Don’t Miss OS X Mountain Lion’s Potential in China

Many in the media who got an early preview of Apple’s new Mac OS Mountain Lion are notably excited about a range of features. I point out a few of them in my article sharing my experience with the developer preview. Given that much of the mainstream media, or at least the sites that get the most publicity, are not based in China it will be somewhat easy to not focus on the China specific features built into Mac OS X Mountain Lion. China is a significant growth area for Apple and the improvements made for China should not be missed. Here are some of those features.

Late last year I saw a survey from Morgan Stanley that looked specifically at the PC market in China. Now by PC they mean a clamshell notebook or desktop form factor. Based on Morgan Stanley’s survey of Chinese consumers, here are the data points that stood out to me.

— Consumers in tier 1-3 cities and enterprises are key to China’s PC growth. 45% of tier 1-3 residents plan to buy a PC in the next three years vs. 36% in tier 4-6 cities. Just over half of PC owners live in tier 1-3 cities and the rest in tier 4-6. Large enterprises plan to grow 2011 IT budgets by 10%, outpacing SMBs at 2%, and spend 37% of their budgets on hardware.

— Consumer PC purchasing behavior in China is similar to developed markets in several ways. Our survey suggests Chinese consumers (9% of global units) spent $700 on their current PC, same as the US. Encouragingly, consumers in China plan to spend 6% more on their next PC and half of them plan to upgrade to a new PC in the next two years (four-year cycle).

— Our survey suggests one in five consumers want to purchase a Mac as their next PC, four times Apple’s 5% share today. However, Apple’s share gains in the near term are likely limited to the 7% of respondents who are willing to pay over $1,100 for a PC. In the long-term, as Chinese consumers become more affluent, we believe Apple could see further share gains as it is the most desirable brand, according to survey respondents.

— Apple stands out as the strongest consumer PC brand, but it may take time to monetize its growth potentials. Chinese consumers rate Apple as the most desirable PC brand well before

When you look at that data, it becomes clear that Apple has been well positioned to succeed in China. When you look at the improvements Apple made specifically for Chinese customers with OS X Mountain Lion, you can argue that the case for the Mac in China is stronger than ever.

The data from the Morgan Stanley survey points out the need for affordability with Mac hardware to come down and that is true as still only a small amount of Chinese consumers are what should be considered “affluent.” So price will be somewhat of an issue in that region but you have to also consider a brand and aspirational purchases which sometimes trump affordability or cheap. Chinese customers are very brand centric and prefer items with high brand appeal. For that I would contend that if Chinese customers have to save a few more months to get a Mac, I am willing to bet a large percentage will.

Also, iPad and iPhone are hot in that region–and cost less than the Mac. This again will make the case for the Apple ecosystem in China. All of Apple’s products help sell the others. Once you get one you most likely want them all, or at least more. iCloud’s tight integration with OS X Mountain Lion will make the ecosystem even that much stronger in every region.

Lastly, it is important to point out is that all of these specific features for the Chinese market will increasingly become a key differentiator for the Mac in that market. Compared to other “PCs” in that region these new OS X features and more will make the Mac highly differentiated in China. This also sends two messages. The first that Apple is very serious and committed to China. The second is that Apple is telling Chinese customers that they are interested in innovating uniquely for them.

Mountain Lion Gets Serious About OS X App Security

Apple’s attitude towards OS X security has always been a bit equivocal. On a technical level, it has done a good job. OS X out of the box is reasonably secure and Apple keeps it that way with regular, usually monthly, updates.

Mountain LionBut Apple’s marketers have long seen the Mac’s perceived security edge over Windows as a competitive advantage, which leads them to disparage the idea that Mac owners need to much to protect their systems. This worked for a long time mostly because Windows presented the bad guys with so much greater a target of opportunity that few attacks targeted Macs. (In fact, the inherent security of OS X and windows have been pretty much even since the launch of Windows Vista.)

But the surge in the popularity of Apple products makes Macs a much more tempting target and with Max OAS X Mountain Lion, Apple is moving to get ahead of the problem. One of the new features in the OS is Gatekeeper, an optional whitelisting approach that should help keep the unwary from loading bad applications onto their Macs. Apps (and their cousins, browser plug-ins) rather than the operating system itself have become the leading vector of attacks since the quality of app code varies widely and apps are generally not subject to the same sort of security scrutiny that the OS goes through.

Related content: My Experience With The OS X Mountain Lion Developer Preview

With iOS, Apple takes a draconian approach to  whitelisting. The only way to load an app onto an  non-jailbroken iPhone or iPad is to download it from the iTunes App Store, which only distributes code that has been vetted by Apple. There had been rumblings that a similar approach might be taken with the Mac and even the hint of such a move suggested that Apple would face a firestorm from the Mac faithful if it imposed such severe restrictions.  So in Mountain Lion, it is taking a more nuanced approach.

Gatekeeper dialog box

Gatekeeper offers users three levels of security of app downloads. At its strictest level, it will allow only apps downloaded from the Mac App Store to be installed. This adds two kinds of protection. First, apps most be approved by Apple to get into the store. Second, new developer rules for the App Store sharply restrict  the amount of damage an app can do, although potentially at a considerable loss of functionality. Starting March 1, all apps submitted to the App Store must run in a “sandbox,” a restriction similar to that imposed on iOS developers, that limits a program’s access to system resources.

That will be too much security for many Mac users, since it would cripple many applications that depend on extensive communication with other apps–often the case in programs used for content creation or software development.  So Mountain Lion offers a more expansive option that allows installation of App Store downloads plus any app signed with a valid Apple developer ID. Before installation, the signature is checked against an Apple database to make sure the app has not been identified as malware, that the developer is not known to have distributed malware, and that the code has not been tampered with.

If you attempt to install code that lacks a valid signature, Mountain Lion will throw up a dialog box warning you. If you choose to install it anyway,  you can control-click the app or its installer and use the context menu to override Gatekeeper.

Finally, for those who prefer to live dangerous, and “Anywhere” setting allows promiscuous downloads without any warnings (an administrative password is till required for installation.)

I think Apple has hit this one right. There has been a lot of doomsaying on blogs that Apple was going to take the same locked-down approach to Mac apps that it does to iOS. But Gatekeeper’s tiered system shows that Apple understands there is a big difference between Mac (and Mac users) and iOS. I think the great majority of users will go for the middle option (isn’t that always the case when you are given three choices) since it provides the best tradeoff between security and functionality. On the whole, this is a big step forward by Apple that Microsoft ought to give a serious look at for Windows 8.

 

 

My Experience With The OS X Mountain Lion Developer Preview

Apple is on pace to bring a new OS X release on an annual cadence. They released today the first bit of information as a developer preview for their latest OS X release called Mountain Lion.

The big story around Mountain Lion is iCloud. Apple, with Mountain Lion, has taken another step in tightly integrating iCloud into OS X the same way iCloud is tightly integrated into iOS 5. This is key because when OS X Lion came out last year iCloud was not yet released. iCloud is becoming the glue which ties all your Apple products together and with Mountain Lion that glue is coming to OS X.

The other key takeaway beyond iCloud is that OS X Mountain Lion brings many of the primary apps and iOS 5 experiences to the Mac platform. Things like Notifications, Notes, Reminders, iMessages, Game Center, Twitter and other quick share features, along with many more. Although this is an early developer preview, I am guessing there are a few surprises with Mountain Lion up Apple’s sleeve.

I have had the privilege of using an early beta release of the developer preview of Mountain Lion for a little while now and I want to share my experience with this latest release. Keeping in mind the software is still in beta yet it is a VERY solid Beta.

There are three key experiences I want to share along with one final point that should not be missed about OS X Mountain Lion and China.


I do a lot of texting. Other than email, texting is one of my primary forms of communications with a range of people in both my work and personal life. Having iMessage on my Mac has been a profound experience.

Perhaps this is because it feels as if it is the union of two things near and dear to me, Instant messaging and texting. From about 1998 to 2004 I used AOL Instant Messenger heavily. iMessage is like the union of texting and AIM and it is bliss for those deeply committed to the Apple ecosystem.

When someone texts me, the ability to quickly respond without having to pick up my iPhone or iPad is terrific. Primarily because when I am on my Mac I am generally writing a column or an in-depth analysis for a client. Responding to a message with iMessage on the Mac allows me to quickly respond and get back to what I was working on without fundamentally disrupting my work flow. This is probably the case because I am a part of the multi-tasking ADD generation and this was something I used to do with AIM as a part of my work flow. Also having all my message threads in sync across my Mac, iPhone, and iPad is tremendous as well. Basically I can pick up whatever device is most convenient at the moment to respond with and my conversation threads are always in sync.

iMessages on the Mac is something I have wanted since I started using it on the iPhone. I am glad Apple agreed.


Next up is how useful notifications on OS X truly is. Notifications were one of the features I was most excited about with iOS 5. Mostly because notifications are one of my favorite features with Android, but I don’t use an Android device as my primary phone for a variety of reasons related to personal preference. So this feature with iOS 5 was great for me as an Apple customer. Apple bringing notifications to OS X is equally exciting.

On this point, it is important to note that I have set my applications dock to hide and not stay visible all the time. Therefore having a “badge” show up on the application in the dock is not terribly useful for me. With that established, you can see why having a better notification for important things like email has always been a desire for me. In fact I have purchased at least three different third-party plug-ins for Mac Mail in order to notify me of email and many of them were more hassle than valuable.

While writing a column, analysis, creating a presentation, etc, being notified of new email from key contacts, as simple as it sounds, has been a great experience–and it works even while in full screen app mode.


AirPlay mirroring in iOS 5 was more valuable of a feature to me than I originally thought it would be–especially with the iPad. It turns out that I use AirPlay Mirroring from my iPad to my TV quite a bit. Whether it is playing a YouTube video, sharing photos from my iPad, playing a game, or sharing a website, I love moving content from my iPad to my TV. I wrote a column about that experience on how my iPad is taking over my TV.

Bringing this feature to the Mac opens up many new possibilities. For example, streaming TV shows from the web. Not all TV shows are available through things like Hulu+ or other network apps. However, nearly all network shows are available as a catch up TV solution through the web browser on a notebook or desktop. AirPlay Mirroring in OS X Mountain Lion will bring the full web in all its glory to your TV wirelessly. And in HD since OS X Mountain Lion AirPlay mirroring supports streaming 720p HD as well as resolution matching of your display to the TV.

Apple products are also invading the enterprise and corporate accounts in large numbers and this includes Mac products as well. I will bet that AirPlay Mirroring within OS X Mountain Lion is going to be a very handy feature for many conference rooms and work place settings.

Even creating Mac OS X apps that work in conjunction with your TV to give you a “two-screen” experience, similar to apps that do this on iOS, is exciting un-explored territory.

Don’t Miss Mountain Lions Impact to China

Lastly, I want to point out something that I think is very important. Because Apple so tightly controls not only the hardware they sell around the world but also the software, they are able to make very specific regional solutions as a part of their operating system. They have done just that by tightly integrating some incredibly useful features for the Chinese market.

A few key features for China:

  • Better suggestions: As you type, Mountain Lion offers more up-to-date and relevant candidates for words and phrases.
  • English and Chinese: You can now type English words in a Pinyin sentence without switching keyboards.
  • Better handwriting: Mountain Lion more than doubles the number of Chinese characters supported in handwriting recognition.
  • Autocorrection: If you enter Pinyin incorrectly, Mountain Lion suggests a likely candidate for the word you meant to type.
  • Fuzzy Pinyin: Mountain Lion adds support for Fuzzy Pinyin, which makes text input easier for users who type Pinyin with regional pronunciations.

Also full support for many popular services in China like Baidu search in Safari, Sina weibo, Youku, Tudou, is integrated right into Mountain Lion.

What is important to point out is that all of these specific features for the Chinese market will increasingly become a key differentiator for the Mac in that market. This also sends two messages. The first that Apple is very serious and committed to China. The second is that Apple is telling Chinese customers that they are interested in innovating uniquely for them.

Related: Don’t Miss OS X Mountain Lion’s Potential in China

Mountain Lion proves that Apple is still innovating specifically for the Mac. Yes the growth in iPhone, iPad and iOS is astonishing but the Mac remains an important part of the Apple ecosystem.

From what I have seen with the Mountain Lion developer preview, I see a myriad of things for Mac app developers to be excited about and many features consumers will find valuable.

Apple Rumors: Separating the Probable from the Impossible

Drawing from  Apple fuel cell patent application.
Drawing from Apple fuel cell patent application.

It’s silly season again in Apple-land. As usual the company is holding off on an announcement of its next announcement until the last-minute, but there’s a general consensus in the tech world that Tim Cook will unveil the next version of the iPad the first week in March.

I don’t know what Apple is going to announce. Neither does anyone else who is writing about it. But that doesn’t stop anyone, a the rumors can be expected to reach fever pitch in the next couple of weeks. Here are some handy rules for making sense of the Apple rumor machine.

 

  • Consider the source. Apple has a long history of feeding product leaks to The Wall Street Journal. So I take today’s report that the new iPad will include 4G LTE wireless more seriously than most. Stories based on reports in Taiwan’s Digitimes, which bases its predictions on vague rumblings in the Asian supply chain, not so much. Analysts’ predictions are particularly suspect. Piper Jaffray’s Gene Munster has been predicting the imminent arrival of an Apple television for years. Some day he’ll be right.
  • A prototype is not a product. Another WSJ report says Apple has been testing an iPad with an 8″ display in Asia. I don’t doubt that this story is correct, but just because they are testing it doesn’t mean it will make it to market. Prototyping is very expensive and for most companies, the existence of prototypes is tantamount to a product announcement. But Apple has $100 billion in the bank. It can afford to prototype anything it damn well pleases without any commitment to production. Maybe Apple will do a smaller iPad; maybe they won’t, but the fact that there may be a prototype out there doesn’t say much, one way or the other.
  • A patent really isn’t a product. Apple employes a lot of really smart, creative people and they come up with a lot of interesting ideas. Like most companies with a lot of money, Apple will file for a patent on anything that is novel and looks potentially useful. And since patent filings become public after 18 months, they are one of the very few windows into Apple’s secretive product development process. But only a small percentage of patents ever make it into products. And patent lawyers are very good at writing applications that obscure what an invention might be good for. So don’t hold your breath waiting for an iPhone powered by the hydrogen fuel cell revealed in a December Apple patent disclosure (drawing above).
  • Does it make sense? For several years, we were treated to regular rumors about an iPhone “nano.” Supposedly, Apple was going to come out with a smaller, cheaper version of its iconic phone. No one ever bothered to explain what the advantage of a smaller iPhone might be, especially at a time when the competition, such as it is, was steadily growing bigger. No one bothered to explain how a smaller iPhone could cost significantly less without compromising the user experience (a smaller display alone would save very little, and might even cost more.) With android phones soaring to 5″ plus, the iPhone nano rumors seems to have finally died out, but I expect to start hearing reports of a bigger iPhone this summer any time now. Don’t believe those either.
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  • Don’t trust “confirmation.” Once a upon a time, if a publication reported that a report had been confirmed, it meant that someone in an official capacity and with authority to do so had said it was correct. In gadget blogs, however, confirmation simply means that a rumor has cropped up somewhere else. More likely than not, it’s the original rumor eating its tail like an ouroburos. Unless the confirmation comes from someone like Tim Cook, Scott Forstall, Phil Schiller, or Eddie Cue, pay no attention.
  • Consider the timing. Once Apple announces that it will have an announcement, the nature of the rumors changes dramatically. The reports get much more focused and much more believable. By the time Cook and friends get up on stage, everyone in the room has a pretty good idea of the details of the announcement. Partly this is because as the event nears, the circle of people informed necessarily gets wider and begins to include significant numbers of business partners and other outsiders. Secrecy gets very hard to maintain. And Apple, which is as good at managing expectations as anyone in the business, does its own strategic leaking.  So the reports you hears within a week or two of an Apple announcement are much more likely to be true. But still, there is almost always a significant surprise or two that doesn’t leak out.

Google Officially Owns Motorola–Now What?

US Regulatory agencies along with the European Union approved Google’s acquisition of Motorola today. This acquisition, although initially positioned for Motorola’s patents, could very well cause quite a bit of change in the mobile landscape.

I wrote a column back in August on all the reasons why Google Should Buy Motorola. To my surprise five days later Google actually did buy Motorola Mobility, Inc. As a part of my work as an analyst we do future scenario planning and that column was a theoretical analysis of a scenario we could see playing out.

My main logic was around how difficult it is in mature consumer markets to be a hardware only company and thrive. I was convinced that over time Motorola would face financial struggles and would need to be bailed out or go out of business. Google was my logical choice to buy them in that scenario. The patents and other points were timely but icing on the cake.

There are some strategic elements of this deal that whether or not were clear to Google at the time could be very interesting. Assuming Google does not sell the hardware business at some point in time, which would be sealing Motorola’s fate, I see two directions Google can take with Motorola’s hardware business.

Attack the High End

Right now the point needs to be made that Motorola hardware is the ONLY hardware brand which is committed to Android only. Every other partner of Google with Android also ships or will ship Windows Phone and perhaps something else as well in the future. It is also no secret that the Android ecosystem is broken and fragmented and needs to be fixed. I went into depth on that last month in this column.

Because Motorola is the only handset and tablet brand that is Android only, Google could turn Motorola hardware into the flagship, premium, hardware and Android experience. Android devices need more differentiation in order to compete in the sea of sameness which is Android devices. Google could focus on heavily differentiating Motorola hardware and focus on the high-end, premium part of the market. Perhaps Motorola hardware could become the Nexus line of devices, and used as the flagship “hero” Android products.

Attack the Low End

The other thing Google can do with Motorola is attack the low-end part of the market and practically give Motorola hardware away for free. On this point it is key to note that Google is a services company. Any and all hardware that Google cares about exists only to give consumers access to Google’s services. Therefore, it is within Google’s strategic interests to get as many Android devices out there as possible. One way to do that is to give away, via heavy subsidization, handsets and tablets in order to make up lost revenue elsewhere.

As it stands today Android hardware is just one piece, and not even a big piece, of Google’s revenue stream. Google makes a lot more money elsewhere and does not necessarily need to make money on hardware. It is more important that they get that hardware to as many consumers as possible.

Motorola could become the entry-level brand with the Droid brand or some other “fighter” brand going after the lower end, entry-level, cost conscience part of the market.

Not Competing with Partners

The biggest concern many have with Google owning Motorola is that it sets Google up to compete directly with their partners. If they focus on either the high-end or the low-end, they could then focus on helping their customers compete on different playing fields.

This could perhaps work best if Google choose to go after the low-end for example. This would then give Google the ability to figure out how to help their Android partners better differentiate themselves from the sea of sameness and compete in the higher end of the market which allows for more favorable margins.

It will be fascinating to watch how this all plays out. We believe going vertical meaning single companies owning hardware, software, and services (like Apple does) is a disruptive trend. This is not easy but strategically could protect from market volatility. Now that this deal is official Google has a number of company defining decisions in front of them.

Future iPads Will Cannibalize TVs

As ZDNet’s Adrian Kingsley-Hughes points out, we know absolutely “nothing” about the iPad 3 right now.  While pontificating about future Apple products is a lot of fun, drives many page views and makes web site editors very happy, it’s  just a pontification factory.  At some point in the near future, the iPad will have a better display and will be lighter than its predecessors, which drives me to the conclusion that the next generations of the iPad will start to rapidly cannibalize HDTVs, particularly second or third sets. I’d like to share my thoughts on why this will happen.

 Consumers Radically Changing TV Viewing Habits

I have done a lot of consumer research and have been tracking PC use in the living room for years.  Around 10 years ago, outside the very tech savvy, users started augmenting their TV viewing experience with a notebook PC.  The early majority pecked away at their notebooks as the rest of the family watched something the early majority somewhat ignored.  This model then transitioned into family members watching shows that were on the major broadcaster’s web sites.  Remember when Big Brother started providing live PC feeds?  This model quickly was augmented by Hulu and Netflix diving into the market as an intermediary.  The iPad followed which provided very simple, manicured apps that gave access to rich “TV” content from Netflix, Hulu, and even cable companies like Time Warner and Comcast.

These viewing habits drove a wedge between two distinctly usages; personal and group viewing. Mobile devices like the iPad and their services enabled growth of personal viewing and consumers could watch finer slices of what they wanted to watch, when and where they wanted.

Group viewing isn’t going away any time soon, but as more people spend time on personal viewing, group viewing declines.  They only exception is “crossover” viewing where a family member is wearing headphones watching another show on a mobile device while other family/dorm members are watching on the HDTV.  Regardless of the viewing model, it drives the need more personal viewing devices and less group devices, or certainly drives the behavior to prioritize personal over group.

Consumers are changing their viewing habits from group to personal, but will future iPads be up to the task in terms of video and weight?

Future iPad Display as Good as Watching a 75″ HDTV?

No one publicly knows the iPad 3 resolution for sure, but let’s assume that the lines are doubled horizontally and vertically to provide a “2K” (2,048×1,536) resolution which provides 4X the resolution of the current.   I will also assume that content will come in three flavors: 1) upressed to 2K by the iPad, 2) services provide upressed 2K content, and 3) in special cases iTunes will provide native 2K content.  Net-net there will be video content that can take advantage of the new and higher resolution.

Most people watch iPad video content between 12″ and 16″ from their eyes depending on if they’re in bed or sitting on a couch. Assuming the iPad 3 is 2K, the visual experience would be similar  to watching a 75″ HDTV at 10′.  Users vary in terms of visual acuity and even neck length, but mathematically the numbers are accurate and make sense.  The farther the TV is away from the user, the larger it must be to compensate for the distance is away from the user.  Future iPads will provide a similar video experience as a huge HDTV.

Weight is a Deal-breaker

Many I discuss this with argue that the iPad 2 is light enough to replace much of the TV viewing.  There aren’t “standards” that dictate this, but from doing primary research with consumers, there are products that more comfortably enable someone to comfortable hold a device for hours and stare at it comfortably.  The Amazon Kindle DX2 at 18.9 ounces (1.18 lbs.) is the closer to right form factor and weight to be held comfortably in bed or on a couch.  If you have ever watched a show on an iPad 2 at 1.325 lbs. in the bed, you know exactly what I am talking about.  After a while, you wish the iPad would just float so you didn’t have to touch it.  Or you find a way to rig the stand so that you can lay on your side without touching it.  To effectively replace a TV, future iPads must be significantly lighter to effectively replace personal TV viewing.

5 iPads for the Price of One HDTV

Consumers have an amazing way of rationalizing cool electronics they want to buy.  Most consumers use their heart over their head when making an electronics purchase and I can see users rationalizing buying multiple iPads instead of placing their investment into a TV. If Apple were to go after the secondary TV market with vengeance, I could see the consumer rationalism going like this…. “Hmmmm…. I can buy 5 iPads for the price of  one high quality 60″ TV.  And everyone in the family would have them.  I will be the hero of the family in that everyone gets an iPad where they watch what they want to watch and do all the other great iPad things. And, when we want to watch the big game together, we can watch the older, but good enough 50″ we bought 5 years ago.”  This is human rationalization at work and happens every day in consumer electronics.

Siri Will Push Consumers Over the Edge

I’m not going out on a limb when I say I believe Apple will integrate Siri into future iPads.  The stronger commitment I think they will make is to an entertainment dictionary and natural language capability.  As I wrote last September on the fabled “iTV”,  instead of popping between Netflix, Hulu+, YouTube, iTunes and TWC TV, I believe Apple will aggregate and index this “channel” content into Siri to provide a one-stop touch and voice enabled experience. In this way, the users can say “find Revenge” and Siri will scan across all of the registered sources and look for re-runs, live or taped versions of “Revenge”, regardless of the source.  This is the ultimate remote controls in our world where there are a 1,000s of “channels” available.

This will serve as the final consumer rationalization point they need to make the tradeoff between a new TV or iPad.

Holiday 2012 Will Provide a Directional Indicator

With 3D an unmitigated flop in TVs and flat panel saturation becoming a reality, the TV industry is banking on “Smart TV” to pull it out of the hole in 2012.  As I’ve written previously, TVs won’t be very smart in 2012 when it comes to advanced user interface and they aren’t bringing anything else to the table to motivate consumers to replace their old HDTV.  What is new is a shiny new iPad with much higher resolution than their TV and the best entertainment remote control interface at a dramatically lower price than a new TV.  I believe the future iPad will take a big chunk of the secondary TV and even delay new primary TV purposes through consumer rationalization that it can serve as the primary “personal TV” device and I expect to start to see the effects in the holiday 2012 selling season.

Best Buy: With Lots of Unbiased Advice

Best Buy has been running a commercial for the past few weeks where they are positioning themselves as THE place to buy a mobile phone. The commercial was very well done.

The commercial included many who invented recognizable aspects of the mobile phone experience. People like Philippe Kahn who created the camera phone. Or Ray Kurzweil touting speech and voice technologies he created. Each person goes on to say what they created in relation to the mobile phone. Then it ends with some Best Buy blue shirts saying the following:

We created a better way to buy a smart phone. Any phone, any carrier, and all of their plans, with lots of unbiased advice.

It is the last few words that I find the most interesting–with lots of unbiased advice. This insinuates that cell phone retailers should be accused of selling phones with biased advice. Perhaps not just bias advice but sales kickbacks from handset vendors as well incentivizing sales people in carrier stores to push one device over another. Not every vendor does this but it does happen. It can lead to overly zealous sales folks pushing devices on consumers they don’t actually want. I have actually witnessed this in action.

Last summer I was in a certain carriers store activating an iPad for their data network. I overheard a sales conversation between a woman in the store and a sales rep. She had mentioned several times that she was interested in the iPhone. During the process of the conversation the sales person talked her out of the iPhone to go with another device. I listened to her explain what her main uses were and they were fairly simple. Talk, text, email, web, and the device she was sold was fully capable. The only observation I made was that she did not seem overly technical. I was leaving the store at the same time as she was and I gave her my business card and asked if she wouldn’t mind emailing me in 30 days if she hadn’t exchanged the device. She emailed me a week later saying she exchanged it for the iPhone.

This is what I am referring to when I speak of the complexities and challenges of selling devices as retail. This is why I expect that over the next several, or more, years that we will see more companies duplicate Apple’s retail strategy and start opening more of their own direct to consumer outlets. Tim articulates in his column today that he expects Amazon, an online only retailer, to start employing their own retail strategy–which would truly signal this fundamental shift.

All of this just goes to demonstrate how the carrier sales channel is fundamentally broken. Best Buy is looking to solve this problem by carrying every device on every network. To some degree I almost wonder if Best Buy’s approach won’t lead to more challenges for consumers as there are faced with an overload of information and options. This is known as the consumer paradox of choice, which I have written about before.

Best Buy’s approach, believe it or not, will make handset vendors lives even more difficult. At least when sold through the carriers channel, these OEMs compete with a limited number of devices. Carriers don’t generally pick up every device an OEM makes but rather picks certain ones to fill gaps in their lineup. Competing in the sea of sameness which is the Android landscape, and will someday be the Windows phone landscape as well, will be even more difficult in an environment where the sea of sameness is multiplied. This is exactly what will happen in Best Buy as they sell every device, from every network.

And lastly is it even possible to be a sales person in retail and not have bias? We will see how this turns out as hopefully our friends at NPD will be able to track specifically what happens with sales of mobile phones and tablets at Best Buy. I, for the time being, will remain skeptical and convinced that the OEMs are better with their own retail presence. I outline that logic in this column by pointing out how similar the personal electronics market is to the automobile market. I remain convinced that the way we buy products is going to be drastically different in the not too distant future.

If you haven’t seen the commercial here it is:

Why Amazon Will Create Brick and Mortar Retail Stores

Over the years, in my various discussions with Steve Jobs about Apple and their products, there was one theme that always came out when we discussed any of his product designs; they had to be easy to use. In fact, he was the consummate customer of Apple products. If he deemed them not “easy-to-use” then it was back to the drawing boards until they were.

But while this was at the heart of his designs, he also knew that easy to use was actually a relative term and that in the end, there are a lot of variables around the technology people use that determined if they were easy for “them” to use or not. So when Apple was creating the Apple stores, they made sure that they did not just create a place where people can come and buy an Apple product. Indeed, an Apple store, with its extremely knowledgeable sales staff and their genius bars are just as critical to the success of Apple’s stores.

What Jobs and team fundamentally understood is that for those who use technology every day in the office, their ability to use a Mac and Apple’s products are intuitive enough for them to learn and use out of the box. But for the millions of people who do not use technology as part of their work or school, even easy to use products can be intimidating and some will need hand holding from time to time. Apple also understood that as people begin to integrate them into their daily lifestyles and use them as the center of their digital universe, the variables of how to make the technology work for them would only increase. With that in mind, Jobs and team knew that they needed to not only create a product but also had to provide the software and services, in an integrated way, if they were going to grow the company and become extremely profitable.

This formula is not new. In fact, if you look at the history of mainframes, mini-computers and even PCs, they all followed a similar evolutionary path. First comes the hardware, then the industry backs a major OS for these systems, which then makes it possible for the software world to create the programs that make the hardware indispensable. But over time, the profit is taken out of the hardware and the real money shifts to software and services. This is especially being played out now with the PC crowd. The profits are gone in hardware and only the software guys (i.e. Microsoft) are making any money in the PC game. That is why HP has spent billions on EDS and their service business because all of the real profits for the hardware guys have shifted here.

Related Column: Dear Industry Why History Won’t Repeat Itself

Apple is insulated from some of these issues since they control the hardware, software, and services. But while most people think of their services as iTunes and their related apps and cloud services, they miss the fact that their Apple stores are also part of their services offering. A good way to think of this is that the Apple store is their EDS. They are there to interact with the customer, to help them integrate Apple’s various products into their life or work-styles and if there is a problem, solve it for them on the spot. (Sounds a lot like EDS and the big service providers does it not?)

This is why Microsoft has suddenly entered the retail business. While selling their products is part of their retail offering, these stores are their “EDS” that meets the needs of their consumer’s customers. Like Apple, these stores are there to help them “integrate” Microsoft products into digital work and lifestyles and if problems arise in doing this, be the place to come to help them deal with it. While the Microsoft stores need to break even, they are not necessarily profit centers. Instead, think of them as consumer service centers that keep the customers happy and making sure they keep buying products that use Microsoft’s software from all of their partners.

Google opening a store in Ireland is a nod in this same direction. And now we have rumors that Amazon is looking at opening their first store in Seattle. At first, you might think that an Amazon store will be going after a Costco given their breadth of products. But Amazon is smarter than this. They have gone to school on Apple and like Microsoft, understand that a retail storefront is actually a vehicle for servicing their customers who buy their dedicated technology products. At the center will be their Kindle line of course, and the store will be there to answer questions and help people get the most out of their Kindle eBooks and tablets. But it would not surprise me if this signals they might also do an Amazon branded smart phone and over time consider other Amazon branded products that these stores can sell and support.

None of these moves to copy Apple with storefronts should be too surprising given Apple’s success in this area. But while Apple Stores do sell Apple products and are used to drive people into the stores to show off their wares, keep in mind that the role it plays in providing service and support is equally important to its success equation. And for Microsoft, Google and Amazon, and any other vendors who move towards vertically integrated products, if they really want to keep their customers happy and coming back for their branded products, they better be ready to provide the service and support that goes along with helping them integrate these products into their digital lifestyle. If not, that loyalty will shift to Apple, who has defined the consumer version of EDS and is well positioned to continue to take customers away from the competition.

Windows 8 on ARM: The Big Questions

Microsoft released a lengthy blog post yesterday on their website specifically around Windows 8 on ARM. Although the post shed some insight into a number of the looming questions we all have about Windows on ARM, there are still a few things I am concerned about.

Windows 8 on ARM has the potential to be either wildly successful and disruptive but it also has the potential to fail in the short-term.

How Will Microsoft and Retail Position the X86 vs the ARM hardware Versions?
When I put myself in the consumer buying mindset for a new Windows-based PC, I see some potential confusion when it comes to product positioning. Microsoft has a challenge on their hand that I am fascinated to see how they figure it out.

What Microsoft, their hardware partners, and their retail partners can not do is position ARM notebooks or other form factors as limited devices. So they can’t use terms like “full Windows experience” or “the Windows you know and love” types of terminology for non-X86 devices. Taking this direction would cause consumers to ask of their ARM counterparts: “I don’t get the full Windows experience I know and love on these products”? Which would essentially deem Windows on ARM devices to fail because they would be positioned as truncated.

This is actually an area where I am intrigued to see if the Intel inside branding efforts of years past have any relative spill over. It actually could if consumers are on the fence. Consumers may consider going with a product with Intel, or AMD for that matter, the “safe bet” if there is any confusion what-so-ever.

Unfortunately, or fortunately depending on who you are, I don’t think any of the ARM companies benefit by touting their brand name in a Windows 8 on ARM device. For example saying “Runs Nvidia Tegra 3” or “Qualcomm Snapdragon”. In fact that may add to the confusion rather than help clear it up.

It is of course possible that Microsoft and retail partners ignore trying to position Windows on X86 and Windows 8 on ARM differently at all. However, unless the device experiences have no difference at all this would be a mistake.

Will All Drivers Be Supported?
To quote the blog post directly:

“Our device strategy uses standardized protocols and class drivers extensively”

“Of course Windows has many class drivers inside, which you experience when you plug-in a wide variety of USB devices, such as storage, mice, or keyboards.“

“The majority of printers selling today are supported using the class driver, which means you’ll be able to “plug and print” on WOA without additional drivers”

This must be true and must be delivered upon. I want to be optimistic about this and take Microsoft at their word that drivers won’t be an issue, as they appear to insinuate. However, I will feel better once I see Windows 8 on ARM working with a wide variety of peripherals.

Are Consumers Willing to Invest in New Software?
This may be perhaps the biggest point to wrestle with. As I have stated before, I believe Microsoft, with Windows 8 in general, has come as close to fundamentally starting over with Windows as they possibly could without completely starting over. Windows 8 is a step in the right direction to optimize Windows for the future of computing.

Consumers being willing to start fresh with software is the wild card for me. Unfortunately I have no hard data (yet) on this but I will offer some observational logic as to why this may be the case.

Firstly, consumers switching to the Mac platform at incredible rates is an indicator. Apple continually mentions their stats on each quarterly call that 50% of Mac sales are to first time Mac buyers. This would mean that many of those customers have made investments in Windows software and are willing to start over. Perhaps this same buying psychology could translate to Windows 8 on ARM with a reality that legacy Windows software isn’t as important as many would think.

Secondly, reports came out in late December from Flurry that on Christmas day there was a 125% increase in app downloads mostly coming from the 353% increase in device activations on the same day. This leads us to believe that as consumers get a new device they go app shopping.

Lastly, the economics support this trend. The reality is that the new app economy has driven the cost of software down. This is not only true of mobile devices but of desktop / notebook as well. The days of selling software and software bundles in the hundreds of dollars are over. If you look at the top-selling apps in the Mac OSX App store there isn’t a single one over $29.99 and most are well south of that figure. With lower overall app pricing becoming the norm it makes it feasible for consumers to actually start over with software.

Could it be Netbooks all Over Again?
In all of these scenarios I am generally concerned that Windows 8 on ARM devices may be headed down the path of Netbooks in their early days if we are not careful. Netbook return rates were north of 30% in their early years mainly because consumers bought them expecting a “full PC” experience and early Netbooks didn’t deliver. This was primarily because early devices were Linux-based. However, even once the devices ran Windows, they were still positioned as “not full PCs” mainly because they were underpowered. It was a positioning mess in my opinion.

I am not as concerned of these devices being underpowered as much as I am them fully delivering on the full PC experience. This will have to include a robust list of software, which Microsoft and partners are working on. There are a number of form factors outside of the clamshell PC design that I think will be more successful for Windows 8 on ARM vendors and Hybrids being the most interesting potential.

Even with all the questions still looming, ultimately the positioning of these products is what will make or break Windows on ARM devices.

Do Apple Competitors Make Bad Products?

I often engage in discussions with the financial community on matters related to tech for their portfolio management. One of the things I was asked in a recent conversation intrigued me. The question was around why Apple seems to be dominating their competition with such a limited product portfolio mix.

Tim Cook continues to emphasize with each investor, earnings, and public event that Apple’s laser focus is to continue striving to make the best products on the planet. Given that Apple seems nearly unstoppable, it appears their strategy is working. And it does make you wonder what Tim Cook’s statements about Apple continuing to focus on making the best products and Apple’s dominant position (especially with iPhone and iPad) says about other products on the market.

So the question thrown at me was “Do Apple Competitors Make Bad Products?” In light of Apple’s continual progress forward and other companies’ struggle to keep up, this is an interesting question. The answer is simply that many Apple competitors make very good products. I happen to like quite a few of them. The problem—for competitors—is that Apple makes exceptional products and perhaps more importantly, extraordinary experiences with those products.

To dive into this deeper, three fundamental points need to be established…

Apple Has More Competition Than Anyone—Yet No True Competitors

When you think about Apple’s vertically integrated business strategy of having a dedicated hardware business, software business, and services business, you realize that Apple competes toe-to-toe with almost the entire tech industry. Yet no company competes toe-to-toe with Apple.

What I mean by that is Apple competes directly with hardware companies, meaning people who make notebooks, desktops, all-in-ones, smartphones, tablets, and set-top boxes to a degree.

They also compete with those who make software, particularly in operating systems, but also in core apps. They compete with Microsoft at an OS level and at an Office level with Pages, Keynote, Numbers, etc. They compete with companies who make media management and creation software like Adobe, or ArcSoft etc, with iMovie, iPhoto, etc. They compete with Google with Android. The list could go on.

They also compete with services companies. iTunes and iCloud as a service competes with a host of online services providers from email, to calendar, to movies, music, storage and backup etc. Google and Microsoft again are competitors here along with a long list of others.

They compete to a degree with retailers. Apple retail competes with Best Buy, Wal-Mart, Target, Staples, etc. Note that Apple doesn’t compete on all levels with these retailers, but we have to acknowledge there are some crossovers.

When you look at the sum of their businesses, because of their vertically integrated strategy, it is not quite obvious the large list of competitors Apple has all over the industry. Yet the reality is that no other company has such a tightly integrated vertical strategy as Apple. So my first point is that at a fundamental level, Apple doesn’t actually have any true competitors who compete with them on every level they way they do with the rest of the Industry. This, at its core, is what sets them apart.

Granted we could debate that with Google’s acquisition of Motorola, they have all the parts on paper to compete with Apple toe-to-toe, but for the time being I still consider that a stretch.

Apple’s “Works Better Together” Philosophy

What is truly unique about Apple is the relationship that all their products have with each other. It is as if each product was made for the other, yet alone each one is still a solid standalone product. We call this the “Works Better Together” approach. It means that your products or “consumer end-points” can work fine as standalone products, but work even better as a comprehensive whole. In concept this sounds like a no-brainer, but the reality is that Apple’s vertically integrated approach is essential in executing this strategy.

Too many companies who make consumer products organize their business units to compete for PNL. Sometimes even worse than competing for PNL, they work as a silos and never have a clue what the other business groups are working on. This makes it extremely difficult for a company to create a “works better together” portfolio even if they have all the parts to make it work.

By developing this strategy as a part of the “iDevice” ecosystem, Apple benefits by creating a user experience that is not related to simply one device, but to the entire Apple ecosystem. This and more is what we mean when we talk about the Apple ecosystem being sticky and creating consumer loyalty.

Technology as Art

Lastly, Apple has a culture that is completely unique, which is another part of the reason for its success. Steve Jobs in his many keynotes has pointed out that Apple’s approach to products is that they are at the union of liberal arts and technology. And nobody in the industry so far has been able to match Apple’s eye for design.

What this means is that there is an added dimension of design and technology as art that influences the thinking of those who work at Apple. This group is like a passionate team of artists who happen to turn their art into technology.

This is the major reason that Apple emphasizes simplicity. Steve Jobs has in many keynotes and demos said that Apple’s various products “just work.” What we must not forget is that creating technology products that are simple is no trivial task. Simple solutions require sophisticated technologies. Apple knows this better than anyone and it has oriented itself to succeed at just that.

So it is not that Apple competitors make bad products. Their hardware competitors and OS competitors make good products. It is simply because of their vertically integrated model, paired with a works better together product philosophy, coupled with incredible execution, and a hardware as art design strategy, that Apple simply makes exceptional and extraordinary products.

Which is why one can argue that they truly do not have any real competitors.

Wolfram Alpha: Analytics for the Rest of Us

Wolfram Alpha may finally be making the big leap from interesting curiosity to generally useful tool.

For the 2 1/2 years of its existence. Alpha has had something of an identity crisis. It’s sort of a search engine, but instead of crawling the web for results, it relies on a large set of curated databases. At its heart is the computational engine of Mathematica, so it can do some amazing things with that data. When you asked it a question that it knew what to do with, it could produce very interesting, sometimes surprising, analytical results. But it often bombed on simple queries that Google handled with aplomb. It could tell you the distance between San Francisco and Buenos Aires (6,456 miles or 35 light milliseconds) but not where to find a nearby pizza. Alpha got a considerable boost when Apple chose it to handle computation-based queries from Siri–the New York Times reports that Sire generates a quarter of Alpha’s traffic–but it  remained a bit of an oddball service.

With the launch today of Wolfram Alpha Pro ($4.95 per month, $2.95 for students), the service is promising to get a lot more useful. There are loads of new features that make the pro option well worth its modest cost. One big change is that you get a persistent account, in which past analyses are remembered and can be modified. Another the ability to upload your own data for analysis and then to download any of the analytical results, including some very sophisticated graphics.

As a simple test, I uploaded about 65 years worth of government data on U.S. growth of gross domestic product, change in the Consumer Price Index, and the unemployment rate. After an initial glitch, in which Alpha interpreted a column headed “Real GDP” as representing amounts of money in Brazilian reals, it gave me an instant deep analysis of my data. As I would have expected, it should a fairly strong relationship between GDP growth and unemployment,  but no significant correlation between inflation and either growth or unemployment.

bubble chartThe bubble chart on the left is an example of the sort of thing Alpha does automatically. It’s a sort of three-dimensional graphic, in which the y-axis represents GDP growth in a given year,  the x-axis is inflation, and the size of the circle represents the  unemployment rate.  Other data generated include scatter plots, histograms, a regression equation, a covariance matrix, and principal component analysis for analysis of variance.

Using Pro, you can also perform analysis on Alpha’s extensive databases  and  download not only the results but the raw data (there are some restrictions on data exports imposed by Wolfram’s licensing agreements with the data suppliers.) CEO Stephen Wolfram describes the service as “all the tools a data scientist would have combined with knowledge of the world.”

Another feature offered by the Pro service is analysis of images. Upload a photo and alpha will perform a range of  analyses on it, including metadata, color analysis, intensity histograms, edge detection, and even some basic editing tools. Nothing that Photoshop can’t do, but its quick and easy.

The real prize in Alpha Pro, though, is the data analytics. You can learn a lot when you start looking at your data in more depth than yu can get from a spreadsheet. Alpha makes it cheap and easy to get started.

 

 

 

What Intel Must Demonstrate in Smartphones (and soon)

Intel made a big splash at CES 2012 with the announcement that Motorola and Lenovo committed to Intel’s Medfield clip_image002smartphone solution. This came on the heels of a disappointing break-up between Intel and Nokia as well as a lack of previous traction with LG. While Intel has come farther than they have ever come before with one of their X86 SOCs, they still have a long way to go to claim smartphone victory. Of course Intel knows this and is working diligently and sparing no expense. The biggest challenge Intel faces is attacking a market where the incumbent, ARM ecosystem partners Qualcomm, NVIDIA, and Texas Instruments have almost 100% market share. To start gaining share in smartphones, Intel must demonstrate many things in the near future.

More Design Wins with Key Players

The Motorola announcement was impressive in that Moto has a respected name in smartphones, but they won’t carry Intel that far alone. Lenovo is an even smaller player and while very successful in PCs, hasn’t been able to secure a lot of smartphone market share even in their home country, China. Intel knows they need a few more partners to start chipping away at market share and I expect them to announce at least one at this year’s Mobile World Congress.

One of the challenges is that many of the top players are already locked-in in one way or another, Intel has some negative history with, or has rapidly declining share. Apple already has their own A-Series SOC, Samsung has Exynos SOC, and Nokia rebuffed Intel last year and is clearly locked into ARM and Microsoft for the time being. RIM as a partner is a shaky proposition and HTC is an aggressive player but is recently dropping share. That leaves lower smartphone market share holders LG, Sony, Sharp, NEC and ZTE in the short term.

Longer term, I don’t expect Apple or Samsung to get out of the SOC business because they have been successful with their own strategies. I cannot see Nokia or Microsoft motivated to drive a change or provide dual support for X86 until Windows 9. RIM is in a free-fall with no bottom in sight. Intel is forced to take the long-term approach as they are with Lenovo by developing smaller smartphone players to become larger ones. ZTE certainly is a good long term prospect as is Huawei. If Intel can leverage their PC franchise with them I could see them being successful.

Relevant, Differentiated, and Demonstrable Usage Models

In fighting any incumbent, the new entrant must provide something well above and beyond what the incumbent offers to incent a change in behavior. I am assuming that Intel won’t lead in low price or lowest development cost, so they must offer handset makers or the carriers a way to make more money or get consumers to demand an Intel-based smartphone. Regardless of which variable Intel wants to push, they must devise relevant, differentiated and demonstrable usage models that ARM cannot.

By relevant I mean that it must be fixing a known pain point or creating a real “wow” feature consumers never asked for, but is so cool it cannot be passed up. One pain point example is battery life. Battery life is simply not good enough on smartphones when used many times daily. If this weren’t true, car chargers and battery backs wouldn’t be so popular. Wireless display is useful and cool but not differentiated in that Apple can enable this via AirPlay. Demonstrable means that it must be demonstrated at the store, an ad, or on-line on a web site. If something isn’t demonstrable then it may as well not exist.

I would like to see Intel invest heavily in modularity, or the ability to best turn the smartphone into a PC through wireless display and wireless input. Yes, this is dangerous short-term in that if Intel does a great job at it then they could eat into their PC processor franchise. But, this is the innovator’s dilemma, and a leader must sacrifice something today to get something tomorrow. I could envision an Intel-based emerging region smartphone that enables PC functionality. ARM cannot offer this well today but will be able to in the future with their A15 and beyond-based silicon. Intel should jump on the modularity opportunity while it lasts.

One other opportunity here is for Intel to leverage their end-to-end experience from the X86-based Intel smartphone to the X86-based data center. If Intel can demonstrate something incredible in the end-to-end experience with something like security or a super-fast virtualized desktop, this could be incredibly impactful. One thing that will be with us for at least another 5 years is bandwidth limitation.

Carrier Excitement

Outside of Apple, the carriers are the gatekeepers. Consumers must go through them to get the wireless plans, the phones, and most importantly, the wireless subsidy. Apple’s market entry strategy with AT&T on the iPhone was a strategic masterpiece in how to get into a market and change the rules over time. Apple drove so much consumer demand for iPhones that the carriers were begging Apple to carry the iPhone, the exact opposite of the previous decade.

Intel must get carriers excited in the new usage models, bring them a new stream of revenue they feel they are being cut out from, or lower their costs. Intel doesn’t bring them revenue from content side but could I can imagine Intel enabling telcos to get a piece of classic retailer’s PC action once “family plans” become a reality. While telco-distributed PCs weren’t a big success in the past, this was due primarily from the absence of family data plans. I can also imagine Intel helping telcos lower the costs of their massive data centers with Xeon-based servers. Finally, if Intel could shift traffic on the already oversold “wire” by shifting processing done in the cloud and onto their SOCs, this would be very good in a bandwidth-constrained environment.

Competitive Handset Power

At CES, Intel showed some very impressive battery life figures for Medfield handsets:

• 6 hour HD video playback

• 5 hours 3G browsing

• 45 hour audio playback

• 8 hour 3G talk time

• 14 day standby

This was measured on Intel’s own reference platform which is somewhat representative of how OEMs handsets will perform. What will be very telling will be how Medfield performs on a Tier 1 handset maker, Motorola when they launch in Q3 2012. There is no reason to think the Moto handset won’t get as impressive battery life figures, but Intel could gain even more credibility by releasing those figures as available.

When Will We Know When/If Intel’s Smartphone Effort is a Success?

Intel has slowly but surely made inroads into the smartphone market. Medfield is impressive but competing with and taking share from an incumbent with 99%+ market share is a daunting task. The easy answer to measure Intel progress is by market share alone but that’s lazy. I believe that Intel smartphone efforts should first be measured by handset carrier alliances, the number of handset wins, the handset quality and the new end usage models their SOCs and software can enable. As these efforts lead to potential share gain does it make sense to start measuring and scrutinizing share.

Why Tablets are Important to eCommerce

I recently noticed something about my tablet usage that really intrigued me. Since using the iPad, it has become a constant companion to me and along with my iPhone and Droid, I carry it with me all of the time. Although my smartphones are quite important to me, I have always had a bit of a difficult time reading their small screens and as I get older, I have to admit that the size of the screens I use in my life are becoming an important part of my user profile. And while I would often buy apps on the smart phones for use on them, I very seldom used them for any real eCommerce purchases. For that I mostly deferred to my laptop.

But over the last six months, I began noticing that my preferred screen for buying things started shifting over to the iPad. This particular fact came into even sharper focus for me recently when I read a piece in Wired that pointed out that Amazon’s tablet might actually serve as a powerful vehicle for their overall large store.

In this same article, they recounted a Wired interview with Steve Jobs in 1997 where they asked him what opportunities he saw with the Web. Here is what he said:

Wired: What other opportunities are out there?
Steve Jobs: Who do you think will be the main beneficiary of the web? Who wins the most?
Wired: People who have something –
Jobs: To sell!
Wired: To share.
Jobs: To sell!
Wired: You mean publishing?
Jobs: It’s more than publishing. It’s commerce. People are going to stop going to a lot of stores. And they’re going to buy stuff over the Web!

As you can see, even back then, Jobs saw that there would be a major shift in user buying habits and that the Web would become a serious vehicle for eCommerce. And over the last 13 years that has happened in a big way. eBay, Craigslist, Amazon, iTunes, etc have all driven eCommerce into the mainstream and they are now just a normal part of the way most of us buy things, especially things that we cannot find at our local mall. Of course, the irony of this quote from Jobs is that while iTunes has driven his eCommerce vision, he also created stores that have become one of the most successful retail chains in the world.

Now, if you look closely at peoples shopping habits these days, much of how they search for a product through search engines and review sites like PC Mag’s product reviews, and then buy them over the Web, should give you an understand that the Web has literally become the most powerful medium for commerce next to the grocery store. Sure, people will always go to the mall, but the mall and local stores will always have a limited supply of goods. But through the Web, you can buy just about anything. Although people will still use desktops and laptops for eCommerce, if my experience with the iPad is any guide, then the tablet, with its bigger screen then a smart phone and its full access to all Web eCommerce in this highly mobile for factor, could actually drive even more eCommerce purchases in the future. Another way to look at this is that the tablet is Amazon’s Brick and Mortar and a tablet is to Amazon what a physical store is to Wal-Mart.

If you think about Amazon’s business, it started with selling books online and then quickly became a place where consumers can buy just about anything and shop competitively from one single location. It just so happens however that this location is not physical; it resides fully within your browser. Amazon’s location is virtual.

To contrast, a company like Wal-Mart is evolving into the digital age with a strategy that includes their brick and mortar stores. To some degree Barnes and Noble is doing something similar but only in the realm of books. Amazon however has no intentions of creating a physical location where you walk in to experience their service. I believe however that Amazon is very interested in giving you a virtual physical storefront and it started with the Kindle.

Any retailer will tell you how important the overall retail experience is to their success. Some companies do retail poorly and others do retail extremely well. The Kindle for Amazon started completely around discovering, purchasing and reading books. The Kindle is the retail storefront to Amazon’s digital book library.

I believe that the evolution of the Kindle will follow Amazon’s business evolution. It started with books then included everything else. Which is why this next device that will most likely be a fully featured tablet will also come with Amazon’s complete shopping experience built in. This includes not just digital storefronts like books, music and movies but physical items as well. Since Amazon is one of, if not the largest digital storefront, it benefits them to get devices on the market where they control the entire shopping experience.

This is one of the reasons Amazon re-jiggered their iOS app strategy to stay away from Apple’s transaction model and fees. I don’t believe this move was just about avoiding management fees but that Amazon wanted to control the user experience with their storefront instead of Apple.

Reflecting on that point briefly, it becomes clear that Apple’s app store commerce model works for those for whom billing and storefronts are a problem but it does not work for those companies who have spent millions of dollars perfecting their own e-commerce experience. This leads me to believe that if the entire eCommerce experience is baked into the tablet experience then Apple’s new big purchase might be an eCommerce “etailer” that offers a broad range of products that Apple can integrate into the complete user experience of the iPad.

Amazon also has an interesting strategy with their Prime service that could be strategically integrated as well within their tablet offering. Perhaps Amazon gives better deals or promotions to those who own the tablet and are Prime customers thus incentivizing more purchasing from their store directly on the tablet.

This is why I believe a tablet is actually strategic for Amazon. Of course they can and will make sure their services are available on every device imaginable. However if they bring a device to market that is a full blown tablet and also includes the most elegant and seamless experience to research, discover and purchase from, then that device becomes the retail storefront to everything Amazon sells – and more.

The Tablet is the Ultimate Mobile Personal Computer

Our firm has been doing an extensive amount of tablet analysis over the past year. The more I study the role of the tablet in the industry and in the lives of consumers the more fascinated I become with this form factor. To clarify, we believe and classify the tablet as a PC. We simply view it as a form factor within the PC landscape.

One theme of late that has some of my mind share is around tablets going where traditional PCs can not. I am not just speaking of overall market share, although that factors into my thinking, but rather I am thinking about location. Now to be clear, I am not saying PCs (clamshell notebook PCs specifically) literally can not go to the locations I will talk about. Rather, what I want to point out is that the traditional PC/Notebook PC is the wrong form factor for a growing number of use cases and market pain points.

Prior to tablets, I believe the technology industry at large looked at nearly every consumer use case, as well as every vertical market, as an opportunity for the sale of a traditional PC/Notebook PC. What this led to was the adoption of the traditional PC into scenarios, where although sufficient, was the wrong form factor for the job. If you follow much of what I write you will notice that I am fond of Clayton Christensen’s philosophy in The Innovators Dilemma that consumers “hire” products to get jobs done. Prior to tablets the market “hired” the PC to do jobs that we are now finding tablets are better suited to do.

Last week I looked at the adoption of the iPad by a growing number of enterprises for specific mobile workforces like field force and sales force automation. In many business related scenarios we are seeing the iPad step in and take the place of notebook PCs primarily because it is better suited for the specific task at hand. Enterprises are finding that for their most mobile workers the iPad is a better tool for the job than a clamshell notebook.

Late last year I wrote in my TabTimes column about how small businesses are using iPads for things like point of sale retail and even mounting an iPad for interactive product/ media placement. I even talked about some examples where restaurant owners were going digital and integrating iPads for the uses of taking orders, showing pictures of menu items to customers, and adding other relevant information for customers to make dining decisions. In both those later use cases the job could have never been solved by a traditional clamshell PC because who wants to hang that device to the wall at retail or walk around a restaurant holding a clamshell notebook? This is at its core what I mean when I say that tablets will go where PCs can not. This is what I mean when I say that the tablet is the ultimate mobile PC.

Further to this point, I highlighted yesterday in an article how the iPad makes the perfect learning companion. I have been very vocal about how touch computing removes barriers to computing presented by mouse and keyboards and therefore are better tools for learning for all ages but kids specifically. We have been using PCs in the classroom because they were the only tools available. Now there is a better tool, the iPad, and it will find itself fitting into educational environments better than the PC ever could.

The list goes on from legal firms, to financial management firms, to hospitals and doctors, pilots and airlines, public safety, and more, who are all finding that the iPad is better suited than a clamshell PC for their specific computing needs. Consumers are waking up to this reality as well.

Although, the notebook PC is portable you don’t typically see consumers move around, walk around, or stand up and use their notebook. This is because the form factor lends itself to a desk or a lap where the screen sits at arm’s length away. Tablets are very different. Consumers are comfortable using them while standing, walking, sitting on the couch, laying in bed, in the bathroom, by the pool, at the beach, in the kitchen, etc. The tablet is not designed to be viewed at arm’s length and because of that our relationship with this form factor changes. We can use it in different ways and more importantly take it places we would not or could not take our clamshell PCs.

I would argue the tablet form factor lends itself to more mobile computing use cases than a clamshell notebook. Because when consumers use a clamshell notebook they are not truly mobile–they are stationary. Whereas one can actually use a tablet and truly be mobile. I know I am tweaking slightly the classically held definition of mobile computing. However, due to the nature of tablets impact on the market I believe the traditionally held definition of mobile computing needs to be challenged.

The PC, tablet, smart phone, and perhaps something new down the line, are all tools to get jobs done. Each one has its place and each will remain relevant in some way shape or form. However, when it comes to mobility the tablet is mobile computing in its purest form.

The iPad: The Perfect Learning Companion

If we are honest with ourselves we have to admit that our country’s educational system has some serious fundamental issues. Our educational infrastructure is ranked 23rd in the world and seems like it declines even more every passing year. For a country that has always prided itself on progress our educational system has progressed very little. Apple and the iPad could stand a chance to change all of that. If the powers that be are smart, they would jump on the iPad bandwagon and begin integrating it at every level–especially elementary school.

Credit - OnlineEducation.net

I came across a recent info-graphic from the folks at OnlineEducation.net which visualizes quite a bit of good data about the state of US education. The graphic shows the bad and then presents some of the hopeful points from successful iPad trials in schools. The most encouraging statistic so far shares that through multimedia platforms student interest and retention goes up 25%. I encourage you to check out the full info-graphic here.

As much as I believe the iPad, and tablets in general, present one of the most exciting advancements for education in some time integrating it successfully will not be easy. For this to work, the system has to change and we need to begin to think more creatively about how we educate our youth.

One of the most important and fundamental principles that has at least been acknowledged over the past 20 years is that not everyone learns the same way. My 8-year-old, for example, has no problem learning through repetition and busy work. For her the system works. There are of course ways the system can develop and be more effective even for her learning style but the point is it works. For my youngest, who is now seven, the system does not work. She learns very differently, she learns through interaction and engagement, needs more hands on work filled with examples, and more importantly (just like me) she learns through trial and error most effectively. She gets frustrated with the current systems process but that doesn’t change the fact that she is hungry to learn. She simply needs a better tool. She is not alone.

That is why I have been integrating the iPad into both their learning processes since it first came out. That is why I stated in a previous column, as well as in my TIME column, that I believe the iPad is one of the best investments in a child’s future. You can choose to agree with me or not.

As I stated earlier, the system needs to be reformed. The iPad, and technology in general, present the best opportunity at a fundamental level to re-build our current system. It won’t be easy but there are several keys required for this to work.

Integrate Technology Early
Getting kids started early with technology is key. We want them to be comfortable and embrace technology as a part of their lives. This doesn’t mean they need to be entertained in order to learn but rather technology presents a way for them to engage with what they are learning in ways not possible before.

As we understand and experiment with how best to integrate things like the iPad into the classroom, we will make progress in better understanding the right approach and educational philosophy. The key is not for educators to be afraid of this change but to embrace the iPad as a new tool in their toolbox to better lay learning fundamentals and prepare our kids for the future.

We Need New Software
The second thing that needs to happen is dedicated software or apps for teachers and kids at every learning level. We are constantly taking steps in this direction but the software development community has yet to fully catch on and take this category as seriously as they should.

What we need is something akin to a fund, whether a specialized VC fund or government grant fund, to encourage our best and brightest software developers to use their talents and invest not just in gaming apps but education apps as well.

Apple Needs to Lead
Apple has taken a leadership position with the iPad and we need them to do so with their educational strategy as well. Luckily this is exactly what they are doing. This section of their website is dedicated to providing resources and education on using the iPad in education.

Apple is continuing to develop a dedicated ecosystem around the iPad and education. iBooks Author and iTunes U are good examples of Apple continuing to invest and focus on this area. As Apple actively engages the academic community, I hope we continue to see a mass of quality multi-touch textbooks as well as educational apps for every subject at every learning level.

The one area I would personally like to see more progress is in the app curating part of the iTunes App Store. There are so many apps that “app shopping” can become a burden. Apple already curates some areas of this with their “Apps For” categories. It would be great to see a more expansive curating process for education like breaking out apps for learning by age, or subject, or topical interest.

Teaching Teachers
Lastly, we need to teach our teaches as well about the benefits of using technology and specifically the iPad in the classroom. My wife is a teacher, and she like many of her friends who are teachers, needs a little help when it comes to technology. Generally speaking, they are not the tip of the early adopter iceberg.

Along those lines having courses at the college level or as a part of the teaching credential process on using things like the iPad would be extremely helpful. I assume that over time this will happen but hopefully it happens sooner than later.

Our teachers are valuable assets to this nation. Empowering them with the right tools to educate and encourage our youth is a legacy the technology industry needs to focus on.

For further interesting reading I encourage you to check out this online Ning social forum that was created for teachers to share stories and leaning experiences on using iPad in the classroom. http://ipadeducators.ning.com/

The Mysteries of Office 15

As Microsoft works on the next release of Windows, it has been remarkably forthcoming about its details. The Building Windows 8 blog has not only laid out the changes in the new version, but the thinking behind them.

Office logoBut Microsoft has said almost nothing about the new version of Office it is developing in parallel with Windows 8. It has distributed an early version to a select group of testers, but wrapped it in a non-disclosure agreement. We’re not likely to get the full details on Office 15 (a development name unlikely to be used for marketing) until a public beta is released this summer.

The new Office is a big deal, perhaps the most important release in the suite’s history because Microsoft has to pull off a number of difficult and contradictory things. On one level Office and its associated back-end components such as Exchange and SharePoint are both mainstays of enterprise technology and by far the most important source of Microsoft profits. The last thing enterprise customers want to see is a drastic change in Office.

At the same time, Microsoft must deal with a revolution in user devices. Conventional PCs are giving way to tablets and, to some extent, smartphones. Even in the enterprise, where desktops and laptops will continue to rule for a long time, mobile executives and field workers are depending more and  more on tablets and phones.

Office as it exists today is a catastrophe on any sort of touchscreen device, let alone one with a 10″ or smaller display.  Starting with Office 2007, Microsoft began replacing Office applications’ traditional cascading menus with a “ribbon” of choices. For a traditional mouse-driven user interface, this is probably an improvement, but it’s no help for touch.

The Word 2010 ribbon
The Word 2010 ribbon

 

 

 

 

 

The little icons on the ribbon (above) are too small to hit reliably with a finger, and most of them open a window or drop-down with additional icons or menu choices. In addition to the difficulty of navigating this clutter by touch, the ribbon occupies an amount of real estate that is intolerable on a tablet, let alone a handset. And Office as it exists today is way, way too big for the limited storage capacity of tablets.

Still, the richness of functionality that all those icons represent is the essence of Office. It’s true that many consumers never use 90% of the functions, but in a business setting, complex options such as edit tracking, table of contents creation, and mail merge are often regarded as essential. It’s not at all apparent how this sort of rich application can exist in a simplified, touch-optimized user interface like Metro, which will be the default paradigm for Windows 8.

It seems likely that Microsoft will end up with two versions of Office, a classic UI for traditional PCs and a stripped down and simplified Metro UI for tablets. How seamlessly can these two versions co-exist? Will the simplified version be able to display complex content correctly (this has historically been a problem with all programs that purported to offer limited editing of Office files)? How do you even begin to make Excel useful on a tablet? Can  Microsoft developers find a way to bring full offline functionality to Outlook without downloading a multi-gigabyte database?

This is only the beginning of a very long list of questions about how this new two-headed Office should work. And it doesn’t even touch on the question of how much Office functionality will be available in the version that is to run on tablets powered by ARM rather than Intel processors. (Intel users will, in theory, have the option of running older, classic versions of Office. ARM users will not.)

Depending on how strictly testers adhere to their NDAs (and how serious Microsoft is about enforcing them) we may begin to get some answers soon. A version of Office that makes business users productive with their key applications could be a big competitive advantage for the forthcoming Windows tablets. But making this work will be one of the biggest challenges Microsoft has ever faced.

2012: The Year Google Fixes Android or Loses the War

The end of 2011 brought about some interesting market developments. Both Nielsen and NPD shared data that the once so dominant Android actually declined in market share over the holiday quarter of 2011. Both Nielsen and NPD also shared that during the same quarter iOS, mostly due to the iPhone, closed the gap on overall Android market share.

Now, with all of these quarterly market share reports, we have to keep in mind that this data only reflects the current quarters data and not the annual or overall installed base. Still, it is important to note that during the holiday quarter (perhaps the most important quarter) Android market share declined and iOS jumped dramatically. This reality should concern Android partners and Google.

We sensed this trend early on and shared with our clients last fall the fact that Android could be headed for a decline in market share. In my TIME column in October of last year I outlined many of the ways that Google was mis-handling Android and unfortunately further straining their already strained relationship with their partners. If Google does not get a handle on not only the fragmentation issues but also their relationship with their partners (by being more transparent and trusting with them) then I anticipate the decline in Android market share to continue. Not solely based on more consumers choosing iOS but by Android’s partners vesting more resources and upping their commitment to Windows Phone.

I don’t expect any Android vendors to completely dump Android but I could see them shipping fewer Android devices overall as a part of their product mix in favor of Windows Phone, which inevitably would lead to fewer Android devices on shelves at any given time, which would lead to even further Android market share decline. I firmly believe that Android device volume is its strongest competitive advantage. Right now Android currently has the bigger share of OEM resources and overall device mix per OEM. However, that could all change very quickly and in 2013 Microsoft will have a compelling story around Windows Phone and Windows 8 for their partners. If Google does not adjust their strategy with Android quickly they run the risk of OEMs shifting the balance of their resources more toward Windows Phone (or something else) and away from the Android platform.

If you line up all of these underlying trends it could spell real trouble for Android. My biggest concern for Android overall is that the platform itself creates no significant hardware loyalty. That is a dangerous truth for any of Google’s hardware partners. The same can be said of Windows Phone, or any other horizontal platform for that matter. If you are going to be in the hardware game you have to differentiate and more importantly create a partner ecosystem that creates customer stickiness.

Lastly, on my point that Android’s competitive advantage is volume of devices in channel at any given time. NPD shared their data on the top devices sold over the Oct/Nov time period. If you look at the chart you see that the top three are iOS devices. Note these are three different phones. If Apple does continue to diversify their products on the market and leave legacy devices in channel at lower price points, they will themselves be creating their own iPhone army of devices that could further hurt Android’s market share over the long haul.

Why the PC Industry Cannot Ignore Smartphones

When HP abandoned their smartphone and tablet business and webOS last August, many in the industry were hp-veerdisappointed in the speed of the Palm acquisition and the quick dismantling of it. Some who consider themselves "business-savvy" said it was the wise approach as it wasn’t core to HP’s corporate mission. They said that smartphones were a distraction to competing with IBM and even Dell. We won’t know until 3-5 years from now whether it was a good decision or not.

I believe though, that just as PC companies fought to stay away from the sub-$1,000 PC market in the 90’s, PC makers who don’t embrace smartphones could be out of the client hardware business in 5 years.

Some Context

Over the last 20 years, PC hardware and software have done this little dance where one is ahead of the other. New software came out that required better hardware, then the new hardware outpaced the old software and the cycle continued. With the better hardware and software came new features and usage models like multimedia, desktop publishing, 3D games, DVD video, videoconferencing, digital photography, the visual internet, and video editing. Then Microsoft Vista was launched and it seemed no matter how much hardware users threw at it, issues still existed. Microsoft then spent the next few years fixing Vista and launched Windows 7 instead of developing environments for new rich client usage models. Windows 7 actually took less hardware resources than Vista, the first time a Microsoft OS could say this. Microsoft is even publicly communicating that Windows 8 will take less resources than Windows 7. So what happened? Did the industry run out of usage models to consume rich PC cycles? No, there are many usage models that need to be developed that use rich PC clients.

What happened was netbooks, smartphones and tablets. Netbooks threatened Microsoft and forced them to re-configure Windows XP for the the small, cheap laptops. This was in response to the first netbooks, loaded with Linux, getting shipped into Best Buy and direct on the internet. In retrospect this wasn’t a threat to Microsoft, as those netbooks had a reported 50%+ return rate. After netbooks came MIDs and after MIDs failed came touch smartphones and the iPad. Once the iPhone and iPad showed strong sales it was clear that the center of design was moving to mobility even though needs the rich client PC could solve didn’t just go away.

Windows 8 and Rich PC Clients

Windows 8 was clearly architected to provide a tablet alternative to the iPad and stem the flow from Windows to iOS and Android. Most of the work has been to provide a new user and development environment called Metro, WinRT and to enable ARM SOCs. None of these investments does a single thing to propel the traditional rich PC client forward, maybe with the exception of enabling touch on an all-in-one desktop. Without Microsoft making major investments to propel the rich client forward, it won’t move forward even to the dismay of Intel, AMD and Nvidia. I want to be clear that there are still problems that the rich client PC can solve but the software ecosystem and VC investment is enamored primarily with tablet, smartphones and the cloud. Without Microsoft’s investment in rich PC clients, thinner clients like phones and tablets will evolve at a much faster rate than rich PCs.

The Consequences of Not Investing in the Rich PC Client

With the software ecosystem driving "thin" clients at a much faster rate than "rich" clients, the consequences start to airplaytvemerge. We are seeing them around us every today. Users are spending more time with their tablets and smartphones than they are with their PCs. Savvy users are doing higher-order content creation like photo editing, video editing and even making music with GarageBand. That doesn’t mean that they don’t need their PCs today. They do, because neither smartphones nor tablets can do everything what a PC or Mac can do…. at least today. Display size, input method and lack of software modulraity are the biggest challenges today.

Enter Smartphone Modularity

Today, many users in traditional regions require at least a smartphone and a PC, and a tablet is an adder. Tomorrow, if users can easily attach a keyboard to a tablet via a convertible design, they may not need a PC as we know it today. It’s not a productive discussion if we debate if we call this a PC with a removable display or a tablet with a keyboard. What’s important is that some users won’t need three devices, they’ll just need two.

What about having just one compute device, a smartphone, and the rest of the devices are merely displays or shells? Sounds a bit aggressive but lets peel this back:

  • Apps: If you believe that the smartphone ecosystem and apps moves a lot faster than the rich client ecosystem, then that says that thin clients at some point will be able to run the same rich apps as a PC. Then the question becomes, "when".
  • OS/Dev Environment: iOS, Windows, and Android are all becoming modular, in that their goal is that you write once and deploy everywhere. Specifically, write once for a dev environment and deploy to a watch, phone, tablet, PC and TV or console.
  • Hardware: Fixed function blocks and programmable blocks on tablet and smartphone SOCs are taking over many of the laborious tasks general purpose CPUs once worked on. This is why many smartphones can display a beautiful 1080P video on an HDTV. This is true for video decode, video and photo cleanup, and natural user interfaces too. 3D graphics will continue to be an important subsystem in the SOC block.
  • Display: With WiDi, WiFi Direct, and WiFi AC on the mainstream horizon, there’s no reason to think that a user cannot beautifully display their apps from their 4" smartphone display to a 32" high resolution PC display. Today with my iPhone 4s airplay movieI can display 1024×768 via AirPlay mirroring with a little lag but that’s today via a router and WiFi network. I can connect today via hardwire and it looks really good. In the future, the image and fonts will scale resolutions to the display and the lag will disappear, meaning I won’t even need to physically dock my smartphone. It will all be done wirelessly.
  • Peripherals: Already today, depending on the OS, smartphones can accept keyboard, mouse and joystick via Bluetooth, WiFi or USB. The fact that an iPad cannot use a mouse is about marketing and not capability.

Smartphone Modularity a Sure Bet?

As in life, there are no sure things, but the smartphone and cloud ecosystem will be driving toward smartphone modularity to the point where they want you to forget about PCs. Apple, Microsoft, and Google are building scalable operating systems and development environments to support this. Why Microsoft? I believe they see that the future of the client is the smartphone and if they don’t win in smartphones, they could lose the future client. They can’t just abandon PCs today, so they are inching toward that with a scalable Metro-Desktop interface and dev environment. Metro for Windows 8 means for Metro apps not just for the PC, but for the tablet and the Windows smartphone. The big question is, if Microsoft sees the decline of the PC platform in favor of the smartphone, then why aren’t all the Windows PC OEMs seeing this too? One thing I am certain of- the PC industry cannot ignore the smartphone market or they won’t be in the client computing market in the long-term.

Made in China: Why Boycotting Apple Would be Wrong

If you have been reading the articles from the New York Times about the working conditions at some of the factories that Apple and other big tech companies use to make their products, you can’t help but get upset and concerned when you learn about the abuses mentioned in the report. Apple has publicly shared how they are trying to combat these abuses and has even gone as far as joining a third-party monitoring group to get independent help to deal with these problems. Clearly, Apple has to put even more pressure on all of their suppliers to improve these conditions and rally all of the other tech companies who use these same suppliers to help with this cause.

The New York Times articles pointed out correctly that the human toll due to these abuses is a serious issue. But there is another side to this story that is not getting enough press and it is equally important to this discussion. I have traveled to China for 25 years and worked on many sourcing projects and have had to deal with Asian manufacturing issues for some time. One of the first things I learned about manufacturing in China is that the majority of factory workers come from very poor areas in central or eastern China. They covet these manufacturing jobs to get them out of their abject poverty.

In 1996 I visited an extremely rural area of China and saw first hand how they lived and the poverty they faced. I was shown a cement home that could not have been more than 10’ X 12’ and was told that two families as well as an aging grandmother lived in this place. And that their only earnings came from their field work if they could get it. I was also told that the parents in these areas pushed their teenage children to try to get the new manufacturing jobs that were just starting to emerge back then. Millions of families in China still live in this type of poverty and these manufacturing jobs are actually a life saver for them as these kids send some of the money they earn back home to help support the family.

There is an even darker side to this. The parents in these regions don’t have a lot of options and in some cases they actually sell their kids into prostitution as ways to support the family. So they see these manufacturing jobs as a better way for their kids to better themselves and still help the family. Although they only make $17.00 per day, this is at least 10 times what they could make a day in the fields if the work is even available.

And there have been reports of underage kids in these factories. But I know for a fact that the poverty is so bad in some areas that it is the parents who push these kids to lie about their age to get them into these jobs. A very sad fact is that the age of the kids sold into prostitution average 13-15. While hiring kids at this age for factory work is still wrong, you can see how when parents get desperate they could push their underage kids to the factories instead of some of the seedy alternatives available to them.

With this in mind, the call for boycotting Apple products would be just plain wrong. Apple selling less products would translate into the loss of jobs for these workers and force them back into levels of poverty and working conditions that would be even more difficult than the one’s they have in the factories.

“This American Life” quoted New York Times columnist Nicholas Kristof, a noted human rights crusader, as defending the Chinese labor system as a positive step in the evolution of the country’s economy. “I think it’s useful to be reminded about how grim the conditions are,” Kristof says in the show. “But again, I just think that if you try to think how you can fight poverty most effectively, and what has fought it within China, then I think sweatshops are a key part of that answer.”

I have actually visited some of the high-tech manufacturing factories in three regions of China and the term “sweatshop” actually does not apply to them. Because of the precision work and need to keep things very clean when making these products, these places are well-lit, air-conditioned and efficiently designed. That said, the work is tedious, and the long shifts can become exhausting. And any reported abuses must be dealt with aggressively.

But the call to boycott Apple would be irresponsible on our part. Apple’s success has created ten’s of thousands of jobs for these workers and these factory jobs are a lifeline to them and their families. Yes, these types of manufacturing jobs have gone offshore and as Steve Jobs told President Obama last year, they are not coming back.

In fact, Thomas Friedman wrote a great piece on the fact that for most American companies their customers have become world customers now and the need to manufacture and sell to them has become a global business issue.

While we might not like that Apple has created so many jobs in China, the reality is that, as the NYT’s articles pointed out, the type of manufacturing needed to make things like the iPhone and the iPad are not available in the US anymore.

The answer to dealing with these abuses is not to boycott Apple products. That would directly impact the lives of thousands of workers in a very negative way. Rather, it will be for Apple to step up their efforts and get as much help as possible from the Chinese government and other tech companies to put pressure on all of their suppliers to deal with these abuses and adhere to the rules demanded by their customers for good wages and good working conditions. They also need to find other creative ways to make the working conditions better for those who work in these factories. Let’s hope that Apple and others can make this happen soon. But boycotting Apple would be the wrong way to solve this problem.

We Need Electronic Health Records Now: A Personal Tale

Last week, shortness of breath after exertion led to an urgent visit to the doctor. What I first thought was a recurrence of bronchitis turned into an up close a personal encounter with medical technology and a much-maligned system that at its best works very well indeed. It also left me convinced that, while I still doubt that electronic medical records can be the big money saver that advocates claim, EHR can definitely improve the quality of care and save lives.

CT scan of pulmonary embolism
CT scan of a pulmonary embolism. (Wikipedia)

I have been a member of Kaiser Permanente Mid-Atlantic for many years and my experience began in urgent care at a Kaiser facility about five minutes from home. After I described my symptoms, they put me on oxygen and began tests. When blood tests suggested the possibility of a clot but a chest x-ray was inconclusive, they gave me an injection of the anticoagulant Lovenox and shipped me by ambulance to a second Kaiser facility equipped with a CT scanner.

Because Kaiser has an excellent EHR system (developed at great cost and after a couple of painful false starts) and requires doctors and nurses to document everything in the system, the staff at Kaiser Capitol Hill knew everything that had happened at my neighborhood facility. They continued the tests and treatment and when the CAT scan showed a dangerous pulmonary embolism, they decided I belonged in the hospital.

Another ambulance ride took me to Holy Cross Hospital in Silver Spring where I spent an uncomfortable day and a half being poked, prodded, tested, and generally well cared-for. Holy Cross is heavily used by Kaiser and is hooked into their system, so again the staff instantly knew everything that had been done. (It was also kind of cool to get the results of tests run the night before on my iPad, including the good news that a cardiac enzyme test for possible heart damage was negative, while lying on my hospital bed.)

I realized how useful the EHR system really was  when I got a new roommate after I had been declared stable and was waiting for my wife to come fetch me. A man in his 80s and apparently suffering from some level of dementia was brought in, though neither he nor the hospital staff seemed to know exactly why (there is absolutely no privacy in a hospital room.) He remembered that he had suffered an allergic reaction to penicillin during World War II, but wasn’t sure what led to his being taken to the hospital. Without good access to his medical records, the nurse was having a bad time just trying to figure out what meds he was on. Both he and the hospital staff were at a huge disadvantage because they had no history to work with.

It’s going to take a while, and a lot of money, before the U.S. health care system comes close to matching the EHR systems of organizations such as Kaiser and the Veterans Administration. Both have the enormous advantage that their doctors are employees, not affiliates, and therefore can be required to use the system. But building a national EHR system is vital work, and the much-maligned Affordable Care Act should help spur things along.

As for me, I’m happy to say that I’m doing well. The  anti-clot treatment seems to be working as the shortness of breath is gone. I’ll be on blood thinners for some months and I’ll be a lot more careful about flying once I get back in the air. Flying, especially long flights in cramped conditions, are a well known risk factor for the deep vein thrombosis that leads to pulmonary emboli and the nine legs I flew, including two of more than 12 hours, in the month before I landed in the hospital, certainly didn’t help.

On a personal note, I want to thank the urgent care staffs of Kaiser Permanente Kensington and Capitol Hill and the staff of the monitoring unit at Holy Cross Hospital for the treatment I received during this adventure. I don’t think I could have asked for better care.

 

Apple’s Enterprise Invasion: Why Winning in Consumer Means Winning in Enterprise

There used to be a time when I would go to tech industry events, trade shows, internal company meetings, etc. and I was one of the few in the room with a Mac. I took great pride in that fact, but now the Mac is gaining everywhere. It’s in schools, hospitals, labs, construction sites, restaurants, consumers’ homes, coffee shops, and now increasingly in the enterprise.

With this observation in mind it should come as no shock that Apple blew the doors off their latest earnings and recorded all time sales of Macs. My analyst colleague, Frank Gillet at Forester, shared his research which showed that 1 in 5 Global workers now use an Apple product for work.

So what is fueling this trend?

Apple Products Cost Less to Support

When I worked at Cypress Semiconductor, I moon-lighted from time to time and helped our IT department by solving Windows problems. I prided myself on the fact that I could troubleshoot Windows with the best of them. I could navigate my way in and out of all of the different and common Windows conflicts. Then a funny thing happened. I switched to the Mac and all of a sudden troubleshooting became a thing of the past. That reality is now hitting the enterprise IT departments.

A recent survey by the Enterprise Device Alliance which surveyed IT professionals in large enterprise environments that have a mix of Macs and PCs overwhelmingly found agreement with IT managers that Macs cost less than PCs to support. IT managers noted that Macs presented higher up front acquisition costs, but also noted that the long-term benefits were worth the tradeoff.

When it came to Mac adoption in the enterprise, ease of technical support and lower total cost of ownership were among the top reasons for the switch. Number one on their list–employee preference.

Bring Your Own Device To Work

If you follow this industry even a little bit you keep hearing about the “consumer-ization of IT” or the “Bring Your Own Device” trend. Yes, both trends are real and IT managers are diligently working to allow employees to use whatever devices they want at work.

We recently interviewed SAP’s CIO Oliver Bussman. He shared with us that inside SAP they have 14,000 iPads and 8,000 iPhones deployed. That is a total of 22,000 iOS devices compared to the 20,000 Blackberries deployed to his workers. SAP, like many other companies is working to cater to their employees’ device preference. And Mr Bussman shared an interesting perspective with us. He said that he now has to pay closer attention to what is going on in the consumer market because if he doesn’t, he would not be able to stay ahead of the game. His workers use and learn how to make things like the iPad work for them at home. Then they come to him and say they want to use it in the office as well. After his visit to CES, Mr. Bussman recorded a video of his thoughts on the consumer-ization of IT and it is worth watching as he has a very important perspective on the subject.

The Right Product for the Right Job

In the construction industry they say that “every job is easier with the right tools.” Perhaps for too long, due to the Windows monopoly on most businesses, IT managers have been forced to have workers use the same tool to get a multitude of jobs done. But now devices like the iPhone and iPad in particular are proving more effective in many situations like field force and sales force automation.

During our interview Oliver Bussman also shared with us that he was able to deploy 300 iPads to his global sales team in just 4 weeks. In many enterprise solutions, the iPad, and touch computing in general, is just a better tool for the job.

IT managers need to effectively empower their workforce to be productive and equipped with the tools they need to be successful. Apple products are now becoming a critical part of the enterprise tool set.

Apple’s focus has not been the corporate IT accounts. Apple has always been a consumer product company waiting for a pure consumer market to mature. Now that the consumer market for personal electronics has matured, it appears to also be an enterprise strategy. Demand for Apple products is at an all-time high with consumers and their latest earnings prove this. What no one really could have predicted was that to win in enterprise you had to also win in consumer. It seems logical, but hindsight is 20/20. That reality is now fueling growth in Apple’s favor from every corner of the technology sector. The scary thing for Apple competitors is that they are just getting started.

Copyright and 3D Printing: A Fight the Makers Can Win

Will homemade 3D objects be the next intellectual property battleground. Perhaps, bit this time the fight will be very different because the makers, not the owners, have the legal high hand.

Photo: MakerBot Replicator
The MakerBot Replicator

3D is one of most exciting technologies to emerge in a long time. Machines using inkjet-like technology lay down precise layers of material. If you can create a file describing an object, and programs such as Autocad and Mathematica can do this automatically, you can print it.

High-end printers can create objects in aluminum, stainless steel, and ceramic. Simpler units, such as the $2,000 MakerBot Industries Replicator can print objects in two colors of ABS plastic.

The Pirate Bay blog waxed rhapsodic about the prospect:

We believe that the next step in copying will be made from digital form into physical form. It will be physical objects. Or as we decided to call them: Physibles. Data objects that are able (and feasible) to become physical. We believe that things like three-dimensional printers, scanners and such are just the first step. We believe that in the nearby future you will print your spare parts for your vehicles. You will download your sneakers within 20 years.

But it turns out that replicating objects is far from piratical for the simple reason that no existing form of intellectual property protection covers most physical objects. The only 3D objects off any sort on the Copyright Office’s list of protected works are sculptures and architecture. You can trademark something like the Nike swoosh and the concept of trade dress provides some protection to designs, but the fashion industry learned decades ago that neither copyright nor trademark could stop design knockoffs, such as a mass market version of a couturier dress. Patents could provide limited protection but it is very hard to use a patent to protect a part.

In the past, this gap in IP coverage wasn’t much of an issue. Skilled machining and toolmaking were too expensive for knockoff parts to be economic. Only where there was a opted rial for large sales, such as automotive crash parts that mimicked original body panels, did copying parts make sense.

The coming of 3D printers and other equipment, such as inexpensive computer numerically controlled (CNC) machine tools has drastically changed the landscape. I think it is unlikely that printed objects will ever be cheaper than standard mass production, but scanning and printing replacement parts, profitable items for many manufacturers, will become common.

I’m sure there will be attempts to restrict scanning and copying of physical objects. (Efforts to win copyright protection for objects such as laser printer toner cartridges by embedding chips with ostensibly copyrightable code have failed miserably in the courts.)But one important lesson of the (so far) successful fight against the Stop Online Piracy Act is that it is a lot easier to stop a law than to pass one. This time the makers sand a good chance of winning.

Where Have All The Profits Gone? Gone to Apple, Every One

A few years ago, folks in tech used to worry that all the profits in the PC industry were being scarfed up by Microsoft and Intel and that the crumbs left to PC makers would be insufficient to fund any innovation. For companies not named Apple, those were the good old days.

Chart: Apple per share earningsApple’s  blowout December quarter was stunning enough viewed in isolation. But it is even more striking in comparison to the rest of the industry. Apple’s revenues of $46.2 billion blew past Hewlett-Packard’s $32.3 billion to make it the industry leader by sales. But the real story is profits. Apple’s net of $13.1 billion was just a hair less than the earnings of Microsoft, Intel, HP, and Dell combined.

For a little historical perspective, in 2006, Apple earned just under $2 billion on sales of $19 billion for the entire year. Microsoft and Intel combines for sales of $80 billion and profits of $18 billion.  (M.G. Siegler at TechCrunch has a host of other Apple-industry comparisons.)

Apple’s growth and stunning profitability is obviously wonderful news for the company and its shareholders. And there are no signs that its remarkable run is over. The growth rate of the December quarter is unsustainable, but that is a reflection of the strength of one three-month period, not an indication of any weakness.

But the concentration of the tech industry’s profitability in one company is a potential problem for the industry as a whole. Apple is a wonderfully innovative company that has, year after year, come out with the most interesting products in tech. And the iPhone and iPad have spawned a whole ecosystem of successful third-party products.

Innovation, especially in hardware, requires talent, imagination–and money. Apple’s cash hoard–by now over $100 billion–allows it to do things that competitors cannot even think about.

It’s not a healthy situation to have all the innovation coming from one company, no matter how brilliant. But the razor-thin margins of Apple’s competitors make risk taking difficult. Consider the sad case of HP and the TouchPad. Executives of HP’s Personal Systems Group saw webOS and the TouchPad as a way to both challenge Apple and to free the company from the domination of Microsoft.  PSG chief Todd Bradley saw this as a fight of  “years, not months.” But looking at startup costs in the billions and a lack of instant success, HP’s top management got cold feet and killed the project before it had a chance. A lot of this had to do with HP’s tumultuous internal politics,  but the fact that the company earns eight cents on every dollar of revenue  while Apple nets 29 cents  has to have been an important factor in its skittishness. The problem is the vicious cycle, in which a financial squeeze cripples innovation which damages the prospects for growth.

It’s hard to see how this situation changes anytime soon. Perhaps Google, which has margins even better than Apple’s though it is a much smaller company, can use some of its profits to turn stodgy Motorola Mobility into an innovation engine, assuming that it completes its planned purchase. Maybe the partnership of Nokia and Microsoft will produce something wonderful. But for the foreseeable future, expect Apple to expand its dominance.

The Dell XPS 13: An Ultrabook that Could Steal Customers From Apple

If you are in the high-tech industry and haven’t heard of the term “Ultrabook”, you’ve probably been on sabbatical or have been living under a rock. Intel introduced an industry-wide initiative to re-think the Windows notebook PC, which they have dubbed and trademarked the “Ultrabook”. Launched at Computex 2011, Ultrabooks are designed to be very thin and light, have good battery life, have instant-on from sleep, be more secure and have good performance. If you want to see the details on what constitutes an Ultrabook, let me direct you to an article I wrote in Forbes yesterday. Does this sound a bit like a MacBook Air? This is what I thought about the entire category until Dell lent me their Ultrabook, the Dell XPS 13, for a few days. I have to say, I am very impressed and believe they have a winner here that could take some business from Apple. I don’t make that statement lightly as my family is the owner of three MacBooks and I do like them a lot.

Dell plays hard to get
When Ultrabooks were first introduced in July, Dell was somewhat silent on their intentions. Typically Dell is locked arm in arm with Intel many steps of the way. When they didn’t introduce an Ultrabook by the back to school selling season, “industry people” started to ask questions. When Dell didn’t release one by the holiday selling season, people were asking, “what’s wrong with the Ultrabook category”, or “what is Dell cooking up”?

I thought they were waiting for Intel’s Ivy Bridge solution that was scheduled for earlier in the year. Whatever Dell was waiting for doesn’t matter, because they did nothing but impress at CES. During the Intel keynote with Intel’s Paul Otellini, Dell’s vice chairman Jeff Clarke, stormed on-stage with some serious Texas swagger. The video cameras at the CES event didn’t do the Dell XPS 13 justice as it’s hard to “get” the ethos of any device on camera, but with Jeff Clarke and Paul Otellii on stage, you knew it was important to both companies. In my 20+ years as PC OEM and technology provider to OEMs, I believe the only way to really “get” a product is to live with it as your primary device for a few days. And that’s just what I did.

Industrial Design
It’s apparent to me that Dell took their combined commercial and consumer experience and put it to good use. Rather than just follow Apple, HP or Lenovo, they put together what I would call the best of both worlds. The machined aluminum frame adds the brawn and high-brow feel, while the rubberized carbon-fiber composite base serves to keep the user’s lap cool and reduce weight. The rubberized palm rest provides a slip-proof environment that adds serious precision to keystrokes and trackpad gestures. It also provides a slip-proof mechanism for carrying the unit across the house, the office, or into a coffee shop. In a nutshell, Dell solved my complaints about my MacBook Air and made it look, feel and operate premium.

Instant-On
I give Dell and Intel credit for working together to make Windows 7 PCs almost “instant on”. The XPS 13 turned on and off very quickly thanks to Intel Rapid Start and Dell’s integration. I wasn’t able to use Smart Connect, but when I can use the XPS 13 for a few weeks I want to try this out. This is essentially a feature that intermittently pulls the XPS out of sleep state and pulls in emails and calendar updates. While this is as close a PC will get to “always on, always connected”, it is a decent proxy.

Ingredient Branding and Certifications
Historically, the typical Windows-based PC with all its stickers looks like a cross between a Nascar racing car and the back of a microwave oven. That doesn’t exactly motivate anyone to shell out more than $599 for a Windows notebook. There are no visible stickers on the XPS 13 and the only external proof of Intel and Microsoft is on a laser-etched silver plate on the bottom of the unit. Underneath the plate are all the things users usually ignore like certifications.

Keyboard and Trackpad
I never quite understood how little evaluation time users spend on what ends up being one of the most important aspects of a notebook; the keyboard and trackpad. I already talked about the rubberized palm rest that gives the XPS 13 a stable palm base for the keyboard and trackpad. My palms slip all over the place with my MacBook Air. The XPS 13’s keyboard is auto backlit and the keys have good travel and a firm touch. The trackpad feels like coated glass and supports all of the Windows 7 gestures. Clicking works by either physically clicking the trackpad down or gently tapping it. It’s the user’s choice.

Display
The display is 13.3″ at a very bright 300 nits at 1,366×768 resolution. It’s an edge to edge display (or nearly), which allowed Dell to design a 13.3″ display into around a 12″ chassis. I compared it to a MacBook Air and it is in fact narrower with the same dimension display. That is very impressive. I would have preferred a higher-resolution display but I don’t know if many users will make a huge deal out of this. The display is coated with Gorilla Glass which gives some extra added comfort knowing it will be up to the task of my kids accidentally scratching it up.

Ports
Compared to some of the other Ultrabooks, I applaud Dell for removing some of the ports that I am certain primary research said were “must-haves.” Must haves like a VGA port, 5 USB ports, and an ethernet port. (yawn) Users get a Displayport, one USB-3, one powered USB-2, and a headphone jack. The only port I would have preferred was a mini or micro HDMI port. Displayport guarantees that I will need to buy a cable or an adapter I don’t have. I can live without the SD card reader but it sure would have been nice if they could have fit it inside.

Battery Life
I am still very skeptical on most battery life figures of any battery-powered product. One exception is the Apple iPhone and iPad, where Apple goes out of their way to provide as much detail as possible for different use cases. With that caveat, I do believe the Dell XPS 13 will have very respectable battery life figures versus other Ultrabooks and the Apple MacBook Air. Dell says the XPS 13 will achieve nearly 9 hours of battery life, well above Intel’s target of between 5 and 8 hours.

One of the sexier features harkens back to the days of Dell batteries, which had buttons to gauge how much was power was left. Like the Dell batteries of yesteryear, press a small button on the side (not back) of the XPS 13 and it will light up circles to show how much battery you have left. That shows a dedication to useful innovation, not penny pinching bad decisions made in dark meeting rooms. This is the kind of small thing that demonstrates attention to detail that Apple quite frankly has dominated so far.

Consumer and Commercial Applicability
Whenever I hear that one product serves two different markets I usually cringe and jump to the conclusion that it will be mediocre at both. I also take a very realistic approach on the “consumerization of IT”, in that I believe we are a long way off until 50% of the world’s enterprises give their employees money to choose their own laptop. In the case of the Dell XPS 13, I believe that it will provide a good value proposition to both target sets. Consumers are driven by style, price, aesthetics and perceived performance at an certain price point while businesses are more interested in TCO, services, security, and custom configurability. The Dell XPS 13 provides all that. They may run into challenges with IT department and sealed batteries, lack of VGA and Ethernet ports, but then again a few IT departments would require serial ports if you let them spec out the machine completely.

Pricing and Specs
The Dell XPS 13 starts at $999 and includes an Intel Core i5 processor, Intel HD 3000 graphics, 128GB SSD hard drive, 4GB memory, USB 3.0, and Windows Home Premium. For a similarly configured Apple MacBook Air, buyers would pay $1,299. With the Mac, you get OS X Lion, a bit higher resolution display, Thunderbolt I/O, and an SD card slot. And yes, for the record, I know PCs don’t primarily sell on specs but they are still a factor in the decision. If it weren’t, Apple wouldn’t provide any specs anywhere, right?

Possibly Taking Bites from the Apple
From everything I experienced with the Dell XPS 13 evaluation unit, I can safely say that they have a potential winner. Why do I say “potential”? First, I’m using an evaluation unit, not a factory unit with a factory image. As a user or sales associate, if I start Windows and I start getting warning messages for virus protection, firewall and 3rd party software, the coolness factor will be for naught. The first consumer impression will be bad. I hope this doesn’t happen with the factory software load.

Many success factors go into successfully selling a system and creating a lasting consumer bond. Great products must align with great marketing, distribution and support. Controlling the message is key at retail. If, and I mean “if” Dell can effectively pull their messages through retail and somewhat control merchandising at retail, this will be a solid step in connecting the value prop with the consumer. This is very hard, especially in the U.S., where Best Buy rules brick and mortar. What will the Best Buy yellow shirt say when someone asks, “whats the difference between the MacBook Air and the Dell XPS?” If they say “$300” that is a fail. Retail will be important, more important than direct for Dell, because industrial design doesn’t translate well to the web. Seeing the XPS 13 image doesn’t impress as much as holding it does, so retail cannot be minimized.

I see the XPS 13 doing well in business and enterprise, again, given aligned messaging, channel, sales training and support. IT departments now have a design that is every bit as cool as the MacBook Air and arguably more productive plus the added benefits of TPM and Dell’s customization and support.

Net-net I see potential consumer and business buyers of thin and very light notebooks looking at Apple’s MacBook Air and many choosing the Dell XPS 13 Ultrabook instead. This won’t just be based on price, but all other benefits I’ve outlined above. I also believe Apple’s MacBook Air sales will increase during 2012 but they would have sold more had it not been for Ultrabooks, especially the Dell XPS 13, the best Ultrabook I’ve used so far.

You can get more information on the Dell XPS 13 Ultrabook here on Dell’s website.

Are Netbooks Poised for a Comeback?

The answer to this is no, and yes. Let me explain.

In 2007, Netbooks took the market by storm. These small low-cost laptops hit the market at the beginning of the recession and were instant hits. Although first versions with Linux were panned once a low-end of Windows was made available they really took off. By 2010, we were selling about 30 million a year.

But in 2011, demand for Netbooks took a major hit. Many attributed this to the intro of Apple’s iPad and other tablets but in truth, the real reason for the decline is that once the vendors realized there was serious demand for low powered, low-cost laptops, they went full-bore in creating full-sized laptops in this price range. Last I checked you could get a 15.6 inch AMD Dual Core E-300 accelerated processor based laptop for around $329. Although Netbook customers liked their small sizes and low weight, they valued even more laptops that had extra power and full keyboards.

But if you try hard, you can actually trace Ultrabooks back to Netbooks. Indeed, at the WSJ D conference a few years back, when Netbooks were all the rage, the late Steve Jobs told Walt Mossberg that nobody really wants a Netbook. While he did not downplay demand for a smallish type laptop, he felt that people wanted a small laptop with a full keyboard and the same power as their mainstream laptops. Three months later, he and Apple introduced their first MacBook Air and of course, this successful product is the reason all the vendors are creating Ultrabooks now.

But Ultrabooks have one big problem. On average, they will be mostly in the $699-$999 price range and well outside of the realm of what we call value PC pricing. That range is from $299-$599. But to say there is still demand for an ultra-thin and low-cost laptop in this value price range would be an understatement.

What you can expect to happen is, in a way, the rebirth of the Netbook in the form of value priced ultra-thin PCs. These will not meet any of Intel’s Ultrabooks specs, but instead, will have low-end mobile processors, perhaps the home version of Windows 7 and a low-density hard drive. But they could be relatively thin and really cool, just with lower end chips and low-cost screens. In many ways, these will speak to the same audience who wanted a Netbook, namely those who desired a really low-cost laptop for basic computer usage.

This low-end category could get an interesting boost later in the year in the way of Windows on ARM. Arm chips are already low-cost, but with long battery life and some pretty good processing power. You can believe they will shoot for use in ultras-lims as well.

So while Netbooks as we know them are mostly dead, expect to see them return in the form of ultra-slims, ultra-thins, or some type of name the vendors will give them that targets this low-end value segment of the market. While I don’t believe it will have a heavy impact on the more full featured laptops in the value end today since these will sport much better processors, higher quality screens, etc. these low end thin laptops will hit the nerve of a part of this value market and could actually become big hits on their own.