Dell and the Battle for Business

There’s been a fair amount of talk recently about the state of PCs and PC makers, with many predicting fairly dire circumstances for those “dinosaur” companies still stuck making PCs. While clearly the consumer PC market isn’t enjoying a heyday moment—nor is it expected to any time soon—recent news from Intel regarding their improved outlook was a clear sign that the market for business PCs is improving.

The simple fact is that business PCs aren’t going anywhere, anytime soon, except in a positive direction. On a day-to-day basis, in businesses around the world, PCs are still the work horse devices that most knowledge workers rely on to get the vast majority of their work done—despite the influx of smartphones and tablets—and that situation is not likely to change anytime soon. We will likely see PCs continue to evolve, with more and more of them adding touch capabilities and more tablet-like functions, but that does not mean tablets are replacing PCs. It’s also important to remember that commercial PC sales now represent just more than half of all worldwide PC sales and that percentage is expected to modestly increase over the next several years.

The continued health of business PCs is an important issue for a company like Dell. In fact, the company acknowledged at its recent analyst conference that nearly 70% of the overall enterprise deals it makes start with a discussion about PCs. Given the recent resurgence in the commercial PC business, it’s easy to see why there’s a renewed sense of optimism and enthusiasm at the company.

That optimism became very apparent to me recently, having had the opportunity to spend some quality time down in Austin, TX with Michael Dell, his leadership team and the company overall. Through the course of those meetings and interactions, I realized that there is still a very robust, if not always groundbreaking, business that’s being done in the basic blocking and tackling areas of enterprise computing, servers and storage. Much of it is glossed over in the tech press, because it isn’t perceived as being on the cutting edge, but it does reflect where a lot of companies actually are in their technology deployments.[pullquote]There is still a very robust, if not always groundbreaking, business that’s being done in the basic blocking and tackling areas of enterprise computing, servers and storage.”[/pullquote]

That’s not to say that Dell, and its competitors, aren’t moving forward in driving new technologies. However, the gap between what the IT industry and tech press expect business IT decision makers to be focusing on and what they are actually doing is starting to widen. In taking a more conservative approach to many of these developments, Dell is aligning with its customers’ needs better than it might, at first glance, appear.

Many of the innovations Dell has been discussing recently have been in the area of commercial PCs. Leveraging the growing interest in hybrid, 2-in-1 devices—which we would argue are essentially next generation PCs—Dell demonstrated a 2-in-1 addition to its Latitude line of commercial notebooks. In addition, they’ve added more IT-friendly management and security features to its consumer/commercial crossover XPS line of notebooks.

Though Dell does participate in the consumer PC and tablet markets and it has grown its business their quite aggressively over the last few quarters, much of the reasoning is to build the scale and purchasing power necessary to compete effectively on a worldwide basis. Its core focus has been and continues to be business products and solutions. To that end, they’ve also been placing more emphasis on Windows-based tablets for business, although that continues to be a relatively small market at this point.

In the case of software and services, Dell has also been making major investments in enterprise-focused solutions, such as StatSoft for big data analytics, and is creating a number of innovative and impressively thorough client security solutions. The end result is that the company is offering a pretty comprehensive and compelling story for behind-the-scenes business computing.

The topics may not be as intriguing as wearables or the latest mobile phones—two markets which the company specifically said it has no intention of entering any time soon—but as Michael Dell pointed out, they’re more than happy to sell the infrastructure necessary to deliver software and services to those devices on an ongoing basis. It may not be sexy, but it gives them a solid opportunity to maintain their enthusiasm and drive their business forward.

Up-Selling The Mac

Yesterday, in “Whither Apple Or Wither Apple?” I wrote about Apple’s efforts to steal market share from Android. Today I focus on Apple’s efforts to up-sell their iPhone and iPad customers to the Mac.


At WWDC 2014, Apple introduced the concept of continuity — a slew of new features for OS X that are designed to make using your iPhone, iPad and Mac one truly seamless experience. The message was clear — if you want to get the most out of your iPhone or iPad — buy a Mac. Here’s just a few of the continuity features that Apple introduced:

— Unified look and feel
— SMS messages on the Mac
— Phone calls on the Mac
— AirDrop will work between iOS and OS X devices
— Mail drop will work between iOS and OS X devices
— Family: you can now share purchased music, movies and apps with up to 6 people — so long as there’s one credit card linking the iTunes accounts
— Handoff

Handoff is my favorite of all the continuity features and it exemplifies what Apple is trying to accomplish. With handoff, you have the ability to pick up your work right where you left off — whether that be on an iPhone, an iPad or a Mac. For example, you can start an email on your phone, realize that it’s going to be complex, and seamlessly move to your Mac and pick up your writing right where you left. Or, conversely, you can start an email on your Mac, suddenly be called out of your home or office, and pick it up and finish it on your iPhone or iPad.

One Step Back, Two Steps Forward

Three years ago, Apple held a back-to-the-Mac event. In it, they introduced a slew of iOS features for the Mac. Some of these features worked well, but others missed their mark. What Apple was going for was comfort — they wanted their iPhone customers to feel at home when using the Mac. However, some of iOS-type features — like launchpad and single-window mode — just felt awkward and out of place on the Mac.

With “continuity”, I think Apple has hit the sweet spot of iOS and OS X integration. It has little to do with making the iPhone work like the Mac or the Mac work like the iPhone. Instead, it has to do making the work you’re doing on the iPhone transition seamlessly to and from the Mac.

Upsell People Walking Into Store Customer Conversions


Apple constantly touts the fact that 98% of Fortune 500 companies use iOS. But Apple wants more — much, much more. In order to make that happen, Apple introduced new features at WWDC 2014 that were developed specifically for Enterprise, including “new security features, enhanced Mail and Calendar, and better device management. Equally meaningful are app extensions, which will not only make power users happy, but also better enable corporations to create and meaningfully use proprietary line-of-business applications.” ((Ben Thompson)) Further, there’s integration with Box and OneDrive as storage options. Even Mark Up can be used as a way of adding on-line signatures to Enterprise documents.

Why Bother?

All this begs the question: Why bother? Isn’t the PC a shrinking market and isn’t the Mac a tiny niche within that shrinking market? Why throw all these resources at a 30 year old device – virtually a tech dinosaur — that’s headed for extinction anyway?


Another thing Steve taught us all was not to focus on the past. Be future focused. If you’ve done something great or terrible in the past, forget it and go on and create the next thing. ~ Tim Cook

Isn’t Apple violating its own principles? Shouldn’t they be burying the Mac instead of praising it? Shouldn’t they cut loose the anchor that is the Mac and sail unhindered into their mobile future?

The Mac is dead. Long live the iPhone! Long live the iPad!

Whoa! Hold your horses there, Bucko. Not only isn’t the Mac dead, it’s about to make a big time comeback.

The Mac is still alive and well. ~ Ben Bajarin (@BenBajarin)



It is rather incredible to think about a 30-year-old product being a growth story, but it absolutely is the case. ~ Ben Thompson

Even before WWDC 2014, the Mac was going strong and growing stronger:

  1. Mac sales have exceeded PC growth and gained overall marketshare in 30 of the last 31 quarters.
  2. The 4.1 million Macs sold last quarter were a March quarter record for the company. If Gartner and IDC were accurate in their estimates of personal computers shipped worldwide, Macs accounted for between 5.3% and 5.6% of the total.
  3. Apple’s average Mac selling price was steady at $1300.
  4. The ASP, or average selling price, of the Mac line actually increased 2% quarter-over-quarter, climbing from $1,322 to $1,344.

Mac average selling price

In other words, PCs are getting cheaper and consumers are buying less of them and Macs are getting more expensive and consumers are buying more of them. In what world does that make sense?

The Mac Is The Grand Piano Of PCs

Smartphones and tablets have replaced PCs as the primary computer for most normals. But that doesn’t mean there isn’t a role for the PC. As the PC (and the Mac) becomes a specialized tool used mostly by specialists, those self-same specialists will want to use the very best tools available.

black grand piano isolated on white backgroundTo steal an analogy from Ben Thompson, there was a time when the grand piano was the only piano available. Then the upright piano — which wasn’t nearly as good, but which was cheaper, smaller and easier to move — took its place. However, there were still those – mostly concert pianists – who needed a grand piano. Were they going to go cheap when they purchased said grand piano? Hell no! This is their livelihood you’re talking about. They’re going to get the best piano they can afford.

The same rule holds true for computing. For example, at WWDC — and at the Microsoft Surface event that preceded the WWDC — almost all the reporters had notebooks, not tablets, and almost all of the notebooks were high-end MacBooks, not cheap PC knockoffs. Concert pianists need concert pianos because their livelihood depends upon the quality of their tool. Reporters need high-end computers because their livelihoods depends upon the quality of their tool. Are reporters going to go cheap when they purchase their computer? Hell no! This is their livelihood you’re talking about. They’re going to get the best computer they can afford.

Anytime anyone NEEDS a grand piano, they’re going to want to spend enough money to get the best. And anytime anyone NEEDS a PC, they’re going to want to spend enough money to get the best. The Mac is the grand piano of PCs. And any specialist who needs a PC is going to want to buy a Mac.


Only about 20% of the worldwide market for computers is premium. This is bad news for the iPhone which is rapidly approaching saturation. But this is incredibly GOOD news for the Mac, which is nowhere near saturation.

And the Mac’s share of the Enterprise? Fuggedaboudit. The upside is virtually unlimited.

iPhones and iPads already dominate upscale and Enterprise usage. Apple’s new continuity tools send those users a clear message:

If you already own an iPhone or an iPad and you need to own a PC, then the Mac is the only PC for you.


Microsoft’s Two Big Announcements and Their Future Impact

Microsoft made a number of announcements at their Build conference this morning. While many were related to Windows 8.1 and Windows Phone 8.1, most feature announcements were simply playing catch up. But they did announce a few things I think are interesting.

Let me preface this by saying Microsoft is in a deep deep hole. Nothing they announced or will announce any time soon will immediately get them out of it. What I am looking for are things I can point to that signal they are building a step, or a ladder, to get out of this hole.

The first and most important announcement is they are not charging any OEM making a tablet or smartphone less than 9 inches a fee for Windows Phone or Windows 8.1. The big one here is Windows Phone is now free to OEMs. Again, this announcement will not immediately get them out of this hole but several observations need to be made about it.

First, this move is geared at hoping to win over OEMs who are making smartphones for the low end of the market. This is the part of the market where the vast majority of growth will be over the next 2-3 years. My numbers tell the story that, over the course of the next 2-3 years, the market will add a billion new smartphone owners. Over 80% of these new users will purchase their first smartphone at a price point less than $150 and largely less than $100. In making Windows Phone 8.1 free, Microsoft is hoping to get a slice of the next billion smartphone owners who will be connecting to the Internet for the first time. Microsoft played a key role in connecting the first billion users via a PC, and are hoping to play a key role connecting the next billion via a smartphone.

Note this picture showing the growing ecosystem and the regions where each OEM is strong. Most of the OEMs that you may not recognize are serving the low end of the market in their respective regions.


The second observation, which is important to the first, is most of the vendors in this screenshot are paying Microsoft a licensee fee for their Android implementation. Which means for many of these OEMs, shipping a Windows Phone will cost them less than shipping an Android phone. The problem for Microsoft is if they can not monetize a shift in the mix of Android phones sold by these OEMs, then they are losing money by not monetizing the OS. For this to work, Microsoft must have services they can make money on, to the tune of $5-12 per year per device for this to make them as much money as they make on Android per device. A key point to this observation, however, is Windows Phone requires quite a bit of processing power. An OEM likely can’t ship a phone costing less than $100 dollars, given the tech specs necessary, that runs Windows Phone. For this strategy to even be remotely possible for Microsoft, they need Windows Phone to require less resources so it can ship on a lower cost device specification wise. Windows Phone hardware, and even the software, is now truly just a shell to Microsoft services — very similar to Google in this regard. To work, Microsoft needs services these new customers value and will use.

The second announcement is a bit more nuanced but could have interesting implications. Microsoft announced their own smart voice assistant on Windows Phone called Cortana. This is the name of the cloud computer based personal assistant for the Master Chief character in Microsoft’s popular Halo gaming franchise. While most of the things this solution enables are just catching up to Siri and Google Now, this service is fully powered by Bing. When I look at many of the services Microsoft is offering, Bing is the one I believe they have the best chance at monetizing with these new low end customers — assuming they win their allegiance.

I do believe the next big evolution of the smartphone is to transition the device from what it is today and move toward a true personal assistant to its owner. Artificial intelligence will play a key role in this. While this is not necessarily something a first time owner needs or wants, it is an important foundation for Microsoft to build upon.

As I stated earlier, none of this immediately gets Microsoft out of this hole. While neither announcement is a guarantee they are building toward a ladder, these are at least a couple of the things I think make the case they are moving in that direction.

Intel Strategy Moves Forward

After a long period of relative stasis, it’s becoming clear that relatively new CEO Brian Krzanich and his leadership team are driving forward with some important new strategic directions for Intel. The company is moving aggressively to shed its image as little more than a PC and server component supplier—a welcome and long overdue move. They recently unveiled a forward-looking guiding principle/strategy catch phrase, “If it computes, it does it better with Intel,” which is a concrete reflection of their desire to extend their reach and influence to other new markets.

The company previewed some of these ideas at CES, where Krzanich unveiled a complete line of Intel designed (though not Intel-powered) wearable devices, as well as board-based products. The new boards are named Galileo, for the burgeoning “maker” market, and Edison, which the company hopes to see embedded into a whole new generation of wearables and other “smart” devices (think Internet of Things, or IOT). The Galileo is made more interesting by the fact it apparently only had an 8-week gestation period from idea to shipping product—a completely unheard of time frame for the “old” Intel. The company was late to the game for mobile phones and other mobile products, so it’s good to see them getting aggressive early on in what are expected to be higher growth areas.

One of the more interesting aspects of some of these recent announcements—based on comments Intel leaders have made—is the company is willing to acknowledge it’s not entirely sure where some of these new markets are headed—a refreshingly honest perspective—yet it still wants to actively participate to help drive innovations. Whether they actually can remains to be seen of course, but there’s clearly a new perspective from the top on how the company can and should proceed.

The company has also recently started to emphasize their developments outside of CPUs, with a particularly strong focus on communications. Again, this is also long overdue as the company is virtually unknown as the number two player in the modem market. They’ve also been making the point they want to be seen as an SOC (system on chip) company, not just a CPU company. The company has talked in detail about their achievements in LTE modems and mentioned improvements in process and packaging technology that could offer improvements for flash memory and other non-CPU components. Given their strong interest in wearables and IOT, it wouldn’t be surprising to see the company making investments in technologies such as sensors and wireless power, both of which would help them offer a wider range of key components for future SOCs. In fact, they may want to consider broadening their new strategy catch phrase to say, “Make your devices smarter and better connected with Intel.”

In the realm of PCs, its traditional stronghold, Intel also continues to drive forward, with plans to drive greater awareness for portable all-in-ones, like Dell’s XPS18, as well as continuing the push for 2-in-1 devices. The company has also targeted 40 million Intel-based tablets for the year—an aggressive target that, thanks to its many investments in Android compatibility, it could very well achieve. For PCs, things are going to be tougher because many of the same challenges that have plagued the PC market remain. But even here, Intel seems to be approaching things with a new, more realistic attitude by focusing on several potential opportunities for interesting sub-segments instead of a complete PC industry turnaround.

All told, Intel’s attitude and approach seems to reflect the beginning of some important changes stemming from the recent transition between former CEO Paul Otellini and Krzanich. The company’s view is arguably getting broader, deeper and more open than we’ve seen in some time and I for one hope it represents a sign of things to come.

Chromebooks and the Low-Cost Laptop Collide

At the HP analyst meeting in Boston, I was intrigued by two products showed by its Personal Systems Group. As you may know, HP is going through a major turnaround and for some time it was unclear how committed the company was to the PC business. Under its last CEO, in fact, HP was actually looking to sell its PC business. When Meg Whitman became CEO, however, she made a commitment to PCs. Since then, HP has been trying to innovate around various PC and tablet form factors.

The two products that caught my attention were the new Pavilion X360 laptop, which is similar to Lenovo’s Yoga design, and its updated Chromebooks. What makes the Pavilion X360 so interesting is its price of $399, which includes an Intel Baytrail Pentium class processor, 4-gig DRAM and a 500-gig hard drive with an 11.6-inch HD screen. During the event, HP also highlighted its new Chromebooks, priced between $250-350, depending on the configuration.

Various PSG managers and VPs told me that Chromebooks are very popular in education markets, as well as the consumer market, where people understand the role of the cloud and just want a cheap laptop for Web browsing, Web services and Web apps. This latter group of consumers is growing and HP is very pleased with the uptake in sales of Chromebooks to both groups.

But HP wanted to have some Windows laptop replacements for previous low-end laptop models. With this in mind, at Mobile World Congress (MWC) last week, the company announced the Pavilion X360, which caught a lot of people’s attention because of its attractive price and robust capabilities. Add the Yoga-like features—so it becomes a tablet, too—and you can see why it got a lot of media attention. In fact, it even won PC Mag’s Best of Show Award this year.

As I looked at these products side by side, it was clear to me that they are on a collision course, at least to some degree. In terms of price, the two are so close that from a consumer or even educational buyer’s standpoint, the bump up to a Windows 8 system is almost negligible. More importantly the X360 is much more versatile from a hardware standpoint. The fact that it can run any Windows application further enhancess its perceived value.

To be sure, Chromebooks are not going away any time soon. Google and its partners are highly committed to them and they will continue to be a good option for education and a lot of people who would only use the device for Web browsing. But the appeal of having a fully loaded PC with a 500-gig HD—in combination with a relatively fast and power-efficient processor—for just a little more is certainly compelling.

HP also showed off the 6- and 7-inch Phablets it introduced at MWC India. Although HP seems to have no interest in getting back into the phone business in the US, this phablet is scheduled to be introduced in Europe this summer. An Android-based phone, it is priced very aggressively. The 6-inch model is priced at 249 Euros, while the 7-inch model is 299 Euros. These are unlocked phones with two SIM card slots for dual communication capabilities.

These new products suggest to me that HP is much more serious about its PC business now than when I met with people from the company last year at this time. They are also working hard at innovating around PC and tablet platforms. While I myself am mainly a MacBook Air user, I personally would buy the X360 as my home Windows 8 system for use with Windows apps that I need every so often. I wouldn’t go so far as to say that HP is completely back and not going to experience bumps in the road in the future. But last quarter’s financials were solid and positive. My observations of the PSG group suggest to me that it is back on track and serious about PCs again.

One last note from the HP event. I had the opportunity to chat with CEO Whitman, at which time I asked her about something she said in her opening presentation. She confirmed that HP now has $9 billion of free-flow cash in the bank and zero operational debt. This is a far cry from the company’s financial situation this time last year and very good news indeed for this Silicon Valley hi-tech icon.

Report: Smart Devices and E-Commerce

E-commerce has been a buzzword in the industry for more than a decade. I have come across some interesting data points that paint a new picture of the e-commerce marketplace than one that has previously existed. Not surprisingly, this shift in e-commerce trends is being driven by mobile devices. The implications of mobile on e-commerce will be significant.

Take a look at the following chart depicting the past 11 years Q4 US e-commerce sales as a % of US retail.

Screen Shot 2014-03-03 at 12.52.24 PM

As the chart above illustrates, Q4 2013 saw the biggest jump in e-commerce growth of any past Q4. According to the US Department of Commerce, 2013 online sales grew 12% over 2012. During the same time period overall retail growth in the US was up a less- than-anticipated 4.1%. According to a recent report from Monetate, in 2012, only one in five online purchases were made on a mobile device (phone and tablet). This year, that number jumped to one in three, growing approximately 50% in one year. In many of the ways the mobile web is poised to become more powerful and more dominant than the desktop web, so will mobile e-commerce be more powerful and more dominant than desktop e-commerce.

However, not all mobile platforms are made equally when it comes to e-commerce. To understand the future of e-commerce and mobile e-commerce we need to understand how platforms and form factor trends signal how this market will evolve. For the sake of this report we will focus on tablets and smartphones.


Compared to 2012, the tablet saw an increase in average order value (AOV) of 14.13%. This last holiday quarter in the US the tablet AOV was $162.80. AOVs on tablet map much more closely to that of a traditional PC. For comparison the tablets YoY increase in AOV was 15.71% with a total value of $167.31.

Similarly conversion rates of tablet purchases and PC purchases were similar as well. The tablet saw purchase conversion rates increase 17.75% YoY with a conversion rate of 3.16% in Q4 2013. The PC saw conversion rates jump 24.29% with a total of 4% of purchase converted.

Screen Shot 2014-03-03 at 1.30.54 PM

Understanding that the tablet and the PC have similar average order values and similar conversions is a key takeaway. Why we are more optimist these trends will continue and the tablet may even continue to grow as a percentage of e-commerce transitions is due to its mobility over the PCs. More and more consumers are using their tablets while in key modes of discovery. Using a table to read a digital magazine in bed or on the couch, or using a tablet while watching TV are all situations where the consumer may see something they may be interested to purchase. The mobility of the tablet makes it the perfect form factor for not just gathering data but also for completing the transaction.

A joint research project between Ipsos and Google highlighted that the tablet was the device with the highest number of purchase conversions where the discovery process of something like shopping, planning a trip, and managing finances, were most commonly started and finished on the tablet. Where in the case of the smartphone most of the same tasks were started on the smartphone and completed on a device like a PC or a tablet.

While the traditional PC will still play a key role in the future of e-commerce, the tablet is the device with the most potential in not just western markets but global ones as well. I expect the tablet to soon be the king of e-commerce in every market.

When it came to platforms, unsurprisingly, iOS dominated with the higher AOV of any tablet platform. Below is the AOV by tablet platform for the past few quarters.

Screen Shot 2014-03-03 at 2.14.36 PM

Similarly the iPad drove the highest conversion rates of any other tablet platform. In Q4 2013 the iPad saw conversion rates of 2.72%. Android was 1.82% and the Kindle Fire just a measly .82%.


The smartphone presents the platform with most upside but its upside may reside less with e-commerce and more with driving new in-store mobile experiences/commerce. When it came to e-commerce the phone is still a distant platform to PCs and tablet in many respect. According to Monetate’s research the smartphone actually saw a decline YoY of 2.20% in average order values. Last Q4 2012 the smartphones AOV $136.61 and in Q4 2013 it dropped to $133.60.

Conversions of purchases from smartphone increased by 26.70% YoY to 1.18% in 2013. What the data suggests is that smartphones are valid entry points to search, discovery, and to help consumers decide what to purchase. Where the tablet is becoming the device consumers use to actually buy. This research from Monetate coincides with the data from IBM’s black Friday report where the following point is made:

Smartphones Browse, Tablets Buy: Smartphones drove 24.9 percent of all online traffic on Black Friday compared to tablets at 14.2 percent, making it the browsing device of choice. Tablets drove 14.4 percent of all online sales, double that of smartphones, which accounted for 7.2 percent of all online sales. Tablet users also averaged 15 percent more per order than smartphone users, spending on average $132.75 versus $115.63 for smartphone users.

Where smartphones may see their true potential is to drive more in-store activity than perhaps traditional e-commerce. In-store beacons may serve as the foundation for this new transaction driver. Apple is aggressively moving forward with implementations of its iBeacon technology. As more of these beacons which have the ability to send targeted and specific data base on precise location are installed in retail locations, retailers will be able to dramatically alter the in store experience. This shift will open new opportunities to influence the behavior of consumers in retail locations. If a store knows where a consumer is in their store it will make it easier for them or brands to offer them information and even promotions in real time.

Image that Coca-Cola puts a rule in place at a local grocery that if a consumer is standing in the isle near Coca-Cola products for a set amount of time, like 1min or more, to offer that person a discount on select Coke products if they purchase today. A smartphone and an abundance of strategically located beacons in stores will lead to this kind of super targeted advertising and promotions.

Technologies like TouchID also stand to impact the mobile shopping experience. This level of security depth will give merchants the ability to not just know where a customer is in store but also that they are who they say they are. Naturally, TouchID is important in the value chain of mobile purchases. This single technology has the opportunity to not just decrease the amount of credit card fraud globally but to also perhaps be a catalyst for an increase in mobile purchasing at large.

Smartphones, paired with in-store beacons, and a secure mobile purchasing mechanism all combined together make for exciting opportunities for brick and mortar stores to add value and to compete against on-line retailers or even use online retail to their advantage.

Mobile Traffic

Mobile devices are invading the PCs territory in nearly every dimension. Monetate’s research pointed out that one out of every three visits to leading e-commerce websites come from either a tablet or a smartphone. Mobile e-commerce orders grew 102% YoY and accounted for 4.22% of holiday e-commerce orders.

On Black Friday, traffic from tablets jumped 89.46% compared to Q4 2012. Similarly, Cyber Monday saw tablet traffic increase to 73.09%. Similarly Christmas day tablet and smartphone traffic was up 46.9% YoY. All data points according to Monetate.

The e-commerce trends are clear. T standout from my observations of market data and research from other and our own internal data is the tablet. You can not ignore the kind of data we are seeing about how tablets are being used in many vectors of consumers digital lives.

The Inevitability of Office and How Microsoft Can Save It


Microsoft Office logo

When I am not writing for Tech.pinions, I spend a fair amount of my time doing a variety of  things, and a significant part of my freelance life is helping to write responses to Requests for Proposals, most of them for large, complex IT deployments. The RFPs, and the nature of the response to them, very a lot, but one thing they have in common in the pervasiveness of Microsoft Office and related software.

One thing I have noticed in a great deal of tech analysis and journalism is that except on sites focused on an enterprise audience, such as InfoWeek or ComputerWorld, there seems to be very little sense of how dependent the enterprise is on Microsoft. As a result, they tend to grossly underestimate both the importance and staying power of Microsoft.

To some extent, that is not surprising. Not many writers have much experience in the enterprise world. Journalists, in particular, do most of their work in content management systems that don’t use Office components. (When writing for Tech.pinions, for example, I either write directly in our CMS, WordPress, or use a markdown editor. Occasionally, I’ll use Excel to analyze data and generate a chart or table, but that’s about it.[pullquote]Microsoft also needs to come to grips with the reality that iOS and Android, not Windows Phone and Surface, are going to be the dominant players in the mobile enterprise.[/pullquote]

But other work is all Microsoft, all the time. The RFPs themselves are often published as word documents, and even if they are PDFs, it’s a good bet they began life as Word docs. And the RFPs generally specify response be in Word, Excel, and PowerPoint. The teams writing the responses depend heavily on the Track Changes and commenting capabilities of Word. SharePoint is used as the document repository and for version control. Team members communicate using Exchange/Outlook and Lync. (All of this, by the way, is supported on Macs, although the Mac Outlook client is pretty bad and the Mac SharePoint tool (Microsoft Document Connection) is extremely finicky.)

As for the systems described in the RFP, the back ends may be based on software from SAP, Oracle, or Microsoft, among others, but the presence of these systems being accessed by desktops or laptops running Windows and Office is simply taken for granted. In most cases, especially in government RFPs, mobile access is often an afterthought and is handled through a smartphone or tablet browser, if at all. iOS or Android support is starting to show up a bit more, particularly for HR self-service applications.

All of this is important because it shows that predictions of doom for Microsoft are grossly exaggerated. Microsoft clearly has long-term problems that will affect its dominance of the enterprise if not addressed successfully. One of the features of Windows 8 that could appeal to enterprises is sophisticated baked-in support for both public and private clouds. But Windows 8’s user interface mess is a non-starter for enterprise customers, and it is unlikely that windows 8.1 Update 1 is going to move the ball far enough to be of much help. It’s imperative that Microsoft come up with a Windows 9 that both gives enterprises the user experience they want (i.e., one that imposes a minimal retraining burden) while building the on ramp to the cloud services that are Microsoft’s future.

But a successful future for Microsoft, even in the enterprise, has to go far beyond hanging on to Windows PCs. While they are not going away, neither are they growing and are more likely to shrink as those workers not tethered to their desks trade their traditional PCs for more mobile devices. Microsoft needs to find a way to extend its software and services into the mobile space.

Jean-Louis Gassée argues in a Monday Note that the key is a radical invention of the Windows tablet:

Microsoft faces a choice. It can replace the smashed bumper on its truck with a stronger one, drop a new engine into the bay and take another run at the tablet wall. Or it can change direction. The former — continuing to attempt to bridge the gap between tablets and laptops — will do further damage to the company’s credibility, not to mention its books. The latter requires a radical but simple change: Make an honest tablet using a version of Windows Phone that’s optimized for the things that tablets do well. Leave laptops out of it.

I believe that’s the right track–I have maintained for a long time that trying to build a tablet OS down from desktop Windows rather than up from Microsoft’s phone software was a strategic blunder–but unless Microsoft has been quietly working that approach for many months, it is going to take too long to pull off a new tablet software design.

Microsoft also needs to come to grips with the reality that iOS and Android, not Windows Phone and Surface, are going to be the dominant players in the mobile enterprise. The company has taken small but important initial steps with SkyDrive (soon to become OneDive) and Lync apps for iOS and Android. But it needs to take the big step of providing solid Office and SharePoint apps for tablets, sooner rather than later. It will have to do a lot better than existing third-party solutions (not all that hard) and signal to the world that it will support its vital Office infrastructure on a heterogeneous world of mobile devices.



Apple First Quarter of 2014: All Eyes on the iPhone

Apple had the kind of quarter companies long for. The established new record number of sales in iPhones and iPads and had the best of any technology company. Yet the iPhone sales will remain a focal point for most. While Apple sold 51 million iPhones, more than any other previous quarter, that number was a bit short of most estimates. The reason for this is an important one to understand.

Much of it had to do with the US market. Carriers moved to a 24 month upgrade cycle from a 20 month. The implications on this were speculated but what I believe it resulted in was an even longer extension of the phone life cycle. We saw a little bit of this with Verizon’s recent revealing that their fourth quarter smartphone activations declined in 2013 vs. 2014 1 million units. Verizon has a significant number of consumers on their network that fall into the late majority and laggard category of consumers. These consumers upgrade more on a need vs. want basis. Up until recently the mobile phone category in general (not just smartphones) has continually kept pace with the 20-24 month cycle. One of the things we believe we are seeing is the lifecycle extension of smartphones in the US. So many late adopters who have come into the market the past few years may impact the annual cycles more than some realize. This will be a key thing to watch.

The 5s turned out to be the hot ticket item and it was wise for Apple to re-shuffle the manufacturing mix. One wonders how many iPhones they would have sold if the mix was anticipated correctly from the beginning and Apple was not supply constrained with the 5s.

Ultimately Apple lost smartphone share in the global market. Apple is now the second company besides Samsung to to ship 50 million units in a quarter. However, Apple did it with a much more focused lineup and a much higher margin. Both impressive feats in my opinion. However, Apple’s market share of the global smartphone market is now 15% which is down from 20% in 2012. This is a key growth statistic to watch. The iPhone needs to remain a growth business and Apple must focus on grabbing new land (like China to do this.) I estimate Apple to grow market share in 2014 perhaps back to and even beyond their previous 20% of 2012.

The Mac did well in Q4 which is impressive given how poor the PC category is doing and has done. I maintain the Mac remains a growth story for Apple over the next few years. Macs are now nearly 7% of the global PC install base and this percentage will be a key area to watch.

The iPad remains a bright spot and given seasonal trends of the PC industry are shifting to the tablet category this is of no surprise. The iPad represented 31% of the total PC sales for Q4. While the iPad may not be considered a PC that statistic reveals the volume of the iPad compared to the PC. A further point is that the iPad’s 26 million sales was more volume than any PC vendor shipped of all their PCs in Q4. Lenovo who shipped the most PCs in Q4 shipped 14 million PCs.

I stick to my growth story points for Apple in 2014 as key narratives to watch. I appreciate and understand the desire for Apple to start to add new segments or categories to add further revenue growth but also highlight the reality that there is still ground to gain in every category they currently compete.

The wording Apple executives choose to emphasize ultimately underscore the priorities. They spent time talking about iOS usage share, customer satisfaction, loyalty rates and even discussed their ecosystems momentum in commercial accounts. All are designed to highlight that Apple has confidence that once people get into their ecosystem they rarely leave. This is key as we grasp the global growth story still ahead for the technology industry and Apple’s role in it.

The Next Big Challenge for the PC industry

By all accounts there are about 2.8 billion people on the planet that use technology and in various ways are connected to the Internet. One third connect via PCs while the other two thirds use smartphones, tablets and other connected devices that have sprung from the Post PC Era. What is quite interesting is that for the first 30 years of the PCs existence there was little innovation in user interfaces. PCs used mice and keyboards to navigate and interact with digital information. But by 2004 touch had been introduced in some very early tablets and smartphones and it took Apple’s introduction of the iPhone in 2007 to move touch into mainstream of user interfaces. Today all mobile devices use touch for navigation and input and with the introduction of Siri and Google Now, voice has entered the scene as another form of input.

As we move forward, the goal of the tech industry is to bring the next 1 billion on line by 2017-2018. But there will be a big difference this time when it comes to delivering new devices and services to this new crowd. This new age of users will not be burdened or even tied to legacy UI’s and apps from the past. While mice and keyboard will still be optional UIs for some, the majority of the new user will enter the connected world via new UIs that include touch, gestures, voice and even bio-senors that will be used by them to navigate the next Internet age. More importantly, I estimate that at least 80% of these new users will come in through some form of mobile device and that the PC and laptop will have very little interest to them.

The ramifications of this for the tech industry is huge. PC vendors of the past will have to adapt or they will die. I see Microsoft having the greatest risk in that they are so PC centric with so much legacy baggage that making this transition will be difficult. The problem with Win 8 is not the software, but users ambivalence. Unless you are a business user tied to their apps, Win 8 and its lack of apps has little appeal to the mass market. Also, Android and IOS more than deliver what most people need and will continue to rule the OS world of this new digital era.

The biggest challenge though is two fold. The first is related to user interfaces. Mice and keyboards will have minimal interest to these next billion users. The majority of these folks will come in through mobile devices of the Post PC era. That means touch is the new “keyboard” and perhaps gestures is the new “mouse” for these folks. We also see voice playing a more important role in UI’s for the next billion users although perfecting this by 2017-2018 is not very likely. Siri and Google Now show voice’s functionality today to a point but for voice to be integral to the mobile experience it will need better speech to text recognition and more powerful voice accuracy for it to be really useful as a future UI.

The second thing that will need to be in place is a powerful service’s engine that ties these next billion users devices to the cloud and makes interacting with the cloud and their devices easy to do and seamless. Of course, the cloud based apps, synchronization, storage and communications layers have to work harmoniously too. Apple, Google and Amazon have a huge lead in this space and it will be difficult for others to keep up. On the other hand we are talking about a billion new users throughout the world and there is great opportunity to create regional versions of these services as well as deduced devices just for these regions too. The idea of one size fits all won’t work for the next billion users who will want variety in hardware and services.

I see the next two years as pivotal for all of the major players in the PC and CE industry. For the PC vendors, they have to move on and think of their PC business more in terms of a mature market that needs to be kept steady. There is still room to make money and innovate in PC’s and laptops but it will never be a growth market again. Instead they need to focus on mobile products and services that meet the actual needs of these next billion users and put serious R&D into innovating around these new computing paradigms. For the Telecom industry, breadth will be important. They too need to keep investing in building out networks, making them faster and secure to stay competitive but also expand their reach. Sprints move to buy TMobile is a good example of this. They also need to bulk up their services offerings. As for the CE companies, they have to add Internet connections to the majority of the devices they make. Gone are the days when most CE devices are islands unto themselves. They need to think connectivity and sensors and move to make most of the products they make smart. This goes for devices for the home, cameras, TV’s and even toys.

Also, all of these industries need to invest heavily in new user interfaces for their devices in the post PC era. The next billion users will demand a whole host of new ways to communicate and interact with their digital products and ultimately I see this as one of the tech industry’s biggest challenges in the near future. The good news is that there are at least another billion people clamoring to become part of the digital revolution. However, for them to come to the digital party the tech companies have to readjust their thinking about what it will take to interest and reach these new users with their brands and services and invest accordingly if they want to be a company that interests the next billion people who will come online in the next 3 to 4 years.

Understanding the Market for Chromebooks

A few days ago NPD released numbers that caused many media outlets to proclaim the amazing success of Chromebooks as a data point in the market. These numbers were bring used in blog posts to suggest that the rise of Chromebooks were impacting PC sales, and in particular Macs and Windows PCs. As so often happens, the media has mis-interpreted the data points released in a vague press release from a device counting and tracking agency. However, this press release is specifically talking about the commercial sales channel (i.e the channel used by organizations for purchasing) not the consumer retail channel like Best Buy, Staples, Fry’s, etc.

NPD is about as reputable of a US retail consumer electronics tracking firm of any I follow. In fact, I generally trust their data more than most. This is because NPD has relationships with all the major US retailers and gets actual channel sell through data. So when they release data we know that we are getting actual numbers of products being sold at US retail. However, we have to keep in mind that while their data is accurate it is also somewhat incomplete in some cases. NPD does not track Amazon sales, or other e-commerce sales, nor do they track Apple store retail sales or other OEM vendor channels. So while NPDs data is important and useful it is also somewhat incomplete. In most cases this doesn’t matter since the bulk of US consumer electronics is sold through retail channels which NPD tracks. While Apple does sell more than average product through their own retail channels they still sell the bulk through retail channels.

Now the story around Chromebooks has been a fascinating one to watch. Earlier in the year, we had picked up on a key data point that Chromebooks were selling almost as many per month as Ultrabooks. Ultrabooks were a specific segmentation of notebooks at retail which had quite a bit of marketing behind it. To learn that Chromebooks were moving in similar volumes to Ultrabooks did take me by surprise. So the question we had to answer was why.

Chromebooks as Textbooks

Earlier in the year I spoke at a conference of educators and IT managers that worked for the state of California and managed the technology purchased and implemented for all California school districts. What we learned was that education markets were buying and deploying Chromebooks in fairly significant numbers. Much of California’s, and many other states, computer programs and curriculum are web based. School districts have a license to education software that is accessed through a browser and teach things like computer literacy, language arts, math, and several other subjects. The bottom line, is that when you dig into many of the ways in which computer based curriculum has been evolving in school districts you learn that much of it is becoming browser based.

There are still many PCs still being used in schools, particular at more advanced grade levels, but many districts are implementing Chromebooks as dedicated web portals to online education software to be used in classroom settings.

This is not surprising given the cost of Chromebooks vs. the cost to replace or add new PCs during these times when many school districts across the US are facing budget restraints.

The key takeaway about Chromebooks in this use case is that they are being used a specific purpose devices. In fact, it is reasonable to think of Chromebooks very much like textbooks in many education environments.

While Chromebooks have a great deal of upside as they evolve, they are being used as specific purpose devices in nearly all markets today. This is both the potential of the upside but also the products challenge in going up against more general purpose computing devices.

Chromebooks has a role, but over the next few years whether its role is as specific purpose devices or general purpose applications will wait to be seen. Stay tuned, however, should Google release a tablet running Chrome OS things could get very interesting.

Glimmers of Hope for the PC Industry

There have been some interesting data points over the past few quarters that I’ve been following. Most of them are related to some specific interplays between the tablet market and the PC market. As many of our readers know, I divide the tablet category into two categories–for now. One is the market for more capable tablets like the iPad, Surface fits into this category now as well, and a slew of other new tablets called 2-in-1s (I dislike the term) coming in 2014 will as well. Then there are tablets which are purely more media consumption products. Now what is interesting from a data point is that the US, who is one of the largest regions for notebooks and desktops, also happens to be one of the largest regions for tablets as well of both categories. But perhaps more importantly, the US is one of the largest markets for iPads. The rest of the worlds big markets are higher consumers of less expensive, commodity tablets, which is actually where much of the tablet growth has come from the past 6 months. So with these observations in mind let’s look at a few charts.

Screen Shot 2013-12-16 at 7.55.57 AM

What this chart is showing is that it appears the PC market is stabilizing in the US. Meaning that quarterly negative growth is lessening. What it also shows is that tablet growth is also slowing in the US. I believe there are several explanations for this.

While I believe a certain class of tablets will suffice for the masses as a PC replacement, the majority of the installed base is still using them in conjunction with their PCs. It is important to remember that over 90% of tablets sold are sold to EXISTING PC owners. Many PC owners find that owning a capable tablet allows them to delay their purchase or need for a new PC. Most are still using their tablet and keeping but using their current PC less. This would explain many data points we see from comScore and others showing PC usage high during the day and tablet usage high during the evening.

The question now becomes: Are many of those tablet (mostly iPad) owners finally ready to start upgrading their PCs? This is the theory the PC industry hopes is true. I do believe there is some merit to this theory. However, it is going to take at least another six month’s for us to have a clearer picture. My hunch is that the tablet slow down picks back up this holiday Q4 and notebook and desktop sales remain negative. In fact the Consumer Electronics Association Black Friday and Cyber Monday survey’s indicated that tablets were the second most frequently purchased product at 36% to the notebook which was 23%.

How negative notebooks and desktops are in Q4 is a key point. If it is around -4 to -5 or better then this is actually good news as it would add to the theory that the market is stabilizing. I fear it may be off more than that, but this scenario may also be interpreted as a good sign for PC refresh in 2014.

The other bit of good news is that the higher-tiered price bands of PCs are doing better than lower tiers.

Screen Shot 2013-12-16 at 8.24.23 AM

As you can see the chart shows the greater than $400 segment as doing better than the less than $400 segment. Even the premium segment of PCs is holding steady mostly thanks to Apple.

Looking forward, if the PC market is stabilizing this is good news. We could very well be looking at a pendulum swing in the industry where PC slowdown and tablet slowdown off-set each other in particular years. PCs may be slow during tablet refresh cycles and tablet refresh cycles may be slow during PC refresh cycles. The key point in this scenario is that tablet refresh cycles will be more frequent that PC refresh cycles.

2014 will be an interesting one to observe these trends and the interplay between tablets and PC. I feel that by the end of 2014 we will have a much clearer picture of this somewhat symbiotic relationship.

Tablet Metaphysics

Are you ready for some Tech Metaphysics?

“Aristotle drew a distinction between essential and accidental properties. The way he put it is that essential properties are those without which a thing wouldn’t be what it is, and accidental properties are those that determine how a thing is, but not what it is.

For example, Aristotle thought that rationality was essential to being a human being and, since Socrates was a human being, Socrates’s rationality was essential to his being Socrates. Without the property of rationality, Socrates simply wouldn’t be Socrates. He wouldn’t even be a human being, so how could he be Socrates? On the other hand, Aristotle thought that Socrates’s property of being snubnosed was merely accidental; snub-nosed was part of how Socrates was, but it wasn’t essential to what or who he was. To put it another way, take away Socrates’s rationality, and he’s no longer Socrates, but give him plastic surgery, and he’s Socrates with a nose job. ”

~ Excerpt From: Thomas Cathcart. “Plato and a Platypus Walk Into a Bar.”

Now what the heck does all of this have to do with Tech and Tablets? Well, I’ll tell you.

One of the major mistakes that Microsoft and its OEM partners are making is that they are failing to properly distinguish between the “essential” and the “accidental” properties of a tablet. Here’s two opposing examples to illustrate that point.


If you take away the keyboard from a Notebook computer, it is no longer a Notebook computer. It can’t function. But if you take away a keyboard from a Tablet, it is still a Tablet. Using Aristotle’s definitions, a keyboard is ESSENTIAL to a Notebook computer but it is ACCIDENTAL to a Tablet computer.

With me so far? Here’s a second example.


If you take away the touch user interface from a Tablet, it is no longer a Tablet. (See Microsoft’s failed attempts to create a tablet from 2001 until 2010.) It can’t function. But if you take away the touch user interface from a Notebook computer, it is still a Notebook. A touch user interface is ESSENTIAL to a Tablet but it is ACCIDENTAL to a Notebook.

Just one more step and we can bring it home.


Both Pixel input and Touch input require a metaphor that allows our minds to grasp the use and usefulness of that input. For example, menus and scroll bars are standard fare on Notebook and Desktop computers but they are anathema to Tablets. Why? Because menus and scroll bars are too small for multi-pixel finger input. On Tablets, menus are replaced by large buttons and scroll bars by replaced by “flicking” the screen up or down. This is not minor matter. A wholly new, built from the ground up, Touch User Interface is ESSENTIAL to a Tablet.


Touch is ACCIDENTAL to a Notebook computer. It’s plastic surgery. It may enhance the usefulness of a Notebook but it doesn’t change the essence of what a Notebook computer is. A keyboard is ACCIDENTAL to a Tablet. It’s plastic surgery. It may enhance the usefulness of a Tablet, but it doesn’t change the essence of what a Tablet is. Further — and this is key — a touch input metaphor and a pixel input metaphor must be wholly different and wholly incompatible with one another. It’s not just that they do not comfortably co-exist within one form factor. It’s also that they do not comfortably co-exist within our minds eye.

In plain words, it’s no accident that tablets and notebooks are distinctly different from one another. On the contrary, their differences — their incompatibilities — are the essence of what makes them what they are.

Big Tablets Could be a Big Trend

There continues to be a lot of talk around tablets which are larger than the traditional 10″ screen sizes. Rumors have it that Apple is working on a larger iPad and that Samsung is as well. While I don’t think it makes sense for Apple to make a larger tablets, and Samsung will experiment with every screen size, there may be a small role for larger tablets. Before I dive into this topic I want to level the discussion by establishing some definitions.

By tablet I mean a device that is designed as a pure slate. Something like the iPad for example. This can be used with our without a keyboard but is not dependent on one as a part of the design. Devices like convertibles and hybrids (which Intel now calls 2-1 computers) are not tablets in my opinion. Some of them may bleed over and include tablet features but they are not pure tablets.

There is no question in anyone’s mind that tablets are stealing sales from traditional PCs. IDC estimates that 2013 will end at a negative 9.7% for the year. In their press release from last a few months ago they stated”

The market as a whole is expected to decline through at least 2014, with only single-digit modest growth from 2015 onward, and never regain the peak volumes last seen in 2011.

Thanks to tablets, the market will never regain the peak volumes last seen in 2011. Very telling.

Yet even with this “PC is dead” narrative there are still many complexities. For example, if you have used a tablet for any length of time to do something considered more productive then you know these task are better experienced on larger screens. In fact in our consumer interviews they continually explain how when they go to edit a video, image, write a lengthy email or document, manage finances, etc., they choose to go to their PC to do these tasks. So in line with the theory that people love their tablets but also want a larger screen to do some tasks the question is whether or not there is a market for larger tablets.

The answer is yes. How big of a market there is for larger tablets is still the real question. In the short term I don’t believe it is that big but as certain technologies evolve the demand could get larger. But in the short term there is an interesting exception happening in the market.

The One Interesting Exception
I have been using the Dell XPS 18. Which is a tablet disguised as a desktop PC all-in-one. This product has been an interesting experiment for myself given my questions both around big tablets and my ideas on how the technology evolves to make the market interesting.

The first thing worth pointing out is that these larger “slates” actually have much more appeal from a collaborative standpoint than anything else. Things like working together, learning together, playing together, etc., all start to become more interesting when we can gather around a large touch screen and interact at the same time.

Imagine doctors being able to show patients digital images or other material and interact with it in real time. Or teachers using these larger screen tablets to collaborate on an assignment or teach something specific to a student. Even at home my family has been using the XPS 18 to play board games together. One of my daughters is taking piano lessons on it. But then as soon as you want to use it as a PC with a mouse and keyboard you place it on the dock and it is ready to go.

Large tablets have a place in certain verticals this I am sure. I can see tablets at 13-20-inches doing well in these spaces where the value of a larger touch screen for productive and collaborative use cases are more prevalent. For the mass market consumers, I’m not sure sure. For this market I can see tablets playing out differently when it comes to big screen use cases.

I mentioned that the technology may not be there yet and this is specifically where. I believe that consumers would find value in “docking” there existing 7″ or 10″ tablets into a large screen set up. And by large screen I mean something 20″ or greater. My view on this is the crux of why I am skeptical of Intel’s 2-1 category and personally feel it is a solution in search of a problem. It seems to me the more interesting solution for buyers interested in tablets is to get a pure slate tablet in the 7-10″ range and then also get a larger tablet like the XPS 18 and use them together as a solution. This way you get the benefits of a smaller more portable tablet for mobility and then the larger tablet/detachable desktop for more big screen productive desktop modes as well as more collaborative ones.

This is the advice I would give to hardware companies asking me about screen sizes. I would say for tablets focus on 7-10″ because those are the volume sellers. Then look to innovate around these larger screen detachable all-in-ones and create value in having the small tablet and larger tablet being used together as a solution.

In an ideal vision of the future, consumers will use their 7″ or 10″ tablets as their primary computing devices. Given that consumers primary needs are not that intense and mostly consumption over productivity, this device is well positioned for that. However, when they want to do something like edit a video, picture, write a long document, etc, they can “dock” their tablet to a larger screen and begin using the tablet + dock as a full desktop PC.

This vision has been shared before by many but for technical reasons has not made it to a useful reality. In the future if the technology enables this solution, it could literally mean the end of the notebook as we know it.

Whether big tablets would be an instant hit with certain verticals I’m not sure. But the common wisdom is that the larger the screen the more productive you can be.

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“))

Geeks onlineAgreed.

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

Compueternerds online

“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 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)

geekI 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.

—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

—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.

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:

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


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

Microsoft’s Windows 8 Blunder

When I first saw the direction Microsoft and their partners were looking to take Windows 8, I was optimistic. Metro sounded good in concept, as did some of the features and functions built into Windows 8. But then as the time got closer, it became very clear that this version, more so than any other, was going to depend a lot more on hardware than any previous version.

Prior to Windows 8, Vista was a hardware hog. In fact, I would argue that had more companies been more intentional about adding chips with better graphics, either discreet or integrated, that Vista would have performed better on early hardware. But Vista looks like a raging success compared to Windows 8 at this point.

As Patrick noted in his column the other day, it is ironic that we are in a position where the hardware is necessary to save the software. Building touch into notebooks and desktops is now the only way forward for Microsoft and partners. Microsoft has gone down a path of attempting to condition the market to not only be comfortable using touch on their notebooks and desktops but to desire it. I remain doubtful this will happen.

The primary reason is proximity and context. When we use notebooks or desktops we do so at arms length. This is the most comfortable position when the device is on your lap or on a table. Even though our arms are likely slightly bent while resting on the keyboard, the screen in most cases, is a full arms length away. Sometimes quite a bit more with a desktop.


Adopting a New Posture

While I was at Microsoft’s build conference last week, I decided to make a point to keenly observe those attendees who have embraced touch on notebooks and watch how they use them. The plus to being at a Microsoft conference was that I saw more touch notebooks, and Surfaces for that matter, in one location than I have ever seen out in one place.

What I observed was interesting. Those who had adopted touch on their notebook would type with the device at arms length, but then move their body and face closer to the screen as they sought to use touch input. In essence to use touch they actually leaned in, performed the action and either stayed or leaned in to scroll a web site for example, and then leaned back to start typing again.

Interestingly, Surface owners had adopted an entire experience built around leaning in. I can only speculate that this is because the screen is so small that staying leaned in closer to the screen makes it easier to read the text, etc. Surface owners would even type with arms bent significantly more because of how close they were to the screen.


My key takeaways from these observations were that to use a notebook, or an aspiring hybrid like Surface, adopting touch as a paradigm is one necessary component, but so is adopting new body language to operate it in a useful and efficient way.

So the question we need to ask ourselves is this: Is this better? Does touch bring so much to the notebook and desktop form factor that we should consider this new, somewhat un-natural required body posture worth the effort?

Let’s look at it this way. Is adding touch as a UI mechanism to something like a desktop or notebook a more efficient input mechanism? In notebook and some desktop form factors, I would argue that it is not.

I absolutely condone touch on smartphones and tablets. In these devices touch is natural, and the best and most efficient input mechanism for the use cases they are best at. This is because they are truly mobile and you use natural motions to touch the screen to navigate. But notebooks and desktop are different beasts that succeed at very different use cases for very different reasons.


What I’ve tried to bring out, both in public and in private, is this: does using touch as an input mechanism on a notebook or desktop make me more efficient in my workflow? I’m yet to find that it does.

When you sit behind a notebook or a desktop you are prepared to get work done. In this context speed, efficiency, and ease of use are keys to make these devices the best tools for the job. So for touch to be compelling, it must be better at the above experiences than a solid trackpad or external mouse. Does it do this? The answer is no.

Take the trackpad for example. My hands have less distance to travel for me to reach the trackpad on all installations. To use a trackpad I bring my hands closer to me a very short distance (maybe 2-3 inches). Contrast that with using touch as an input mechanism and rather than bring my hands in a short distance I must reach for the screen (approximately 5-6 inches). This requires more effort and more time than using the trackpad and is more tiring to the arm, by keeping it fully extended to operate. Unless you hunch over or lean in, which is also uncomfortable for any length of time. I concede that for some the amount of time and effort may not be considered much difference by some, but it is still a key point.

When I discuss this with those who advocate touch screens on notebooks, they propose that touching the device for input is a preferred mechanism to the trackpad. My counter point is that this is because most trackpads put on Windows PCs are downright terrible. Sometimes I wonder if Microsoft pushed OEMs to do this on purpose to make touching the screen seem like a better experience, simply because the trackpad is so bad, that it makes touching the device appear to feel like a better alternative.

I’d like to quantify this sometime by having a race with a Windows user and challenge them to a similar task, like creating a few slides and graphs in Power Point. Them on their touch notebook and me on my MacBook Air. We will see who can finish the task the quickest.


So what is Microsoft’s blunder? Well, in my opinion, they made the strategic error of believing that what they did in Windows 8 would be the shortcut to help them compete with tablets from competitors. When in reality, to compete with other tablets, what they should have done was bring a version of Windows phone to the tablet form factor. Doing this would have done several things.

First, it would have significantly helped the Windows Phone ecosystem by way of apps. Quality and long tail apps are so dramatically void from the Windows Phone ecosystem that several carriers have specifically told me it is the reason for the abnormally high return rates of Windows Phones to their stores. By bringing Windows Phone to to the tablet form factor, it would have spurred more developer attention for phone apps and most likely tablet apps as well. Apple has lapped Microsoft in this area many times over.

The second thing it would have done was position Microsoft better for small screen tablets. Windows 8 is overkill in my opinion for what consumers want and do with smaller screen tablets. Windows Phone is positioned well for portrait mode use cases, which is the dominant orientation for consumers with small screen tablets.

Microsoft is at least 3 years or more behind in mobile. Windows 8 has and is doing nothing to help catch them up in mobile and realistically is only leading them down the path of being more behind. They have spent the bulk of their resources focused on areas of computing that are declining not growing. Tablets and smartphones are the growth segment and should have been the top priority. I would argue Windows Phone innovation and focus should have been a higher priority than Windows 8. I would even go so far as to make the case that Windows 8 should have been more evolutionary to Windows 7 and the revolutionary attempt should have been with Windows Phone and a specific tablet version of the Phone OS.

It would be hard to argue that an evolutionary version of Windows 7 would not have sold well running on the powerful, all day computing, thin and light hardware we are seeing enter the market this fall. You certainly could not make the case that we would have sold less Windows 7 devices in 2013 that’s for sure. In fact, I’m pretty sure I could make a compelling case that had Windows 7 or an evolutionary flavor of it, been the OS for 2013, that we would have sold more notebooks and desktops than we have and the PC market wouldn’t be off as much as it is.

To be clear, the blunder was thinking they could turn the ship by taking a PC approach instead of a post PC approach by focusing more on smartphones and tablets.

Who knows, maybe Microsoft will prove me wrong and announce some brilliant unification strategy with Windows 9 that solves the problems outlined above. I’d have an easier time believing this possibility if Microsoft had a better track record at getting things right the first time.

On a side note, notice that Apple has NOT introduced a touch based laptop. I believe Apple, who is very picky when it comes to user interfaces, knew that touching a screen on a laptop is completely unnatural and instead made the Magic Trackpad to emulate touch in a way that does not disrupt that natural motion of hands placed on a keyboard. I remain skeptical you will ever see a touchscreen based laptop from Apple.