Tablets – Tech.pinions

The Tablet Computer is Growing Up

I vividly remember when the iPad first hit the scene. Much of the commentary at the time ranged from confused, to skeptical, to wildly optimistic and then some. However, very few people truly grasped the underlying shift to the touch-based computing paradigm that was underway. In fact, throughout a good portion of the tablet computer’s life, the form factor has continually fallen short of its full potential. Most were convinced this device could never be a productivity machine. These folks missed the broader reality that many millions of people were being extremely productive on their smartphones using a touch-based operating system and generations of young people would grow up with an intense familiarity and comfort level using touch-based systems as their primary computing platforms. It was this broader shift of workflows, from a mouse and pointer to ones which used touch, that I articulated in one of my first public columns back in 2010. “From Click to Touch – iPad & the Era of Touch Computing”:

It is interesting to have observed the barrier to computing a keyboard and mouse have been for so long. I was always amazed at how older generations stumbled with a keyboard and mouse, or how the biggest hurdle of learning computers for my children was the keyboard and mouse. Even my youngest, who had issues with the mouse and is just learning to read, is operating the iPad with ease and engaging in many learning games she couldn’t on the PC with the traditional peripherals. Think about the developing world and the people who never grew up with computers the way we in America have with a mouse and keyboard. How much more quickly will they embrace touch computing?

This point, which I have expanded on and further articulated through the years, has served as the basis of my bullish view on the tablet’s potential. Touch-based operating systems, built from the mobile/smartphone experience, eliminate the complexity that exists with Windows and macOS and makes computing more accessible to the masses who are, admittedly, not the most technology literate people. Mobile operating systems like iOS and Android abolish the need for tech literacy classes yet still yield the same potential end results in creativity and productivity as any desktop OS.

In the years since the iPad’s launch, the broad observation of the power in touch/mobile operating systems has manifested itself with Windows and the PC ecosystem creating products more like tablets, Apple with the iPad Pro, and now Samsung with the Galaxy Tab S3 just announced at Mobile World Congress looking to make tablets more like PCs.

However, now we are several years down the road. My concern is tablets have not gained as much ground on the PC as the PC has gained on tablets. It’s true iPad has tens of thousands of dedicated apps and both iPad and Android tablets are utilized in enterprises for mobile workforce computers but, when it comes to the average consumer, they are still not turning from their PCs to iPads or Android tablets as a replacement. In a research study we did in the second half of 2016 on consumers usage and sentiment around PCs and tablets, 67% of consumers had not even considered replacing their PC/Mac with an iPad or Android tablet.

As you may have seen, the tablets trend line is not encouraging.

While it is true the PC trendline isn’t much better, over the past year or so a fascinating counter-trend has been happening in the PC industry. The average selling price of PCs is actually increasing. In the midst of the tablet decline, many consumers are realizing they still need a traditional laptop or desktop and are spending more on such computers than in many years past. Our research suggests a key reason is because consumers now understand they want a PC which will last since they will likely keep it for 6 years or more. They understand spending to get a quality product, one that won’t break frequently or be a customer support hassle, is in their best interests and they are spending more money on PCs than ever before. This single insight is a key source of my concern for the tablet category.

Another key data point in the tablet and PC conversation is how the tablet continues to fall by the wayside when it comes to the most important device to consumers. While the smartphone is the obvious choice consumer pick as most important, the tablet still ranks lower than both desktops and laptops — this is true of iPad owners as well. Tablets and the iPad have yet to overwhelmingly move from luxury to necessity for the vast majority.

I’m still as bullish as ever on the tablet’s potential. However, my concern is consumers may be extremely stubborn and lean heavily on past behavior and familiarity with PCs instead of going through the process to replicate the workflows and activities they did on their PCs and transition to tablets. This is a year where Apple needs to take great strides in software around iOS for iPad if they want the iPad to become more than it is today and truly rival the PC in the minds of the consumer. While tablets have no doubt grown up, they still have a little more growing to do if they want to truly challenge the PC and Mac.

Microsoft Surfaces Compelling New Devices

Today, Microsoft launched its revamped device line. Since taking over the reins at Microsoft, Satya Nadella has focused on developing a class of devices that shows off the strength of its brand and underlying Windows 10 OS. Under the device division leadership of Panos Panay, Microsoft is well on the way to achieving that vision and moving the bar from being just a provider to a premium brand.

Today it launched the next generation Fitness Band, two new Lumia mobile smartphones, showed next generation HoloLens capabilities, announced a revamped Surface Pro, and previewed a brand new Surface Book 2-in-1 laptop replacement.

Microsoft has hit a home run with their devices this time around. Attacking the high end of the market with “halo devices”, it is establishing a position for “best in class” products and related services. Microsoft Band is not another “me too” fitness band and has the price to prove it ($249). The Microsoft Lumia phones with groundbreaking features/performance will appeal to business users (especially with Continuum smart docking capabilities through the Display Dock). The update to Surface Pro shows a continuation of Microsoft trying to push the limits in form, functionality and innovation, and the improvements in processing power, battery life, screen resolution and keyboard/pen will be compelling to the higher end, primarily tablet-oriented users. The newly introduced Surface Book may actually be the most compelling of the products launched. It re-imagines what a laptop can be, with an innovative accessory GPU that enables engineering tasks and gaming previously unimaginable in a thin/light form factor with impressive 12-hour battery life.

These announcements will shake up the market. Although everyone likes to point to Apple as being the best tech innovator, I think, after today’s announcements, the new crown needs to go to Microsoft in the markets it has identified as being critical (no doubt I will get many arguments against this position). In my opinion, Microsoft is taking the battle directly to Apple’s doorstep and has thrown down the gauntlet to say you’re not the only innovator out there. Frankly, Microsoft has left Google in the dust (although no doubt Google has the means and the will to catch up, with its new phone and tablet devices a good first step).

Microsoft’s market strategy is right on. Instead of being a volume player in a cut-throat market (e.g., tablets, phones, laptops) with minimal margins, it has chosen to reinvent those markets in its own image. Although Intel “invented” the 2-in-1 class of notebooks (along with Ultrabooks), the market has been slow to take off, mainly due to a lack of true innovation and too high a price for what users’ received. Microsoft introduced the revolutionary Surface Pro to demonstrate what could be done with some forward thinking and engineering of out-of-the-box products and the 2-in-1 market has doubled in the past year alone. With Windows 10 now hitting its stride to actually showcase what these devices can do (Windows 8 was a poor performer and a hard to use product that few liked), the market should become even more robust.

Microsoft is not trying to compete directly with its customers in general purpose hardware but it is serving notice to traditional OEMs (e.g., Dell, HP, Lenovo) that, if they won’t innovate and drive the market in the direction Microsoft wants it to go, Microsoft will. These new products are literally a kick in the butt to OEMs to start innovating. Microsoft certainly has no interest in putting them out of business and competing at the low to mid tier, but Microsoft has correctly seen a lack of understanding that there is a compelling need for higher end devices (the equivalent of Lexus or Mercedes in cars) that isn’t being adequately served, especially in the high end of the business market. It is this area where Microsoft is squarely targeting its devices and where it will be successful.

Make no mistake, MSFT could not have pulled off 30% more power, 12-hour battery life and twice the performance of a MacBook Pro in its new Surface Book without the 6th generation Intel core chips and the Nvidia GeForce GPU built into the Surface Books. Microsoft is saying this is what 2-in-1s should have been all along, and here is the products to prove it can be done. The price of the Surface Pro (starting at $899) and Surface Book (starting at $1499) puts them in the premium range, but the Surface Book does for the moribund laptop market what Tesla did for cars. With high end 8 and 6 core Qualcomm Snapdragon chips in its Lumia phones, Microsoft is saying processing power is important and price should not be a reason to make underpowered, low-performance devices.

I expect the new devices to be very popular with the high-end buyers who look for form, fit and function above price. While this is a relatively small portion of the overall market, it is the same “luxury goods” market other product segments have gone after for years and that has not been well served by the computer industry fixated on volume at all cost. Apple has known this for some time with a selected, targeted attack on the higher end consumer with its products (then ultimately letting the higher end products trickle down to the mid-priced range). Microsoft has now awakened a higher end market that is not locked into Apple’s ecosystem, with users willing to either switch, or who already have a preference for Windows but were waiting for compelling products to urge them into action.

Microsoft knows that, instead of imitating Apple as it tried to do in the past, its focus must be on differentiating. Attack them if you will, but there are still many Windows users out there who have no intention of switching. Microsoft is determined to keep them.

Flat Slab Finale?

The Mobile World Congress (MWC) show in Barcelona has always been somewhat of a paean to the mobile phone and, for the last several years, to smartphones. This is the trade show where the world has witnessed the flattening and expanding of smartphones from the smaller screen, thicker devices of just a few years back into the thin, large-screen devices they are today. With the exception of Apple—who never has a booth here—many other companies have also used the show as a launching point for a fair number of tablets.

In other words, Barcelona has become the place where most of the world’s vendors have introduced a whole lot of flat slabs of smart glass. This year’s show was no exception. Samsung introduced the S6, HTC unveiled the M9, Microsoft released the Lumia 640, Sony introduced the Xperia M4 Aqua, etc.

Many of these new smartphones offered some notable improvements over their predecessors—better cameras, faster processors, tougher glass, slightly slimmer sizes, and all the other things that have come to represent enhancements to today’s smart phones.

But as with CES, I was disappointed to find that virtually no company has done any fundamental rethinking or redesigning of smart phone form factors. It’s a bunch of smart, flat, planes of glass.

The problem is, that’s not really exciting any more. We can’t exactly get bigger screens without getting devices that are too big. In fact, several vendors have pulled back from 6” and larger devices and settled down into the 5-5.5” sweet spot that most vendors and consumers seem to see as a relatively ideal size. We may be able to shave off a few fractions of a millimeter in width, but only at the expense of battery size and, likely, battery life. Bottom line is, it increasingly feels like we’ve come to the end of the line when it comes to the basic design of both smart slab smartphones and smart slab tablets. We’ll continue to see improvements in the internals, of course, but despite vendors’ best efforts, all these devices are increasingly looking the same.[pullquote]It increasingly feels like we’ve come to the end of the line when it comes to the basic design of both smart slab smartphones and smart slab tablets.”[/pullquote]

To be fair, this form factor seems to work for most consumers overall, but they provide absolutely zero tactile feedback. Now that lack of feedback has been perfectly fine on billions of smartphones sold over the last few years, but it feels like the time has come to rethink where smartphone and tablets designs are going.

We have seen an interesting experiment via LG’s Flex smartphone, which features a curved screen, but not really much else. There have also been some demonstrations of interesting haptic technologies, which provide force feedback to users of touch-based devices, such as tablets and smartphones. The latest is the Tactus Phorm iPad Mini case, which uses a fluid-based screen overlay technology that can generate physical keys seemingly out of nowhere and then disappear when they’re no longer required. In addition, I’ve heard rumblings of technologies that can leverage supersonic audio waves to generate a type of haptic force feedback as your hand hovers over a flat display. Nothing, however, has really made any kind of impact just yet.

I made the prediction at the beginning of the year —and have since had the thought verified by a number of long-time industry players—that we are overdue for much more tactile devices and experiences. So far, the market hasn’t moved in that direction, but I’m certainly hoping that by next year’s MWC, we’ll be able to start looking beyond the flat slabs of today to more interesting form factors of tomorrow.

The Implications of the Low Price Tablet Era

I’ve been tracking nuances of the global tablet market since the origins of the category. As I emphasize in my analysis, we know not all tablets are created or used equally. I’ve also been adamant about explaining that, when I look at tablet usage data, we essentially have two tablet markets. Tablets with a brand on them from companies like Apple, Samsung, Lenovo, Dell, etc., and a huge market of white box tablets made by no-name brands, sold at prices in the $100 range.

Our usage research shows these low end tablets, counted in the category labeled “other” in data reports, are essentially being used as portable media players — larger pieces of glass to watch videos and play games. Very little web browsing or downloading of apps is done. However, with the price of these white box tablets, it is time to start thinking differently about their usage and ultimately the role they play in consumer’s lives and homes.

For much of the last three years, essentially the short life of the tablet category, these low cost white box tablets have sold in massive numbers in markets such as China, India, Russia, and a few others, but not much in developed markets like the US or UK. Last quarter however, something interesting happened that may very well signal a changing tide.

According to IDC, RCA joined the ranks of the top five global tablet vendors by shipments into the channel in Q3 2014. Here is the chart of the tablet model.

How did RCA go from essentially zero in shipments to the number five spot out of nowhere? To begin, we need context. I discovered RCA’s shipments were entirely to Walmart and the US market. To be clear, a US retailer amid heavy promotions propelled a new entrant with virtually no tablet market credibility to the number five position globally for Q3 2014 quarterly shipments. ((RCA was long sold off but a company named Venturer Electronics has the rights to the name for products like tablets and is the maker behind these devices.)) Here is the full lineup of RCA tablets.

Walmart offers the 10″ with a keyboard case for $129.99 and the 7″ with a keyboard case for $59.99. Here is my take on how this happened. Firstly, these are rock bottom prices. Knowing quite a bit about Walmart’s typical customer, they likely saw the tablets at these prices and, having a general interest in tablets to begin with, recognized the RCA name and figured they couldn’t be that bad. These are likely used in many of the same ways as white box tablets in emerging markets. For games, video, and some internet. And at these price points, these products essentially become disposable. Now this is where the point gets interesting. As these prices become the norm in retail outlets everywhere, why not just buy several and stick them in every room in the house? Put one next to your bed to be used for your bedside web browsing tablet and alarm clock or use it as a portable TV for the kitchen or the bathroom while getting ready for work. Take it outside to watch video by the pool or garden. Put three in the car and leave them there. Coffee table tablets, one for every child in the home, multiples in every room just laying around waiting to be used by whoever. At these prices, why not? If it breaks, just get another one. There is very little downside to treating them as disposable pieces of smart glass to be used in any number of fairly simplistic ways. Believe it or not, prices will keep getting cheaper and from more brands and in more retail outlets than Walmart, thus making the barrier to entry even lower and increasing the availability of these low cost tablets. Cheap, numerous, disposable pieces of smart glass in every US home. A fascinating and potentially disruptive change of dynamics could be around the corner.

Of course, our readers will start asking what does this mean for Apple. I have several thoughts. I still believe the iPad is being used to do something very different than what I have outlined. However, as much as I like the new iPad commercials, they highlight things that CAN be done with the iPad but that the majority DOES NOT do with an iPad most of the time. Unfortunately, the iPad is used to do simple things by simple users to do many of the tasks I’ve mentioned. The iPad is undoubtedly 300% more capable than all the low end tablets. However, my concern is the mass market has either not fully utilized those capabilities or more worryingly, has no real intention to do so. The tablet’s ultimate mass market appeal may very well be to simply have a general purpose piece of glass laying around for every person in the house to use for any number of very simple, mostly entertainment-based tasks. In this case, these low end tablets may outnumber humans per household. Which makes the tablet market number much larger than many have projected. But, for Apple, fighting the “good enough” battle with these low end tablets is a strand of thought worth working through.

These are still early days and I’m providing our readers with some observations to discuss. This could be something or it could be nothing.

Chart: Internet Access by Device

As our readers know, every now and then I like to post a chart and tease out the highlights. Today, I want to do that with some updated data. Across many global markets, consumers were asked which devices they have accessed the Internet on, either through an app or browser, over the past 30 days. This data is updated frequently so we can track the growth of internet access by device over time.

Mobile/Smartphones: This is be obvious and we can expect continued growth in internet access by smartphones for the foreseeable future.

Tablets: Tablets remain the other growth area. Given the slowdown of tablet growth overall, we can make a few observations. The first is the tablet is continuing to steal internet time from other devices, mainly the PC. The second is the tablet market is actually growing. However, it is doing so by the secondary market. Meaning that many of those initial rush of iPad buyers are continuing to hand down older iPads to other family members as they upgrade their iPad. Since this upgrade isn’t happening all at once but is trickling in over time, we see slower sales but larger use of tablets. Another is the continued explosive growth we see of Chinese white box tablets. In certain markets like Russia, India, Mexico, Brazil, and to some degree China, these low cost, no name brand tablets are quite popular. Most are dedicated game players or portable TVs, but internet access at some level should also be assumed. This is happening to a degree in the US as IDC highlighted RCA being in the top 5 of tablet vendors for Q3 2014.

As I see this data on tablets and see quarter after quarter of more people say they are getting on the internet with a tablet than the quarter before, it shows us the category is still viable and still growing.

PC/Work PC: I like that these two categories are separated in the survey. It helps us get an understanding of how much larger the consumer PC segment is vs. those who use a PC at work. When you look at both numbers, it is possible to interpret their lines and believe the PC market is simply not growing. This certainly looks to be the case. We are not adding brand new PC users at anywhere near the rate we once were. Also, as I alluded above, more PC users’ internet use is likely shifting to other devices.

I point this out in many of my focused PC industry analysis reports through my firm Creative Strategies. What we discover when we study PC behavior in both consumer and enterprise environments is the device is becoming a much more focused product than a general purpose one. People use it for specific tasks and have now defined what tasks it is better for vs. others. A great example of this is Facebook. In our studies, we found over 75% of daily US Facebook users access Facebook on their phone but while sitting at their work PC. Facebook has a browser based version so why not just use it? We find people simply prefer the mobile version, so we see this dual use of a PC and smartphone at the same time. Responses we’ve heard were that it was faster, more private, more convenient, and they could use the mobile app to get a particular task done, even though they could have done the same thing on the PC. If general purpose computing moves from the PC to devices like the tablet and even more so to the smartphone, it will bring dramatic implications to the PC ecosystem.

Television: Increasingly, more people are accessing the internet from their TV. It is important to note in this data that a game console or set top box is included. This is not referring to a dedicated connected internet TV, but to the use case of connecting to the internet in some way from your TV. Clearly Netflix, online console gaming, and other use cases drive this, but the fact it is slowly increasing tell us quite a bit about the role the TV will play going forward and the internet services are poised to be monetized from the big screen.

Given this survey comes from over 30,000 responses, what the lines also show approximates volumes. The higher the percentage of the line, the more people using the device to access the internet. Like most surveys, it does not include mobile only consumers, but we can be assured there are more people accessing the internet from a mobile device than a PC, even though these lines don’t show that. What this chart sheds light on is what the internet by device landscape looks like in the multi-screen user world. The “internet embedded into everything” is the theme. What devices dominate its usage is the interesting part to watch going forward.

Could Apple ever do a “2 in 1”?

If you have heard Tim Cook talk about “2 in 1’s”, you already know the answer to this question. He likened the marrying of a tablet and a laptop to “converging a toaster and a fridge. You could do it but it would not be pleasing to the user”.

One of the big issues around 2 in 1’s is, in most designs, they are not great laptops or tablets. Indeed, most of the ones on the market, including the Lenovo Yoga-like designs in which the screen just flips back, or convertibles, where the screen is detachable, have too many compromises to be great by themselves. By trying to marry the two functions, they often come out as “tweeners” and are not great laptops or tablets in their own right. Also, many of the Yoga-like models are still in the 13-15 inch range. While they are very good laptops, the screens are too big and unruly to be great tablets.

However, while Apple does not have a 2 in 1 of their own, the world of 3rd party peripherals have created a sort of pseudo 2 in 1 with the iPad and with 3rd party keyboards they can actually become functional 2 in 1’s in a way. What is interesting to note here is in this case the center of the universe is a tablet. Apple makes it clear the iPad is not a laptop. Yet, a lot of people are buying external keyboards and using the iPad in a laptop-like mode anyway.

There have been rumors Apple has a 12” or 12.8” iPad in the works. This has me wondering if perhaps a product with this size screen coupled with a snazzy and ultra sleek keyboard might be coming from Apple. If so, Apple would be very clear this is a tablet and a great one at that. But I don’t think they can ignore the real interest in how people are using an external keyboard with iPads. An ultra thin 12.8” iPad Air with a Johnny Ive’s designed keyboard might be a big hit with those who do real productivity on an iPad now but have to cobble together their own solutions with 3rd party keyboards.

Just wondering.

Panic Inside Apple and Cheers for Satya

The blogosphere has suddenly discovered the incredible array of products, tools and services Microsoft has long possessed. Better late than never, I suppose. Fact is, their realization of the obvious is in large part due to the accessible dynamism and well-regarded tech cred of Microsoft’s new CEO, Satya Nadella.

Nadella’s hire makes for a great story on many levels. I will get to those in time. The more important story however, is the potential trouble brewing inside Apple.

Yes, Apple is the richest tech company in the world. Its laptops, smartphones and tablets are the established market leaders. But as we learned last week, from still another Apple-Samsung court case, Apple is clearly in the throes of that great ontological concern sure to stricken all those with immense wealth and power: Who am I?

The very question could prove debilitating.

Since being named CEO, Nadella has rallied the troops, made the necessary overtures to developers, appeased the critics, silenced the doubters and taken rather bold, once unthinkable actions to ensure Microsoft has a prosperous future in mobile, in the cloud, in homes and businesses, on Apple, the web, and the Internet of Things. Not a bad two months.

The talk about Apple? There’s still no large display iPhone and the iPhone 5c is still unwanted.

All Our Yesterdays

Thanks to Apple’s ongoing “holy war” against Google — and the court documents that are now public — we learned last week what we already suspected:

Samsung’s ads attacking Apple users are particularly powerful.
The market for smartphones costing less than $300 is growing like mad — and this greatly concerns Apple.
The market for smartphones with displays larger than the iPhone 5 and 5s is growing like mad — and this greatly concerns Apple.

We learned something else, however. Something I had not previously considered — there is dissension among the upper ranks of Apple.

Apple is struggling to understand the bounds between margins and market share and how best to maintain the profit stranglehold its iPhone franchise has on the industry.

If Apple doesn’t know, this game just got really interesting.

Guess what? Apple doesn’t know.

The iPhone 5c has made that painfully clear.

With iPhone sales growth rapidly decelerating, SVP Phil Schiller is rightly worried “customers want what we don’t have.”

What Apple doesn’t have of course, is two things: an iPhone under $300 and an iPhone with a larger Lumia 1520-like display — the two areas where most of the smartphone growth is coming from.

Expect a larger display iPhone this year.

The low cost iPhone was supposed to be here already: the iPhone 5c.

Someone at Apple clearly blinked.

Given Phil Schiller’s exhortations for a low cost device, my suspicion is Schiller is now on the opposite side of Jony Ive and possibly even Tim Cook. Given the early growing pains of iCloud, perhaps Eddy Cue also was opposed to a low cost iPhone. They really needed to have decided all that before launching 5c.

Tomorrow and Tomorrow and Tomorrow

The iPhone 5c was meant to be the “low cost” iPhone but has failed at this one job. It’s almost comically overpriced. I’m now convinced internal divisions, corporate concerns over margins, branding and sourcing all forced Apple to blink and price the 5c far higher than it ever should have been.

As I wrote in a previous Insiders post (subscription required):

Apple’s iPhone 5c has been a striking failure, however, selling far fewer devices than Apple expected, likely dampening overall iPhone sales, and, if well-placed rumors are correct, very soon to be no longer of this world.

It all began, of course, with so much promise. The iPhone 5c — aka the “cheap iPhone” — was, we were convinced, going to be the aggressively priced new iPhone, ready to dismantle Android throughout the developing world, possibly beyond. It would (quickly) add tens of millions, ultimately hundreds of millions of new users into the Apple/iOS ecosystem.

Based on the court documents we saw last week, which make clear many inside Apple understood the pressing threat from the low end, such a low priced device was commissioned. Only…Apple doesn’t do low end.

But it must.

But Apple doesn’t do low end.

The end result: a failed product, at least. Given Apple’s strengths, that’s easy to recover from. If there are splits within Apple’s executive ranks, however, that could prove a lasting harm.

The iPhone 5c should not exist unless it’s priced at about $300 or so. The forces within Apple demanding such a device obviously clashed with the forces that demanded margins — and brand equity — trump new users.

I confess I find this fascinating.

I find it even more intriguing now that the giant, bloated, aging Microsoft has been rather stunningly re-energized.

In my earlier Insiders post on the iPhone 5c, I was troubled with the question, ‘why’. Why did the 5c happen and how?

Explain this: A 16gig 5c retails for $549. A 16gig 5s retails for $649. Why?

For that extra $100, the iPhone 5s buyer receives the following additional hardware, services and benefits:

A7

M7

TouchID sensor

Lighter weight

True Tone flash and larger 8 MP sensor

Slo-mo video

Enhanced imaging features

I stated then Apple had foolishly devalued its hardware by making a mere $100 price differential between iPhone 5s and iPhone 5c:

The most egregious, most confounding failure of the 5c, and the one I think will haunt Apple, is that the 5c effectively declares to all the world that one or all iPhones are radically overpriced. I am at a loss to understand how Apple allowed this to happen.

Now I know. Internal divisions. The 5c is a fine product, one explicitly designed to bring millions more into the iOS ecosystem. Only, the counter-forces decided another piece of beautiful, functional Apple hardware could not be priced with other ‘mid-tier’ devices.

That’s just not Apple.

Full Of Sound And Fury

The iPhone still accounts for the majority of the Apple’s revenues. The focus then is on building out the iPhone base, maximizing its profit potential, surrounding it with more and more devices, services and accessories to ensure lock-in. This is Tim Cook’s wheelhouse.

You can brand Cook as not being a ‘product guy’ like Steve Jobs, or not a true techie like Satya Nadella, but there is probably no one better suited for growing Apple and the iPhone business.

With Cook in charge, and given his keen ability to scale manufacturing and optimize profits, expect the iPhone to be the center of the Apple universe for years to come, probably through at least this decade.

Apple wearables will require the iPhone. CarPlay will require the iPhone. New Apple accessories will be optimized for the iPhone. iBeacons will work best with the iPhone. New forms of peer-to-peer and point-to-point sharing, via the iPhone, will be rolled out over the months and years.

This is all very wise.

But I confess the failure of Apple to deliver a low cost iPhone, when so many obviously want one, when its top execs understand the potential for one, does make me question Cook’s ability to guide Apple toward the post-iPhone revolution.

Unfair? Perhaps. Even if I’m right, given I expect iPhones — smartphones, in general — to be our primary mode of computing and connectivity through this decade, Apple likely won’t feel the least bit of pain.

We are, after all, still well into the evolutionary phase of smartphone and tablet computing. This year’s iPhone, this year’s iPad, will be better than last year’s. Next year’s will be better still. And so on and so on. But a revolutionary new product? One that can live outside of the iPhone or iTunes sphere? Do not expect any such breakthrough product or service anytime in the near future from Apple. Apple is on a very direct course, set by Tim Cook, with its mission being to ensure the iPhone continues to print money. A low cost iPhone would have threatened the vision Cook holds for Apple’s future. It’s a vision I believe is almost guaranteed to succeed yet also highly predictable.

At Microsoft meanwhile, everything is in flux.

Which brings me back to Satya Nadella. He has the benefit of knowing his core moneymakers are nearing the end of their life. Tim Cook is not yet aware of such horrors.

When that day does come, I cannot say if he will still be the best person to lead Apple.

The Computer Chronicles

Why are you here? Why are you even reading this?

Me? I know why and am grateful for the odd, stirring, mostly unplanned path that brought me here.

My father spent over 30 years working inside an auto factory, the first 20 “on the line”. When he heard “computers were the future”, he saved up, found one at a garage sale and proudly brought it home. It was a Commodore 64. I loved it from the start.

Confession: I have never cared much for coding, programming or building my own computer. I was however — and still am — acutely interested in what I could do with a computer. In the case of my 64, I was a kid, so mostly gaming. Lucky for me, dad’s garage sale booty included a “floppy drive”, several games and various “educational” programs.

In short time, I became reasonably expert at H.E.R.O., Fort Apocalypse, and Summer Games. There was a time when I engaged in far more virtual Raid(s) over Moscow than any of today’s most capable generals.

The Commodore 64 cost far more than my parents could reasonably afford. So from the start they made it plain it was very important, not at all a toy (despite how I used it), and repeated this to me like grace before dinner. Computers, they insisted, are the future. Be a part of that.

That’s why I’m here.

Intel Inside. And Maybe Hopes & Dreams.

Of course my native Detroit was far away from Silicon Valley, the fast beating heart of the computing revolution. It didn’t matter. The 64 carried me here. For all the machines that followed, the used Mac, the shiny new Mac LC, the Toshiba laptops and many more, it was that first 64 which shed a light on my future, a future where people and data and machines and ideas and random musings are all connected.

The Commodore 64 lured me down the rabbit hole that was online bulletin boards, which led me to Prodigy, Dialog, Compuserve and others. From there, I discovered Mosaic, then Netscape. By then I had a career in computer tech, almost without planning it; my parents’ intentions realized.

I can’t stop now. I don’t want to stop. It’s not just there’s more to come. More is coming faster, and it’s even more amazing.

Consider the scary-exciting merger of healthcare and computing. Acknowledge the rapid rise of Facebook and global messaging, from nothing to vital in a few short years. Reflect upon the astounding functionality of the iPhone, the utter pervasiveness of Google, how giant Microsoft is morphing before our eyes. We have new media, mobile payments, crypto currencies and experimental forms of retail. Global connectivity has dethroned the sovereigns of time and distance. Yet, both real time and precise location are now more critical to more of what we do and say (and even think, see and feel) than ever before. I did not see that coming.

I am here as well because the visions, proclamations and inspired work of the early computing pioneers really did come true. Their words, their mad tinkerings quickly spread far beyond Silicon Valley, where the shrouded potential of their creations seeped into our computer-less consciousness, found their way into the local news and duly informed my parents who went straight out and acquired for me everything they were told I would need to become a part of the future.

I am pleased to still be part of this long running serial.

Yes, our industry failed at much. The endemic spread of pornography, the utter devaluation of personal privacy, our rather casual silence at how the latest waves of computing technology are displacing good, smart, hardworking people by the millions, leaving them with little to do but hope self-employment, freelancing and the sharing of labor and tools can somehow enable them to get by. There is much to fix.

Random Access

The arrival of that Commodore 64 led to another serendipitous find. We could afford only one television in those days, no cable, and when home, my father religiously watched the local news and all sports. Big-ticket purchases like the 64, however, demanded he work on Saturdays — time and a half made those 8 extra hours of work equal 12 hours of pay, which mattered dearly. Which led to him being gone one particular Saturday. Which led me to gleefully run through all 9 channels. Which is when I stumbled upon The Computer Chronicles.

“the amazing palmtop computer”

The Computer Chronicles documented, almost from the very beginning, the rise, the spread, the incredible innovation of personal computing. It proved to me — because it was on television — a career in computers was viable, no matter where I lived.

I am more excited, more convinced of the transformative power of computing tech and its ability to achieve net good than ever before. This is one reason why I never play favorites. It’s why I can’t suggest you buy Bitcoin, no matter how hyped it has become, or why I cannot recommend the iPhone 5c, no matter how greatly I admire Apple. It’s why my posts cause numerous CEOs and VCs (and several editors) to immediately block me from their Twitter feeds, and limit my access.

All worth it. This stuff matters to me and I fully appreciate how it impacts you.

We are the screen. The screen is the world.

Whatever the reasons you are here, I am glad you are. Now hang on tight.

As Google and Facebook appear to buy up everything that was only yesterday considered cutting edge, as venture capital becomes, somehow, even more of an insider’s game, with not even scraps available to the rest of us, I nonetheless stay positive. I know money, computing power, networking, software, the creeping of technology into all aspects of our life and into every personal and business endeavor, and the random, very human mutations that takes hold inside this swirling glorious mix will continue to create still more and larger revolutions, more big and bigger bangs, more insanely great.

We are rapidly transitioning from the era of personal computing to an era where each person is a computer — with eyewear, wristbands and clothing all capturing who we are, what we do, and how, when and where. Then sending this data floating off, joining up with 7 billion similar nodes.

We are the screen. The screen is the world.

I say this all not because I have a product to sell you or because the larger, more pumped the market, the greater the return on my quickie investments. I say this because it’s true: The computer chronicles have only just started.

Holiday Shoppers Gifting Themselves

Now that we’re fully in the throes and craziness of the holiday shopping season—just seven shopping days left until Christmas!—it seems appropriate to further investigate how the process really works, especially when it comes to electronics purchases. In fact, I’ve always been curious to not only know what items are hot sellers each year, but what drove the purchase decisions. The common perception, of course, is that most holiday shopping outings have an intended gift recipient in mind. But recent research just completed—the first report created by my new firm, TECHnalysis Research—reveals that many of the electronics purchases made in the early part of the holiday season are actually for the buyers themselves.

Specifically, in a survey of 401 US consumers aged 18-74, we found that a full 50% of electronics purchases made on Thanksgiving Day, Black Friday and Cyber Monday—either in retail stores or online—were for me. Well, not actually me, really, but the “me” of the shopper who made the purchase. The chart below summarizes the basic results.

Perhaps not surprisingly, women were a bit more generous than us guys, with only 47% of female’s purchases being for themselves vs. 47% being gift purchases and the remaining 6%—like the total numbers—a “non-gift” purchase for others. Men, on the other hand, listed 52% of holiday electronics purchases as being for themselves, 42% as gifts for others and 6% as “non-gift” purchases for others. Clearly, lots of tech shoppers wait for and specifically target these huge shopping days for their purchases—either that, or the spirit of Uncle Scrooge is perhaps a bit more alive today than many of us would like to admit. But I digress…

The top-selling items among survey respondents were large-sized tablets (those with screen sizes greater than 8”), followed by game consoles, small-screen tablets (under 8” screen sizes), PC accessories and smartphone accessories. The chart below lists the top ten of the 19 categories that were covered. The x-axis represents the % of respondents who made a purchase in that category.

Of those purchases that were made as gifts, the top category was actually small tablets, which makes sense given their lower prices, followed by larger tablets and game consoles. Interestingly, the top category for both personal purchases and as “non-gift” purchases was PC accessories—which covers things like USB drives, speakers, keyboards, mice, cases, printers and more.

In terms of buyer rationale, 57% of the purchases were considered “net new” devices, and 43% were replacements for existing devices, though the numbers ranged fairly significantly based on the category of device. For example, 75% of small tablets were considered new purchases, whereas only 32% of desktop PCs were additions to the household.

An interesting statistic regarding the new category of smart watches and other wearable devices was that only 45% were considered new and 55% were replacements. To be fair, the sample size for that group was only a modest (and not statistically reliable) 11 purchases. Still, it suggests either that early purchasers of those devices were not happy with their first choice, or that it’s the same people who keep buying many of the different options now available. Only time will tell….

Another interesting statistic from the study relates to the manner (and location) in which the purchase occurred. For online shoppers, which were intentionally just over half of the total respondents, 45% of purchases on Thanksgiving or Black Friday were made on mobile devices—either tablets or smartphones—while that number was 39% for Cyber Monday purchases. Additionally, 11% of all online purchases made on either Thanksgiving or Black Friday were done while the individual was mobile—either while shopping, while travelling, or at another public location, such as a café. If there was ever a question about the impact that mobile devices have had on people’s lives—let alone their shopping—these data points clearly show it.

If you’re interested in learning more, you’re welcome to download a free copy of the top-level results from the study at the TECHnalysis Research sample deliverables page.

Apple’s Free OS Upgrades and iWork Could Leave a Mark on Microsoft

Apple’s announcement Tuesday brought with it many innovations across the span of tablets, notebooks, and workstations. Apple introduced the new iPad Air, updated the iPad mini, redesigned the MacBook Pro, and provided more information on the Mac Pro. I attended Apple’s event, and one announcement that didn’t get much attention until Microsoft’s blog is that much of Apple’s key tablet and personal computer software is now “free”. Over the long-term, I believe this could have an impact not only on Microsoft, but its OEM partners, too. Let me start with what Apple announced.

Yesterday, Apple announced that with the purchase of every new iPhone, iPad, and Mac, OS upgrades, iLife and iWork will now be “free”, or downloadable and usable for no charge. Think about that for a second…. Free, high-quality operating systems, lifestyle, and productivity software across phone, tablet and notebook and workstation. Consider for a second that it costs $120 to upgrade from MS Windows 7 or Vista to Windows 8.1 and an MS Office 365 license costs $99 per year or $300 over a three year period. I believe this will make a difference to desktop software in the long-term.

From a tactical point of view, this reduces the Apple premium price for the premium experience. Let’s consider the new 13” MacBook Pro. What was once $1,299 could now appear $879 if you factor in three years of MS Office and one major MS operating system upgrade. This is a TCO basis that may be more appropriate for businesses than consumers, but does comprehend the potential full costs. I don’t believe this will immediately be comprehended in consumer’s or businesses value proposition, but I do think overtime, it could. Now let’s look at this strategically.

Microsoft has diversified over the last decade into enterprise software and services, but Office and Windows, including upgrades, are still cash cows. Enterprises don’t pay list price for OS upgrades or Office, but based on MS’s profit margins, there is still a lot of “room” to work. And it’s that “room” that Apple intends to pierce based on today’s announcements. Consider for a minute what the MS world would look like to Microsoft’s customers and partners with the expectation of free OS upgrades and free Office. Apple is essentially commoditizing OS upgrades and productivity software. The PC software industry has already has been impacted by the mobile world and I don’t see this stopping anytime soon. In fact, Apple’s announcement exasperates the issue. PC software and services like Windows upgrades and Office will continue to look more expensive year after year.

So what does this mean to MS’s partners?

MS OEMs like Dell, HP, and Lenovo now must consider the entire value proposition with PCs with Windows and MS Office. Consider that OEMs do drive revenue selling Office. Just look at how hard they pressure sell you in on-line configurators. OEMs recognize that Office is the business standard, but how do you deal with a “free” cloud and client offering from a credible brand like Apple over the long haul?

Free MS Office productivity alternatives to Office have been available for 20 years, but this time, it’s different now. PC software that costs a lot of money looks odd when compared to low cost mobile and freemium models. As I said before, over time, I believe buyers will be less likely to pay as much as they do today for PC software, look more closely at the alternatives. This creates a big challenge for Microsoft.

I believe that OEMs, because of the vanishing software opportunity, just have one less reason to connect themselves to Microsoft and more strongly expand their opportunities with alternatives like Android, Chrome OS, and Linux. This transition has already started when you look at Dell’s, HP’s and Lenovo’s products, but Apple just gave OEMs another reason to invest more into the alternatives.

Net-net, Apple’s “free” software announcement will hurt Microsoft, starting with consumer, then bleed over to education and small business. I don’t think this will have much of an impact to medium and large enterprises because Microsoft has money to move around (Exchange, SharePoint, Windows Server, Lync, etc.) but will certainly come up in Microsoft price negotiations.

Beware Geeks Bearing Hybrids

Anyone that has been paying attention to the evolution of OS X and iOS will have at some point noticed that the two operating systems are slowly acting more like each other. ((All article excerpts are from: “MacPhone Air: Mark Shuttleworth predicts Apple will merge Mac and iPhone“))

Agreed.

Mark Shuttleworth, founder of Canonical who recently attempted to crowdfund the Ubuntu Edge phone that would double as a desktop PC … predicts Apple will merge Mac and iPhone hardware one day soon, creating a device similar to the Ubuntu Edge.

Vehemently disagree.

…Shuttleworth said that though his company’s Ubuntu Edge didn’t reach its crowdfunding goal, it drummed up enough interest in a phone that doubled as a desktop PC, and other companies would adopt the concept as their own.

Yeah, right, You failed miserably, so now everyone is inspired to be you.

“(Shuttleworth pointed) out that the Cupertino company specifically labeled the phone’s A7 SoC as a “desktop-class processor.” Shuttleworth thinks Apple specifically chose this nomenclature as a way to hint at the future of its hardware, stating that it was a “very clear signal” that Apple would merge the iPhone and MacBook Air into one device.

Yeah, right, because Apple just LOVES to give hints (eye roll).

OS X and iOS have been on a collision course for some time now, though both operating systems are traveling in slow trains.

Collision course or parallel courses? There’s a big difference between the two.

Who knows if Shuttleworth is right in predicting that Apple would converge the two devices….

Oh, me, me, me!

I’m sorry — was that supposed to be a rhetorical question?

Shuttleworth’s analysis is as wrong as wrong can be. Here’s why.

Jobs To Be Done

“To forget one’s purpose is the commonest form of stupidity.”~Friedrich Nietzsche

If a device isn’t doing a useful job, it won’t get hired. If it’s doing an unmet job, then it will be staggeringly successful.

Tablets are stealing jobs from keyboard-based computers in a steady war of attrition~Horace Dediu (@asymco)

What many fail to realize is that mass market consumers are using tablets in the SAME ways they used to use PCs. And then some.~ Ben Bajarin (@BenBajarin)

As one teen said to another: “I love my iPad. I can do so much more on it than on my laptop.”~ Horace Dediu (@asymco)

If you don’t think that the tablet is doing its job, it’s because you don’t understand the job the tablet is being hired to do.

Design

Design isn’t a matter of building, it’s a matter of taking away. It’s like Michelangelo taking a block of marble and chipping away at it until it reveals David.

Perfection is achieved, not when there is nothing left to add, but when there is nothing left to take away. —Antoine de Saint-Exupéry

Tech Geeks (like us) v. Real People (like them)

I define the word “Geek” as, well, pretty much anyone who is reading (or writing) this article. We’re not like real people.

(I mean, c’mon, you know I’m right.)

The way we see the problem is the problem.” ~ Stephen Covey

— Real people look for solutions;
— Geeks look for problems — and find them.

In most aspects of life, too much of something is just as bad—and often much worse—than too little.~Dr. Mardy’s Aphorisms

— Real people focus on what it is.
— Geeks focus on what is missing.

I’M NOT FINISHED.” —Edward, Edward Scissorhands

— Real people say: “What can I do with it?”
— Geeks say: “What can I do to it?”

In all human affairs, the wisest course is to be passionate about the role of reason and reasonable about the role of passion.~Dr. Mardy’s Aphorisms

Geeks are passionate about reason. They need to also be reasonable about the role that passion plays in our lives.

The brain and the heart are like the oars of a rowboat. When you use only one to the exclusion of the other, you end up going around in circles.~Dr. Mardy’s Aphorisms

Using reason to evaluate a product is like rowing with one oar. Only if we view a product through both its utility and its appeal to human emotions can we truly make any progress.

Geeks Simultaneously Think That The Tablet Is Fabulously Successful And Fatally Flawed

Most people look at the growth of the tablet and say: “Wow, the tablet must be doing something right.”

Geeks look at the growth of the tablet and say: “Yeah, sure, it’s doing well and all…but what would REALLY make the tablet great would be if it were a hybrid!”

Touch Input And Pixel Input Are Inherently Incompatible

DESTINY! DESTINY!  NO ESCAPING THAT FOR ME!” —Dr. Frederick Frankenstein, Young Frankenstein

Contrary to geek wisdom, Frankenstein’s monster was not a shining success, the creation of life from inanimate matter. It was, well, a monster, a sort of hybrid.

— A telescope is good for big things. A microscope is good for small things. A Tele-Microscope is good for nothing.

— A Microwave cooks fast. A stove cooks slow. A Micro-Stove Oven leaves us cold.

This was the genius of the iPad. It was a mediocre notebook computer, but it was a great tablet. This was why, after 10 years of failure, the tablet took off. We still haven’t learned the lesson. Geeks still want the tablet to be a combination of a tablet and a notebook despite the fact that the market clearly prefers tablets to be tablets.

Listening To The Market

When I was in law school, they taught me that when the Judge was agreeing with you, you should shut up and sit down.

Fine, fine advice…that I never took. But that doesn’t mean that you shouldn’t heed those wise words.

The public is the only critic whose opinion is worth anything at all.~Mark Twain

In technology, the market is the Judge. And when the market is shouting you down…

…shut up, sit down and enjoy the ride. That’s what the vast majority of consumers are doing. We would be wise to do so too.

Could Apple be Reinventing The Hybrid Notebook / Tablet?

I was quite intrigued by an article in CNET that shared a research report from Barclay’s Equity Research that speculated on the idea of Apple creating an iPad with a larger screen and using their new 64-bit processor in it.

The CNET article states that “In a note to investors Tuesday, the firm laid out why it believes the new 64-bit architecture paves the way for a 13-inch model of the iPad that would be aimed squarely at replacing laptops for both casual and business users. That includes some of Apple’s Mac portables with more productivity features.” It went on to suggest that it would “Pack more RAM than current iPad models thanks to the newer 64-bit architecture; Sport a Smart Cover with a built-in keyboard and trackpad along with a battery pack to add additional running time.”

On the surface (pun intended) it would be hard to believe that Apple would create a Microsoft Surface-like device given the fundamental failure of that product to date. And while the concept of 2 in 1’s is the next big thing Intel and Microsoft are pushing to try and reignite the demand for laptops, it is too early to tell if consumers really want this type of product given the lower cost of tablets that are being used as companion devices to existing or even new laptop purchases.

If you look at Apple’s history, they normally don’t jump into a market until they see it as really valid, and then they do so by adding their design expertise, great software and services and a rich ecosystem that together delivers a better solution than any other versions already on the market. They did this when they reinvented MP3 players with the iPod, reinvented smartphones with the iPhone and reinvented tablets with the iPad. And then with each iteration of these products they made them better and rely on economy of scale to lower prices yet add more bang for the buck.

While the Barclay Equity Research Research report states that this idea is speculative, I believe they are actually on to something. While Microsoft’s Surface has been an unsuccessful product, the idea of adding a keyboard to the iPad is not new and in fact dozens of companies now create third party Bluetooth keyboards for the iPad and they actually sell pretty well. In fact, when I go to meetings I no longer take my laptop anymore. Instead I use the larger iPad and the Logitech Ultrathin Keyboard with it and using a cloud based note taking app like Evernote, Notes or even Pages I create my notes in this manner. This has worked for years and interestingly I have often thought that an even larger screen iPad with even more powerful apps would be nice, especially where true mobility is important. Surely Apple has seen the attach rate of keyboards for use with the iPad as more than a small trend and must have learned much about how people value a keyboard with the iPad.

When Apple introduced the new iPhones in Sept, they had one of the game companies show off a game they modified for the iPhone that took full advantage of Apple’s new 64 bit processor. According to them, they were able to make it work with this 64 bit chip and iOS in only about 2 hours. After the event I asked an Apple executive how they were able to do this so quickly. He said that the game itself was created for the Mac and its 64 bit architecture, but with their software developer tools, all they had to do was modify their system calls for iOS and since iOS was now 64 bit compatible, it was quite easy for them to make a Mac app work on a 64 bit iOS iPhone. Also, iOS and OSX use the same code base that underline each operating system.

For some time many Mac observers have suggested that iOS and the Mac OS were on a collision course. The fact that a Mac app could be easily and quickly adapted for iOS is quite telling. While I do think that Apple will continue to create more powerful versions of Mac OS, especially for use by their high end customers who need its raw power to handle graphics apps, engineering and other complex tasks, it would not surprise me if the Mac Apps and iOS apps are the ones that collide and delver a new type of mobile computing experience suggested in the Barclay’s report.

One could imagine a 13″ iPad/Macbook combo device that runs both Mac apps and iOS apps. Or for that matter this could work in reverse too. A 64 bit Mac OS based MacBook could easily run all iOS apps that could be modified for use on a traditional OS X MacBook. If one thought that adding 64 bit to the iPhone was a gimmick, they would be proven wrong quickly. Clearly Apple’s move to 64 bit was much more strategic than many may have thought and if this scenario is even half right, it shows that Apple has a much greater and longer vision for both of these products that could be designed in many ways, shapes and forms.

If Apple were to reinvent 2 in 1’s in this creative way, especially if the apps become cross OS and for use on all devices Apple creates, Apple could develop a whole host of new types of laptop/tablet combos that could be tied to their rich eco system that is already pretty much cross platform and deliver some rather innovative and powerful mobile computing devices in the future. Apple clearly wants the iPad to become more focused on delivering productivity as well as consumption and this could become part of their design guidelines and goals for all iPads 9″ inch’s and above. In fact, given Apple’s design chops they could even create various tablets, laptops and keyboards that could be compatible and fully interchangeable. Keep in mind, iPads are already invading the enterprise in big numbers and making them laptop like could only help them gain more ground in IT.

If this should happen, the ramifications for the industry could be very interesting. At the very least, it would validate Intel and Microsoft’s 2 in 1 designs but at the same time it could become a highly competitive product that could hinder the Windows 2 in 1’s from gaining ground in IT. And for the Android in enterprise crowd, it too would become a powerful product that could keep Android at bay for some time since Android could not even come close to delivering the same type of cross OS capabilities. And this would impact Intel if more and more of Apple’s mobile devices, including a potential 2 in 1, uses Apple’s own 64 bit processors instead of theirs. While Apple will probably never drop the MacBook, a 2 in 1 that favors Apples processor could be where the real volume will be.

Like Barclay’s, my analysis is also speculative. But given the indicators we have seen, especially how easy it is now to take Mac apps and put them on iOS, it would not surprise me at all of Apple does have various types of 2 in 1’s in the works and could try and reinvent this category of devices even if the Windows 2 in 1’s are still in the early stage of adoption by the enterprise and consumers.

Apple’s 5C Invasion Strategy

All the speculation around the iPhone 5C was that it was designed to be Apple’s product to infiltrate the lower tiers of the market and begin to take share from Android.

You may or may not know that in several markets like the US, Japan, and parts of Europe, the iPhone dominates the premium section of the iPhone market. This market makes up roughly 10-15% of the global smartphone market. Obviously Android dominates the other and much larger sections of the smartphone market. So the speculation around the 5C was that it was designed to help extend Apple’s product line beyond the 10-15% of the high-end segment. So does the 5C do this? I believe the answer is yes but it is not clear exactly by how much.

I know that is a foggy answer but this is a complex problem. If you study Apple like I do you know that what matters to Apple is not just market share but the right market share. Apple wants customers that add value to their ecosystem. Meaning that they spend money on apps, media, accessories, etc. The ultra-low-end part of the market does not do this. The larger middle-tier of the market does this to a degree. The market that Apple currently dominates does do this and in large volumes.

Apple has brought a current generation iPhone line-up in the 5C at lower-costs than previous current generation iPhones. This is why in the US market the lowest-priced iPhone with a new two year contract is $99. Now in many other markets Apple does not set the price of the phone. The carrier buys the phone then prices it at whatever they want. So this means a carrier in other parts of the world can buy the iPhone 5C then charge any price they want. They can make it free, $49, $69, etc.

So to answer the question we need to anticipate the value of the iPhone to a carrier by way of driving data services. If you follow the iPhone’s market share by way of web consumption (data) then you will know it is the undisputed leader when it comes to driving data usage on carrier networks. This is a big deal and I believe that carriers in markets outside the US understand this value and will price the 5C aggressively in order to attract the more valuable customers to their network.

So what about China?

This is the big wildcard. Apple for the first time included China as a launch day country. This is significant and the Chinese customers will appreciate this in that is shows them Apple is not treating them like second class citizens. Of course to really tackle China Apple needs to have China Mobile as a distributor.

This deal is inevitable in my opinion, especially since the new iPhones support TD-LTE which is the standard for China Mobile network. Cost aside, my firms forecast and from many others I saw, anticipated that a China Mobile deal alone could lead to 3-5% extra market share in China for the iPhone.

Is the cost high for the iPhone 5C in China? Yes, but keep in mind that all imports suffer a massive import tax. This will always keep the cost of iPhones higher than any local brands in China. This fact alone complicates the competitive landscape in China more than many realize.

All of that being said, I’ll say this about what Apple announced today. In light of the competition, they have never been up against an actual iPhone lineup. Competitors have been competing against only one current generation phone. Yes Apple offered legacy devices in the market but I can’t overstate the importance to new buyers and upgrades on current generation devices. This holiday will be the first time that Apple’s competitors will be going up this strong of a current generation iPhone lineup. With that I will add that Apple’s brand and marketing should not be underestimated by the competition.

Many of my analyst colleagues doubt that Apple’s moves today take them beyond the 10-15% they currently own. I disagree. Colors will be of interest to many segments of the market. The gold iPhone will be a huge hit in China due to what the color represents. Pair that with the project Red case and the Chinese will go crazy.

I’m not going to project or forecast what amount of extra share Apple can garner from the new lineup. But I will not be surprised if this takes them beyond the 10-15% and into the 20% if not higher. I certainly believe that in markets where the iPhone is priced even just 100-200 dollars more than a competing mid-tier Android device that the iPhone will fair well. In fact in all but pre-pay markets we estimate the iPhone to take share from the 350-400 dollar mid-tier Android devices.

There are number of data points we are tracking to validate this. Google Play app store revenue in Japan for example as well as the sales figures of Samsung and others in key regions. Lastly, we estimate that by the end of the year iOS will have gained enough ground on Android to now have more than 50% us market share.

Microsoft Sinks Beneath The Surface

Dogs chase cars, but that doesn’t mean they know how to drive.

Microsoft is chasing the tablet market, but that doesn’t mean they know how to take control of that market and drive it.

Microsoft’s Flawed “Vision” For Tablets

I was walking down the street wearing glasses when the prescription ran out. ~ Steven Wright

Microsoft has lost their vision. They see everything through the lens of “Windows”. It’s distorting their outlook and it’s destroying their tablet strategy.

We don’t see things as they are, we see them as we are. ~ Anaïs Nin

If The Surface Is Microsoft’s Answer To The iPad Then They Are Asking Themselves The Wrong Question

The Surface is supposed to be the answer to Apple’s iPad. It’s nothing of the sort. It’s much, much more of a laptop than it is a tablet.

The Surface Pro ain’t a blockbuster, true. But it is the best-selling Windows laptop model among those that cost $800 and above. ~ Harry McCracken (@harrymccracken)

That’s not a GOOD thing, that’s a BAD thing. The Surface is competing as a LAPTOP. It’s supposed to be competing as a TABLET.

Follow this link and take a gander at how Microsoft is advertising the Surface 2:

Youtube Video Commercial

Not once during the commercial – NOT ONCE – is the Surface used as a tablet.

After seeing Surface 2 ad, I’m more convinced than ever Microsoft has zero clue why iPad is selling in the tens of millions. ~ Tom Reestman (@treestman)

Honestly, what are they thinking? Picasso said that “Good artists copy, great artists steal.” Not only isn’t Microsoft stealing the great tablet ideas of their competitors, they’re not even capable of COPYING them properly.

Microsoft won’t make a tablet if it’s the last thing they don’t do. ~ Alex Dobie (@alexdobie)

Neither Fish Nor Fowl

The problem with the Surface is that it’s a laptop with no keyboard and a tablet with no apps ~ Benedict Evans (@BenedictEvans)

Microsoft claims the Surface Pro is the best selling product in its class. What class is that? ~ Avi Greengart (@greengart)

Microsoft has the Windows RT market all to themselves. ~ ßen ßajarin (@BenBajarin)

Unfortunately for Microsoft, having the Windows RT market all to themselves is the equivalent a sailor having the bottom of the ocean all to themselves.

Denial Ain’t Just A River In Egypt

Surface 2. Why? ~ Sammy the Walrus IV (@SammyWalrusIV)

Because the only thing better than writing off $900 million is doing it twice? ~ Brad Reed (@bwreedbgr)

Microsoft’s Surface Strategy 1) Make mistakes 2) 1) + some more mistakes 3) Go to 1) ~ chetansharma (@chetansharma)

The Job It Is Not Being Hired To Do

Microsoft has improved the hardware, but made no fundamental changes to the software. ~ Avi Greengart (@greengart)

So Microsoft thinks the problem with Surface was specific flaws that are fixable, not the broader 2-in-1 strategy. ~ MattRosoff (@MattRosoff)

There’s something comical—almost deserving of pity—in Microsoft still claiming you can’t “get things done” on an iPad. ~ Tom Reestman (@treestman)

It would probably help Microsoft immensely if they were to understand the things that people wanted to get done on their tablets. But maybe not.

Same ol’ marketing message that iPads can’t do real work and a Frankenstein hybrid is the answer. ~ Tom Reestman (@treestman)

The ingenuity of the device blinds us to its utter uselessness. ~ Anonymous

Damn The Market, Full Speed Ahead

If someone is going down the wrong road, he doesn’t need motivation to speed him up. What he needs is education to turn him around. ~ Jim Rohn

Not only isn’t Microsoft changing their tablet strategy, they’re doubling down, literally accelerating their progress down – what I think is- the wrong path.

It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change. ~ Charles Darwin

Fini

Sometimes I lie awake at night, and I ask, ‘Where have I gone wrong?’ Then a voice says to me, ‘This is going to take more than one night. ~ Charlie Brown

It might take one a long time to explain exactly where Microsoft went wrong. But it doesn’t matter anyway. Despite all the evidence to the contrary, Microsoft is convinced that they’re in the right. And so, inevitably, we can expect Microsoft to sink much, much further beneath the Surface before they even begin to attempt to reverse their course and try to save themselves.

And by then, it might well be too late…

It is not necessary to change. Survival is not mandatory. ~ Peter Drucker

What the A7 being 64-bit Means for The Competition

Samsung declared that it too will follow in Apple’s footsteps and embrace 64-bit processor designs in their products. I have no doubt that Qualcomm and Nvidia will catch up with equally impressive 64-bit designs. That being said, Qualcomm and Nvidia do not have what Apple does, an operating system.

Although Qualcomm and Nvidia will make exceptional processors, the question remains as to whether Google will do what needs to be done to transition Android to 64-bit.

When I first saw that the A7 was 64-bit my first thoughts were about what this means for the competition. More specifically I started thinking about what this means for Android.

Now to clarify there is a port of Android that exists that is 64 -bit. It happens to be a port of Android that Intel has developed running on their own 64-bit x86 architecture. That said, this implementation is designed for more desktop device than for mobile. Intel’s smartphone chips are not yet 64-bit. But an interesting point to this competitive story is that Intel has the expertise already to take Android to 64-bit in mobile.

There are two things to understand about this from a competitive picture. The first is that the transition to 64-bit alone is not the only contributor to performance upside. The 64-bit architecture Apple has adopted and modified is an updated version of the ARMv7 architecture called ARMv8. There are a number of optimizations ARM has included that makes ARMv8 a much more enhanced architecture than ARMv7. Efficiencies have been added that are key to the overall story. The fact that it is 64-bits is just part of the story. This is simply a more efficient new architecture built on a 64-bit framework.

Not all companies are like Apple. Apple designs their own chips solely for their own purposes. This is why they can take liberties in the design process that competitors can’t.

Competitors need to spend the lengthy time going through the ARM validation process for all their chips. Competitors also work to tune the software running on their chips but this also takes time, especially with Android, when you have to optimize for many different OS configurations.

There is no question the competition will go 64-bit but will the platform benefit? From what I see, Google wants to go downstream with Android not upstream. They are trying to commoditize computing not do something unique with it.

On Android games will benefit greatly from 64-bit. But I am not sure the rest of the developer ecosystem is trying to push the envelope. I could be wrong but we will have to wait and see. Regardless, Apple can take advantage of every bit of 64-bit computing. I’m not sure I can say the same about the competition.

The biggest blow to the competition will be the iPad. The iPad going 64-bit has the potential to transform the tablet in ways not yet imagined.

Apple’s lead time over competitors in this is significant. It will be at least a year before we see products on the market. Apple will have developers already established and entrenched.

I’ll end again by restating a point. Apple is trying to do something unique with computing. Google is not. The A7 is a prime example of this and there will be many fruits from this effort.

For a bit deeper dive on just some of the uniqueness of the A7 read this article on the role of the A7 with the Touch ID.

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

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

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

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

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

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

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

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

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

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

Time To Reboot Smartphone Benchmarks

Benchmarks are used in every market as one way to show why one company’s widget is better than another company’s widget. Whether it’s MPG on a car, energy ratings on appliances, or a Wine Spectator rating, it’s a benchmark. The high-tech industry loves benchmarks, too, and there is an industry full of companies and organizations that do nothing but develop and distribute benchmarks. With high-tech benchmarks come controversy, because the stakes are high as all things equal, the widget with the highest benchmark scores will typically receive more money. The recent spat about Intel versus ARM in smartphones illustrates what is wrong with the “system”. When I mean “system”, I mean the full chain from benchmarks to the reporting of them and to the buyer. I want to explore this and offer some suggestions to help fix what is broken.

The first thing I want to highlight is that getting benchmarks “right” is important to the buyer. If a buyer makes a choice based on a benchmark and either the benchmark isn’t representative of a comparative user experience or if the benchmark has been manipulated, the buyer has been misled. The first case would be like a buyer buying a racing boat based on the number cup holders and the second would be an auto MPG test during 100 mph tail winds. The smartphone benchmark blow-up has accusations of both and reminds me a bit of a Big Brother episode.

It all started with ABI Research publishing a note in June entitled, “Intel Apps Processor Outperforms NVIDIA, Qualcomm, Samsung”. News outlets like the Register picked up on this and wrote an article entitled, “Surprise! Intel smartphone trounces ARM in power trials.” Seeking Alpha jumps on the bandwagon, citing the ABI report with an article entitled, “Intel Breaks ARM, Sends Shares Down 20%”. 100′s of article later, if you believed the press,Qualcomm, Samsung, Nvidia, would be driven out of mobility and Intel would pick up all their business. Even Intel doesn’t believe that even though they have made some pretty remarkable mobile improvements with Atom from where they were three years ago.

I published a note entitled, “Smartphone Benchmarks: Caveat Emptor”, taking aim at the ABI methodology and the specific benchmark used (called “AnTuTu”) in ABI’s press release. BDTI’s Jeff Bier said that, “… the compiler omitted some essential steps in the benchmark code”. In English, Bier is saying the AnTuTu benchmark of the Intel Atom SoC didn’t have to perform as many steps as the ARM-based ones and therefore received a higher score and used less power because it didn’t have to work as hard. The same day BDTI report was released, AnTuTu released a new benchmark that changed the results by 20%. Imagine if auto MPG worked like that. One day the car you were eyeing to buy got “50 MPG” and the next day it got “40 MPG”. That would be insane, right?

As I said before, this isn’t the first benchmark controversy or the last. BAPCO Sysmark andMobileMark were some of the more controversial in the PC world over the last decade, and even 3D benchmarks have controversy too. Apple isn’t immune either. Servers and systems are chock-full of examples, too. So why would mobile smartphone benchmarks be any different?

In talking with Intel, they said that no one should ever use one benchmark to measure performance and that if there were questions on how AnTuTu worked on their processors or compiler, they should contact AnTuTu. I’ve had no luck with that yet. Smartphone benchmarks are an issue, so what should the industry do?

I have had the pleasure of being part of multiple industry benchmarking efforts over the last 20 years, have seen some success, some failures, and learned a lot. I think that if consumers, press, analysts, and investors stuck to a few guidelines, we wouldn’t get sideways like this.

The following are my top benchmark learnings for client devices like phones, tablets and PCs:

The best benchmarks reflect real world usage models: It all starts with what the user wants to do with their device. For smartphones, it should reflect what is done with the content- social media, email, messaging, web, games, music, photos, video, and talking. As an example, do smartphone benchmarks comprehend photo lag time or battery life?
Never rely on one benchmark: There are no perfect benchmarks and every one of them has a flaw somewhere. In the AnTuTu case, many in the press and analyst community relied on one benchmark which exasperated the issue at hand.
Benchmark shipping devices: Many benchmarks are performed on test systems, not real devices. Typically, there is benchmark variability between phones in-market and test systems and they go both ways. Some early ODM phones or reference designs have beta stage firmware and drivers which can be slower or faster than production level designs by OEMs. Many shipping phones have bloat-ware, which can slow down a benchmark. Intel was very clear with me to ignore the latest leaked Bay Trail benchmarks that were on reference designs
Application-based benchmarks are the most reliable: There are three types of benchmarks, synthetic, application-based, and hybrids. Synthetic benchmarks, like the AnTuTu memory test, are running an algorithm that tests one specific subsystem, not how a smartphone would run an app in the real world. The benefit of synthetics are that they are easier to run and develop. I prefer application-based benchmarks like the 3D benchmarkers are using where they test a specific game like Crysis, but I am OK with hybrids as long as they reflect the performance of real-world applications. Application-based benchmarks take a lot of development time and resources.
Look for transparency: Some benchmark companies and groups tell you exactly what they test, how they test, and even offer source-code inspection. If benchmarks don’t offer that, be very wary, and ask yourself, “why don’t they”?
Look for consistency: The best benchmarks are repeatable and can be relied upon time and time again. Be wary of benchmarks that give you different results after running them multiple times. You just can’t rely on benchmarks like that.

While no benchmark is perfect and all have issues, I really like FutureMark’s benchmark approach, execution and the ability to herd many of the largest tech companies to arrive at decisions.

Mobile benchmarks are one of the more challenging benchmarks to develop, for many reasons. First off, mobile benchmarks support multiple mobile operating systems, primarily iOS and Android. Secondly, there are three processor instruction sets to support- ARM, MIPS, and X86. Thirdly, smartphones are based on somewhat custom subsystems like image signal processors, digital signal processors, and video encoders which are often hard to support. Finally, it is very difficult to measure power draw of specific components of an SoC or even a complete SOC because it entails connecting tiny measurement probes to specific parts of the phone.

In the end, I’m glad the AnTuTu-Intel-ARM blow-up happened, because it gave the industry a chance to reflect on how well smartphones are being evaluated with benchmarks, their pitfalls, and the impact of the industry quickly jumping to conclusions from one benchmark. Now it’s time for the smartphone industry to come together plug many of the holes out there.

Why Windows RT Will Survive $900M Later

Yesterday, Microsoft announced that they were writing off $900M in Surface RT inventory. This is based on price reductions on Surface RT to clear inventory. If we assume that Microsoft factored in $150 per unit and we do some simple math, we can then estimate that Microsoft is sitting on 6M Surface RTs. This is an absolute abomination, and I don’t think this is a surprise to many that Surface RT didn’t sell well, but what is a surprise is the magnitude of the write-down. Even with nearly $1B in write-downs, I don’t think Microsoft will cancel Windows RT and I want to share my thinking.

I would be remiss if I didn’t first give my opinion on why Windows RT didn’t sell well. First, I disagree with the notion that it has to do with the dual tablet-PC nature of Windows 8, and for that matter, RT. Research I have conducted and research I have seen shows that once users actually use a use a touch-Windows device, they like it. It’s that trial that is the tough part. What doomed Surface RT, plain and simple, was the lack of premier apps and because the tablet market shifted to the 7-8″ form factor. This isn’t the main topic of this post but I needed to weigh in.

To better understand why Microsoft will keep investing in Windows RT, we have to know why they invested in it in the first place. When Microsoft would have had to make the decision to support an ARM-based Windows RT, Intel did not have a competitive mobile part and had just come off of some very public mobile failures, Menlow and Moorestown. The CloverTrail schedule was risky, too, and Microsoft felt that they needed lower power ARM-based SOCs to meet the battery life bar set by the iPad and the Motorola Xoom. The other factor is that in the minds of both Microsoft and Intel, any dollar invested by an OEM into each others products, is a dollar that they lose. Microsoft is interested in cheap hardware so they can charge more for software. Intel is interested in cheap software so they can charge more for hardware. Makes sense, right?

The first reason Microsoft will keep investing in Windows RT is to keep Intel competitive on tablets. Microsoft thinks that if they don’t hold something over Intel’s head, they won’t see solutions in the future as competitive as Bay Trail which, at least on paper, looks very competitive for holiday 2013 Windows 8-based tablets. Microsoft is also seeking to lower prices on 7-8″ tablets, and they see ARM-based SOCs from someone like Rockchip or Huawei providing that cost reduction necessary to enable Microsoft to charge more for software or lower the product street price. We also need to factor in phones. Windows Phone 9 will most likely share the same kernel as Windows RT (9) and therefore it would make sense to cease development now for ARM to revive it a few years later. Finally, Microsoft is thinking wearables and IoT devices based on this shared Windows RT (9) kernel, and so far, Intel doesn’t have a roadmap that would provide this level of performance/watt necessary to last weeks on a single charge.

So even with nearly $1B in “losses” racked up so far, Microsoft will trudge on, because they believe that they need ARM-based silicon to cover all their product segment bases and increase the price of their software to OEMs.

Why PC Modularity Could Be Successful

Modularity in electronics is defined as being able to transform or extend from one device into another. In smartphones, it has been very successful and for the most part, it has displaced the mp3 player, and GPS. For many, the smartphone displaced a portable game device and a camera. Some consumers are using their phones as their stereo by plugging it into a speaker bay, and some college kids will even link their phones to their HDTVs to watch videos. Years ago, one could claim that the PC sucked in the typewriter, but it’s hard to say that recent modularity attempts have been a commercial success. With all the PC “gloom and doom” though, I do see a few likely scenarios where PC modularity could be a success.

With today’s technology, if one wants to have a modular PC, they need to accept a few trade-offs. The Dell XPS 12 is a great notebook, but because of its size and weight, it is only secondarily a tablet. The HP ElitePad 900 is a really good tablet, but doesn’t have enough performance nor does its display size serve the PC function. New technology is coming down the road that changes a lot of these challenges where a PC tablet could successfully transform into a small notebook and serve as a good desktop solution as well. Let’s talk chips first.

Intel is bringing out Bay Trail which will maintain the ten hours battery life, double CPU performance, and triple GPU performance. This means 2-3X the performance of the current chip, Clovertrail, that already gets high performance marks versus the competitive set. It has also been rumored that Intel will offer a 4.5 watt Haswell, enabling PC performance with less than Bay Trail battery life. This passes my smell test of 20+ years working in and around the chip industry. These two potential (one rumored) choices enable a fanless tablet that can then transform with the help of peripherals. One very interesting peripheral showed up on my doorstep last week that got me thinking about modularity again.

What got me thinking more about this was actually using a new peripheral for the HP ElitePad, the ElitePad Productivity Jacket. When it was announced months ago, it looked good, but I had no idea just how well it could be used to replace a small notebook. I already use the Expansion Jacket and the Docking Station, but the Productivity Jacket pulled it all together. I want to reiterate that the current solution has Clovertrail, not Bay Trail or Haswell, so it’s a bit pokey, even on basic productivity. Let me outline how I use these devices to complete the experience:

ElitePad, no peripherals: use this when you want the lightest and thinnest tablet experience. I get 10 hours battery life and use primarily Metro-based apps.
ElitePad + Expansion Jacket: I use this when I want extended battery at 20 hours, and I want tablet protection. I dropped it twice on concrete with nothing more than a slight, temporary compression.It also gives me two full USB, full HDMI, and an SD card slot. I would take this to my kid’s volleyball, football, and basketball games.
ElitePad + Productivity Jacket: This jacket adds a full keyboard, a protective case, two USB and an SD card slot. I plan on taking this on business trips and to meetings. The keyboard is not full size, but large enough for me to call it my #2 productivity device.
ElitePad + Docking Station: This is where I get the “real work” done. I work primarily with Windows Desktop apps here. I attach the dock to a large wireless keyboard, large wireless mouse, and a 32″ display. The dock has four USB ports, RJ45, HDMI and an audio line out. It’s nice, too because I can use the docked ElitePad as a second monitor and its size is perfect to display a calendar or email.

So I see a day when we have Haswell-based tablet parts, where one device, in specific use cases, can effectively be used in bed, on the couch, at the desk, in a car, on a train, and on a plane. I see this working extremely well for those who use a desktop and a 10″ tablet today. I see also see it as very good for someone who has a thin, 11″ notebook and a 10″ tablet. For someone who prefers a larger 13-15″ notebook, I don’t see it as optimal nor someone who needs workstation-class performance.

All of this discussion precludes that CPU and GPU innovation will outpace the performance needs of non-workstation personal computer applications. This is a bet that I would gladly take given Intel is ramping at a pace I haven’t seen since the early Core days. Intel’s continued business model hinges on PC growth, defense of their PC turf, and taking mobile share. When Intel’s backs are against the wall they have performed best, so I believe they will over-serve the performance needs of tablets and hedge by pulling Haswell down into that power range. All of this translates into a lot of tablet performance that, through modularity, can effectively be used as a PC.

Are the Latest 10”+ Android Devices DOA?

I’ll admit it, I have a love-hate relationship with Android. I love it as a phone choice, love it on 7” tablets, but think it provides a lousy experience on anything 10” display and above. I’m not alone as Android has captured 75% of the smartphone market but hasn’t had big success in the 10” and above category. Companies like Acer and Asus are now venturing into some very dangerous territory and some of their new Android products risk ending up like previous 10”+ Android devices. I’d like to begin with some Android tablet perspective.

It’s hard to believe that up until a year ago, Android had no tablet market to speak of. Android tablets had really been defined by market debacles like the Motorola Xoom. Samsung cranked out some interesting, high-res 10” tablets and Asus delivered some inspiring detachables, but none of them sold very well. Then came Google IO 2012 and the introduction of the Nexus 7, which redefined the volume tablet market. As Apple and Amazon followed with their new 7-8” offerings, the entire tablet market swung toward smaller screens and cheaper tablets. Even though there some excitement around the Nexus 10, on the whole, 10” Android tablets continued to sit, uninspired. What’s going on here?

The challenge with 10” Android tablets is all about apps, which goes all the way back to the first Android tablets. In fact, there are so few tablet apps that there isn’t even a way to segregate the app store to do a decent count of them. That’s when you know very few apps exist. This is a bit of a chicken and egg problem and Google hasn’t yet dug itself out of this hole yet. So why aren’t devs creating apps for the Android 10” platform?

Devs right now are confused about the Google large display ecosystem. I say “Google” and not “Android” because some devs see what Google and partners are doing with Chrome and need to first decide between Chrome and Android. They see Chrome notebooks selling well on Amazon but they are not seeing big optimism on 10”+ Android devices. Developers are confused and when it gets to the point of lock-up, stick with the safe bet, iPad.

In the end, it’s the consumers who suffer. You can install a 4” Android app on a 10” tablet, but many times it gets stretched to the point where the app is unusable. Imagine how that 4” app looks on that 20” display. Well, about twice as bad as the 10” display. All kidding aside, it is the consumer who feels the pain after they get home and try it out and expect an experience that just works. For users who stay in email, the browser, and a few optimized games it’s probably fine, but for those users who use many apps, the experience will be suboptimal. This brings us to the new Acer and Asus SKUs.

Acer has launched a 21.5” all-in-one with Android 4.0 (ICS) with a very slow OMAP 4430 that’s in the Kindle Fire tablet and Google Glass and 8GB of storage. Given what is under the hood, I can only imagine how anemic this system will be, regardless of the lack of apps. Asus has launched the “Transformer Book Trio”, a 12” two operating system (Android/Windows), dual architecture (Intel Haswell/Intel Clovertrail), tri-modal UI (Metro/Desktop/Android), and tri-modal physical (tablet/notebook/desktop). This is clearly not for the technology weary as bundles nearly every possible confusing variable to a general consumer. Aside from these variables, like the Acer AIO, it will stretch many 4”-designed apps to 12”, providing a less-than optimal user experience. Let me close in on answering the original question.

Are the latest Android 10”+ devices DOA? Yes, they are until Google can motivate application developers to create more Android apps that work well, and not stretched from 4” to 10” to 12” to 21”.

SKAA: Better Than AirPlay and Bluetooth for Premium Wireless Audio?

Wireless audio speakers and headphones are growing as a consumer category. Best Buy has 192 different “wireless speakers” on their website, Amazon, 400. The growth in wireless audio was helped by the growth of the premium music headphone phenomenon, started by Beats Audio. Of these wireless speakers, the clear majority utilize either Bluetooth or AirPlay to connect the device to the speaker or headphone. The problem is that both of those standards fall short on premium audio quality, openness or ease of use. Skaa, an emerging audio standard with roots in pro wireless could solve most of today’s problems inherent in today’s wireless solutions.

Let me begin with Bluetooth. Most wireless audio products on the market today use stereo Bluetooth, A2DP. It’s on all modern smartphones, tablets and on many but not all computers. Bluetooth’s primary use is very straigh-forward: connecting one phone to one headset or earpiece from Plantronics or Jawbone so drivers can talk and drive. But as we have all experienced at some point, Bluetooth is an absolute nightmare to pair and maintain a reliable pairing. To add to the pairing nightmare, Bluetooth-based speakers also face a contention problem. Wireless audio contention occurs when people, in my case family members, have paired to the same wireless speaker, allowing anyone to take control. In my house, we share a wireless Bose Soundlink II system across 4 people. We have taken it everywhere inside our house, to parties, and when we travel. If my wife is connected, even if she’s not using it, I have to ask her or my two daughters to turn off Bluetooth on their phones to let me in. The other issue is distance. I cannot take my phone too far from my speaker or else the audio starts degrading. The speaker starts hissing and popping. I personally don’t use the Bose wireless speakers anymore because it is such a hassle. The final challenge for Bluetooth is bit rate. I interviewed a few audiophiles for this piece and they literally said they do not buy any wireless Bluetooth devices because of its “less than MP3 quality” nature. I wrote a more technical note here, which provides a technical comparison. Let me switch to Apple’s AirPlay.

Another wireless audio alternative is Apple’s AirPlay. I think AirPlay is an awesome feature to mirror my Mac and iPad displays and share photos with a group of people, but it comes with its own set of major issues for a premium audio experience. First, you need a WiFi network to use it, at least until WiFi direct is enables. The network requirement eliminates the option of taking AirPlay-based set of wireless speakers to the park, unless you’re a mega-geek and bring a router with you. Secondly, AirPlay is limited to Apple host devices, the iPhone, iPod, iPad, and the Mac. I recently switched from an iPhone 4S to an HTC One X and my tablet to a Nexus 7, therefore limiting my AirPlay investment. Staying inside the premium walled garden of AirPlay is great if you or the family is all-Apple, but not for the other 75% of smartphone owners out there.

AirPlay also limits my ability to enjoy certain audio usage models. First, there are no AirPlay headphones. You can still do wireless headphones on Apple devices via Bluetooth, but AirPlay uses too much power as its basis is WiFi. Secondly, if I want to play a game or watch a movie directly on my iPad, I cannot send the audio to a wireless speaker as it will be out of sync with the video over AirPlay and for any other WiFi-based wireless speaker solution. This is because AirPlay uses the unreliable home WiFi network with higher latency. If the home network is 2.4Ghz., it is susceptible to interference from Bluetooth, the neighbor’s WiFI, microwave ovens and cordless phones.

There is a developing standard for wireless audio called Skaa, which eliminates many of the premium audio challenges inherent with Bluetooth and AirPlay.

SKAA comes from the professional and pro-sumer music world. The basis for SKAA is a standard called PAW, or Pro Audio Wireless, and powered the wireless gear for artists like Justin Bieber, Lady Gaga, Keith Urban, Kanye West, Eminem Band, and Justin Timberlake. These bands used PAW in concerts for wireless guitars and speakers because of its high quality with a high bit rate, long range, and because wasn’t susceptible to interference from other 2.4 GHz devices like smartphones and WiFi. SKAA, simply put, is the consumer flavor of PAW, designed for consumer phones, tablets, computers, TVs, and game consoles.

With SKAA, users can connect up to 4 speakers from one device, and because it has long range and multi-point capabilities, consumers could have four speakers in the kitchen, living room, dining room, and bed room all broadcasting the same, synchronized audio. The pairing nightmare goes away as it uses small, mobile-friendly, wireless transmitters that immediately start playing the music after pressing one button the first time you get a speaker. These small, wireless transmitters are currently available for Apple’s 30-pin devices and USB for all computers, Mac, PC, and even Linux. Apple’s Lightning devices, micro-USB for Android devices, and other wireless transmitters are coming soon. So am I saying that Bluetooth and AirPlay are going away? Absolutely not as these are two pervasive and flexible standards that will be here for a long, long time. For audio, particularly premium audio, I do believe that SKAA-based speaker and headphone companies will start adopting the new standard and challenge AirPlay in the premium audio space.

If you want a more technical dive, I have written a short note here.

Can Microsoft Compete in a Post-PC World?

Microsoft says it sold 100 million licenses for Windows 8 in the six months it was on sale. Not spectacular, but not bad either. But for Windows RT, Widows 8’s tablet-friendly little brother, things haven’t been so hot. Microsoft hasn’t given out numbers, but IDC estimates sales of Microsoft’s Surface RT at a bit over a million for October through March. It seems likely that combined sales of OEM RT products–all four of them–were even lower. By contrast, Apple is selling nearly 1.5 million iPads a week.

The failure of Windows RT–and it is getting very hard to call it anything else–leaves Microsoft in a terrible bind, as least a s a seller of consumer products. The post-PC era is upon us, not in the sense that traditional PCs are going way, but that they are no longer the center of the computing world, either in most people’s usage, in mindshare, or in sales. We’ve just entered this new era and it should be possible for a company with Microsoft’s resources to recover. But the first step in recovery is recognizing that you have a problem, and Microsoft doesn’t seem to quite be there yet. Consider Board Chairman Bill Gates’ comments on CNBC:

Windows 8 really is revolutionary in that it takes the benefits of the tablet and the benefits of the PC and it’s able to support both of those. On Surface and Surface Pro, you have the portability of the tablet but the richness in terms of the keyboard and Microsoft Office…. A lot of [iPad] users are frustrated. They can’t type, they can’t create documents, they don’t have Office there. We’re providing them something with the benefits they’ve seen that have made that a big category without giving up the benefits of the PC.

In other words, what people want is more mobile versions of traditional PCs, and that’s what Microsoft is determined to give them. The problem is that this is a serious misreading of why customers are flocking to tablets. Mobility is, of course, an important attribute of the tablet. But so–and here is where Gates and Microsoft go wrong–simplicity. The iPad has limitations which users accept in exchange for wonderful simplicity and great ease of use. Tablets, and especially, the iPad, have the shallowest learning curve in the history of computing. Their software does not break. The process of updating their software is simple automatic. They don’t run Office but, while this may come as a surprise to Gates, many people do not see that as a disadvantage. They are, as my colleague Ben Bajarin would put it, a great example of “good enough” computing.

So what can Microsoft do about this? I have always thought the company made a strategic mistake when it decided to adapt desktop Windows to tablets rather than follow Apple’s lead by using an enhanced version of Windows Phone. It ended up compromising both the desktop and the tablet experience (based on the reports we’ve been hearing lately, such as this from ZDnet’s Mary Jo Foley, the upcoming “Blue” update to Windows is designed more to address Windows 8’s shortcomings as a desktop OS than to rescue Windows RT.[pullquote]I have always thought the company made a strategic mistake when it decided to adapt desktop Windows to tablets rather than follow Apple’s lead by using an enhanced version of Windows Phone.[/pullquote]

Windows 8/RT was a radical step for Microsoft, but in the end it just didn’t go far enough to succeed on tablets while perhaps going too far to win friends on the desktop. A true tablet OS simply would not have a Desktop mode that depends on a keyboard and mouse for usability, and Windows RT regularly requires going into Desktop for critical tasks (we can only hope that Blue will fix this.) The vaunted availability of Office is no advantage at all for most users because the Desktop Office apps simply don’t work well on a tablet. True touch versions of Office applications are reportedly in the works, but they are not expected before late 2014.

OEMs disappointed with Windows RT are building Windows 8 tablets. The most PC-like of these may succeed as sort of Ultra-ultrabooks, Windows 8 is fundamentally unsuited to a pure tablet. It requires too much process, too much battery power, too much storage, and too much keyboard. The same OEMs, even those most loyal to Microsoft, are also hedging their bets with Android.

That may well be too late. iOS 7, expected this fall, is likely to be a major enhancement of the iPad and we may see iOS 8 before the Windows tablet software upgrade is complete. Android tablet software still lags; the operating system has not made nearly as much progress on tablets as on phones. But Google and its partners will get it right sooner or later, and probably before Microsoft.

None of this means that Microsoft is going away. It’s back-end software powers most enterprise computing and its clients continue to have a vital place in business. For some business users, Gates might even be right about tablets: they need Office worse than they need the elegance and simplicty of an iPad. But with the mass of consumers, for whom a conventional PC is more likely to be a place where they store stuff rather than do stuff, Microsoft is in real trouble with no easy way out.

Windows 8: Hardware Innovation Is Outpacing the Software

Windows 8 hasn’t spurred a boom in PC sales, but it certainly is inspiring some unusual hardware designs. The problem, though, is that no one seems able to quite master Windows’ touch and keyboard-plus-mouse dual personality.

Acer is the latest to try with the Aspire R7, a striking departure from a company not particularly know for adventurous design. Aimed at what the company calls the “duality of touch and typing,” the R7 is a convertible 15.6″ notebook with a unique “Ezel” hinge that allows the screen to move from a conventional laptop position to horizontal to reversed (for presentations.) It also can lie flat in a slate configuration, but at 5.3 lb. (2.4 kg) it’s unlikely to see a lot of tablet use.

I can see uses for both the horizontal and the reversed positions. It’s the more conventional arrangement that is, in fact, the oddest. The most strikingly unconventional thing about the R7 is the layout of the keyboard deck. The keyboard itself is placed at the very front of the deck, with a large touchpad above it. Yes, you read that correctly. The touchpad is above to top row of keys.

The display can be set up in two positions. In one (photo top), the bottom end of the screen sits just above the top of the keyboard, covering the touchpad and looking a bit like a gigantic version of an iPad sitting in a keyboard case. In the other (photo left), the screen opens like a conventional clamshell. I spent a little time using the R7 in both configurations. The screen-forward setup is more convenient for touchscreen use since the display is closer to your hand position on the keys. But in my experience with Windows 8 so far, the limited availability and frequently poor quality of “Modern” (or Metro) apps means I spend most of my time using legacy desktop applications, And since these are not built for touch, they generally don’t work very well without a mouse or touchpad.

In alternative setup, the strange location of the touchpad is a real problem. When I am working in a typing application, I typically use my thumbs for most simple touchpad maneuvers, which lets me control the mouse without moving my hands from the keyboard. There’s no similar simple stretch available to reach the R7 touchpad. Furthermore, most of us now have 15 years practice with below-the-keyboard pointing devices and will spend a lot of time on the R7 poking at empty space. I hope to spend some more time with the R7 soon; perhaps the discomfort of using that oddly placed touchpad will go away quickly.

Microsoft could make this problem mostly go away by fully touch enabling Windows and key Windows applications. Maybe the Windows Blue update due in the fall will help, but there are depressing reports that a fully touch-ready Office won’t arrive until the fall of 2014.

The Acer Aspire P3 takes a different approach to the duality problem. Though billed as a convertible Ultrabook, its design is much more like a Microsoft Surface Pro, a Core i5-powered tablet with a detachable Bluetooth keyboard. But in a sad concession to reality, it offers one thing the Surface doesn’t: A built-in stylus holder on the tablet.

Are Google Apps On iOS A Trojan Horse Or A Concession to Apple’s Dominance?

Grin And Bear It

Aside from Google Maps and Google Now, many users would sooner tap on Gmail, Google Chrome, and Google Drive than the apps Apple would much rather you use, and the result is completely antithetical to Apple’s insistence of a controlled ecosystem and specific apps within a walled garden.

Google apps are besting the iPhone’s default software, and Apple has to grin and bear it. ~ Mike Schuster, USA Today

Apple has to grin and bear it? Do they? Or is it actually the other way round and Google is the one who has to grin and bear it?

App Revenue

Apple’s iOS ecosystem is crushing Google’s Android in dollars generated from App sales.

“Cumulative app downloads have surpassed 45 billion and app developers have made over $9 billion for their sales through the App Store, including $4.5 billion in the most recent four quarters alone. Canalys estimate the sales from our App Store accounted for 74% of all app sales worldwide in the March quarter.” ~ Apple Earnings Call

According to a new report from app analytics firm App Annie, the iOS App Store has maintained its lead in terms of monetization, earning around 2.6 times more revenue in the last quarter. During the holiday season – when users are receiving, activating and then filling new smartphones and tablets with apps – that lead was even higher, with iOS generating roughly four times more revenue.

Ad Revenue

Whenever it’s pointed out that Apple developers make far more income than do Google developers, Android advocates quickly point out that Google is an advertising company and that they and their developers make their money through advertising rather than through the sale of Apps. Only here’s the thing…

… 75 cents of every dollar spent on mobile advertising is spent on iOS, not Android.

“…iPhone, iPad, and yes, even iPod touch ad rates are much higher. While Android smartphones draw $.50 CPMs (cost per thousand impressions), iPhones pull in $.65 to $.88 CPMs, iPod Touches do $.74 to $.98, and iPads do between $.82 and $1.16.” ~ Venturebeat

As you can see from the chart, below, what’s utterly amazing is that the iPad alone makes almost as much advertising revenue as all of Android put together.

Convoluted Logic

I have heard it said that Google’s excellent iOS software is a Trojan Horse that will make it easier for iOS users to switch from iOS to Android. But I fail to see how Google’s efforts to improve their iOS software – and therefore improve the iOS experience – either harms the iOS platform or makes it more likely that iOS users will leave the platform.

Google is not creating iOS Apps out of the goodness of their hearts. They make money when people use their apps and consume their advertising. And right now, the bulk of the app money and the bulk of the mobile advertising revenue is being made on iOS. If Google wants to stay in the game, then they’ve got to deign to play on Apple’s turf. It’s as simple as that.

Android’s Leaky Bucket

John Paczkowski over at AllThingsD covered a report written by Carl Howe, VP of the Yankee Group. Carl makes a bold statement, indicating iPhone ownership in the US will exceed Android US ownership by 2015.

Carl has developed an analogy using the idea of a leaky bucket. In short, he proposes that if platforms are a thought of as a bucket and their buyers comprise the water that fills it. Therefore how "leaky" a bucket is refers to a consumer intent to buy something else. What Carl's consumer survey research shows is that the Android bucket is leaking faster than the iPhone bucket.

A couple of stats to highlight from the Yankee Group survey.

91 percent of iPhone owners intend to buy another iPhone
6 percent plan to switch to an Android device with their next purchase
76 percent of Android owners intend to buy another Android phone
24 percent of Android phone users plan to switch to another platform
of those professed (Android) switchers, 18 percent plan on buying iPhones.

While 76% plan on remaining faithful to Android, 91% plan on remaining faithful to the iPhone. Carl's point is that the Android bucket is leaking faster than the iPhone's.

So ultimately platform loyalty is the key indicator here from a sustainability standpoint. The key to Carl's theory, however, will be the decisions of the lower end and new smartphone buyers, not necessarily purely switchers.

I'd again argue that the anticipated behavior of both the lower end market, who probably bought a cheap or free Android devices as their first smartphone, along with smartphone intenders, favors Carl's theory. How many smartphones on the market will be able to compete with a $99 subsidized iPhone 5? Probably only the Galaxy S3, arguably.

I'm not sold on the idea that everyone in the US who wants an iPhone has one. However, I'm also not convinced that the category is fully mature from a consumer adoption standpoint. What I specifically mean when I say that is, i'm not sure the market has fully experimented with different devices, platforms, software, etc., in order to fully define their needs, wants, and desires. Once this happens we will truly see a much clearer picture of platform share and sustainability.

One thing our research continually shows, as does the Yankee Groups and a host of others, is that once consumers get into the Apple ecosystem, they rarely leave.

Which makes one single point perhaps the most significant. The key for Apple is not necessarily to get consumers to buy all their products at this very moment. Rather, to just get consumers to buy one, which acts as the gateway to their ecosystem.

* Caveat. Surveys are, of course, not always an exact indicator of future behavior. However, I have seen more than a few solid data points that support this data. Also, without knowing specific device plans of Apple or competitors the timing is also hard to predict. What Carl proposes could happen sooner or later. This is why I mentioned the market adoption cycles and experimentation still taking place.