Lack of iPad Competition: A Tale of Missed Opportunity

HP touchPad photoIn a new report on the tablet market, Gartner predicts that the iPad will account for two-thirds of the 103.5 million units it expects to be sold next year and nearly half of the 326 million units in 2015. While its easy to quarrel with some of the details in the forecast (not to mention the ridiculous habit of forecasting sales to the nearest thousand) the general drift of the prediction seems dead-on.

It wasn’t supposed to be this way. This year, the iPad was supposed to get three serious competitors in Android, Research In Motion’s PlayBook, and Hewlett-Packard’s TouchPad. Instead, the TouchPad was killed before it had a chance, PlayBook’s heart is barely beating, and Android, while still promising, is beset by mediocre products, fragmentation of the operating system, and a severe lack of applications. The only really good news is that Microsoft is determined to make Windows 8 tablets succeed when they launch next year, though it is way to early to assess its chances.

For competitors, 2011 was a year of badly missed opportunities and at least in the case of RIM and HP, these flubs have serious implications for the future of the companies. For RIM, the PlayBook, based on the QNX operating system, was to breathe new life into the slumping BlackBerry line. It showed great promise at the Consumer Electronics Show last January, but quickly flopped when launched in April.

The reasons were pretty obvious. Not only was it buggy, but the PlayBook shipped without native email, calendar, or contact apps. It was usable only if paired with a BlackBerry, which it also relied on for a 3G connection. In practice, its market was limited to existing BlackBerry owners on carriers other than  AT&T because AT&T blocked installation of the software required for PlayBook pairing. To make matters worse, the selection of apps was dismal, even by BlackBerry standards. Summer came and went without promised software improvements appearing. Little wonder that PlayBooks mostly sat on dealers’ shelves.

In fact, the QNX sales forecasts are one of the odder things in the Gartner report (table).  The analyst firm projects sales of 3 million for all of this year, odd because RIM shipped (to dealers, not sold through to customers) only 900,000 units in the six months ended in August. In would take one spectacular autumn to hit 3 million, and some sort of miracle–or at least a while new product line–to hit the forecasts of 6.3 million next year and 26 million in 2015.

Worldwide Sales of Media Tablets to End Users by OS (Thousands of Units)

OS 2010 2011 2012 2015
Android 2,512 11,020 22,875 116,444
iOS 14,685 46,697 69,025 148,674
MeeGo 179 476 490 197
Microsoft 0 0 4,348 34,435
QNX 0 3,016 6,274 26,123
WebOS 0 2,053 0 0
Other Operating Systems 235 375 467 431
Total Market 17,610 63,637 103,479 326,304

Source: Gartner (September 2011)

The failure of the TouchPad was even more tragic. When HP bought Palm and its webOS last year, company executives saw it out of a path in which its software choices were controlled by microsoft and its hardware was increasingly commoditized. But all the steam, heart, and funding went out of the effort when CEO Mark Hurd was fired and replaced (temporarily, it seems) by Léo Apotheker. What could have been a serious iPad challenger launched this summer as an intriguing but half-finished product. A battle that HP officials once said would take years, not months, ended in abject surrender after six weeks, when HP killed the TouchPad and the rest of the webOS Global Business Unit. The main impact of the whole HP-webOS affair was to set of an existential internal struggle over the future of HP. Gartner wisely projects next year’s sales at 0.

Android’s future as a tablet OS is hard to assess because the present is so muddled. This year saw dozens of products, or widely varying quality, hit the market, but none of them really took off, and none could answer the essential question of why they should be purchased rather than an iPad. Google will try again this fall with a new version of the software, called Ice Cream Sandwich, that is supposed to unify the fragmented Android landscape. But, in fact, further fragmentation may be in store if Amazon.com goes ahead with rumored plans for a custom tablet based on its own modified version of Android. If the rumors are correct, Amazon doesn’t want so much to challenge Apple as to create a new market for a low-0cost media consumption tablet.

One place I think Gartner may be seriously off the mark is in its forecast for Windows tablets. An estimate of 4.3 million units might be on target for next year because we don’t yet know when Windows 8 will ship, but 34 million, barely 10% of the total, seems unduly pessimistic for 2015. We’ve just gotten our first real glimpse of Windows 8, but it is clear that this is a very serious effort by Microsoft–the first, really–to design an operating system optimized for PC-like devices that lack mice and keyboards. Many questions, including how well Microsoft will do in attracting developer support, remain, but Windows 8 has the potential to become the iPad’s most serious challenger.

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Anti-Google Coalition’s Strange View of Business

FairSearch.org, a coalition of Google competitors that thinks the search giant is being very evil, seems to have a strange idea of how business works.

In a blog post that is part of a running argument with Wall Street Journal columnist Gordon Crovitz, FairSearch attempts to rebut the argument that while Google’s practices may have hurt competitors, they have actually helped consumers by contending that Google is killing innovation:

Google doesn’t offer free products – advertisers pay for them, to the tune of Google’s $29.3 billion in 2010 revenue. Those billions get passed on to consumers and business customers in the form of less innovation, higher prices, and less free services and information provided by others online.

FairSearch describes this as a “Google tax,” but this is a very odd notion indeed. Advertisers choose to place ads through Google and the prices they pay are established by auction. Companies may argue that Google’s sheer size leaves them with little choice but to advertise through Google, but in the days of dominant newspapers and TV networks, I never heard anyone talk about a Chicago Tribune tax or a CBS tax, and those prices were set a lot more arbitrarily than Google AdWord or AdSense rates. Companies paying other companies for products or services is just the normal course of business and to call this a “tax” mostly just deprives the word of any meaning. And the assertion that the money flowing to Google reduces innovation is just that: An assertion advanced without evidence. Who among FairSearch’s members has come close to matching Google in innovation?

FairSearch has been a driving force behind a Federal Trade Commission antitrust probe of Google. And there are certainly issues that should be explored, particularly Google’s treatment of  Yelp as described in yesterday’s Senate Judiciary Committee hearing. But the government has the burden of showing that Google’s behavior  hurt consumers, and not even outraged competitors have made much of a case for that yet.

It’s not particularly cynical to suggest that FairSearch members are more interested in hurting Google than they are in helping consumers. And Microsoft, by far the biggest company in the coalition, knows all too well the crippling effect an antitrust case can have on a business, even when it results in no meaningful penalties.

2 Reasons HP Should Not Spin Off The PC Business

I have been thinking about this ever since the news broke that HP wanted to spin-off their PC business. My company Creative Strategies, Inc has a long history with HP of providing industry and trend analysis to many key groups within the company. Because of that relationship, it would pain me to see HP make a questionable decision to spin-off their PC business.

Right now HP appears to be a company with serious identity issues. We don’t know what is going to happen with their current CEO although rumors are floating that there may be a change at the top. As the board is faced with many tough decisions, I genuinely hope that with these gut wrenching decisions they also reconsider spinning of the PC business.

Bloomberg ran a report yesterday stating that they are in fact reconsidering the proposal to spin-off the PC group. I hope this report is true.

There are two fundamental reasons why spinning off the PC business is the wrong decision for HP.

Hardware Only Business is Dead

A simple look at the history of the technology business highlights some profound truth’s about how hardware evolves. We are in a world where every PC maker other than Apple is dealing with the commoditization of hardware. If HP was to spin-off the PC business they would leave the new entity to solely compete in the global economy with price. This is a battle that a US vendor cannot win against the low-cost strategies of Asian OEM’s.

Proprietary software and services are needed in order to differentiate and add value beyond price. A hardware only business does not have this advantage and can only compete on price.

A hardware only PC business would not likely survive where the industry trends are heading. Which leads to the second reason this is a bad idea.

We Would Lose a Key US Based OEM

If the above scenario played out we would lose a key US-based PC vendor. Only Dell and Apple would be left. Please note, I am not saying HP would go away, only that the spinoff and whatever it would be called have a hard time thriving as a hardware only business.

Because of the historic role HP’s hardware has played in the evolution of the technology industry, it would be tragic if it faded into irrelevance.

I fully understand HP’s desire to move more into the software and services business. Apple has the same strategy, but for Apple, the hardware continues to be a key strategic element to complete and differentiate their ecosystem.

I wish HP would understand this and value the role of hardware in our computing future. Indeed, their PCs and tablets can provide a powerful screen that taps into next generation software and service optimized for their own ecosystem. And they have many of the key elements to continue to thrive as a hardware, software and services company.

Rather I would love to see them craft a vision of what the future should look like with HP hardware, software and services in it and then relentlessly innovate.

HP’s Never Ending Drama: Blame the Board

I don’t pretend to know what is going to happen next at Hewlett-Packard, but both Bloomberg and All Things Digital report that the board is meeting to consider ousting CEO Léo Apotheker and perhaps replace him with former eBay CEO (and current HP director) Meg Whitman.

The HP board has long had a well-earned reputation as one of the worst around, going back at least to the clumsy dumping of CEO Carly Fiorina and the ensuing scandal over spying on reporters to determine the source of boardroom leaks. But its performance in the last year puts it in a class by itself. A board shouldn’t have much involvement in the day-to-day running of a company, but it is responsible for oversight and strategic direction. The HP board has provided neither.

HP stock price chart

HP common stock price (from MarketWatch)

The big problems started a little over a year ago when then-CEO Mark Hurd got caught up in accusations of sexual harassment and an improper relationship with a contractor. The board decided Hurd hadn’t violated any policies on harassment or relationships, but fired him anyway for falsified expense reports. Hurd was widely disliked within HP for his slash-and-burn approach to improving earnings through stringent cost reduction, but he was a first rate operations executive who did make the trains run on time.

The choice of Apotheker seemed to signal a major strategic move by the board. For some time, HP had been a three-headed beast, comprising PCs and associated consumer electronics; enterprise servers, services, and software; and printing and imaging. from desktop inkjets to commercial Indigo digital presses. Apotheker, who had spent most of his career at German software giant SAP,  seemed to be chosen to focus on the enterprise business, especially since the board chose him over Personal Systems Group chief Todd Bradley and Imaging & Printing Group chief Vyomesh Joshi.

Apotheker made his big move this August when he announced that HP was killing the phone and tablet business acquired  (under Hurd) from Palm, was considering selling or spinning out the rest of Personal Systems, and was acquiring Autonomy, British business analytics software maker, for $10 billion. The Autonomy purchase was unanimously approved by the HP board according to the announcement; the other moves certainly must have had board approval as well.

But HP has been in a tailspin since the announcements. The stock price, which had been sinking since spring, cratered (though it rose 10% in intraday trading today on rumors of Apotheker’s departure.) Competitors such as Dell moved to poach corporate customers unnerved by the uncertain future of the PC division.  A fire sale of  the inventory of TouchPad tablets added to the ridicule. And the board, it would appear, panicked again.

In the circumstances, the choice of Whitman, would be an odd one. She has a solid record of accomplishment and has been cooling her heels at the venture capital firm of Kleiner Perkins Caulfield & Byers since losing a bid to become governor of California in 2010. But her business background is largely in consumer services and she would be taking over an HP that Apotheker has remade into an enterprise company.

Might such a move signal the board’s intention to reverse the enterprise direction? Possibly, though that would only lead to even more turmoil. The Autonomy purchase has been approved by both boards, though not yet by shareholders, and would probably be both very messy and very expensive to undo; such agreements typically carry heavy termination fees if the deal fails to close. Nothing irrevocable has been done yet to sell the Personal Systems Group, but the former palm operation is well and truly dead–the Apotheker rumors broke the day after HO began wholesale firing of webOS Global Business Unit employees.

However this turns out, we can expect more drama, and probably more missteps by the HP board. Somewhere in tech heaven, Bill Hewlett and Dave Packard are crying.

 

Is Apple Stock and Customer Satisfaction Tied Together?

The American Customer Satisfaction Index (ASCI) recently released their findings across multiple industries. Unsurprisingly Apple continues to reign supreme when it comes to customer satisfaction. In fact according to the release Apple’s customer satisfaction is now at 87% 9 points higher than their closest competitor.

There was however another point in this release that caught my eye. A quote from the release states:

In the eight years that Apple has led the PC industry in customer satisfaction, its stock price has increased by 2,300%,” remarks Claes Fornell, founder of the ACSI and author of The Satisfied Customer: Winners and Losers in the Battle for Buyer Preference. “Apple’s winning combination of innovation and product diversification—including spinning off technologies into entirely new directions—has kept the company consistently at the leading edge.”

Perhaps there is a correlation to customer satisfaction and stock price. One could make a strong argument looking at the above quote and statistic.

This I believe speaks to the difference in thinking quarter by quarter with your product roadmap and to Apple’s approach that innovates for the long-term and for the future.

Many intelligent financial analysts and consultants have remarked on how developing products that satisfy consumers is a more valuable and sustainable strategy then developing one that satisfies investors.

The Harvard Business Review calls this thinking Customer Capitalism and I believe it is spot on.

I would argue that this data validates that focusing relentlessly on the customer experience as a holistic part of the brand and product experience pays off with Wall Street in leaps and bounds.

How iWant drives iRumors

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

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

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

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

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

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

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

How Google Can Learn From Microsoft

There has been some interesting commentary around how different the approach between Microsoft and Apple is as it relates to their developer conferences.

It is certainly true that these two companies approach them differently but as Steve Wildstrom points out in his article on why Microsoft’s approach is more open than Apple’s, it is because of the more complex ecosystem Microsoft has.

Microsoft has many vendors, who build a wide variety of product configurations based on their software. Because of that it is very important that Microsoft be open and clear with all in their value chain so that the appropriate plans can be made.

With that in mind and after reading Steve’s article I can’t help but think about how very different Microsoft’s developer and partner strategy is from Google’s.

With Microsoft they are out there talking to OEM and ODM partners early, actually working with them to make better products and tune their systems to work with Windows 8. And oh by the way they are doing this and have been doing this well over a year in advance of their product.

Now Microsoft and Google have almost identical partner ecosystems. They both rely on hardware companies to bring their software to market. Yet Google does not talk to their partner ecosystem until much later in their development. Unless of course you are one of the chosen few to go live with the latest Google release you are almost kept entirely in the dark.

That may be entirely fine for Google but that puts your hardware partners in very difficult positions because they plan their hardware and make design plans with the ODM’s at a minimum of 8 month’s out.

I can’t tell you how often I hear from OEM and ODM vendors who express their frustration with Google on how they work with their hardware “partners” around Android.

Because of this and because Microsoft takes a much more partner centric strategy with their software, I am hearing a great deal of excitement from around the industry for this next release of Windows. It appears that the vast majority of those who make PC’s and tablets are going to rally around Microsoft for this next release.

That of course does not ensure its success, my only point is that by working with partners early in the cycle it gives them a more confident feeling and approach to supporting the Microsoft ecosystem.

The level of secrecy that Google employs around Android literally makes zero sense. It would be one thing if Android was light years ahead of anything on the market in terms of an OS but the reality is it is not. I’m sure we can debate this all day but I see no value in Google keeping hardware partners in the dark as they do, and all it does is rub key partners the wrong way.

Google should learn from Microsoft on how to take a true partner centric approach to their development of Android and treat all who desire to ship Android as partners and not keep them in the dark until the last possible minute.

Why Microsoft’s Development Must Be More Open Than Apple’s

Matt Rosoff at Business Insider writes that a principal reason why Microsoft reveals a lot more about its development process than Apple does is that Apple is a consumer products company while Microsoft is a technology company.That’s somewhat oversimplified, but mostly true as far as it goes. However, it misses some deeper reasons for Microsoft’s greater openness.

Windows 8 screen shotThe most important reason is that Windows lies at the heart of an extremely complex ecosystem. Microsoft needs to provide its partners, both computer manufacturers and enterprise customers, with a clear development roadmap. For OEMs, this is vitally important if they are to be able to ship optimized hardware, such as the new Windows 8 tablets, when the new software is released. This requires lots of lead time.

Windows also runs on an almost uncountable variety of of hardware configurations. Device manufacturers, like computer OEMs, need lead time to have optimized drivers ready when the new OS ships. Fortunately, Windows 8, like Windows 7 and unlike Vista, does not require extensive rewriting of drivers. But there are always issues of fine-tuning the software.

The variety of configurations also calls for extensive beta testing. There’s no way Microsoft can test any but a tiny proportion of the possibilities in-house. It needs debugging input from a large number of users.

Apple, by contrast, tightly controls the ecosystem. It can, and does, regularly release OS versions that render relatively new hardware and software obsolete. Apple can get away with this approach, which enables it to avoid Microsoft’s endless problems with legacy code, largely because it does not have to worry about keeping enterprise customers happy.

Apple’s development secretiveness does cause problems. New OS releases often cause serious compatibility problems. Even a relatively minor upgrade like Lion has produced a long list of hardware and software incompatibilities that probably would have been a lot shorter had Apple been more open with third-party developers. This is a price Apple is willing to pay, but that Microsoft, because of its different position in its own ecosystem, cannot afford.

Should Apple Fear HTML 5? Not a Chance

Apple-Think DifferentIDG News Service’s Leok Essers has an article in which a couple of financial analysts predict dire consequences for Apple from the growing adoption of HTML 5, a technology that allows web pages to behave much more like native apps.

Toni Sacconaghi Jr. of Bernstein research thinks HTML 5 could reduce Apple’s operating profit growth through 2015 by 30%. Jeffrey Hammond of Forrester Research argues that adoption of HTML 5 will squeeze Apple by increasing the commoditization of both hardware and software.

This sort of analysis fundamentally misunderstands the nature of Apple’s success. The first question you have to ask yourself is why, if HTML 5 is such a threat to Apple, why is it embracing the technology so aggressively?  When the iPad was introduced in early 2009, Steve Jobs famously rejected Adobe Flash in favor of HTML 5 for providing media content and rich apps and a browser, a stance from which Apple has never wavered.

The fact is that no company is better at resisting commoditization than Apple. It does this through relentless focus on user experience. “It just works” may be a Jobsian cliche, but it is the essence of Apple. It provided a breakthrough user experience with the original iPhone, which relied on Web apps that are not nearly as good as what HTML 5 offers, it did it again with native apps on later iPhones and the iPad, and it will do it with HTML 5.

The one area where Apple may be hurt a bit will be the ability of HTML 5 web apps to go around the iTunes store and the 30% of sales that Apple takes off the top. But that’s not where Apple makes its money. In the June quarter, all iTunes Store revenues, including apps and content, accounted for only $1.6 billion of Apple’s $28.6 billion in revenues.

A bigger threat perhaps is that in a world of HTML 5 web apps, Apple will lose the curatorial control that the App Store has provided. While Apple’s “control-freakery” has been much criticized, this curation has maintained fairly highly minimum standards for iPhone and iPad apps and has avoided the chaos of the Android Market. HTML 5 will loosen control somewhat, but I suspect that Apple will find a way to keep that user experience coming.

 

Mozilla Gets Tough on Digital Certificates

Firefox logoIn a preemptive step to protect users from possible attacks based on fake digital certificates, Mozilla has given certificate issuers a week to present proof of security measures they have taken or have their certificates rejected by Firefox browsers.

Digital certificates are a critical part of the web’s security infrastructure. They are how sites prove that they are what they claim to be and they are also used to encrypt transactions between browsers and servers. But the integrity of the system was called into question by an attack on DigiNotar, a Dutch certification authority (CA), that allowed the attackers to issue false certificates in the name of a large number of well-known sites, including Google.com and there have been less serious breaches at other CAs.

In a letter to all CAs whose certificates are accepted by Firefox, Kathleen Wilson, who is responsible for managing certificates in firefox, gave CAs until Sept. 16 to complete a checklist of security measures, including a full audit of their public key infrastructure, a key security component.

The is a necessary step, and should be joined in by Microsoft, Google, Apple, Opera, and anyone else responsible for software that maintains a list of trusted CAs. But there is still an element of locking the stable after a fair number of horses have escaped. What is really needed is much toucher standards for CAs on an ongoing basis, and probably a sharp reduction in the number of organizations that can issue trusted certificates.

America Invents: A Step Toward Patent Reform

Patent office logoThe America Invents Act, now awaiting President Obama’s signature, will not solve the most serious problems of the U.S. patent system, especially the ugly mess of vague and dubious software patents. But it is a welcome step on the long road to reform.

The most notable  change in the law is a new criterion for awarding patents: To win U.S. patents, inventors had to prove they were the first to come up with the idea. The new law, following the practice of most of the rest of the world, will now award a contested patent to the first party to file for it. This may be a rough sort of justice and could prompt some premature patent filings, but it eliminates one of the most contentious and costly elements of patent litigation. And as engineers and inventors adapt to the new regime, it could ease some of the lab record-keeping and paperwork now deemed necessary to prove primacy of invention in a patent dispute.

The new law also streamlines the patent application process and simplifies fees. New procedures should mean that the U.S. Patent & Trademark Office gets to keep more of the fees it collects and stronger financing could lead to the hiring of more and better patent examiners.

But the mere fact that the bill passed the Senate 89-8 reflects the fact that the most controversial issues were left on the table. The only real opposition came from some supports of small business and independent inventors, who felt the measure tilted too far in favor of big companies. Among the issues that will have to wait for another day–or case-by-case resolution by courts–is clarification of just what sort of software innovations or business processes are patentable.

 

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

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

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

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

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

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

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

iOS is Still The Best Choice For Developers

Yesterday The Yankee Group released an interesting set of findings from a research study they conducted. The crux of the article was around how Android app piracy is hurting Android developers. The report claims that because of app piracy on Android, developers are losing up to $10,000 in revenue.

We have known for a while that Android has an issue with malware being brought in through apps and now to add to the issues plaguing developers they now have the added threat of having their software pirated.

Android has always catered to the “tech tinkerer” so it isn’t shocking that these underground app stores exist where you can get any app you want for free.

Google’s lack of control or polices related to the Android Market is one of the biggest weaknesses of the entire Android ecosystem. A quote from the report states:

“Android apps are living in the Wild West without a sheriff,” said Carl Howe, Yankee Group director of research and author of the report “Android Piracy: How Republished Apps Steal Revenue and Increase Costs.” “With five other major mobile OSs competing for consumer dollars, Google can’t afford to simply let pirates kill app developers’ businesses. They need to foster some law and order or developers will flee to other platforms and Android will lose customers.”

The Yankee Group’s survey findings from Android developers parallel our discussions with them as well. Many developers we speak with, who develop apps for both iOS and Android, constantly tell us of their frustration and fear with the Android Market.

This is one of the reasons we think that what Amazon is up to could prove disastrous for the Android Market. If some of our early theoretical analysis is correct, Amazon may be planning to use their fork of Android to entice Android developers away from the Android Market.

From many of the developers we have spoken with who also submit apps to Amazon’s app store we have heard much more positive things. Things like Amazon supports them more, has better recommendation algorithms to help their app get discovered and economic value as well. On top of that Amazon doesn’t accept every app submitted, they do actually have a process for approving quality applications to their store.

Based on much of our own research as well as many new reports like the one from the Yankee Group, we have to conclude that for the time being iOS is still the safer and more reasonable platform for developers to continue to pour resources into developing applications for.

For any platform to be successful it needs to have a robust, thriving and more importantly confident software developer community. Google needs to resolve these issues, take more control and cater more to developers if they want their version of Android to continue to garner support from developers.

To add further support for the argument that iOS is still the best place to focus precious developer resources to, the report also states that iOS consumers download six times more apps than Android consumers. So for the developer there is a 6x better chance of getting their application into the hands of consumers.

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It’s the User Experience, Stupid; How iPhone Critics Miss the Point

The title tells it all: 10 Reasons Why iPhone 5 Doesn’t Stand a chance Against Motorola Droid Bionic. The article, by Elias Samuel in International Business Times, not surprisingly, lists 10 ways in which the Droid Bionic, just announced for Verizon Wireless is superior to the the forthcoming Apple iPhone 5.

Photo of Droic BionicI don’t mean to pick on Mr. Samuel’s, whose other work I am not familiar with.  But this article is sadly typical of a common style of tech reviewing.

Never mind that we know very little about the iPhone 5 hardware, though that doesn’t stop everyone from speculating. The problem is that even if all of Samuels’ assumptions about the new iPhone are right, it just doesn’t matter. For example, you can probably count on your fingers the number of potential iPhone buyers who care that the Bionic’s  Texas Instruments OMAP 4430 processor has specifications superior to the iPhone’s presumed Apple A5.

Some of the other claims are downright inane. If the lack of support for Flash and absence of an external memory card slot mattered, they would have killed iPhone and iPad sales by now. Obviously, they haven’t. And the alleged “open source advantage” is of interest mainly to ideologues (not to mention the fact that Android’s open sourciness is questionable at best.)

What is entirely lacking in Samuels’ review, and many, many others of its ilk, is a discussion of the one thing we do know about the iPhone 5, it’s IOS 5 software and the improvements it is likely to bring to the iPhone’s already great user experience. There are many Android phones whose hardware equals or beats the iPhone. There are none whose user experience comes close. And that, not speeds and feeds, Flash and LTE, is what sells phones.

The Droid Bionic looks to be a fine handset and I expect it will do well. But to say “iPhone 5 may not stand a chance against Motorola’s flagship phone” is just plain silly.

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What is Yahoo’s Fate?

I wish I could confidently proclaim that Yahoo’s best days are ahead or them. The fact of the matter is they are in a hole in which they can not emerge without serious help.

Yahoo like most companies lacks vision. If we where to ask Yahoo executives what the online world will look like in 3 years and where is Yahoo’s value in that world, I’d bet we would get a blank stare. The industry perception of Yahoo has been that it is largely irrelevant. They have some very interesting assets, assets that bring in revenue. The problem is they don’t have enough assets brining in enough revenue and they have not been creating any new real value.

All of this Yahoo news is in stark contrast to the news that Facbook has now doubled its first half revenue to the tune of $1.6 billion.

Facebook is killing it in revenue and Yahoo is going the opposite direction.

So what is to come?

The obvious answer is hire a new CEO. The only problem is who is on the market with vision, leadership, communication skills, execution etc that can turn this company around? It is akin to the sports world when there are no big names in the free agent pool. Unless they should take seriously Snoop Dog’s desire to become CEO. Who knows maybe he is exactly who they need – i’m half-joking.

Another element to consider is in uncertain times like Yahoo is going through people start worrying about their jobs and good talent starts looking elsewhere. Furthermore how can they expect to attract new quality talent with this turbulent ride Yahoo is on.

My advice to Yahoo is to start selling off assets rather than the whole company. Flickr for example could be very valuable to a number of folks in the industry. Their Fantasy sports assets could be sold to CBS or ESPN for example. Perhaps Google would want all their email customers.

The bottom line is Yahoo has lost mind share within the industry and with consumers. There is still revenue to be had with their assets and the responsible thing for the company and the board to do is to now minimize the damage and sell the assets to return something to shareholders.

Key Takeaways from Yahoo’s Troubles

Thinking quarter to quarter or even year to year is a failing strategy. Innovate or die.

What is more concerning is that this lack of innovative spirit seems to be a trend I am seeing in larger corporate institutions in the technology sector. More on that to come.

Is it Time for RIM to be Acquired?

The short answer is yes. And it seems like RIM’s investors are starting to chime in and suggest the company look for a suitor.

The technology industry landscape has changed drastically in the last few months. I have written in a number of our reports why we believe that in this new landscape some companies will be better suited to compete together rather than alone. I believe RIM is one of these companies who alone will most likely fizzle into nothingness.

In my column at Techland which is the tech section of Time.com, I explained all the things RIM needs to do if they want to stay relevant in the future. The one point i’ll now add is to be acquired. The main point being that RIM is not a consumer company.

They do not have the DNA to make, market and sell products to consumers. As a matter of fact I think the industry is learning that there are very few companies who do have the DNA to make, market and sell products to consumers.

I believe RIM has the DNA to make, market and sell products to the enterprise. Now we can debate that the consumer-ization of IT could impact any company only selling to enterprises, but that is for another time.

I firmly believe that if RIM is to stay relevant they need to focus on building hardware, software and services specially designed for the business class.

So then the question is who should acquire RIM? Well there is another company who I believe does not have consumer DNA, who is still in the hardware business, and who plans to focus more on the enterprise – that company is Dell. Dell should buy RIM.

Dell’s attempts at smart phones and tablets have yet to become market successes. The company needs help expanding its mobile footprint as a part of the overall Dell solution. Dell is a solutions company and they think like a solutions company. Mobile is a critical part of the Dell solution and the bottom line is they need help.

I believe DELL and RIM are a classic example of two companies who are stronger together rather than separate. With’s Dell’s market cap at just over $25 billion and RIM’s just over $15 billion this would be more of a merger than acquisition.

The real question is whether or not Michael Dell has it in him to do a deal like this. There is uncertainty how competitive an HP spinoff of the PC business could be and this makes for an interesting variable from Dell. Dell’s real concern however should be companies like Samsung and Acer who will be able to compete with them on price.

If Dell bought / merged with RIM I think the two companies could orient themselves to be extremely competitive in the enterprise solutions space. Enterprise is not the sexiest of business’ but it is better than having no business at all.

Why No One Can Match the MacBook Air

Peter Bright at Ars Technica has a feature about his frustrating search for a Windows notebook that can match the MacBook Air–and how difficult it will be for Intel to pull off its quest for Air-like Ultrabooks. The big questions is why it is so hard for PC makers to compete.

ThinkPad X1 photo
ThinkPad X1 (Lenovo)

The answer clearly has nothing to do with technology. Dell, HP, Lenovo, Acer, Sony, and Toshiba, along with smaller players, have all the skills required to design just about anything. Everyone is building their systems using the same components and, for the most part, the same manufacturing partners.

I think the real problem lies in the  marketing DNA of the computer makers, which has evolved to meet the demands of corporate  customers and the retail sales channel. While their  requirements  are entirely different, both drive design away from the clean and simple designs and low-cost, high-quality manufacturing that are Apple hallmarks.

Corporate sales are the lifeblood for many PC makers. Consumers buy a lot more units, but enterprises buy higher-end products and typically provide better margins. But corporations are very picky buyers. Their bid sheets generally include lengthy lists of specifications, often specific classes of processors, specific graphics systems, even specific Wi-Fi radios. They often require legacy ports to be included long after their usefulness has ended. And in most cases, supplying every item on the bid sheet is a minimum requirement to compete.

The result of this need to meet very fine-grained requirements is great complexity. The buyer of a 13″Mac Book Air has one choice to make: a 128- or 256-gigabyte solid-state storage device. The Lenovo ThinkPad X1, one of the most Air-like products, offers three different processors, optional Bluetooth, two flavors of mobile broadband, four Wi-Fi radios, 4 or 8 GB or RAM, and a choice of a conventional hard drive or two different SSDs, making 432 total hardware combinations.

This much variety complicates every stage of the supply chain, from buying components to stocking finished inventory. It raises costs. It also prevents optimizing the design around a set of component choices. (One consequence of the Air’s sleek, monolithic design–a big part of its esthetic appeal–is that what you buy is what you get; there are no field-upgradeable components.

In the consumer market, the problem is different but the result the same. Retailers (including Dell’s mostly online operation) want to have a product, or perhaps a choice of products, at every conceivable price point. This leads to a profusion of overlapping and very similar models and a product line that makes no sense even to very sophisticated buyers. When I asked Dell.com to show me 11″ to 14″ consumer notebooks, the site produced a page offering 12 different versions of two 14″ Inspiron notebooks, the 14R-2nd Gen and 14z (even the names are messy.)

Apple, by contrast, need not satisfy anyone but the ultimate user–and judging by the results, the lack of choice isn’t much of a problem. Even corporations, many of which are reluctantly buying Macs to meet the demands of their internal users, are learning to live with taking what Apple gives. This Apple-knows-best attitude strikes some people as paternalistic, even fascistic. But it produces great products that well-heeled buyers seem to love.

 

 

Amazon Plans on Stealing Android Developers From Google

You may think such a statement sounds absurd. However if a recent report from MG Siegler at TechCrunch is true then Amazon wants to lure Android developers for their own version of Android and Kindle products.

Tim Bajarin in an April PC Magazine column explored this similar line of thinking and now we have more data confirming this assumption.

Earlier today MG Siegler published his scoop on the upcoming Amazon Kindle Tablet. Throughout the report he details his own experience using the yet unreleased and unannounced tablet.

It is interesting to think about how and more importantly why MG Siegler came about this information. This is an important baseline for us to establish since it determines whether or not we can count the details of his experience as credible or rumor.

Given the amount of detail disclosed to MG and that the conditions of his arrangement were that he would get info but couldn’t take pictures, we can reasonably assume this is a planned leak. We also learned that he was in Seattle for this encounter and we know Amazon’s headquarters are in Seattle which strengthens the planned leak assumption.

Strategically this also makes sense for Amazon. MG is very smart, and he has also been one of Android’s harshest critics. He also covers Apple. A lot. So to give the scoop to a rather influential Apple journalist, especially if the outcome of his reaction is positive, which it was, is a smart PR move. My applause for Amazon PR.

All of that to say that I believe his account is credible and is a planned PR leak from Amazon. Therefore I am assuming his account is correct and the information is not rumor or speculation and therefore credible.

Now on to the part where Amazon wants to steal Android developers.

MG details the version of Android as “nothing like the Android you’re used to seeing.” So as to be expected Amazon has taken and created their own version of Android. Because Amazon has their own marketplace they don’t need Google for anything therefore customization is feasible. Google only allows “approved” versions of Android to get Market Place Certification, so if an OEM wants Android Market on their device they have to play by Google’s rules.

Amazon never wanted to, has no intention, and has no need to play by Google’s rules.

The most interesting detail of MG’s account is the detail of what version of Android Amazon built this new Kindle experience on. He details that it is built on some version prior to Android 2.2 Froyo.

This is fascinating.

Why would Amazon not use Froyo? Why would they not use Gingerbread? Why would they not want to go live with Ice Cream Sandwich? Why would they choose what many would deem a supremely inferior and outdated version of Android to build their experience on?

The answer I believe lies in Amazon’s desire to lock Google completely out of benefiting in every way from their tablet, should it be successful. First off Google made major changes which included adding restrictions when they released Froyo. A strong case could be made that Android was more open prior to Froyo. More importantly many of the toolkits and technologies related to the SDK for Froyo evolved.

My point is that to take a version of Android that is not cutting edge means that Amazon intends to make their version cutting edge and will most likely release their own better version of an SDK to write apps for the Kindle.

If Amazon does fork Android as MG states then it means developers will be presented with a choice. Support and develop apps for the Kindle or develop apps for the broader Android ecosystem. I believe Amazon in this move plans to entice developers to follow them down their forked path of Android. They can use their marketplace, as well as their economic incentives to get developers paid, to create all the needed nuggets to attract developers.

If Amazon can show developers the money, and I believe they can, they may have a real shot attracting loads of developers to their market place who will develop apps for their version of Android.

Given that Amazon’s version of Android is so highly customized I am guessing that they have stripped every benefit to Google in terms of data, ads, revenue etc out of this product. Which would mean that Google would not benefit at all should this Kindle succeed. In fact I would be comfortable if we agreed that in fact this Amazon Kindle is not really running Android at all.

Netflix vs. Starz: Hollywood Keeps a Tight Rein on Content

In a short article today, The Los Angeles Times sheds some fascinating light on the failed negotiations that will result in Netflix losing streaming movie and TV content from Starz at the end of February.  Nextflix, the paper said, offered $300 million a year to extend the agreement, but Starz wanted nothing less than a change in Netflix’s one-price, all-you-can-eat business model. It wanted Netflix to charge premium prices to viewers who wanted the Starz content.

Netflix screen grabIn recent Tech.pinions posts, Ben Bajarin, Patrick Moorhead, and I have all argued, in somewhat different ways, that winning the cooperation of the studios who control content is the key to realizing the potential of the convergences of information technology and entertainment. But the Starz move, and other developments such as Fox Television’s decision to withhold new episodes of its shows from Hulu.com for eight days, show that if anything, Hollywood is becoming more resistant to anything that challenges its traditional distribution.

On one level, it’s difficult to argue against the Hollywood position. The studios do not face the challenges that record labels did a decade ago. The DVD business is crumbling and theatrical distribution, while healthy, is showing slow growth at best, relying mainly on ever-rising ticket prices to drive revenue. But “broadcast” TV (I use quotes because relatively few people see these shows through over-the-air broadcasts anymore) is holding up well, and cable on-demand and premium channels are thriving. The studios know they are fighting a historical tide, but for the time being, they don’t see various forms of internet distribution replacing the revenues that they stand to lose from their existing business models.

Starz is owned by Liberty Media, whose chairman, John C. Malone, and CEO Gregory B. Maffei, are about as smart and as tough as they come. (If you ever get into a negotiation and see Malone on the other side of the table, run.  This is the guy who made a fortune selling cable operator Tele-Communications Inc. to AT&T and another fortune as AT&T spun out Liberty Media when it sold its cable operations to Comcast. AT&T took a bath, and Malone made money on both ends of the deal.) I would not dismiss them shunning the Netflix money as the act of foolish Luddites who can’t see what’s coming.

No one much likes their cable company and the notion that we will eventually be able to pick and choose the content we want from the internet is an appealing one. But I think would-be cord-cutters who don’t want to give up current, premium content are going to have to wait at least a few years–and real innovation in entertainment content delivery will probably have to wait with them.

 

Spectrum Wars: The Bleak Outlook for Wireless

In a post at TechCrunch, Frank Barbieri argues that the entire dispute over the AT&T’s acquisition of T-Mobile is really about the failure of spectrum allocation policies in the U.S. He’s right although AT&T’s short-term case would be stronger if it were moving faster to deploy the unused spectrum it already has. And Barbieri is right that the biggest roadblock to freeing that spectrum is local TV st ation owners, who in many cases, especially the most valuable big-city outlets, are CBS, Disney (ABC), NBC Universal (soon to be Comcast), and News Corp. (Fox.)

Cover Art: The Dark Side of the Moon, Pink Floyd

One reason for the transition to digital television in the  last decade is that digital TV uses spectrum a lot more efficiently than its analog predecessor. TV stations traded their old frequency assignments–the spectrum is now mostly owned by Verizon, which is using it for 4G LTE service, and AT&T, which will eventually do the same–for new assignments. But an HD broadcast channel only takes about a third of the bandwidth assigned. The hope was that stations would create second and third channels, but mostly they are filling them with endless loops of local weather radar or similarly uninspired programming, or leaving them idle altogether.

Unused or underused TV channels do seem to be the easiest part of the 500 MHz of bandwidth that Federal Communications Commission Chairman Julius Genachowski hopes to free for mobile wireless use. But legally and politically things get sticky very fast.

One problem is the question of who actually owns the spectrum. In recent years, users such as wireless phone carriers and satellite operators have been required to buy the rights to spectrum at auctions. Earlier, however, the bandwidth was licensed without charge, to be used by broadcasters “for the public convenience and necessity.” Ownership remains with the people of the U.S., that is, the federal government.

As a matter of law, that is indisputable, But as a matter of equity, broadcasters argue that hardly any current owners are the original licensees and that the spectrum has actually has actually been paid for many times over as the licenses have been bought and sold. Regardless of how the spectrum was originally assigned, current owners have an equity interest in it and, in fact, it is often their most valuable asset.

The FCC proposes that the unused frequencies be sold in  an “incentive auction,” in which current licensees will get an incentive to participate by being given a share of the proceeds. This will require congressional approval, and we all know how well that works. One big argument is over just how big that incentive payment will be. The broadcasters seems to think something like 90% of the proceeds would be appropriate, which the government would like to reverse the ratio. Then there are questions about just how voluntary participation in the sale would be and just how to handle the fact that some stations would have to move to new frequencies to allowed the freed-up spectrum to be consolidated into more usable blocks.

Barbieri is quite right that local broadcasters have tremendous power in Washington. Getting free media on the local station still matters a lot to every member of Congress.

The one  hope for anything happening in the near term may be Congress’ desperation to cut the budget deficit without cutting popular programs or raising taxes. In the end, it was congressional hunger for the revenues from reselling analog TV spectrum that put an end to years of successful foot-dragging by broadcasters in 2009. The same could happen this time, though not without an epic fight.

 

 

 

Android Hardware Is Too Saturated For Its Own Good

The plethora of Android devices on the market was added to in a variety of ways today with news from IFA.

My friend Evan Selleck asks a good question over at PhoneDog. Is the market being saturated with Android smartphones?

The answer is yes. Resoundingly and overwhelmingly yes. There is a difference between choice and too much choice. I believe there is a paradox at play with regard to the strategies of Android hardware makers. They believe the more devices the better. I actually believe the opposite is true.

I read a book a while back called “The Paradox of Consumer Choice: Why More is Less” by Barry Schwartz. His main premise of the book is that too much choice actually makes it harder for consumers to make decisions. If you are interested in this I highly recommend reading the book.

If I were to put myself in a consumers shoes, something I do often, and I were genuinely shopping for an Android phone I would find it difficult. There are simply too many choices. You also have the added bonus of knowing something better is just around the corner because Android vendors release new phones as often as rabbits have babies.

Furthermore a saturated landscape of devices is even harder to justify in a market that is in the process of maturing like the smart phone and tablet segment. Most consumers are still buying their first smart phones. Therefore they are still exploring what they want in a smart phone.

So the paradox is that Android vendors believe more is better when in fact while this market matures more is less. Android vendors should be making it easier for consumers to choose their products not more difficult.

The impact is that this saturation and overwhelming amount of choice with Android devices will most likely lead consumers to go with the safe bet, which is the iPhone. All the reviews of the iPhone are positive, consumers hear from their friends how much they love the iPhone, etc etc.

When you add all that up you can see why I stated that the iPhone 5 would be Apple’s biggest launch yet.

The bottom line is this saturation in the Android space makes it easy to conclude that the iPhone’s dominance is no where near being threatened. Apple is the #1 smart phone manufacturer and it doesn’t appear that will change anytime soon.

If you look at the history of the technology industry, the most iconic products stand apart. Take the Palm V(5) for example, arguably one of the most iconic products in our industries history. Palm didn’t release five Palm products that year. They just made one the Palm V and it was the most desirable PDA by far. Apple’s strategy has been the same.

While this market is maturing the right strategy for Android vendors would be to pour all their resources into creating one amazing device per cycle. Unfortunately they are falling into the trap of thinking the more devices the marrier. Thus saturating the market and making it hard for consumers to choose.

You may say this sounds silly since Android has been growing at alarming rates with vendors employing this strategy. To that I say let’s re-evaluate Android market share at the end of the year.

HP Executive Drama Drags On

After Wall Street Journal columnist Al Lewis’s scathing and all-too-true assessment of Hewlett-Packard’s year-long campaign of self-destruction gained wide attention, you’d think the company’s executives might just go to ground for a while. That doesn’t seem to be happening.

Todd Bradley photo
Todd Bradley (HP)

Todd Bradley, executive vice present in charge of HP’s soon to be spun off, sold, or dismembered Personal Systems Group, currently traveling in China,  gave an interview to Reuters that only adds to the sense of confusion and drift surrounding HP.

The interview makes it sound like Bradley, not surprisingly, is campaigning for a spinoff of PSG as an independent company headed by Todd Bradley. And that might very well be the best outcome for all concerned. But in the absence of any clear direction from CEO Lèo Apotheker or other top corporate officials, it sounds very much like Bradley is freelancing.

Even odder was his hint that a free-standing PSG might revive webOS and the abandoned TouchPad slate.  Quoting from the Reuters interview, by Terril Yue Jones:

Bradley said the company could resurrect HP’s short-lived TouchPad tablet computer, which was introduced on July 1 before being terminated only about six weeks later.

“Tablet computing is a segment of the market that’s relevant, absolutely,” Bradley said.

A standalone incarnation of HP’s PC business would be a full-line computer maker including ultrathin and all-in-one PCs.

My guess, based on nothing but some knowledge of the players and their public statements, is that Bradley was blindsided by Apotheker’s decision to unload PSG and particularly by the abrupt axing of webOS. Bradley and his top lieutenants had said repeatedly that they expected the fight to establish webOS was going to be a long slog and given that attitude, he would not have acquiesced killing the TouchPad just six weeks after it was launched.

Furthermore, the purchase of Palm barely 16 months ago was a strategic move designed in considerable part to give PSG, which has long existed primarily as a maker of hardware to run Microsoft software, some control over its own destiny. The strategy might not have worked, but it wasn’t even given enough time to fail.

The problem now is that the PSG, deeply unloved by top HP management, is an asset whose value can only decline as it sits in corporate limbo. And the hints of deep internal divisions over its future can only make matter worse.

 

Here’s a Ridiculous Idea-Split Apple in Two

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

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

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

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

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

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

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

Why Apple Still Shouldn’t Make Televisions

Ryan Block at gdgt has dusted off a six-month-old post to respond to the latest rumors about Apple getting into the business of making TV sets. His arguments about why this won’t happen as as good and succinct as ever.

Old TV with Apple  logoApple very badly wants to get deeper into the TV business, that is, the business of supplying TV content. But it is finding it a very difficult slog. The content business is tightly controlled by an interlocked web of production studios, networks, and cable distributors. Unlike the music industry when Apple attacked, they have a business model that is suffering only minor damage from the assault of internet technology and that still generates profit by the boatload. They don’t need, or want, partnership with Apple. And as the experience of Google TV has shown, the content owners and distributors are ready and able to bar devices they don’t like from accessing their programming via the web.

For Apple’s part, until it can find a way to become a prime delivery channel for content, it is unlikely to go beyond the “hobby” of Apple TV. While I can’t see Apple ever getting into the no-margin TV display business, I have no doubt that it could build a set-top box vastly better than the lame Motorola and Cisco products offered by the cable companies and vastly better than TiVo or Google. The problem is that access to the content runs through the cable companies, and I cannot imagine Apple trying to build such a product based on the kludgy CableCARD or its vaporous successor, tru2way. Apple won’t do it until it can do it right, and that will require the cooperation of a very reluctant entertainment industry. It may happen–Apple, for one thing, has a whole lot of money to throw around– but it won’t be easy.