and security–and set off a wave of opportunistic announcements of encrypted services. Adding encryption is a good thing, but you have to understand what it can and cannot do. and what the newly announced services definitely cannot do is keep the government’s eyes off your data.

There are two fundamentally different problems: Protecting data in transit and in storage (sometimes called in flight and at rest in technical literature.) These are subject to different technical requirements and different legal protections–in general, data in transit are better protected.

In-transit protection. There’s no excuse for not encrypting all sensitive data in transit. There are standard protocols for it: Secure socket layer (SSL), transport layer security (TLS), and the more secure Perfect Forward Security. Transactions with Web sites involving any sort of personal data should use secure HHTP (HTTPS); if you use a mail client such as Outlook, Mac Mail, or Thunderbird, you should choose encrypted transport under server settings (Microsoft Exchange mail is encrypted by default.) If your mail provider doesn’t support encryptions in transit, seriously, get a new one.

In-transit encryption is what most providers offer. Some also encrypt mail stored on their servers, but there’s a catch. The government–and sometimes private parties in a lawsuit–can demand that the stored mail be decrypted and, with proper authority, the mail service provider has no choice but to comply.

When can the government look? Exactly what sort of authority the federal government needs, a major issue in the NSA revelations, is not entirely clear. Normally, the government would need a court order for mail less than 18 moths old, but a mere administrative subpoena for anything older. (Why the distinction? Because that’s what the 1986 Electronic Communications Privacy Act says.) It was the realization that they could not defy government orders that apparently led Lavabit and SilentCircle to shut down their secure mail services.

It is possible to encrypt email traffic from end to end, but the difficulty makes it seriously impractical. To do it, you have to find a way to get a key to everyone you want to be able to read a message. There are ways to do this using public key encryption, but they are far from easy to implement and far from convenient to use, so almost no one does it. And even if you encrypt message data from end to end, you have to leave header information exposed or the mail system will be unable to deliver your messages–and this metadata can reveal a great deal.

Cloud shortcomings. Automatic encryption of information stored on cloud servers, as recently promoted by Google and Amazon suffers the same shortcoming as encrypting stored mail. The service provider has the keys, and can be forced to give them up. This sort of encryption is still a very good idea; if done properly, it is very effective at protecting your data from intruders or other prying eyes. But it won’t work against an adversary with a court order.

The only way to get complete protection of data stored in the cloud is to encrypt it yourself before sending it to the cloud, and keep the keys in your possession. It’s not the most convenient thing in the world and if you lose the keys you are sunk,  but there are standard software packages that will do the heavy lifting.

 

 

 

The Microsoft Surface is (French) Toast

The Apology

Please allow me to begin by apologizing for the saucy language you are about to encounter. There is simply no way for me to tell the following joke without cursing. I really don’t like cursing (although, I do so love using it for effect), so I’m going to employ a substitute for the curse word. I trust that the savvy and discerning Techpinions reader will be able to pierce the veil and see through my little euphemism. Enjoy!

The Joke

On a Saturday morning, three boys come down to the kitchen and sit around the breakfast table.

Their mother asks the oldest boy what he’d like to eat.

“I’ll have some firetruckin’ French toast,” he says. The mother is outraged at his crude language. She hits him and sends him upstairs.

When she calms down, she asks the middle child what he wants. “Well, I guess that leaves more firetruckin’ French toast for me,” he says. The mom is livid. She smacks him and sends him away.

Finally, she looks at the youngest son and asks him what he wants for breakfast.

“I don’t know,” he says meekly, “but I definitely don’t want the firetruckin’ French toast!”

Excerpt from: “Jokes Every Man Should Know

The Analogy

• The mother in the Joke represents the computer buying public.

• The first two boys represent any one of the several PC hardware manufacturers who made tablets running the Windows 8 software but who have since been booted from the market.

• The youngest boy represents Microsoft.

Microsoft – like the youngest boy in the Joke – has gotten the reaction of the public (the mother) all mixed up. The boy thinks that the mother is upset about the French Toast, not the cursing. Microsoft thinks that the public is upset about Windows 8. So Microsoft has been quick to swear off (see what I did there?) Windows 8 and move on to the brand, spanking, new Windows 8.1. That’s going to fix EVERYTHING!

Or not.

‘Cause the real problem – the problem that Microsoft doesn’t see or get – is with Microsoft’s accursed tablet philosophy. Microsoft thinks that what people REALLY want in a tablet is a PC. And Microsoft thinks that what people REALLY want in a PC is Windows. Thus and therefore, Microsoft thinks that what people REALLY want in a tablet is a PC that runs Windows – a hybrid, that does it all and is all things to all people.

Until Microsoft’s outlook (oh my, yet another obscure reference) changes – and I think it’s unlikely to change anytime too soon – Microsoft, like the youngest boy in the Joke, is going to keep on getting slapped around without a clue as to why it’s happening.

Paul Thurrott’s Analysis

Paul Thurrott, in his article entitled, “Can Surface be Saved?“, is seemingly critical of Microsoft’s tablet efforts but, in the end, he erroneously sides with Microsoft’s take on why Windows 8 tablets are failing in the marketplace.

The Surface Is The New Zune

The parallels with (Surface and) Zune are interesting. In both cases, Microsoft established a new (well, recycled in the case of Surface) brand for a new family of hardware products. In both cases, Microsoft adopted a coopetition model in which it sought to have it both ways by both supporting partner devices and then competing with them head-on with their own.

The fear at the time of the reveal event was that Microsoft would alienate these partners by making its own hardware. ~ Paul Thurrott

Microsoft’s move to “co-opetition” is quite interesting. When Microsoft announced the Surface, the pundits seemed to fall into one of two groups. The theorists suggested that by making their own hardware, Microsoft would harm their relationship with their hardware partners. On the other hand, realists looked at the market and concluded: “Harm their relationship? Nonsense. Where are the hardware manufacturer’s going to go?”

In a way, the theorists and the realists were both right. If the Microsoft Windows 8 Tablet program is the sinking Titanic, Microsoft’s PC manufacturers are the lifeboats and those lifeboats aren’t so much paddling toward anything as they are simply madly paddling to get AWAY from the sinking ship that is the Surface. ((Paul Thurrott: First, of the few PC and hardware makers that voiced support for Windows RT last year and the subset of those that actually shipped devices, virtually all have completely and publicly backed away from the platform. Indeed, the most successful Windows RT device, by all measures, is Surface RT. And that device required a nearly $1 billion write-off because of poor sales.
Second, more and more PC makers are turning to free Google platforms. Not just Chrome OS, which is a super-cheap/low-risk bet, but also now Android.))

Redefining “Superior”

Killing off Surface would just deprive customers of some of the only truly superior PC hardware out there.

And these devices really are superior. We can debate specifics around battery life, the keyboard choices, the number of ports, the non-adjustable kickstand, or whatever. But these are beautiful and well made products. ~ Paul Thurrott

Okey dokey then. Let’s take a step back for a second and examine that bit of analysis. I have no argument at all with the hardware quality of the Surface. Beautiful and well-made? Yes. But nothing is truly “superior”unless it serves its intended purpose.

There is nothing so useless as doing efficiently that which should not be done at all. ~ Peter Drucker

The “Pro” Tablet

I previously described (the Surface) as what a “Pro” line of iPads might look like if Apple were to make such a thing. ~ Paul Thurrott

This is where Paul’s analysis and Microsoft’s tablet philosophy go right off the rails. They both think that what the world wants – that what the world needs – is a “Pro” line of tablets.

…I still believe that this kind of hybrid device—one that combines work and play thematically and tablet and laptop physically—is the future of the PC. Not just the Ultrabook, but the PC. The ability to use and travel with just a single device that does it all is still a dream today. ~ Paul Thurrott

Yeah, not so very much.

I can see the appeal of Paul and Microsoft’s “dream”. But – as Microsoft has demonstrated – merging a tablet with a PC is not a “dream”, it’s a nightmare.

Not One Hybrid, But Multiple Screens

Ironically, Bill Gates predicted the future of computing back in 2007:

I don’t think you’ll have one device.

I think you’ll have a full-screen device that you can carry around and you’ll do dramatically more reading off of that – yeah, I believe in the tablet form factor…

…and then you’ll have the device that fits in your pocket…

…and then we’ll have the evolution of the portable machine. And the evolution of the phone will both be extremely high volume, complementary–that is, if you own one, you’re more likely to own the other.

[pullquote]The one, unifying computer is not the hybrid, it’s the Cloud.[/pullquote]

What’s actually happening is that we’re moving toward owning multiple windows (Ironic, eh?) to view and interact with our centralized data in the Cloud. One screen for our pocket (smart phone), one screen for the desk (PC), one screen for the wall (TV) and one screen for walking and lounging about (tablet). The one, unifying computer is not the hybrid, it’s the Cloud.

So if Bill Gates predicted this so very long ago, why doesn’t Microsoft get it? Well, as Upton Sinclair so rightly put it:

“It is difficult to get a man to understand something when his salary depends upon his not understanding it.”

A hybrid computer that runs Windows is not the consumer’s dream, it’s Microsoft’s dream. And the bulk of the computer buying public is having none of it.

Black or White Thinking

Am I saying the the Surface isn’t good for anyone? Absolutely not. There are literally millions upon millions of users who will need it, love it, absolutely adore it.

But that’s not enough.

In today’s marketplace, millions of computers is a niche. The goal is to sell in the BILLIONS. And I’m not being hyperbolic. Android is closing in on a billion activations fast. And iOS isn’t that far behind.

The pertinent question isn’t whether Windows 8 tablets are good or bad. Like all products, they’re good for some people and bad for others. The pertinent question is one of proportion. Will enough people want enough Windows 8 tablets to make them a majority or even a plurality? All the evidence to date says that they will not.

The Surface Is Firetrucked

So let’s tie this into one nice, neat package and put a ribbon on it.

In the Joke, the mom’s problem isn’t with the French Toast. It’s with the kids’ cursing.

In reality, the public’s problem isn’t with the quality of the Surface hardware or about tweaking the Windows 8 software. It’s with Microsoft’s cursed belief that tablets really want to be PCs.

As long as the kid in the Joke doesn’t understand the problem, he’s going to keep getting smacked around by his mother.

As long as Microsoft doesn’t understand the problem, they’re going to keep getting smacked around by the marketplace.

If Microsoft doesn’t start getting the joke, instead of being the joke, their tablet ambitions are going to end up as (French) toast. ((Urban Dictionary: Toast – Destroyed, terminated, ceased functioning, ended abruptly by external forces.))

The Feature the Next iPhone Should Have

I know nothing about what Apple is going to announce at an iPhone event expected on Sept. 10. But I do know about one feature the is a strong candidate and definitely should be included in the next generation of iPhones and iPads: a fingerprint reader.

There are two basic reasons why Apple should–and, I believe, likely will–do this. First, as a result of its 2012 purchase of AuthenTec, Apple owns advanced fingerprint sensor technology that gives it a real competitive advantage. Second, incorporating the technology, with the sort of software support that Apple customarily delivers, will bring real benefits to customers and help strengthen the iOS ecosystem.

Biometric reliability. Fingerprint technology has been around for a very long time, but only recently has it gotten reliable enough to be truly useful. They would reject your finger if your skin was too moist or too dry, or if you swiped too fast or too slow or at an angle. Recent sensor-equipped laptops that I have used read my fingerprint quickly and accurately nearly every time.

Rumor has it that Apple will build a sensor into the home button, a move that seems both likely and practical, since tapping the home button is a common way to wake a sleeping iPhone or iPad. Apple has a patent pending for technology that would embed the sensor in the display itself (illustration above), but it seems unlikely that it would be ready for use any time soon.

The consumer benefit of fingerprint technology is clear. I suspect most iPhone owners have not activated even Apple’s PIN code login protection, which is not a great idea, although having to enter the code every time you want to use the iPhone is a nuisance. The real issue comes with the greater use of handsets as payment devices. For this to work well, you need something stronger than simply possession of the device to authenticate purchases unless you want anyone who happens to get hold of your phone to be able to buy stuff with it. Better authentication is a key to making both buyers and sellers more confident about using phone-based payment systems.[pullquote]Better authentication is a key to making both buyers and sellers more confident about using phone-based payment systems.[/pullquote]

A big improvement. Two-factor authentication is a big improvement, with the rule of them being you need two of three of something you have, something you are, and something you know. The phone is something you have and a biometric–your fingerprint–is something you are. The advantage of a fingerprint is that it’s easy and natural to collect, giving the user the benefits of stronger authentication with little or no effort.

But with authentication, as with all security-related matters, the devil is in the implementation. Biometrics pose a special challenge. If your password is compromised, you get a new password. If your fingerprint is compromised, you cannot grow a new finger. For this reason, your fingerprint should never be stored, not in a database (which is why the stories about Apple acquiring a lucrative fingerprint database and the privacy fears related to it are nonsense) not even on the device itself.

Keeping it secure. The “fingerprint” collected by a sensor actually consists of a map of “minutiae,” specific features of a print, that can be converted into a numerical code. This code is then hashed, run through a one-way mathematical function that will always supply the same output from a given input, but which makes it impossible to compute the input from the output. All the authentication system, whether on the device or on a server, ever sees is the hash. If it matches, you’re good to go; otherwise, your login is rejected. (Password systems should word the same way, unfortunately, many don’t.) The trick is picking a function that makes it very, very rare for two inputs to produce the same output and especially, all but impossible to force such a “collision” to occur. The way to do this is to use a standard, well-tested cryptographic hash algorithm, such as the National Institutes of Standards & Technology’s SHA-2 family.

Apple certainly has the software chops to implement biometrics in a way that is both secure and very user-friendly. If it pulls it off, the $356 million it paid for AuthenTec could prove to be money very well spent.

Customer Acquisition and the Entry Level iPhone

From an industry and market standpoint, a lower-cost iPhone certainly has the potential to shake up the market. In what ways we can only speculate but there are a few points about an entry level iPhone that are worth discussing.

The Cost to Acquire a Customer

This is basically how I view any product Apple prices below a premium price point. Any move Apple makes to go downstream is a strategic move to acquire customers who seek value but not at premium price points and get them into Apple’s ecosystem.

If Apple was just a hardware company and that is all, then it would make sense to have a discussion about how fast they can go downstream in order to compete globally. But Apple is not JUST a hardware company. They are a hardware + software + services company and each part plays a critical part to the whole experience.

To analyze Apple correctly we need to understand how the hardware plays into the software which plays into the services. Therefore we look at an entry level iPhone as a way to acquire new customers Apple finds valuable. I make this point specifically because I don’t believe a customer who just wants a “cheap” product is the kind of customer Apple wants or one that adds any value to a computing ecosystem. I say this because these customers don’t spend much if anything in app stores. These customers just want the cheapest data plans possible. These customers are unlikely to spend money on additional services, etc. [pullquote]The fallacy those who think price is all that matters fall into is believing that all consumers value the same thing.[/pullquote]

This is why Apple will never compete with anyone in a race to the bottom. Those customers are simply not valuable in the grand scheme of things and arguably not worth competing for. And luckily those who just want cheap are only a percentage of the overall consumer segment. The fallacy those who think price is all that matters fall into is believing that all consumers value the same thing. It is incorrect to believe that its hard to compete with free. It is easy, all you do is create a better product, experience, or solution, and market it to those who will value it.

So the philosophy of an entry level iPhone pricing is as such: the lowest price Apple believes is necessary to capture the type of entry level consumer who is still valuable to their ecosystem.

Horace Deidu, posted on his site Asymco in May, that iTunes customers spend at a rate of $40 per year as an average. Certainly in some cases, like mine, people spend more than $40 per year, and certainly in some cases people spend less. A person who just wants cheap would not spend nearly as much if anything in Apple’s ecosystem. But the key point for Apple and an entry level priced iPhone is how low does it need to be to still acquire a customer who will spend money and add value to the ecosystem. Apple could take a margin hit in order to acquire said customer and still make up that margin hit on the hardware and then some over the lifetime value of that customer. This is why the services (iTunes, iCloud, and future services) are so important to Apple’s long term strategy.

Redefining Engagement

Some additional necessary thinking was shared by Benedict Evans today with is post Defending iOS with Cheaper iPhone. Lots of good thoughts in this post as usual from Ben but one in particular is worth fleshing out.

“If total Android engagement moves decisively above iOS, the fact that iOS will remain big will be beside the point – it will move from first to first-equal and then perhaps second place on the roadmap. And given the sales trajectories, that could start to happen in 2014. If you have 5-6x the users and a quarter of the engagement, you’re still a more attractive market.”

This is a very interesting point and worthy of thinking and discussion. Engagement is an important metric but we must first back up and ask whether all engagement is equal? For example are even the most “engaged” people on iOS and Android doing the same things? In some cases, like in working professionals or premium customers, the answer may be yes but I’m sure there are also many cases where the answer is no. The other challenge with using the engagement statistics most promote publicly is that they all exclude important metrics. For example we don’t know how much extra time iPhone (or iOS) consumers spend on the device browsing the App store or shopping for music. The same is true on Android. This would be some key stats that would shed more light on engagement and said users value to an ecosystem. ((of course, engagement on tablets is so disproportionate on iOS vs. Android. And on this point, it may never be equal.))

If we just measure engagement by things like talking on the phone, texting, browsing the web, doing email, playing games, etc., then on the surface we can make an observation that at some point this these will be equal by sheer volume of Android. Simply because these are common tasks. What needs to be added additionally for a holistic ecosystem analysis is how much time is spent additionally where things (and all regions) may not be equal.

Regardless, even if the level of engagement does become equal taking Android 5-6x (or more) the customers to reach the same engagement, both platforms will remain and will be a focus for developers.

Lastly…

This is a point I have not seen made yet that I think is very interesting. As much as Apple will benefit from getting new customers with an entry level iPhone that benefits their ecosystem so will Google. We know Google makes more on iOS than Android and interestingly an entry level iPhone will likely help Google’s bottom line as well. When you dig through the numbers on how profitable iOS is to Google’s search revenue, Google may be the biggest cheer leader for a lower-cost iPhone.

The questions around this are interesting. If a lower-cost iPhone does shake up the market in Apple’s favor globally would Google put even more emphasis on iOS? Would Apple even let them? Will Apple do more strategically with Siri to usurp search or other value from Google?

Services are a critical part of the end game for many industry players. Google was always fascinating to me because they are a services company first who worked their way backwards into software, and now hardware with Motorola. Apple came from it the other direction starting with hardware and software and now investing heavily in services.

Strategically, so much is going on in the market that will define the next decade or more of computing.

With Help From Silicon Valley, America To Dominate The 21st Century

America will dominate the 21st century – economically and culturally – thanks to our dominance in technology.

Mobile technologies, supplemented by social connectivity, integrated with real-time data, enhanced by location-aware services and all supported by infinitely scalable yet highly personalized digital platforms will determine our future. These meta-offerings, delivering growth-spurring anytime, anywhere connectivity to all people and things, are each led by uniquely American businesses.

Apple makes the very best mobile computing devices in the world. Facebook and Twitter connect us all. Google delivers timely, personalized, location-specific data to anyone, for free. The best business software, for companies of all sizes, is developed by Microsoft. There are many other examples, of course, and in virtually every case, an American company and American innovation has the lead. Second-place isn’t even close.

Nearly as important, funding for critical and continuous innovation, everything from Big Banks and crowdfunding, to venture capital, philanthropy and small business loans, are American strengths. America’s universities – public and private – are the best in the world. These centers are the catalysts of innovation.

No nation offers immigrants more opportunity for success. No nation is more secure. Our well runs deep.

Nearly Unlimited Potential

We do not rule all areas of technology, of course. America is just one of several leaders in biotech. That said, American-led businesses and research labs are aggressively targeting rather extraordinary opportunities to extend life, explore the mind, and re-construct severely damaged bodies. Expect America to be the premier leader in biotech very soon.

In the area of green technology, America is lacking. This despite the billions thrown at this potentially vital industry. On the plus side, however, given our massive reserves of oil, coal and natural gas, America’s own energy future is secure. There are extremely few developed economies that can say the same.

America’s strengths are so many and so vast, in fact, that it will be hard to not dominate the 21st century.

Unfortunately, there are two obvious, pressing issues that limit our nation’s future and impede individual joy and prosperity. They are our schools and our safety net, both of which are constructed for an America that no longer exists.

Failing Grades

Our public schools, those K12, government-run institutions nearly all of us attended, are in embarrassingly bad shape. In larger cities, especially, they are a near-invisible tragedy. I offer no magic bullet, merely an admonition: the current model of government-funded, union-led, community-based schools is clearly failing our children.

Given this, we should welcome as much change, innovation and disruption in K12 education as we do in Silicon Valley. Yes, this will likely significantly minimize the power of government-employed unions. If this matters to you, my only suggestion is that you think of the nation and the nation’s children first.

Opportunity Not Inequality

The other national failing is the very real potential of continuous technological change to leave many of our citizens in a semi-permanent economic prison. Understand: I am not speaking of inequality, but misery. Fighting to stop inequality is too often an angry, jealous battle to bring down those at the top. Forget that Larry Ellison owns an island or that Google’s founders have their own private jets to travel in – or that your neighbors are better off than you. Inequality is not the issue. Not providing adequate education, medical care and opportunities to positively contribute to society and achieve prosperity are the real failings we must address.

In retail, for example, America’s Amazon.com and WalMart are global leaders. Their innovations create numerous savings which puts money in our pockets everyday. They also place many out of work and force many more into jobs at barely livable wages. It is a national responsibility to correct this.

Again, I cannot divine any singular path toward resolving this. Therefore, I urge those who fear the power of the government to instead open themselves up to possible innovative solutions which are led partly or even exclusively by government. Yes, funded by taxpayers. This may be the only way to ensure health, education and opportunity for all.

Admittedly, government solutions too often transform into vampires, never dying, feeding off others, caring only about themselves. This is a risk I nonetheless think we should take.

The Silicon Valley – Washington, DC Nexus of Power

America will lead the 21st century, just as we did the 20th. We have the best and the most of the stuff required to retain our current lofty status, and build upon it. Our people and smarts and money and technology – led by Silicon Valley – will usher the world into a new age of abundance, connectivity, innovation and sharing.

Our attention must now focus on ensuring the benefits of each of these flow justly to all our citizens.

It is not surprising that a new nexus of power, linking Silicon Valley and Washington, DC is quickly forming. One has the money, the other has the power.

This new nexus will become as important, as integrated, as accepted and as fruitful as the ties that bound New York and Washington, DC in the prior century. Let us welcome this transformative shift in power and money and values.

Let us also keep vigilant. It’s okay to have more. It’s not okay to leave our fellow Americans behind.

Image courtesy of Flickr.

The Great Wall of Amazon

I love shopping from Amazon. I always have and as long as they are around–which will be a long time–I always will. There are aspects of this statement I just made that need to be analyzed from a market standpoint as well as from a consumer centric viewpoint. I want to do several things in this column. First, I want to highlight some things about the shopping experience with Amazon that is unique to their differentiated offering. Second, I want to relate that to Amazon’s business model and growth strategy going forward.

Convenience and Delight

Amazon is a retail company plain and simple. Retail is by a nature a services business. When you survey the competitive landscape of retailers you conclude that Amazon’s greatest service is convenience. Without question buying things from Amazon is the most convenient retail experience out there today. I don’t think many would argue this point so I’m not going to spend much time on it. Rather, I’d like to focus on an under analyzed aspect of the Amazon buying experience–delight.

When I first started shopping with Amazon it started because of the convenience factor. This simple value proposition was certainly a critical part of the reason I continued to shop with Amazon. However, something deeper was happening psychologically that I picked up on.

Most of us in the developed world have traditions where on special occasions our culture engages in the act of receiving presents. These dates, like a birthday or a holiday, are marked on the calendar and we wait in anticipation for the special day when we receive gifts.

I would propose that shopping on Amazon, followed by the anticipation of the delivery of the package, and then receiving the “little brown box with a smiley face on it” surfaces the same feelings as receiving presents on special occasions. Thus, delivery day becomes a special occasion. It is the climax of the entire experience. This little psychological effect is the cherry on top of the convenient service Amazon provides.

There is another psychological element to the Amazon shopping experience at play as well. When we buy something from Amazon we are engaging in a principal behavioral scientists call delayed gratification. We are resisting the urge to satisfy our immediate impulses with a purchase and are choosing, for various reasons, to buy online and wait for our package to arrive. Interestingly in many studies, researchers found that those who intentionally delayed gratification of something genuinely enjoyed it more and had fewer instances of buyers remorse than those who satisfied their immediate impulse of the same item.

Trust

Another important foundation to understand is the element of trust which Amazon has built and is continuing to build with its customer base.

I’m actually yet to have a bad buying experience on Amazon. I buy at least a dozen things a month from them, so this is perhaps surprising or perhaps not. I do quite a bit of research before I buy things. For the most part when I order something from Amazon, I know its the product I want. I have heard stories from consumers who have had a few bad experiences with Amazon but all of them confirm that they are rare cases and overwhelmingly they have positive experiences shopping with Amazon. Because of this, Amazon has built a level of consumer trust that few companies have.

This is demonstrated by the number of credit cards and extremely high levels of repeat customers Amazon has. In fact, our own research, as well as data I have seen from other firms, suggests that once people start shopping with Amazon, they continually increase their spending with the retailer. Offering the theory that the lifetime value of an Amazon customer potentially has no ceiling. The limiter, if this is true, is Amazon not the customers willingness to spend with them.

“The Profit Switch”

Much has been said about Amazon’s business model this week. It is the topic of the week and a worthy one at that. There are several well written articles I want to highlight that provide a base for this discussion.

The first is by M.G Seigler, who was once a blogger and is now a venture capitalist at Google Ventures. He still writes for TechCrunch from time to time and recently provided his own analysis of Amazon’s model. The theory which he proposes that I want to highlight is that Amazon has a magic “profit switch” that as soon as they are ready they will flip on and start making massive(my emphasis) profits.

The next article was one by Horace Diedu at his site Asymco. Horace makes many significant points and this one in particular.

“The premise that Amazon can, on a whim, change its business model from selling other people’s products at a razor thin margin while investing in capital-intensive distribution to selling other people’s products at a large margin while not investing in capital-intesive distribution is not credible.”

This is exactly right. If we believe that Amazon does indeed have a profit switch then we need to analyze at what they would do, namely in what way would they change or tweak their business model, in order to suddenly realize such profits. There are really only two fundamental ways. They either raise their prices or all of a sudden change their capital expenditures model. Neither of these proposals seem credible given Amazon’s business model.

If Amazon raises their prices two things happen. First they ruin the trust they have built with their consumers. Knowing I am likely going get the best price on Amazon is the single driving factor for repeat transactions. It is, in fact, the only reason that when I am in the physical presence of a retailer that I scan an item of interest using the Amazon app to see if there is a better price on Amazon. Often there is and I choose to buy it through Amazon even though I could have spent $10 more and walked out the store with it. Clearly this matters more with items that are not time sensitive. The key point is, as Ben Thompson pointed out on his site Stratechery yesterday, that Amazon has chosen to focus on breadth and depth of selection and the best price at the same time. This means keeping prices competitive and maintaining the needed CapEx to maintain and expand selection and guarantee timely delivery.

Another element to this profit switch theory is that Amazon will raise prices at the point in which they have a monopoly. Meaning that they have bankrupted most if not all of their competition. This is a sound theory but not plausible. If Amazon was to all of a sudden raise prices, even if they had a monopoly, it would not just hurt trust as I raised before but it would open the door for their own disruption. Even if we believe that Amazon would bankrupt its retailer competitors, raising prices would open the door for its partners to start competing by offering lower prices on their own website for their own goods. The retailer themselves would favor this model because an Amazon monopoly would have conditioned the market to online spending even more than it is today, and allow them to cut out the middle man and not have to profit share with Amazon.

Amazon has no profit switch in my opinion but there is still the possibility of growth. As Ben Evans pointed out yesterday, and to which I wholeheartedly agree, the key to Amazon’s growth is more of the same. Offering the best price, on the widest selection of items. This means Amazon must invest in new areas, which they do, as loss-leaders at first, but as revenue machines over time. This is the model they have used and its the model I believe they will continue to use. It is also one that is requires more CapEx spending not less. Amazon has this model down and they are exceptionally good at it. The question may not be what will Amazon offer but what won’t Amazon offer. ((This column has gotten long enough so I’m adding additional analysis on topics I didn’t cover related to Amazon for our Tech.pinions Insiders))

[For Tech.Pinions Insiders: A Further Analysis of Amazon]

NSA, Google Glass, and Confirmation Bias

Two stories that were literally too good to be true made news this week, one of them silly, the other much more serious. But the fact that both got wide circulation before being corrected shows once again the serious flaws affecting much of what passes for journalism these days.

Confirmation bias is the form of wishful thinking that causes us to believe things we want to be true. Everyone, even the most skeptical Journalist, is susceptible to it. During my years as an editor, the most important question I asked writers was “how do you know that?” I wasn’t interested in epistemology; I wanted them to convince me as thoroughly as they had convinced themselves. If they couldn’t, I sent them back for more reporting. But with the decline of those annoying but useful editors, this check on confirmation bias creeping into stories is much reduced.

MVPoliceBlotter tweetThis week’s silly story began with a tweet from MV Police Blotter reporting that “a man wearing Google Glass breaks window after walking into it while watching YouTube.” Anyone who bothered to check @MVPoliceBlotter’s tweets would have recognized it as a parody account. (The tweet immediately proceeding this one was about an assault with a baguette, with the Mountain View police collecting croutons as evidence.) Furthermore, the story was lacking such important details as the name of the Glass wearer and the address of the incident–but it sounded good.

The obvious red flags didn’t stop lots of sites,  including the San Jose Business Journal (since taken down), from grabbing the story from a flood of retweets. John Markoff of The New York Times expressed some skepticism with a tweet of his own, and @MountainViewPD, the real Twitter account of the Mountain View Police Department, put an end to the nonsense.

The much more serious episode involved a report, circulated by Ars Technica and many others, that malware planted in the browsers of users of the Tor network and used to take down hidden sites hosting child pornography was phoning home to the National Security Agency. Now after all the revelations of the past few weeks, we are prepared to believe pretty much anything about the all-seeing, all-knowing NSA, though the obvious question of why an intelligence agency would be involved in what appeared to be a straight-up law enforcement matter, seems not to have been asked.

The reports were the results of some sloppy work by Baneki Privacy Labs, a consortium of security researchers, and Cryptocloud, that traced an IP address in the malware code to intelligence/defense contractor SAIC and ultimately to the NSA. But the work was done with out-of-date tools that were returning incorrect results. Baneki and Cryptocloud backed down after Wired‘s Kevin Poulsen raised some hard questions about the claim. (Ars has a good piece on the unraveling.) In the end, all we know is that the address in question is assigned to Verizon Business Services and very likely ultimately to SAIC through Verizon’s secure government operations data center.

But by the time the story got sorted out, the NSA connection had been widely reported, not as an interesting bit of speculation but as fact, for example, in this (still uncorrected) post by Cory Doctorow at BoingBoing.

Getting stuff right is hard, especially under time pressure. In the absence of editors or anyone else carefully reading copy before it is posted, we are all prone to letting what we think we know get ahead of what we really know. It is a temptation that must be mightily resisted.

 

 

 

“Android Dominance” Is An Oxymoron

Alarm Bells Should Be Ringing At Apple: It’s Getting Absolutely Creamed By Android, Which Now Controls ~80% Of The Smartphone Market ~ Jay Yarrow, Business Insider

No, it’s not.

Definition of an oxymoron:

A figure of speech in which apparently contradictory terms appear in conjunction

Fact #1: No version of Android dominates mobile OS market share.

“Android Dominance” is an oxymoron. No single “slice” of the Android “pie” is equal to the 93% of iOS users who have upgraded to iOS 6. iOS 6 is the world’s most popular mobile operating system.

iOS_Android_fragmentation-640x281
Source

Fact #2: Historically, iOS customers have been quick to update to the latest OS version. ((iOS 6 Adoption At Just Over One Week: 60% For iPhone And 41% For iPad | TechCrunch))

Fact #3: Apple’s iOS users have even more reasons to rapidly upgrade to iOS 7.

iOS_7_UpdatesiOS_7_Only

A recent developer survey revealed that 95% of developers are updating their apps for iOS 7.

More importantly, 48% of those developers intend to make their updated apps work only on iOS 7.

With so many new and updated apps working only on iOS 7, iOS users are going be strongly motivated to upgrade to iOS 7 as soon as possible.

Fact #4: OS Versions matter.

Apple, arguably, has higher-quality apps because developers still focus on iOS first. The reason they focus on the App Store is that it generates more revenue than Google’s Android store, and users are more engaged. However, there’s no reason to believe this will continue. ~ Jay Yarrow, Business Insider

[pullquote]People who look only at overall OS numbers without taking OS versions into account are missing the “trees” for the “forrest”[/pullquote]

Yes, there is.

Pundits, like Jay, can’t seem to understand why Android leads in market share but iOS leads in usage, engagement, developers, income and everything else that makes a platform strong. ((Why The iPhone's Usage Advantage Over Android Remains So Important. The latest evidence confirms it: iPhone users are far more engaged with their devices than are Android users.)) ((Why Google’s Android is Losing the Battle to Apple’s iOS)) ((Apple iPhone users use their devices 55% more than Android users)) (("Both in apps and overall smartphone usage, iPhone owners rank higher than owners of Android handsets. After surveying both U.S. and European smartphone owners, researchers not only found owners of the Apple device more frequently use apps, but conduct more tasks suitable to smartphones, such as browsing the Internet. This despite Android’s advantage both in number of handsets out there and in sales. The dichotomy just reinforces our Android in a Drawer theory, which says many owners of the Google-powered devices see their handsets as just a spiffier version of dumb feature phones, ignoring most of what makes smartphones smart.")) ((Apple’s iOS continues to dominate with nearly 60% Web usage share vs. Android’s 26%)) ((Apple Continues To Dominate Mobile Video Viewing, With 60% Occurring On iOS Vs. 32% On Android)) (("Sandvine says that the iPad accounts for more home traffic than any other device, at more than 10 percent; and it says that if you added up all of Apple’s devices (iPads, iPhones, Macs, etc.), the company ends up with more than 45 percent of home broadband usage.")) ((Why FRONTLINE Isn’t Doing Android — Yet)) ((BBC – we have an Android development team that is almost 3 times the size of the iOS team)) ((Why there aren’t more Android tablet apps, by the numbers)) ((Android’s consumer strength hasn’t translated to enterprise, where Apple still dominates)) ((Apple rules the skies with 84% in-flight share vs. Android’s 16%)) ((Apple’s iPhone may have kept 400K customers from leaving T-Mobile)) ((screen-shot-2013-07-23-at-10-21-49-amSource)) ((Google shares were down as much as 5% in after-hour trading following a report of second-quarter net income of $3.23 billion compared with $2.79 billion a year ago. The overall revenue figure came in at $14.1 billion. The main reason for Google’s perceived weakness: less-than-spectacular mobile ad sales.)) ((app-revenue-q12013 Source))

Let me help you out. There is no paradox. The latest version of Android does NOT lead the latest version of iOS in market share. People who look only at overall OS numbers without taking OS versions into account are reversing the traditional proverb – but still making the same proverbial mistake – by missing the “trees” for the “forrest.”

Fact #5: Android hardware and software is split into many, many pieces.

  • 11,868 Distinct Android devices seen this year
  • 3,997 Distinct Android devices seen last year 
  • 8 Android versions still in use
  • 37.9% Android users on Jelly Bean

“And by the way, this is the most ideal state of Android. It only includes a version of android which talk to the Google play store so it doesn’t include things like Kindles and Nooks.” ~ Tim Cook, WWDC (113:30)

android-fragmentation-3

Android, for all its popularity, remains a messy, fragmented, less-than-ideal experience for a normal consumer. ~ Jay Yarrow, Business Insider

Ah! And finally we get to the crux of the matter.

Fact #6: It is iOS 6 – not any single version of Android – that is the most dominant and monolithic mobile OS in the world.

“iOS 6 Dominance” is not an oxymoron – it’s a fact. And it is iOS 7 that promises to extend the dominance of Apple’s mobile platform into the foreseeable future.

It’s impossible to look at the landscape today and believe that developers will still be iPhone-focused in five years unless Apple does something drastic to change its competitive position. ~ Jay Yarrow, Business Insider

I sorta hafta to disagree. And reality hasta disagree too. It’s not only “possible” to believe that developers will still be iOS-focused (notice how Jay conveniently ignored iPod Touches and iPads in his OS comparison?), it’s probable too.

You don’t agree? You’re an oxymoron who says that only total OS numbers, not OS versions, really matter? Sorry, I can’t hear you. The facts are shouting you down.

Bezos and The Washington Post: Mr. Disruption Buys a Newspaper

You’d think a newspaper would be the last business in need of disruption. Yet Jeff Bezos, whose Amazon.com is the most disruptive force in retailing and perhaps in all of American business, has just plunked down $250 million of his own money to that The Washington Post, off the hands of the Graham family and the other shareholders of the soon-to-be renamed Washington Post Co.

I’m not going to pretend to know why Bezos did this. Maybe he has some never before expressed desire to be a press lord. Perhaps he had a secret desire to save the Post from the death by a thousand cuts it as suffering. Or maybe, just maybe, he has some notion of how to turn the slowly sinking Post back into a viable business.

National ambition, local reality. The Post has always been a somewhat odd beast. It’s basically a local paper with national ambitions but without the means to realize them. The Post, unlike the Times, never committed the resources needed to go national. At the same time, local news coverage  always took a back seat (and it was something like the back seat of a Porsche) to the all-powerful National Desk.  The Post tended to regard Washington’s suburbs as foreign territory and showed only a fitful interest in the less-prosperous neighborhoods of the District of Columbia.

Lack of attention to the community is likely one reason the Post failed to derive any benefit from the rapid growth of the Washington metropolitan area. Between 1990 and 2010, the Post‘s circulation fell faster than the Times’ even though Washington was growing much faster than New York.[pullquote]Between 1990 and 2010, the Post‘s circulation fell faster than the Times’ even though Washington was growing much faster than New York.[/pullquote]

Disruption can sometimes bring renewal, but the Post  has only seen pain and decline. When the collapse of classified ads and the disappearance of department stores clobbered ad revenues, the Post responded in the worst possible way, by gutting the paper. Successive rounds of buyouts gradually deprived the staff of many of its most talented writers, reporters, and editors (If you leave the choice of who gets bought out to the staff, as the Post largely did, you are going to lose your best people.)

Shrinking news. The news hole shrank drastically, the business section disappeared (taking most tech coverage with it), domestic bureaus were shuttered, and arts and cultural coverage was savaged. For reasons that I cannot explain even to myself, I get three dead tree newspapers, the Post, the Times, and The Wall Street Journal delivered, but I am hard-pressed these days to spend more than five minutes on the Post each morning. It is still capable of occasional greatness, but mostly it is a pale shadow of itself.

Until recently, the Post‘s online efforts have also been pathetic. The online Post was originally established as completely separate operation from the regular newsroom, in part to keep the online staff out of Newspaper Guild jurisdiction. Whatever that saved, it was a disastrous decision. The “real” Post staff regarded the online folks as an even lower life form than the Metro staff. While the Times and Journal built their online operations into real businesses, the Post moldered. It has since taken aggressive steps to remedy this, but it is very, very late.

So Bezos has bought himself a badly tarnished, once-great, newspaper. What is he going to do with it? I hope he will at least stem its decline. If the Post‘s finances stabilize, as they have shown some recent signs of doing (and the Washington Post Company is retaining legacy pension costs), Bezos can afford to absorb the current level of losses for many years to come. Even better, maybe he can find some Amazon magic to revive the Post.

What Exactly is Motorola Hiding With the X8?

Last week, Motorola announced their new line of Droid phones for Verizon.  Three of the features they stressed the most were “up to 32-48 hours battery life”, case configurability, and what they called the “Motorola X8 Computing System” for always-on functionality.  The X8 was by far the most confusing and mis-reported elements of the announcements, with many outlets reporting conflicting facts about the X8.  So what exactly is Motorola hiding with the X8 and why weren’t they more clear with the facts?  Let’s start with what Motorola communicated at their launch event.

During the Motorola launch event, the company characterized the technology as the “Motorola X8 Computing System”.  It fake packagewasn’t described as a chip or as an SOC, but a “system”.  This is the first time I’ve ever heard something described like this and is very confusing.  The picture of the X8 was confusing, too, which I believe shows a fake PCB or package with 8 pads, 4 on each side.  This makes the X8 look like one piece of silicon, or SOC.  Most phone makers like Apple are very clear with their descriptions and describe exactly what is inside their phones as “chips” or “SOCs”.  The word “Qualcomm” was never used during the event, either, nor was it on the Motorola website at first, which has significance as I will point out later.

The press then described the X8 exactly as Motorola presented it, which was that Motorola created their custom SOC, which would be great… if it were true.

Only after ArsTechnica ran an article entitled, “Motorola’s 8-core chip gives us a lesson in marketing-speak” did the details start to emerge.  Ars ran a benchmark which listed the Droid’s configuration, clearly showing clearly that the phone was based on the Qualcomm Snapdragon S4, which is commonly found in 10s of millions of smartphones around the world.  Then the press jumped on that, now referring to the X8 as based on the S4 but with two custom Motorola cores for contextual computing (sensor hub) and natural language.  Also, Motorola then added the following to their own website:

“The Motorola X8 Mobile Computing System is comprised of a Qualcomm Snapdragon S4Pro family processor (1.7GHz Dual-Core Krait CPU, Quad-Core Adreno 320 GPU), a natural language processor and a contextual computing processor.”

Why didn’t Motorola just say that it used the Qualcomm S4 at launch?  Why did they show what looks like a fake PCB/package, making it look like it was one chip with all that functionality?

Sascha Sagan’s PC Magazine interview with Motorola engineering SVP Iqbal Arshad added some extra detail but added some more confusion. Sagan reported that, “The X8’s CPU is, basically, a 28nm Qualcomm S4 Pro running at 1.7GHz. Motorola has customized the chip’s firmware, though.” That custom firmware statement is just bizarre based on my 20 years dealing with chips. Every phone manufacturer customizes firmware of a phone to a certain point, but no one modifies the base level of the Qualcomm IP.  To add a little more mystery on the two specialized chips, in the article, Arshad “declined to say where Motorola got them from, or who manufactured them.”  Again, odd.

So what is it with all this secrecy, seemingly fake PCB/package shots, and confusion?  It’s all about who gets the credit.  Having planned over 100 product launches in product and corporate marketing, I understand the pressure of “the launch”.  With Google breathing down your neck, you’d take some chances, too.  You see, Motorola wants to get most of the credit for themselves and not share any of it with Qualcomm, the secret vendor that developed the two specialized chips, or the secret vendor who manufactured them.

The problem with this approach is trust.  When phones or chips get launched, the tech press and analysts will bare with getting marketed to, but want to know the facts, too.  In fact, doing good marketing is appreciated by the press and analysts, but the facts need to come out alongside of the spin.  If not, a lack of trust starts to build.  The way the X8 was communicated projects a lack of trust, not excitement.

You may be thinking, “so if you’re so smart, Pat, how would you do it?”  Well, I would have positioned the “system” as the holistic combination of the Motorola value-adds.  I like to think of these as “the special sauce” or the “magic blue crystals that make your clothes whiter”.  The Motorola “system” would have been the two special cores and the software that made it all happen, and not try and take credit from Qualcomm.

As soon as the Droid ships, it will be torn apart by iFixIt undoubtedly and we will most likely know what is really inside, with real, not fake die shots.  Going forward, my wish is that Motorola would take credit they deserve, give credit to those who deserve it, but most of all provide the facts.

 

 

Steve Jobs And The Radical Innovation Of Fair Prices For Great Products

I’ll trade you one Twitter re-tweet and a Facebook Like for two LinkedIn endorsements. Deal? How about if I throw in a recommendation on Yelp?

In a world where it seems as if everything has a value, adjusted in real-time, tailored for each specific person based upon their unique wants, needs, interest and location, auto-managed by Big Data, leveraging platforms eagerly funded by Silicon Valley, and all of it executed by a ever-expanding range of bartering algorithms which forever traverse the world wide web, why is it so damn hard to put a actual price on anything?

Excepting Apple products.

I love love love the fact that Apple cares enough about its products – and me – to put a specified price on each of its products, clearly marked, unchanged by locale or season or aggressively savvy salespersons.

Want a Mac? An iPad? Want to download that song on iTunes? Want to purchase that book on iBooks? Want that newest app? The price is obvious. No games, no gaming.

Why is it that so few tech companies, even (supposedly) great ones, are unable to match this simple act?

Microsoft Office has been around for about 20 years. I would honestly not be surprised if every single reader paid a different price than I did. Worse, if you want an online version, or want to be able to access Office on your iPad or Android, for example, you may need to hire an accountant to decode the pricing scheme.

This is not done for our benefit.

I am here, money in hand, ready to buy your product. Just tell me: what does it cost? It cannot possibly be so hard to answer so simple a question, can it?

I’m not simply picking on Microsoft. Amazon is constantly gaming me. Offering an endless series of deals, specials, “gold boxes”,  cheaper prices if I subscribe to Prime,  free stuff if I get a Kindle, virtual coins if I download their Android store.

Still worse, they further compound their anti-customer complexity by offering different prices for the exact same product to different customers. Apparently, Amazon’s big data cloud can alert the company in real-time to exactly how much I am (really) willing to pay. Clever tech, I suppose, but it makes me feel used and cheated.

Apple seemingly stands alone in standing behind its products. The price is listed, take it or leave it.

Google, meanwhile, dares not charge any of us for their service. This speaks volumes. Of course, while they may be unable to divine a price for their very own search and map offerings, they’ve clearly determined how much I am worth to anonymous advertisers.

It really is this radically simple: Build a great product, one that is desired, and market demand will ensure you always achieve the optimum price. Construct a sub-par offering and you must always play a sort of Big Business version of three-card monty.

For example, can you actually tell me how much you paid last month for cable? You’ve had cable television for years. They send you a bill every single month. Yet you aren’t sure of the price being charged? Really? How much does your HBO cost? ESPN? Cable without ESPN? These really should not be unanswerable questions.

Why did every single person on the very same flight pay a different price than you? Does that make you feel like you cheated someone – or were cheated on? Can all these various businesses really only succeed by using vastly superior computing resources to effectively steal from us?

Not Apple. Not Steve Jobs.

Yes, Jobs was a “product guy,” a visionary, a demanding SOB –  one of the crazy ones. He was also a damn smart businessman. Jobs understood that gimmicks and obfuscation are the hallmarks of those unable to offer a truly great product.

Do not be fooled. The oft-promoted notion that our personal algorithms will latch themselves to various network bots and travel the “google” and buy what we need at the best price available, is a con.

You really think your “price bot” will ever out-compete Amazon’s or Google’s?

It’s time we use our sizable purchasing power – all of us – and disrupt Silicon Valley and the Big Data hegemony, which insists upon ever-changing prices, at inexplicable times, for unknowable reasons, based on their constant and hidden buying and selling of who we are, what we care about, and what we need. This is a game we can never win – because it’s been designed to work against us.

Of course, this battle cry should not be considered a call to revolution. Rather, a simple demand for the obvious: Show me your product. Tell me the price. I can then make the decision if it’s worth it. That’s all I’m asking for. And that’s exactly what Apple delivers. It’s just another way they make my life easier, better.

Steve Jobs was on our side. Too many others are not.

Image courtesy of Apple 

The Motorola Mystery Deepens

The Moto X is a phone.

It’s a little newer than your phone.

It will be available for sale in late August.

This is the true story of the Motorola Moto X.

–“The Amazing True Story of the Moto X,” John Herman’s Buzzfeed story in the form of a poem

Fifteen months ago, Google bought Motorola for $12.5 billion. And we are still trying to figure out why.

The flagship Moto X handset, announced Aug. 1, doesn’t do much to clarify things. It’s the first product that bears the clear stamp of Google management. And it appears to be a very nice phone, with solid specs and fully competitive with the latest offerings from Samsung, HTC, Sony, and whoever else is still in the Android phone mix.

What it isn’t is particularly disruptive. Like other flagship Android phones–the Samsung Galaxy S4, the HTC One, the Sony Experia Z–it has some distinctive features that set it aside from the pack. But at bottom, it is built from the same specs and will be sold through the same carrier channels at the same price and with the same plans as its competitors.

Its most notable features include customized colors and textures (initially available only on AT&T models), the ability to take a photo by shaking the phone, even if it is asleep, and tapping the screen, and software that listens and will respond to voice commands at any time. These seem less gimmicky than some of the features of the Galaxy S4, but they don’t feel like enough to shake Samsung’s dominance of the Android market.

In the rumor-laden run-up to the Moto X announcement, there was talk that Motorola’s expertise in sensor technology would yield some revolutionary use of the phone’s ability to sense its surrounding, for example, a phone that might automatically adjust its behavior when it realized it was in a moving car. A lot of this speculation was encouraged by the public statements of CEO Dennis Woodside. So it’s not unreasonable that we hoped for something more interesting than shake-to-shoot.

So the question remains is just what problem Motorola Mobility solves for Google. The Moto X doesn’t reduce Android fragmentation. Instead, it adds its own mildly customized user interface to the Android 4.x mix. It doesn’t answer the question of who is really in charge of the Android user experience, the OEMs, the carriers, or Google. And I have no particular reason to believe it will significantly reduce Moto’s losses, which are running at a pace of about $1 billion a year.

Maybe Google has some grand scheme for its disparate efforts whose logic will some day be revealed to us. Or maybe it really is just a unfocused collection of efforts, ranging from handsets to self-driving cars, funded by a massively profitable search advertising business. Some day we will know.

 

Korus: A Superior Multi-Room, Wireless Audio Solution

For the last few years, casual home speakers have seen a resurgence, proceeded by the popularity of high-end headphones used on smartphones and tablets.  Sonos has run away with the wireless, multi-room consumer speaker system market, but the volume driver has been Bluetooth-based wireless speakers from brands like Bose and Jambox.  Like we’ve seen in many other segments of high-tech and consumer electronics, a new company called Korus and their V-Series speakers could be on their way to disrupting Sonos, Jambox and Bose.

Through the course of doing research with Korus, I have had the distinct pleasure of testing many versions of their new line of speakers.  I can say that I’m very impressed with Korus when compared to Sonos and of course, the litany of Bluetooth-based speakers I have used from brands like Bose.  Specifically, I got to test two different versions of near production-level speakers in their family, the V600 and V400 and I wanted to share my experiences with you.  The first thing I want to go into, though, is one core technology that really differentiates the speakers, called SKAA.

SKAA Wireless Standard

Wireless speakers on the market today typically use two standards for their wireless functionality- Bluetooth or  WiFi.  Each has their pros and cons as I have outlined in detail here.  Bluetooth is built into every phone, but can only support one speaker, is unreliable, difficult to pair, low bandwidth, low range, and high latency.  WiFi, used as the basis for AirPlay and Sonos, is very pervasive, long range, supports 5-10 speakers, high sound quality, but it requires a network, has very high latency, low battery life, mid-grade reliability, and takes a long time to pair.

SKAA, on the other hand, utilized in the Korus V600 and V400, takes the best features of WiFi and Bluetooth and combines into one standard.  SKAA is high bandwidth at 480kbps, long range at 65 feet, very reliable and not as susceptible to interference, has low 40ms latency, 20 hours battery life with an iPhone, and is easy to pair and re-pair. The only thing someone can question is that it requires a “Baton” or wireless audio transmitter, in the device that has the music.  I’ve thought a lot about that and as I survey different devices like Logitech mice and keyboards and even a FitBit used with a PC, they all require dongles to get the highest reliability. Both Logitech and FitBit use a dongle because Bluetooth is hard to pair, unreliable and is susceptible to interference. Let’s get onto the speakers themselves.       

Korus Setup

As I outlined above, the Korus speakers use “Batons” to connect to your phone, tablet or PC.  Here’s how I setup the V600 and V400 with my iPhone for the first time: 1/ play the music on the device and 2/ plug in the baton.  That’s it.  While there are just as many steps to setup as Bluetooth, you never have to setup that baton up ever again.  Also, you are never “contending” for control of the speaker like Bluetooth as whoever has the baton has control of the music. 

Korus Reliability

Once I setup my Korus speakers, the connection just stuck.  I got between 30-75 feet of range in my house, and of course your mileage will vary given house build.  Also, when I got out of range, it wasn’t a gradual AM-radio style interference; the speakers just turned off.  That may sound like a nit, but it’s very annoying at a party when the host who uses Bluetooth speakers gets out of range and the room starts crackling.

Korus Flexibility

When I walk into the homes of most of my geeky colleagues, I usually see a Sonos speaker system somewhere inside.  With a Sonos system, you get a wireless speaker system that can have up to 5 speakers playing the same song simultaneously, controlled by an iOS or Android app.  This is great, but comes with many limitations.     The first limitation with Sonos is that you must have their application to play the audio.  That’s great for supported services, but what if you wanted to play the new Google Play Music All Access, a game or a movie?  You’re out of luck.  Even if your favorite service is supported today, given the finnicky nature of content, you may find in the future Sonos doesn’t support it.

The Korus speakers can play any audio content on any player on iPhones, iPads, PCs and Macs. It plays all music, all game audio, and all movie and video audio.  You see, the batons are essentially just a wireless extension of your audio port.  Try doing all of that with your Sonos.  It won’t.

The final example of Korus flexibility I really enjoyed was what I like to call “party-mode”.  This is when you have a bunch of friends over, you’re having some drinks, and listening to some music.  Undoubtedly, someone will say, “have you heard that new song”?  Someone will reply, “yes, I have it on my phone”.  With Korus, I just needed to hand the baton to the one with the song and it just plays.  Try that with Bluetooth.

Korus Multi-Speaker Capabilities

Korus can play the same song or audio on four speakers simultaneously.  This is really nice when you are having a party or just hanging around the house.  You can adjust the volume via the Korus volume control app, the program’s app, the phone’s device’s volume control, or you can do it manually on the speaker.  There isn’t any lag after pressing play either, when the music starts playing, unlike the WiFi lag you get with Sonos or Airplay.  Needless to say, the multi-speaker capabilities are something no Bluetooth speaker system has.

Korus Speaker Quality

I will say this right now; I’m no audiophile.  What I do know from working on so many speaker development projects in my career isV600_inside_1 that everyone is different in what they consider great audio.  I personally like a very rich, bassy sound.  Audiophiles  don’t like any special effects and can notice highs that my ear doesn’t.  What I can do is vouch for my friends and family who thought the Korus speakers sounded great.

The Korus V600 is a larger 11lb unit and has a frequency range between 80Hz and 20kHZ and include side-firing tweeters which I thought provided a lot of “width” to the audio experience.  The Korus V400 is a smaller 4.4lb unit and has a frequency range between 125Hz and 20kHZ

My Bose wireless speakers were never used again after the Korus came into the house.

Korus Fine Points

The Korus speakers had some softer, fine points I wanted to share with you.  As Apple has demonstrated so many times, some of the softer adders really make the difference and I think they did as well for Korus.  The first are the handles.  These speakers are designed to be moved around the house or taken with you to someone’s house or even to the beach.  The V600 can also be powered for 90 hours by 6 D batteries.  Even the power cords were thought through well.  They remind me of a much softer and flexible version of an Apple TV cord.  The power cord can be wrapped around the handle to move or to remove cable clutter on a counter-top.  Finally, we have the buttons for power, volume etc.  You touch them, there isn’t a lot of side to side travel, which says “quality” to me.  I think consumers notice these fine points and are more important than people think.  Just ask Apple.

Pricing and Availability

The Korus V600 and V400 aren’t cheap knock-offs; they are feature rich and have a price tag that corresponds to it.  The V600 including three batons (30-pin/Lightning/USB) are $449, and the V400 including three batons are $349.  This corresponds quite nicely versus Sonos Play 3 at $299, Sonos Play 5 at $399 plus the Sonos Bridge at $49.  My Bluetooth-based Bose Soundlink was $299.

Wrapping Up

It is always fun to see potential disruptors in markets where you think the innovation is gone.  Korus has demonstrated that there is still a lot of room left in consumer speakers to innovate and disrupt.  When the speakers become available in the fall, I highly recommend checking them out if you are considering Sonos or one of the many Bluetooth-based wireless speakers.

Nvidia’s Shield Was Built for Folks Like Me

I’m right in the sweet spot of Nvidia’s target demographic for Shield. I’m a hard core gamer, I play mainly console games and not as much PC games. Life and career have taken more time and its been harder to find the time to play video games like I once did. This is why the promise of a true mobile console experience has always interested me.

This is why I was very interested when Nvidia announced Shield. I was skeptical I’ll be honest, and a bit surprised. But I remained optimistic because of what I know about Nvidia and how hopeful I am that someone will actually deliver on the mobile console promise.

I’ve been playing with Shield for a while now and I have to say I am impressed.

Some Thoughts on the Hardware

First off the hardware is excellent. The controller feels very much like an XBOX controller, which I would argue is the best controller around. ((This is subjective of course, but the overall feel in my hand and the “just right” stiffness of the joysticks is perfect for me)). If you have spent many hours gaming with the XBOX controller, you will feel right at home with the Shield controls.

Second, the screen is fantastic. I’ve used all the latest and greatest Android devices and the screen on the Shield and although its resolution and PPI isn’t has high as devices like the Galaxy S4, to the naked eye it feels extremely close. Which means the games and whole visual experience are top notch.

Android Gaming

The biggest question here is games on Android. Nvidia chose the Android operating system to run Shield because of Androids open nature. There is no question in my mind that more immersive games will come to mobile devices, but I’ve felt for some time that a controller experience was necessary for this to fully happen. Now that Nvidia has released Shield and that Shield delivers a truly mobile console experience in my opinion, the ingredients are there for console game developers to start taking mobile more seriously.

There are already a handful of Shield Optimized Android games, and like all new console launches I anticipate this number to grow and because Shield is built on Android, I expect the amount of Shield optimized games to grow faster than any other mobile gaming console to this point.

Interestingly, although there are about two dozen Shield optimized games already there are many more in the Android market that work already given their support for third party game controllers.

One last point. In using Shield, I have had the most positive expereince with Android yet. Not only is it a pure implementation running stock Jelly Bean, but In the many of the entertainment use cases Shield is focused on brings to light some of the best of Android. Android is great on Smartphones and tablets, but in my opinion, its even better on Shield.

A Bit of Nostalgia

Although, there is a fair amount of content already available to play on Shield, being built on Android has its advantages. Namely that given its open nature there are very good Nintendo and Super Nintendo Emulators for Android. I downloaded my favorite, SuperGNES, and loaded up the games I have been using on the Galaxy S4 I have. Namely, Super Punchout, Street Fighter II, Mario Kart, and Super Mario World. Low and behold, right out the gate every one worked with the Shield controller with no modification or customization. So here I am now playing Street Fighter II and Super Punchout with the glory of using a game controller.

Having access to all the Nintendo games I know and love, and grew up with, and being able to use a game controller with them, was perhaps the most eye opening experience for me in using Shield.

Powerful Accessories

Beyond the games, there are other benefits for being built on Android that showcase a device like Shield’s advantage over a more closed mobile console gaming experience. Being built on Android opens the door for other unique hardware accessory expereinces to benefit Shield. One in particular I want to highlight. And that is using Shield to fly my Parott AR Drone.

Yes, I have one of those drones, and it is one of my favorite gadgets / toys. You may not know this but the AR Drone has a number of augmented reality games available for it. Games where you use the camera to shoot digital objects in the air or the ground. Or games where you race through a digital course in the physical world. All of these experiences through a touch screen are possible but made all the better using a physcical game controller. To say that Shield has profoundly impacted my flying ability with my AR Drone would be an understatement.

This brings up a broader point. We are seeing a number of electronics like this, whether RC cars, planes, etc., come with software for smart phones. Being able to use Shield as a game controller with some of hardware expereinces like these may open up some doors that were not possible before.

Things to Consider

For us gaming enthusiasts we are faced with a difficult holiday season. This is the first time in a while when the holiday season will feature simultaneous avaialablity of the two top gaming consoles in their launch year. Most of us can’t afford them all this holiday season.

However, if a mobile console gaming experience is a priority for you then strongly consider Shield. It is the best mobile gaming console experience I have encountered. And as I stated there is a big potential upside being built on Android. I strongly believe it is only a matter of time before console first game developers shift to a mobile first development focus. This does not mean they will only develop for mobile device, only that they will embrace the mobile first strategy. Android will clearly benefit from this move and inevitably so will Shield.

Shield may be the most future proof mobile gaming console to hit the market yet. And as I pointed out, playing Nintendo games, using to fly drones, etc., are all icing on the cake.

A Microsoft Without Client Software: It Could Be the Future

It’s easy to forget today but Microsoft got its start as a highly disruptive company. The IBM PC running Microsoft software revolutionized business computing in the 1980s, bringing down the priesthood of the mainframe. As cheap clones and better applications flooded the market, Microsoft was everywhere. In the mid-1990s, the friendlier Windows 95 and the explosion of the World Wide Web made personal computing accessible to a mass consumer market, again dominated by Microsoft.

Twenty years later  though, it’s time to contemplate a future in which Microsoft mainly retreats to the back offices its once disrupted so thoroughly. Microsoft’s client business has gotten into deeper trouble faster than I imagined possible. A years ago, the company launched three new client operating systems. Windows RT, the OS designed for tablets with ARM system-on-chip processors, is an unmitigated disaster. Asus, the last OEM with any real commitment to RT products, appears to be bailing out, and Microsoft, after taking a $900 million writedown on unsold inventory of Surface RT tablets, reported that it sold just $853 million worth. Windows 8, the version for traditional PCs and Intel-powered tablets, is not doing much better.  For the first time, the introduction of a new version of windows has not only failed to boost PC sales but may actually have helped accelerate the decline, while Windows tablets and new convertible designs have failed to gain much traction.

In this field, Windows Phone 8 looks like the winner. At least it is gaining market share. But Windows Phone, with about 4% of the U.S. market, is a very distant third in what increasingly appears to be a two-horse race. So where does this leave Microsoft: Nowhere in the rapidly growing space of tablets. Still dominant in PCs, but in a market facing slow but inevitable decline. And hanging on by its fingernails in a smartphone market in which growth may be slowing substantially. The bottom line is that it is not at all clear that Microsoft has a viable future in client systems. To be sure, the Windows PC will be with us for a long time to come, but its future for Microsoft is one of managing decline. What would a Microsoft without clients look like?

On the revenue side, it’s not too bad. Microsoft financials table The Windows Division (these data do not reflect Microsoft’s most recent corporate reorganization), which consists of, well, Windows, accounted for just over a quarter of Microsoft’s gross in the most recent 12 months. Of course, the decline in clients is also going to affect client applications. Office falls into the Microsoft Business Division, which also includes Microsoft’s growing Dynamics line of enterprise management software. Best guess is that Windows and Office combined provide about half of Microsoft’s revenue. The self-explanatory Server and Tools unit and the Entertainment and Devices Division–mostly Xbox–make up most of the rest.

On a pro forma basis, a clientless Microsoft would still be a $40 billion company. The problems come when you look at profits rather than revenues. Windows and Microsoft Business provide nearly all the profit. This picture is not quite a grim as it appears at first glance. If Microsoft were to contract sharply, the $6.6 billion in overhead (“Corporate-level activity”) should also shrink considerably. And the Online Services Division, which includes Bing Search, Skype, and a variety of other services, appears to be in a serious turnaround, trimming its massive losses to $1.3 billion in the most recent 12 months. Server and Tools turns in a very nice 40% margin.

What you might be left with is a company with $40 billion in revenues and a 30% profit margin in place of one with $78 billion in revenue and a 35% margin. No great, but clearly viable. And the fact that Microsoft will go on receiving streams of legacy income for years to come buys it the time it needs for change. The big question is how you get from here to there. Corporate reinventions, in which a company sheds what were once thought to be core businesses to set the stage for future growth, are hardly unheard of. IBM is probably the outstanding example of such a successful transformation. But the process is wrenching and brutal. And I have never heard of a reinvention on this scale being carried out by the management that landed the company on the rocks. Whoever will lead Microsoft to calmer waters, it will not be Steve Ballmer.

Are The New Nexus 7 Improvements Enough to Dethrone the iPad mini?

It’s hard to believe that 13 months ago, the preferred tablet form factor was 10” and Android was literally nowhere in tablets.  Then came the first Nexus 7 at Google IO in June 2012, Kindle Fire 2 in September 2012, then the iPad mini in November 2012 changing the preferred tablet form factor to 7-8”.  A year later Apple still reigned in tablets of all sizes with IDC reporting that in 1Q13 Apple held nearly 40% market share while its nearest competitor, Samsung, registered around 18%.  Android as a whole did come in at 56% share, 247% growth.   With Asus and Google upping the ante, can the new Nexus 7 dethrone the iPad mini? Let’s first go over what Google launched last week.

Google and Asus last week launched the new Nexus 7, improving many of the specifications.  Here are the major changes:

  • Display:              720P to 1920×1200 resolution, registering a PPI of 323
  • SOC:                     Nvidia Tegra 3 to Qualcomm Snapdragon S4
  • WWAN:              None to LTE
  • RAM:                   1GB to 2GB
  • Cameras:           1.2MP front-facing to both 1.2MP front-facing and 5MP rear facing
  • Price:                    $199 to $229 for WiFi only

Sure, it’s a bit thinner and lighter and uses a rubberized backing versus faux leather, but outside of the additions I listed above, I didn’t notice anything personally that dramatically impact the experience.  Let me talk a bit about the experience.

On the plus side, the display was gorgeous.  I had to strain to see pixels on V1 but I cannot see any pixels on V2.  I’m extremely near-sighted and notice any video aberrations.  I watched three full-length HD movies on V2 and they looked great.  I didn’t experience any arm strain, either as Nexus is light.  Photos really looked awesome, too.  Games were extremely fast and fluid, as well.  Finally, you can’t beat the price of $229, particularly when compared to the iPad mini at $329.  Now let me get to the downsides.

It’s hard to explain, but when compared to the iPad or to my HTC One phone, the Nexus 7 V2 has some kind of user interface lag.  It’s not a lot, but it’s perceptible, at least to me. GMail is annoying too, and I have never gotten quite used to it, which is why on my Android devices, I use whatever the manufacturer like Samsung or HTC offers. The 5MP camera is disappointing as it exhibits tremendous shutter lag and pictures appeared grainy.  So what does this mean to the iPad mini?

Comparing the new Nexus 7 to the iPad mini is harder than you can imagine.  On one hand, the Nexus has a much cheaper base price, a superior display,  and offers a great video, photo and game experience.  On the other hand, the iPad mini’s UI and interface feels quicker and its camera generates higher quality pictures and videos with no shutter lag.  The mini’s mail and calendar experience is so much better as well.  Personally, I was a bit disappointed with the Nexus 7 V2 as I expected more.  Based on specs, I expected no interface lags like on my HTC One and decent pictures.  As odd as it sounds, personally I still prefer the Nexus 7 V2 to the iPad mini because I prefer the Android ecosystem and I am a sucker for a great display.

In the end, I do think the Nexus 7 will pick up some share at the expense of the iPad mini, but not as much as you might imagine or for the reasons you may think.  It is a much closer competition than appears on paper.  Those consumers with iPhones will most likely go with the mini as they have bought into many iOS apps and content and are very comfortable with the experience.  Tablets are still a considered purchase and are perceived as risky and going mini lowers the consumer’s risk.  To a small portion of consumers, the display will be enough to pull them toward the Nexus, but the primary purchase driver will be the cheap opening price and the great display.  Distribution will play a factor too, as V1 had limited distribution, but V2 is expected to have very wide distribution around the world.

So everybody calm down, I don’t believe the iPad mini is dead nor will Apple lose extensive market share based on the Nexus V2.

 

Marissa Mayer Neuters The Cowboy Coder

“All the speed he took, all the turns he’d taken and the corners he’d cut in Night City, and still he’d see the matrix in his sleep, bright lattices of logic unfolding across that colorless void…” 
Neuromancer (William Gibson)

I suspect we are on the cusp of a transformation in how engineers and computer programmers are hired, valued, rewarded, promoted. The line was drawn when Yahoo CEO Marissa Mayer effectively killed off telecommuting. With this, she also dispatched the last of the cowboy coders from the Valley.

The cowboy coder has long been the stuff of pop culture mythos: vain, skilled, belligerent, cool. The dark character-artifice presented in film, books and television. Machines rule our lives, everyone’s lives, excepting, we were told, these Silicon Valley cyber-riders who expertly manipulate the algorithmic levers of the world’s digitized power centers.

Supremely valuable to the company he deigned to work for, far superior than the prototypical office “drones” who showed up dutifully for work every morning, the cowboy coder lived by his own rules, his own creed, his exceptional talents.

Thanks to Mayer, he is no more.

Cowboy Coders Dethroned

Without making headlines, coding prowess – long the princely, priestly lifeblood of Silicon Valley – was dethroned.

Here’s Mayer in February:

To become the absolute best place to work, communication and collaboration will be important, so we need to be working side-by-side. That is why it is critical that we are all present in our offices. Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people, and impromptu team meetings. (emphasis mine)

Translation: Meatspace trumps cyberspace.

Here’s Mayer in April:

People are more productive when they’re alone, but they’re more collaborative and innovative when they’re together. Some of the best ideas come from pulling two different ideas together.” (emphasis mine)

Translation: Conversation trumps coding.

Connections Equal Profits

Power and value now flow not from coding but from creating and enabling connections. Connections equal profits. To create deeper, lasting, more profitable connections with customers requires deeper, more meaningful connections amongst the workers.

Cowboys are loners – and they do not play well with others.

Make no mistake, this phenomenon is not restricted to Yahoo, nor to female CEOs. Recall that the big Facebook-Waze merger was scuttled because Facebook wanted Waze’s people – it’s coding talent – to relocate to Facebook headquarters. Translation: The Valley’s most valued social media company understands that far-flung coding greatness cannot equal the value that arises via physical proximity.

Earlier this month, Steve Ballmer made it similarly clear in his Microsoft re-org that collaboration trumps all:

Collaborative doesn’t just mean “easy to get along with.” Collaboration means the ability to coordinate effectively, within and among teams, to get results, build better products faster, and drive customer and shareholder value.

669px-The.Matrix.glmatrix.2

In-person, cross-company interactions that arise from an army of lesser skilled but far more sociable programmers trumps world-class coding.

Which begs the question: how should coders be valued? Who is “best”? Who achieves “most”? What skills are critical? Who gets promoted? It’s still too early to know. I suggest, however, that we look to the iPhone for guidance.

iPhone Changes Everything

The iPhone changed mobile and mobile changes everything.

Consider that last quarter Apple sold 50 million personal computers. Only 4 million were Macs. The remaining 46 million were iPhones and iPads – mobile computers.

Mobile now rules the computing landscape, and unlike their desktop predecessors, mobile “PC” applications are not optimized for intensive processing, use or focus. Rather, they are constructed, rail by rail, across very distinct tracks – all of which are required for success:

  1. Mobile
  2. Location-aware
  3. Social-collaborative
  4. Touch-based
  5. Cloud-connected
  6. Rapid (“bursty”) use
  7. Native code
  8. Highly visual presentation
  9. Entertaining
  10. Personalized

In this new age of computing, an application can only succeed by effectively traversing multiple domains, multiple stakeholders, disparate content sources, and numerous touchpoints. Think: Yahoo’s mobile applications team working with Apple, licensing content from Weather.com, integrating Yahoo’s user database information with Facebook and Twitter APIs, and coordinating this with Flickr, all just to create the new, free Yahoo weather app for iPhone.

Those who expertly develop, sustain and integrate relationships across the pillars will be well rewarded. Horizontal trumps vertical.

The cowboy coder, working alone, magically conjuring his binary alchemy, a master of a single application or system, is now more of a cost center, inhibiting the development of the far more valuable horizontal connections that determine success.

Coding Is Relationships

It’s time to consign the detritus of the cowboy coder to the dustbin of history. Moving forward, personal (mobile) computing must deliver social, visual, delightful, real-time, collaborative experiences.

For good or bad, coding has gone uptown. Everything is digitized and everyone has a computer. The new “best” coders now arrive for work each morning from inside comfy, anointed busses. From their gleaming office they eat the finest foods, they wear a badge and their cube has a number, well-earned. The products and services they build are for everyone to use.

Laudable – but boring.

The cowboy coder is dead. It’s time for a new programming hero to step forward.

Images courtesy of Wikimedia

Beating The Dead Horse That Is Microsoft Windows (Part 2)

This is part two of a two-part series focusing on what’s gone wrong with Microsoft Windows. If you want to read part 1, click here. If you want to know what’s gone wrong with Microsoft Windows and what its probable future will be…well, read on….

Before you criticize someone, you should walk a mile in their shoes. That way when you criticize them, you are a mile away from them and you have their shoes.

Microsoft’s Core Beliefs

A company’s actions invariably revolve around its core beliefs. What then are some of the core beliefs that helped to shape Microsoft’s most recent Windows 8 campaign?

“We don’t see things as they are, we see them as we are.” – Anaïs Nin

A) “THE WINDOWS AND OFFICE CASH COWS MUST BE PROTECTED AT ALL COSTS.”

The advantages inherent in protecting the company’s biggest moneymakers is obvious. (The disadvantages, on the other hand, are far more obscure.) Focusing on what the company is especially good at – and where most of the company’s monies are made – is the default strategy of almost all businesses.

If the company is doing something well, then the norm is to keep on doing what they’re doing – only more of it.

“Nothing is more important at Microsoft than Windows.” — Steve Ballmer, CES 2012 Keynote

B) “THE WINDOWS’ BRAND IS VERY VALUABLE.”

Microsoft sincerely believes that the “Windows” Brand is both beloved and valuable. It only make sense then for Microsoft to leverage the value of that Brand by slapping it onto nearly everything they make.

“Convictions are more dangerous enemies of truth than lies.” ~ Nietzsche

C) “WE CAN DO IT TOO AND WE CAN DO IT MUCH, MUCH BETTER THAN YOU.”

Two classic business strategies are the “first mover” and the “fast follower”. I’d classify Microsoft as a “slow follower”. Microsoft seems to believe that the best way to compete in new markets is to do what the new product leader is doing…only do it better. Microsoft waits until a clear market winner has emerged and then they try to jump in, mid-race.

The obvious advantage to such a strategy is that Microsoft is able to wait and identify which markets are going to be winners. They can also learn from the mistakes of those who went before them and incorporate those learnings into their own, subsequent, product offerings.

Most importantly, Microsoft believes that their late start can be overcome by their superior technological know-how — aided, of course, by leveraging their existing Windows and Office monopolies and by exploiting their huge cash reserves. Such a belief reveals the incredible sense of self-confidence that Microsoft has in its own abilities. Some might call it hubris, but in Microsoft’s defense, their seemly arrogant strategy has been validated by past successes.

Microsoft dominated personal computing for 25 years. For many, many of those years, they controlled 95% of the personal computing market – a monopoly that is virtually unheard of without the assistance of government mandates. In computing, Microsoft was the very embodiment of the allegorical 900 pound gorilla. What Microsoft wanted, Microsoft took.

For example, Microsoft was late to the internet market, but when they put their mind and muscle to it, they slowly, but surely, smushed their Netscape internet challenger and made their own Internet Explorer THE default internet browser for the vast majority of personal computer users.

Similarly, Microsoft was a very new entrant in a very old gaming console market, but when they put their full weight behind the Xbox, they eventually (after going 5 billion dollars in the hole) became the gaming console market leader. Is there any other company that has the patience, perseverance or cash reserves necessary to follow such a strategy?

Microsoft won the internet wars and the console wars, and they did it with sheer brute force. When you are as big and as strong and as successful as Microsoft, is it any wonder that you think highly of your own abilities?

“An old belief is like an old shoe. We so value its comfort that we fail to notice the hole in it.” ~ Robert Brault

D) “THE MICROSOFT OFFICE SUITE IS THE KILLER APPLICATION, BOTH IN DESKTOP AND MOBILE COMPUTING.”

The Office Suite gives Microsoft a huge strategic advantage in the notebook and desktop markets. Microsoft Office wasn’t the first killer application, but it is the biggest, baddest suite of killer applications of our time.

Microsoft believes that Office is their ace in the hole in the mobile wars. The other mobile platforms may have a large lead in apps, but the Office Suite is the killer app that levels the playing field.

When in doubt, observe and ask questions. When certain, observe at length and ask many more questions. ~ George S. Patton

E) THE TABLET IS MERELY ANOTHER (LESS PRODUCTIVE) KIND OF PC.

Microsoft has always insisted that the tablet is simply another kind of PC. Microsoft contends that tablets alone don’t cut it. What people really want is a productive tablet, a two-in-one device that serves as both a tablet and a notebook, a hybrid that “powers people on-the-go for the activities people really value.”

A belief is not true because it is useful. ~ Henri Frédéric Amiel

Strategy

I believe Microsoft wanted to both differentiate Windows 8 from the offerings of their competitors and to strike at their competitors where they were the most vulnerable. This is a classic strategy known as “exploiting the line of least resistance.” Walmart parlayed this strategy into an empire by initially building their mega-stores in rural areas that their competitors found unprofitable.

Exploit the line of least resistance – so long as it can lead you to any objective which would contribute to your underlying object. ~ B.H. Liddell Hart, Strategy

Microsoft’s line of least resistance was – hybrid computers. In strategic terms, hybrids offered Microsoft a wealth of opportunities. First, no one else was seriously competing there. Second, Windows 8’s dual OS was the seemingly perfect hybrid operating system. Third, hybrids were a natural bridge that could be used to migrate Microsoft’s huge existing desktop customer base onto and into the burgeoning tablet market space.

In strategic terms, Microsoft was partially successful.They did go where Apple and Android were not – which is the beginning of a good strategy. However, they also went where the market was not.

Microsoft exploited the line of least resistance, but the reason it was the line of least resistance was because it didn’t lead to a meaningful objective. It does one no good to exploit a pass unguarded by the enemy if the reason the enemy left that pass unguarded was because it led to nowhere.

A girl phoned me the other day and said, “Come on over; nobody’s home.” I went over. Nobody was home. ~ Rodney Dangerfield

Following the line of least resistance is good strategy – but only if it takes you to your desired goal.

Microsoft’s Windows 8 Campaign

In their Windows 8 campaign, Microsoft made (at least) four key strategic decisions:

1) Create their own (Surface) hardware, but continue to license their operating system software to third-party manufacturers too.

2) Create three separate operating systems for the phone, tablet and desktop, then attempt to unify all three under one name and one user interface.

3) Start a brand new, incompatible, tablet platform named “RT” and supplement it with software from the existing Windows Office Suite.

4) Create a dual OS operating system that would work on tablets, notebooks and desktops but be tailored to run on tablet/notebook hybrids.

Every one of Microsoft’s major campaign decisions contains an inherent contradiction, an internal inconsistency, a self-destructive insistence on having things “both ways”. Let’s see how these decisions played out in practice.

You can’t dance at two weddings at the same time; nor can you sit on two horses with one behind. ~ Yiddish proverb

1) CREATE THEIR OWN HARDWARE, BUT CONTINUE TO LICENSE THEIR OPERATING SYSTEM SOFTWARE TO THIRD-PARTY MANUFACTURERS TOO.

1.1) Microsoft’s share of connected devices sales (in effect, PCs plus iOS and Android) collapsed from over 90% in 2009 to under 25% today.

Screen Shot 2013-07-20 at 9.32.23 pm
Source: Benedict Evans

Microsoft is painfully aware of the fact that their Windows operating system is rapidly sliding from monopoly status to third place, behind Android and iOS.

“If things go wrong, don’t go with them.” – Roger Babson

1.2) Microsoft’s smart phone licensing strategy has been an utter disaster. Not only is Microsoft’s share of the smart phone market tiny, but Microsoft can’t charge the consumer for the operating system like it does on the PC, and Microsoft’s royalty fees from licensing the Windows Phone OS to manufacturers like Nokia, HTC and Samsung are being given back to these companies in the form of marketing dollars.

1.3) In light of these facts, Microsoft decided to adopt Apple’s integrated model and make their own hardware as well as their own software.

When people are free to do as they please, they usually imitate each other ~ Eric Hoffer

Microsoft is virtually telling the world “Our business model works great — except when it doesn’t.”

1.4) The good news is:

— Vertical integration allows Microsoft to better control the user experience from start to finish. ((“What this reorganization makes clear is that Microsoft now thinks it will have to control its own destiny: no longer will it depend on Intel for the computing power, Dell for manufacturing expertise, or HP for marketing heft (and, lest we forget, all of them for its technical support) to get its technologies in front of the public.”))

— It enables Microsoft to make money on hardware.

— It puts Microsoft in a position to directly compete with Apple. ((Microsoft CEO Steve Ballmer told CRN in an exclusive interview Monday that the company’s Surface tablet marks a new era in which the computer software giant will leave no “stone unturned” in its innovation battle against Apple.))

1.5) Make no mistake about it, this is a fundamental shift in the company’s business model, and it could absolutely end up backfiring.

— Microsoft has decided that third-party hardware manufacturers are part of the problem, and not part of the solution.

— Microsoft has stripped funding from its partners and reallocated it to their own hardware efforts. ((“Microsoft’s marketing budgets that are allocated so far for Q2 2013 include absolutely no support for Windows Phone partners.”))

— Microsoft’s strategy distances their interests from the interests of their hardware partners, such as Acer, ((Acer won’t do Windows Phone this year, wants Microsoft to pick up the pace.)) Samsung, ((Something Else Revealed At Samsung’s Launch Event: Disdain For Windows RT.)) Nokia, ((Nokia pulls plug on Windows RT tablet, signals end MSFT)) device makers based in Asia, ((Device makers based in Asia are not keen on Windows RT. That has become painfully clear.)) and trade shows such as Computex. ((One year after debut, Windows RT is a Computex no-show.))

— Microsoft’s policy encourages their hardware partners, such as AMD, ((After years of Windows OS exclusivity, Advanced Micro Devices is opening the door to design chips to run Google’s Android and Chrome OS in PCs and tablets.)) to migrate to Android. ((Android has become a hedge against Microsoft and Windows.))

— Hardware is – no pun intended – hard. Probably a lot harder than Microsoft thought. ((Switching from software to hardware, however, is proving very hard. I’m sure quite a bit harder than (Microsoft’s) management thought.))

— All of this hardware diversification is causing massive customer confusion. Quoting from “Making Sense of All the New Laptop Flavors“:

“Milunovich cites the two different models of Microsoft’s Surface — the ”RT” model running on an Nvidia (NVDA) microprocessor, and the … “Pro” model running on Intel‘s (INTC) microprocessor, as one prominent instance of possible “confusion among consumers relating to software versions and the herd of vendors churning out product.”

“Milunovich thinks the increasing diversity in tablets offered on the market plays to Apple’s advantage, because “user confusion favors Apple given its leading brand, relatively simple product line, and retail store support,” he argues.”

1.6) The entire exercise is counter-productive. The Surface RT and the Surface Pro are not taking sales away from iOS and Android devices. If anything, Microsoft’s hardware is cannibalizing their partner’s Ultrabook sales. ((“Surface Pro is really a PC, and potential buyers will also be considering notebooks and ultrabooks.” noted Moorhead.)) What purpose does that serve?

“A house divided against itself cannot stand.” ~ Abraham Lincoln

2) “CREATE THREE SEPARATE OPERATING SYSTEMS FOR THE PHONE, TABLET AND DESKTOP, THEN ATTEMPT TO UNIFY ALL THREE UNDER ONE NAME AND ONE USER INTERFACE.”

It has always been the dream of programmers to use one underlying code base to run software everywhere. Microsoft has turned that dream on its head and has, instead, devised a scheme that uses three, wholly separate and incompatible phone, tablet and desktop code bases, to run one, seemingly self-same, user interface.

Microsoft has gotten it completely backwards.

Try imagining using one user interface on three different form factors. For example, would you want the same user interface on your bicycle, your motorcycle and your car? On a trowel, a shovel and a backhoe? On a cork-board, a blackboard and a scoreboard? Even the iPad – which critics view as “merely a big iPod touch” – employs a separate user interface from that of the iPhone.

The form factor should not be tailored to the user interface. It’s the other way around. The user interface should be tailored to the form factor. In Microsoft’s desire to have one user interface across all of their Windows devices, they forgot about the most important thing – the user experience.

“How many legs does a dog have if you call the tail a leg? Four. Calling a tail a leg doesn’t make it a leg.” – Abraham Lincoln

How many operating systems do you have if you call them all “Windows 8”? Three. Calling three operating systems by one name does not make them one operating system.

3) “START A BRAND NEW, INCOMPATIBLE, TABLET PLATFORM NAMED “RT” AND SUPPLEMENT IT WITH SOFTWARE FROM THE EXISTING WINDOWS OFFICE SUITE.”

3.1) Microsoft knew that Windows RT was starting at a severe disadvantage to the incumbent tablet makers. It was late, late, late in the platform game and their iOS and Android competitors had literally racked up millions of competing mobile apps. What to do, what to do?

Well, here’s a couple of things that you should probably not do when launching a brand new platform:

— Call your new platform “RT” for “Run Time. (I mean…are you kidding me?)

— Craft your tablet advertising campaign around…a keyboard? RT is supposed to be a tablet platform, right? Focusing tablet advertising on the keyboard is like focusing car advertising on the trailer hitch.

— Introduce the platform with virtually no native software.

— Introduce a platform that doesn’t run Windows 8 applications on the very same day that you introduce Windows 8.

— Make it hard for App developers to know where they’re supposed to focus. (Windows Phone 8, Surface RT, Windows 8?)

Osborne yourself by telling potential customers that you will be, in a few months, releasing a Windows Pro tablet that will do everything that the RT tablet does not.

— Introduce your platform with no clear message, no clear identity and no clear use case.

You have two systems (and operating systems) that look the same and run some of the same apps, but aren’t the same. ~ Mashable

Let me put this to you, the reader. Can you adequately explain the difference between Windows RT and the Windows Pro in a sentence? In a paragraph?

Neither can Microsoft.

If you want to give God a good laugh, tell Him your plans. ~ Yiddish proverb

3.2) Microsoft thought that the Office Suite would be the killer app that would drive sales of the RT platform. But does RT’s ability to run the Office Suite make up for its inability to run the 199,999 apps it’s missing? Not hardly.

Office is not the killer app that Microsoft thinks it is. Non-Microsoft competitors are already far more useful on touch devices. Porting the desktop Office to the touchscreen device is merely an exercise in futility. ((Microsoft Office for the iPhone Is Here. Yawn. / Office for iPhone downloads start with a bang, but fizzle before 4th; Office Mobile for iPhone: Why? / Microsoft Doesn’t Seem To Be Fooling Anyone With Its New Office For iPhone App / Office for iPhone is a belated, ambivalent move, analysts say / Microsoft Office not worth wait / Microsoft’s Office For iPhone: Wrong Product, Wrong Market))

Microsoft’s Office gambit has failed. If you really want Office on your computer, RT is not the solution for you. You’ll be far happier with a Windows laptop or desktop.

Most manufacturers have already dropped plans for developing Windows RT-based products, given the timid sales of their first batch, due to the limited number of applications for the platform. Microsoft’s second Surface RT tablet might be the sole king of a barren land.

“A half-baked idea is okay as long as it’s in the oven.”

4) “CREATE A DUAL OS OPERATING SYSTEM THAT WILL WORK ON TABLETS, NOTEBOOKS AND DESKTOPS BUT WILL BE TAILORED FOR TABLET/NOTEBOOK HYBRIDS.”

4.1) Microsoft seems to truly believe that tablets are underpowered, unproductive devices and that people don’t really want to use them. Of course, this completely ignores the success of the iPad, but let’s set that aside for the moment.

Microsoft believes that what people really want is a single device that they can use to get serious work done; what people really want is a hybrid that does it all; what people really want is a replacement for both the PC and the iPad. According to Microsoft, ordinary people may need to use a tablet here and there, but what they really want in a tablet is the power of a PC and a PC powered by Microsoft Windows.

Microsoft’s products and advertising say it loud and say it proud:
— Two operating systems are better than one;
A two-in-one device is twice as good as owning two separate devices; and
— A dual Operating System that runs on tablets and desktops and hybrids (oh my!) is the best of all possible worlds!

Whenever you look at a piece of work and you think the fellow was crazy, then you want to pay some attention to that. One of you is likely to be, and you had better find out which one it is. It makes an awful lot of difference. ~ Charles Franklin Kettering

4.2) Only, here’s the rub. All of Microsoft’s assertions and assumptions fly in the face of reality.

— No single manufacturer has successfully combined a full PC with the form factor of a tablet and made it work. That should be telling you something.

— The Windows 8 interface baffles consumers.

— People don’t want to use apps on their desktop PC. People don’t want a two-in-one device or touchscreen on their PC. People don’t want a tablet OS with the desktop OS bolted on. People don’t want a tablet on their PC.

— People don’t want legacy Windows applications on their tablet. People don’t want a two-headed OS on their tablet. People don’t want a desktop computer on their tablet.

— People don’t want an all-in-one computer. People DO want multiple connected devices

“Many users are realizing that everyday computing, such as accessing the Web, connecting to social media, sending emails, as well as using a variety of apps, doesn’t require a lot of computing power or local storage,” said IDC analyst Loren Loverde. “Instead, they are putting a premium on access from a variety of smaller devices with longer battery life, an instant-on function, and intuitive touch-centric interfaces.” ~ AllThingsD

The market has voted: Tablets that are just tablets are trouncing Microsoft’s hybrid tablet/PC devices.

thin-many

PCs are like Humpty Dumpty; they are being broken into pieces and won’t be put back together again. ~ Stratechery

4.3) The sad thing is, Microsoft knew better.

Mossberg: What’s your device in five years that you’ll rely on the most?

Gates: I don’t think you’ll have one device. I think you’ll have a full screen device that you can carry around and you’ll do dramatically more reading off of that – yeah, I believe in the tablet form factor – and then we’ll have the evolution of the portable machine and the evolution of the phone will both be extremely high volume, complimentary, that is if you own one you’re likely to own the other… ~ AllThingsD, 2007

144300-3dc6ca66-edc1-11e2-a799-ec5c9dace08aBill Gates saw the future, but he – and Microsoft – abandoned their vision in an attempt to salvage their Windows empire. The future, they knew, was multiple connected devices. But that future had touch operating systems – not Windows operating systems – at its core. And Microsoft couldn’t have that.

Windows 8 is not an attempt to create the future of computing.

Windows 8 is an attempt to preserve Microsoft’s past.

Vision without action is daydream. Action without vision is nightmare. ~ Japanese proverb

Conclusion

“If you cannot answer a man’s argument, all it not lost; you can still call him vile names.” – Elbert Hubbard

Are Microsoft’s Windows 8 problems fixable or are they intractable?

— So long as Microsoft does both hardware and software, either Microsoft’s hardware sales, or the hardware sales of their partners, or both, will suffer.

— So long as Microsoft has 3 different operating systems, Developers and app development will suffer.

— So long as RT tries to use the Office Suite as a substitute for native apps, RT sales will suffer.

— So long as Microsoft’s tablet OS runs dual operating systems tailored for hybrids, their tablet sales (and their tablet owners) will suffer.

Post-PC does not mean no PC. It means that the PC is no longer the dominant device; the center of the computing world.

It is a certainty that Microsoft Windows will continue too. But it is just as certain that it will no longer be the dominant operating system. And unless Microsoft radically changes its strategy – which I highly doubt – Window’s will not be vying for dominance – it will be vying for relevance.

One meets his destiny often in the road he takes to avoid it. ~ French proverb

wp7-parade-100910

Whose funeral is this, anyway?

Tablets, Seasonality, and Adoption Cycles

There is an interesting shift happening in the hardware release cycle of the computing industry. When the PC was the only game in town bi-annual release schedules were the norm. Now with the increased growth in smartphone and tablets, it looks as though the industry may be shifting to a much more seasonal release schedule. In consumer markets seasonal purchasing has always been the norm. But in enterprise markets the bi-annual release schedules allowed flexibility to purchase new hardware to meet demands throughout the calendar year.

The entire industry appears to be shifting away from that bi-annual schedule and to a more consumer friendly seasonal emphasis. This is evidenced by the slowing growth of both smartphones and tablets on a quarter-over-quarter basis according to some of the latest device shipment data. My conviction is not that we are seeing saturation but seasonality. There are other factors at play which I will get into.

This does not necessarily mean that the tablet category is slowing. Rather, what it suggests is that the buying cycles for tablets are shifting to be more seasonal at large. This was always the case for smartphones at large, but it appears the end of the year is now also the hot cycle for tablets and traditional PCs.

What this means is that we are lining up to have a very loaded holiday quarter with new smartphones, tablets, and PCs competing for consumer dollars. This by itself brings with it ramifications for consumers and enterprises alike.

For the consumer market the challenge is going to be for OEMs to cut above the noise in what is going to be an extremely competitive holiday season. Retail placement, promotions, and online / offline marketing are going to be keys to success.

Market Experimentation

Earlier this week I wrote for my TIME column a piece titled “Why I’m Not Switching from the iPhone.” My overall point of the column was to paint the picture of a mature smartphone consumer. Someone who, through experience, has vetted the options and defined specifically needs, and wants.


This has always been at the base of our adoption cycle market methodology. When we research consumer markets and try to get the pulse of the consumer in our interview and observational research, much of our goal is in understanding how mature they are in understanding what they want and why. This was also why I wrote the article on our site here called “I need a PC and I know it.” Again emphasizing a self-awareness of technological needs.

We do not have this with tablets. Where I point out in my TIME column that most mass market consumers at a global level are only on their first or second smartphones, tablet owners are largely on their first tablet and the market for non-tablet owners, or tablet intenders is massive. [pullquote]When we are in a position to get our first car we will take it any way we can acquire it.[/pullquote]

We have gathered quite a bit of research suggesting a high level of buyers remorse for low-cost tablets. This backs up our points of where we are at with adoption cycles of these devices. I liken what is happening with low-cost devices for places like emerging markets or first time owners to our first cars. When we are in a position to get our first car we will take it any way we can acquire it. Then after time, generally speaking, more options will emerge and the choice and preference will become more refined.

For many first time tablet owners who just wanted to get in on the hype they wanted to see what the tablet buzz was all about. So they got one any way they could and for a portion of the market they went with cheaper devices. What our research is suggesting is that they learned their lesson, liked the form factor and the upside, weren’t happy with their choice and are looking to spend up on the next one. This data comes from all markets including emerging (like China) as well.

This point about buyers remorse feeds nicely into the data we see about why iPad usage remains so dominant compared to the competition.

So What Does it All Mean

It means that competing for the mind of the consumer is becoming harder and harder. Consumers are going to be faced with an overwhelming plethora of choices. For the masses who still may be defining and refining their needs and wants, as they look to spend up it will favor certain brands they trust or perceive as the market leader. This is why I have no doubt the iPad will sell marvelously this holiday season and why both the iPhone and Samsung phones are still the dominant global players.

Seasonality is going to change things in my opinion. Marketing for one is going to get much more tricky when we have the kind of loaded and confusing holiday quarter I think we are in for the next few years at least. How companies market and position their products to cut above the noise and gain consumer mindshare will be key.

One thing that our data and even the recent research we have compiled continually emphasizes is that as the adoption cycle moves from immature to mature, cheap goes off the table and the masses begin looking for value. This is why I’ll argue until I am blue in the face that a race to the bottom is not actually what consumers want. It may be necessary in some regions, but over time, even in emerging markets, I believe value is what we will be demanded.

Why We Welcome Commentary on Our Columns

One of the most important parts of our TechPinions columns is the comment section at the end of each column.
As editors, we highly vet each column as we are extremely committed to writing and posting pieces that are insightful, informative and sometimes provocative. Each of our writers are seasoned thought leaders and we highly appreciate the comments and even constructive criticism that is often offered in these comment sections.

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

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

As one of the co-founders of Techpinions I truly appreciate the great feedback we get from our readers and look forward to hearing more of you share your thoughts and analysis on the columns we post each week.

We Took Grandpa’s Keys Away. Now We Have To Take His iPhone.

Is there any more magical device than the iPhone? With this amazingly light, utterly beautiful device, we can call and text, email, video chat, play games, watch television, read the great books of history.

We tweet and Facebook. We buy and sell stocks. We set our home alarm, monitor our blood pressure, pay our bills – all with a few swipes of our fingers.

Perhaps this is simply too much power to possess by someone on the verge of senility.

Some of us have already had the discussion over taking away a parent’s car keys. Soon, we may all need to decide if we should take away their iPhones, iPads, Kindles and Androids.

The very technology that connects them with the world, with their grandchildren, that entertains and enlightens them, may – regrettably – become more than they can properly control.

Forget Nigerian email scams, what of FaceTime video scams? Will your aging mom or dad accept calls from anyone? Might they give away – to that friendly man on the screen – their banking information? Their Social Security number?

Will your father or grandmother, say, in their current mental state, tweet pictures of themselves – to Facebook or Twitter – that are entirely inappropriate?

Who will they text? Will your daughter in high school be troubled by the increasingly irrational emails her grandmother is sending her?

Will grandpa leave the device open, allowing hackers complete, unfettered access?

That Zynga game that your dad spends so much time with – will he spend hundreds or thousands of dollars on in-app upgrades?

Your mother has repeatedly posted embarrassing information about her adult children on Facebook. How do we make her stop?

How will we take away our dad’s iPhone, or our mother’s iPad?

How do we initiate this conversation?

How do we cut off our loved ones from connectivity and all the joy it offers? These are difficult questions but we may have to face them.

Tech companies are designing smartphones and tablets to make it increasingly easier to connect with search, the web, friends and family. Should we demand tech companies also build devices that are harder to use – at least for some?

Is it right – or necessary – to require Apple, for example, to build in a set of “anti-accessible” controls such that we can limit the functionality, use and time our parents and grandparents spend on their devices? Will Silicon Valley create a start-up that uses biometrics, for examples, or other identity tools to ensure a device is “locked down” when we are not around, or that only the “good” gets through, and no bad can get out?

It seems that tech companies, from Samsung and Apple, Google, Amazon and Facebook, ought to bear some responsibility to ensure that the powerless elderly aren’t handed a truly powerful device without any consideration as to the potential harm it may cause.

With smartphone or tablet in hand, everyone and everything becomes instantly accessible, all over the world. The frightening corollary: Everyone and everything now has instant access to your parent’s (virtual) front door. At some point, you may be forced to take away the keys – for their own good.

You should not have to undertake this rather depressing familial obligation all on your own.

Image courtesy of ThinkProgress

Why Netflix Already Won at the Emmys

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

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

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

Industry Firsts

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

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

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

The Clear Future

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

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

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