Month: August 2011

Why the iPad is Not A Tablet

It’s not a tablet, it’s iPad 2.

That statement is a subtle but powerful one embedded deep in Apple’s iPad 2 website. I challenge you to find Apple call the iPad 2 a tablet anywhere on their website.

So I also ask this question that others have posed. Is there a tablet market?

On the surface this is probably a dumb question. Apple is selling millions of iPads a month and tablet fever is all around us. Or is it? Is there tablet fever or iPad fever?

You will notice that when Steve Jobs introduced the iPad he never once called it a tablet. And since then, you have never heard anyone at Apple call the iPad a tablet.

The competition has. Analysts and media have called the iPad a tablet. But not Apple. There is a reason for that. It goes back to Steve Jobs overall view of a tablet. As Windows tablets came out, he looked at them and said “people don’t want that.”

He felt that Windows tablets were too PC like and while more portable it just delivered the same old PC experience just in a new form factor. (Are you listening Microsoft and the Windows 8 tablet team?)

Instead, he put his team to work trying to come up with something people would actually want and actually use. He concluded it would not be a tablet in the PC world’s definition but rather, something completely new and different. It is not his fault that we (competition and the media) keep calling it a tablet. Apple will try and distance themselves from this tablet concept and terminology as much as possible.

Software Is the Real Magic
What Apple has actually created with the iPad is just a portable screen that gives users access to what is Apple’s real genius – its apps and services. They just happen to make a portable screen that is elegant, beautiful and easy to use for accessing these apps and services. What is even more interesting is that if you really look at what Apple does in hardware, it is just to create stylish screens like the iPod, iPhone and now the iPad, that front-ends their apps and services. Hardware is only as good as the software it runs.

When Apple first introduced the iPhone, a Sr. Apple exec laid it down on the table and asked me what I saw. I told him I saw a device with a blank screen. He then said that is what he wanted me to see. When off, it has very little value. But once turned on, that is where the magic is- in the software and services. His point was that Apple is a software company and it is the software that makes this “screen” sing and dance. I fully expect Apple to deliver more elegant screens that front these apps and services in the forms of TV’s, in-car navigation systems, and who knows what else that they may feel is needed to serve as a front end to their software and services.

While Apple is creating these screens to serve as front ends to their software and services, most of the competition is stuck in the old line PC way of thinking about creating a tablet that has its roots in the tablets of the past. They take the typical hardware approach and at the moment are hoping Google will create the software and services that they can tap into. Or those waiting for Windows 8 tablets are hoping that Microsoft will deliver a world of apps and services that they can hitch their wagon to.

Stop Making Tablets
But to be competitive with Apple, vendors have to realize SOON that they cannot create a tablet if they have any hope of challenging Apple. In fact, I would stay away from the word tablet altogether as this term is pure death for them. Rather, like Apple, I would give my “screen” a name of its own and start working on my own software and services play that would allow me to also build more screens that front my apps and services. (By the way, when Amazon introduces their “tablet” soon, listen carefully to what they call it. It will probably have the Kindle brand but don’t expect them to call it a tablet. It is just another screen, like the Kindle, that front ends their apps and services.) Why A Tablet (screen) is Key to Amazon’s Success.”

Of course, the opposite is happening. Competitive vendors think that this “tablet” market will follow what has happened in the PC world and the smart phone world where Windows and Android have surpassed the Mac and IOS. But something tells me that this is different. Apple has not created a tablet. They have created a lightweight portable screen that is the gateway to their software and services. The iPad and its ecosystem will stand alone. In that sense, Apple has proven there is a market for iPads, not tablets.

Now it will be up to the competition to prove that there is another market for what they want to call tablets. And at the moment, considering what HP just did with their TouchPad and the slow adoption of any other tablet out there, it leaves one to think that at the moment there is really just an iPad market, not a market for tablets.

BAPco SYSmark 2012: Dropping the Llano Shoe

No wonder AMD was upset enough over BAPco’s SYSmark 2012 benchmark to drop out of the non-profit benchmarking organization in June with much sturm und drang.

My testing of the AMD Fusion high-end “Llano” processor, the A8-3850 APU, shows an overall rating on SYSmark 2012 of 91. Except for the 3D component of the benchmark, the Intel “Sandy Bridge” Pentium 840 scores higher in individual components — and higher overall — with a score of 98, according to the official SYSmark 2012 web site.

The SYSmark 2012 reference platform scores 100. That puts the high-end Llano desktop performance at 90% of a 2010 Intel “Clarkdale” first-generation Core i3-540, a low-end mainstream processor.

Moreover, the Intel “Sandy Bridge” Core i3-2120 dual-core processor with integrated graphics costs within a dollar of the “Llano” A8-3850 but delivers a 36 point higher score – noticeably snappier performance, in my actual use experience (see chart below).

I also tested AMD’s Phenom II 1100T, a top-end AMD six-core processor with an ATI Radeon HD 4290 graphics card, against an Intel “Sandy Bridge” second generation Core i5-2500 with integrated graphics. The Core i5-2500 is the superior processor on this benchmark; the much-maligned Intel internal graphics barely loses to the ATI 4920 external graphics card in the 3D component, while delivering a 44 point overall advantage. The results are shown below in Chart 1.

Chart 1: Selected BAPco SYSmark 2012 Scores

Processor Overall Office Media Analysis 3D Web Sys Mgt
Intel i5-2500 166 144 162 191 181 168 153
Intel i3-2120 127 123 125 146 125 121 122
AMD Phenom II 1100T 122 109 116 122 183 108 110
Intel Pentium 840 98 100 102 106 87 90 107
AMD A8-3850 91 91 84 96 121 73 88
Intel Pentium G620T 79 81 81 88 70 71 86

Source: Peter S. Kastner andBusiness Applications Performance Corporation

Is SYSmark 2012 Relevant?
SYSmark 2012 is relevant because it allows evaluators to test specific PC configurations against actual, commonly used business applications.

AMD says “AMD will only endorse benchmarks based on real-world computing models and software applications, and which provide useful and relevant information. AMD believes benchmarks should be constructed to provide unbiased results and be transparent to customers making decisions based on those results.” Let’s look at what SYSmark does and how it does it.

Serious readers will study the SYSmark 2012 Overview published at the BAPco web site. This benchmark version is built on 20 years of collaborative experience by BAPco in modeling business work loads into application scenarios and corresponding benchmarks through a 26-phase process that takes years to complete. The last version was SYSmark2007 under Windows Vista. SYSmark is real-world in that it incorporates widely used applications such as Office, AutoCAD, Acrobat, Flash, Photoshop and Internet Explorer under Windows 7 in component scenarios.

SYSmark is widely used around the globe in business and public tenders to select PCs without bias towards vendor and processor manufacturer. SYSmark is the only generally accepted benchmark for general business computers since it uses actual application code in the tests, not synthetic models.

The benchmark is intensive, reflecting workload snapshots of what power users actually do, rather than light-duty office workers. There are six scenario components to SYSmark 2012, each of which counts equally in the final rating:

Office Productivity: The Office Productivity scenario models productivity usage including word processing, spreadsheet data manipulation, email creation/management and web browsing.

Media Creation: The Media Creation scenario models using digital photos and digital video to create, preview, and render a video advertisement for a fictional business.

Web Development: The Web Development scenario models the creation of a website for a fictional company.

Data/Financial Analysis: The Data/Financial Analysis scenario creates financial models to review, evaluate and forecast business expenses. In addition, the performance and viability of financial investments is analyzed using past and projected performance data.

3D Modeling: The 3D Modeling scenario focuses on creating, rendering, and previewing 3D objects and/or environments suitable for use in still imagery. The creation of 3D architectural models/landscapes and rendering of 2D images and video of models are also included.

System Management: The System Management scenario models the creation of data backup sets and the compression, and decompression of various file types. Updates to installed software are also performed.

For each of the six components, BAPco develops a workflow scenario. Only then are applications chosen to do the work. BAPco licenses the actual application source code and assembles it into application fragments together with its workflow measurement framework. The data/financial analysis component, for example, runs a large Microsoft Excel spreadsheet model.

What I don’t like is the “2012” moniker. This SYSmark version is built on business application components as of 2010. By naming it SYSmark 2012, BAPco implies the benchmark is forward looking, when it actually looks back to 2010 application versions. The labeling should be 2010. In spite of the labeling, SYSmark 2012 is unique as a cross-platform benchmark for stressing business desktops using real-world applications in job-related scenarios.

Analysis and Conclusions
The SYSmark 2012 reference-point PC is a Core i3-540 and has a 100 point score. When I used this processor with Windows 7 last year as my “daily-driver PC” for a month, I was underwhelmed by its overall feel. Subjective comment, yes, but my point is that the reference machine is no speed demon.

The new AMD “Llano” A8-3850, a quad-core processor with integrated graphics, is adequate for light-weight office duties as measured by BAPco SYSmark 2012. The top-of-the-line AMD Phenom II 1100T with a discrete graphics card is better suited for mainstream task-specific business computing than the “Llano” processors.

Intel’s low-end dual-core “Sandy Bridge” Pentium 620 and 840 bracket the “Llano” A8-3850 in processor performance, while lagging in graphics-intensive 3D benchmark components.

Intel’s entry-level Core i3-2120 with integrated graphics handily beats the top-of-the-line Phenom II 1100T with a discrete graphics card in all but graphics-intensive 3D benchmarks, making it an attractive price-performer. The high-end Core i5-2500 tops the top-of-the line Phenom II 1100T with a 44 point overall advantage, despite using integrated graphics.

SYSmark’s results do not plow new performance ground. An Internet search will quickly turn up numerous reviews that conclude, using a different set of benchmarks, that the “Llano” line is weak as a processing engine and pretty good at graphics, especially 3D consumer games. Yet consumer games are not typically not high on the business PC evaluation checklist.

Many of the SYSmark 2012 applications use graphics-processor acceleration, when available, including Adobe Photoshop, Flash, Premier Pro CS5, Autodesk 3ds Max and AutoCAD, and Microsoft Excel. SYSmark 2012 convinces me that today’s integrated graphics are plenty good enough for business PCs shy of dedicated workstations. But a strong processor is still necessary for good overall performance.

Business desktops ought to be replaced every three to four years. However, the reality is many businesses keep desktops for five or more years, and many have instituted a “replace it when it breaks” cycle. Productivity studies show that knowledge workers deserve the higher end of today’s performance curve in a new PC so as not to be completely obsolete — and less productive — before the machine is replaced.

No single benchmark should be the sole criteria for selecting a computer, and SYSmark 2012 is no exception. However, I disagree with AMD that SYSmark is no longer worthy of consideration, and by other analysts that SYSmark is dead because AMD walked away from BAPco.

The bottom line for PC evaluators is simple: if you believe that the extensive work by the BAPco consortium across two decades stands up to scientific and peer scrutiny, then the SYSmark results discussed above show AMD at a serious performance disadvantage. If you don’t think SYSmark is a relevant benchmark for business PCs, then neither AMD nor I have a viable substitute.

The next shoe to drop is AMD’s high-end “Bulldozer” processor, expected in the next 60 days.

 

Big Brother has Landed, and his name is Foursquare

It’s hard to know just how big social media is going to get – and even harder to remember that there was once a world without an internet. We’ve all just accepted this “new normal” in our day-to-day lives – along with digital music, eBooks, iPads and a long list of other tech advances that were barely even imagined a mere thirty years ago.  (Some of which I actually had the privilege to work on at their inception – like Music at Apple.)

In my recent interview with the CEO of BookBaby and CDBaby, Brian Felsen, Brian shared that 80% of people under the age of 30 have never even bought a CD.  (To hear that interview, go to http://bit.ly/BrianFelsen).

So where does this go next? It’s more than viral and mobile, in my humble opinion, Social is very quickly becoming Big Brother. Take Foursquare, the king of Geolocated Social Media platforms.  Foursquare made its debut in 2009, popularizing the idea of “checking in,” or using a cell phone application to tell friends that you are at a particular restaurant, bar or park. It’s definitely a cool idea – so cool that Facebook and Google developed their own geolocated check in apps. Everyone wondered if the web giants would squash Foursquare like a bug, but so far Foursquare is definitely more than holding its ground, with over 10 million registered users.

Dennis Crowley, the chief executive and one of the founders of Foursquare, attributed its continued momentum to its singular focus on location. “When people think about Facebook, they think about it as a place to send their friends messages or post updates, not necessarily as a place to check in,” he said. “We’re associated with one thing, location, and that really helps.”

Most recently, Foursquare teamed up with Groupon.  Groupon is actually Foursquare’s sixth and latest daily deals partner, but by no means their last.  Along with Groupon deals, app users also will be able to see deals offered by Foursquare’s five other partners: BuyWithMe, Zozi, Gilt City, Living Social and AT&T Interactive.

In June, they also created an alliance with finance giant, American Express to offer discounts to cardholders when they check in on their cell phone at certain shops and restaurants. (Although Foursquare will not be receiving any revenue from the American Express deal, it says the promotion will help legitimize the company’s approach and will help attract other, more lucrative partnerships.)

How does all of this affect the consumer?  It means real-time, by-location deals will be created through users’ apps.  A simpler explanation:  You’ll soon walk by a Gap and get a Gap deal sent to your device, simply because geolocated Foursquare knows where you are.  Yes, Big Brother is here and we have invited him into our lives, kimono wide open and location checked in.

 

Why the iPhone 5 Could be Apple’s Biggest Launch Yet

Yesterday Techcrunch added more fuel to the reports that the iPhone 5 will indeed be a dual CDMA / GSM world phone.

Making one single device that runs on all the worlds networks makes a great deal of sense. Not only does it streamline Apple’s manufacturing process allowing all their resources to go into building one device, but it also sets them up for what could be their biggest launch yet.

It would be a huge deal to launch the iPhone 5 simultaneously world wide on every major carrier. The strategy itself is simple. Make it possible for every person on the planet to buy an iPhone 5 on the carrier of their choice.

One could make a strong argument, and many have, that the reason other platforms like Android have been gaining is because the iPhone isn’t avaialable on every carrier. This could all change very soon.

And there are two markets of significant interest in this scenario- the US and China.

USA
In the US, if the iPhone is available on all our major carriers, that would mean it would also come to Sprint. If this happens it could have a lot of impact. Sprint sells a lot of Android phones. They also have one of the more aggressive pricing plans for data, voice, text and web. If the iPhone 5 launched on Sprint and it included their aggressive price plan, it would make a very competitive offering.

The timing of this launch is key also. For roughly the last three years the holiday season has been the time of year many people get new cell phones. This is because, for the last few years, new cell phones have made for timely Christmas presents. This means that many consumers are eligible for new phones as a part of their carriers upgrade plan around the fall timeframe. Make it possible for every person on the planet to buy an iPhone 5 on the carrier of their choice.

By launching the iPhone 5 on Sprint, Verizon and AT&T right before or during the holiday shopping season it would probably insure that they could sell more than 80 million iPhone’s this year.

China
Last year I read an interesting article by Shaun Rein who contributes to Forbes but is the Managing Director of the China Market Research Group. He brings a great deal of insight to the China market and in his article last year on “Why the iPad May Succed in China, where the iPhone hasn’t” he makes an interesting point.

“.. why the iPad is likely to succeed where the iPhone didn’t is that Apple didn’t wait as long to launch it. The iPhone debuted in China more than two years after it hit the U.S. market. This time Apple waited only a few months, long enough for early adopters to travel to the U.S. and Hong Kong to buy an iPad and build buzz but not enough for massive numbers of people to have done so. By the time the iPhone officially launched in China, nearly everyone who wanted one already had one. What sane company would delay selling a key product to the world’s second-largest consumer market, where retail sales continue to grow at 16% to 18% a year?”

When a company delays a product in a certain country, no matter what the reason, it sends the message to that region that you are not the companies highest priority. His point was that by not delaying the iPad launch it helped create even more demand in that country.

By making the iPhone 5 avaible on all carriers world wide at the same time, every market has an opportunity to create their own regional buzz and not be left wanting. What’s more, if in every market the iPhone 5 is available on every carrier then consumers will win because they truly have choice to switch or not to switch carriers to get the iPhone 5. This in turn will force the carriers to provide better services and better prices in order to compete.

I would love to see Apple does this when they launch the iPhone 5. It would send a powerful statement to the technology industry as well as to tall the markets they sell and want to sell products in. This would also level the playing field where in every location on any carrier where you can buy an Android, BlackBerry, and Windows phone you can also buy an iPhone. Let’s give consumers the choice and let’s see what happens.

The bottom line is if Apple launches the iPhone 5 on every major network at the same time it would almost certainly dominate every major market.

What Does the TouchPad Fire Sale Tell Us? Not Much.

Way too much is being made of the success of Hewlett-Packard’s fire sale of TouchPad tablet, essentially the liquidation of a lot of distressed inventory.For example, this The Next Web article speculates on what TouchPad sales might mean for Amazon’s still completely notional tablet.

First, let’s put the TouchPad “frenzy” in some perspective. HP, directly and through channel partners, probably moved somewhere between 300,000 and 500,000 units. By past TouchPad standards that was fabulous. But Apple is likely selling close to a million iPads a week, at full price, every week.

Second, it’s pretty easy to get people to buy a product with a $300 bill of materials (iSuppli’s estimate for the TouchPad) for $99, even a dying product. Folks just can’t resist a deep-discount bargain. The problem is there’s no business model that will sustain it for much more than a weekend. Only wireless phone operators, with lucrative two-year contracts, can afford to offer that much subsidy. Amazon might be able to subsidize a tablet, but by nowhere near that much unless it was very, very selective about who got one.

There are lots of retail liquidators around who know how to move distressed goods of much more dubious value than a TouchPad. All you need is a channel and a low enough price. We shouldn’t read a lot of meaning into this.

What If Apple Puts A-Series Processors in MacBooks?

Apple Insider posted a bit of news around the rumor that someday Apple may use its own A-Series chips in products like the MacBook Air and MacBook Pro. When Apple made the move to design their own ARM processor by acquiring P.A Semi and Intrinsity it became clear that using their own processors in all their products made perfect sense.

Apple wants to control all the critical elements of the value chain. For smart phones and tablets it’s clear that Apple wants to control the semiconductor in those products so it can highly optimize iOS for a proprietary SOC. The interesting question is if they want to do the same for OSX in the future.

Apple has no control over the architecture decisions that Intel makes, nor do they control the timeline of those decisions. One could see how future MacBook products could benefit if Apple specifically designed A-Series chips to run OSX. The optimizations they could make for efficiently running OSX could make the OS that much better and that much harder to compete with.

In this scenario Apple unlike Intel doesn’t need to try and make a processor that can run any and all software and operating systems. In fact they don’t even really need to follow Moore’s law in their designs like Intel and AMD. All Apple needs to do is design the most effective piece of silicon to run OSX.

You may think they could never do something like this because of all the software for OSX now running on Intel silicon. That is true but if you remember they made the move from the G5 to Intel and it was fairly smooth. Their developer toolkits and their virtualization software Rosetta could be key pieces in making a smooth transition to their own silicon.

The real question in all of this however is where would that leave Intel if Apple ever stopped using them as a supplier?

Is There Room for A New Mobile OS?

A couple of years ago, when various handset makers were looking for a mobile OS to back for their devices, they were given a proposition from Google that was hard to refuse. Google would provide an open source version of Android and with it allow the vendors to customize and add their own features so that they could differentiate their products from other Android licensees.

At first this worked well and Google got dozens of device makers to hop on the Android bandwagon. And for the most part, Android took off, especially in smart phones. But over time, many Android licensees found Google difficult to work with because of their design approach to Android, which was always a moving target. And while Google called it an open mobile OS, as time went on, it became much more controlled by Google and licensees have had less room to do things to help differentiate their devices. Even worse, they have found it more challenging to control their own destiny when it comes to many key services tied around their own offerings.

Now that Google has bought Motorola, many Android licensees believe Google will be exercise tighter control over Android and with Motorola develop a more vertically integrated approach to the market. This is similar to what Apple does through owning the hardware, software and services; integrating them tightly together to provide customers a seamless user experience. While Google has said that they will continue to develop Android as an open source product and work with licensees equally, none of the licensees I have talked to actually believe this. At the very least, they expect Motorola to get early code. Many believe tighter integration between Android and Motorola hardware is inevitable and doubt they will get a similar deal in any way. The various lawsuits against Android as well as the potential of having to pay extra royalties to Oracle and Microsoft should they win their legal cases against Android does not make them happy either.

Not long after the news that Google would buy Motorola, and that HP was going to ditch webOS, Microsoft started courting Android and webOS developers even harder. In fact Microsoft is offering free Windows phones to webOS developers and more hand holding if they jump ship and start developing for Windows Mobile 7and 8.

But what I am hearing from vendors and carriers is that the original need for a completely open mobile OS is what still they really want. Supporting Microsoft is equal to just supporting Android. Indeed, Microsoft would still control the OS and dictate the terms of use and development and give licensees very little room to innovate at either the hardware or software level.

It is also not clear where webOS is going. We don’t know who its owner will be yet. Does it stay with HP or go with the spinoff? We also don’t know if it will ever be an open OS that licensees of the future can freely customize for their own markets and customers. One thing that needs to be kept in mind is that in developed markets, complete ecosystems of hardware, software and services define the user experience. But that may not be the case in emerging markets.

In emerging markets, the need to have a truly open source mobile OS is very important since they need to be able to customize their offerings around a specific language and localized services. This is especially true for emerging market carriers. The fact that mature markets demand hundreds of thousands of mobile apps does not necessarily translate to the actual needs of smart phone users in emerging markets. There they need the dozens or hundreds of apps that are customized for their regions, customs and traditions.

Everyone knows Apple’s approach to their OS is proprietary. Even though Microsoft’s Windows Mobile 7 OS is freely licensable, it is fully controlled by Microsoft. And now that Google has bought Motorola, Android is looking more and more like it could become more tightly controlled as part of a vertically integrated offering. Unless HP quickly states that webOS will not only be licensable but also truly open (which I don’t think they will ever do), then I believe that there is serious room for a completely new mobile OS to emerge and especially give handset vendors targeting emerging markets an OS of their own to work with.

We are already hearing that even the big handset vendors who are backing Android are seriously looking for an alternative OS to back to hedge their bets and to help them go after emerging markets where giant app stores are less important for success. This leads me to believe that there is not only room for another mobile OS but a need for one that is truly open that will never be encumbered by big company agendas that drive the designs of their mobile OS.

My Advice to HP: Give All the TouchPad’s Away

Shock and Bewilderment swept the industry as well as the tech journalism and blogger community yesterday. HP announced that they are not just looking to spin off their PC business but that they are also discontinuing all webOS hardware which included the HP TouchPad.

It was fascinating to watch the twitter stream of people commenting when the news hit about the HP spinnoff. Shortly after the initial shock of the news the big question got raised: What does this mean for webOS?

During the aftenoon we came to find out that although HP is discontinuing all webOS hardware operations, they are still commited to the software. If this is true, then I contend that they should give away all the TouchPads left at retail for free. They should at least HEAVILY discount them. Maybe let Best Buy do a special promotion where if you spend more than $200 dollars you get a TouchPad for free. Perhaps run a promo where if you buy HP products like specific printers, notebooks or desktop you get a TouchPad for free.

The reason is because if HP is commited to still supporting webOS it will only live on now by way of license. However no one will want to license it if there is no software ecosystem or apps surrounding webOS. There will be no software ecosystem or apps developed if there are no devices on the market for developers to write apps for.

This is why HP should just give them all away – all 400,000 sitting in a store house. They are already writing off this hardware so why not get it into the market any way possible.

Consumers are simply not going to buy them now because with this news will also come a lack of consumer trust in HP and the TouchPad. However people will accept one that is free just to try it and if they don’t like it they can give it to a friend or loved one. This move would also create a positive image for HP in light of the hit they are most likely taking.

The bottom line is doing this would create a market for webOS software developers to create apps for. My sense tells me consumers would actually be quite impressed with the TouchPad once they got it in their home and maybe would even spread the word about how great webOS is to their friends.

The bottom line is HP needs to move that hardware. Consumers won’t buy them or invest in webOS because it is risky and unknown. Give them all away. There is no downside to the consumer and I would argue only upside for all parties involved.

So to HP’s management-Give them away and make it easier for whoever buys it or licneses it to have a built in installed base of users to build on. I know this sounds bold and risky but that is exactly what you need right now.

How Will HP Hold webOS Talent

HP logoJoshua Topolsky at This IsMyNext has details on an all-hands meeting at which Stephen DeWitt, head of HP’s webOS business unit, declared that “we are not walking away from webOS” and promised an outline for the future within a couple of weeks.

In an earlier post, I outlined some of the difficulties that any webOS licensing strategy would face. By DeWitt inadvertently points out one I overlooked: How  on earth is HP going to hang on to any good talent in a market where Apple, Google, Microsoft, and a flock of handset makers are all competing fiercely? The webOS unit is a defunct operation within a division–HP’s Personal Systems Group–whose own future is highly uncertain. A first-rate engineer can sit around waiting to see how things turn out–or can have half a dozen job offers nearly immediately.

Richard Kerris, director of webOS developer relations, tried to put the best face on things in a tweet, but the effect and more sad than encouraging:

webOS: Forget About Licensing, the Game’s Over

Hewlett-Packard’s announcement today that it was discounting all webOS products, including the TouchPad tablet and Pre phones, set off a flurry of speculation that the elegant ex-Palm mobile operating system might find a third life through licensing to hardware manufacturers.

Sad TouchPad image

But the fact is that webOS is now stone, cold dead with no hope of revival. The issue has nothing to do with the quality of the software and everything to do with the state of the smartphone and tablet markets.

Just a couple of weeks ago, my colleague Ben Bajarin suggested that webOS could still mount a real challenge to Android if HP licensed it. But that assumed that HP would be standing behind the OS and continuing to court developers.

The biggest problem webOS faced from its Palm days through its 16 months of HP ownership was lack of support from third-party development. Even if someone, and I can’t quite imagine who, were announce tomorrow that they were taking over webOS,  it would take months to close the deal and get products back into production. The few remaining webOS developers aren’t going to wait. And the chances of restarting a development effort in the face of the Apple and Google juggernauts are nil.

I don’t know what went wrong with HP’s webOS effort. (Disclosure: I did a bit of consulting on mobile strategy with the company around the time of the Palm acquisition.) But I suspect the failure has a lot to do with HP’s never-ending boardroom dramas.

HP bought Palm in April, 2010. In early August, Mark Hurd was forced out as CEO of the company because of an “inappropriate relationship” with a contractor.  In September, HP hired formed SAP CEO Leo Apotheker to run the company. And in February, HP announced the TouchPad and its plans for webOS products at a splashy event in San Francisco.

At the time, HP Personal Systems Group executives, including Executive Vice president Todd Bradley, made it clear that the real goal of the Palm acquisition was to give HP control over its own destiny. Owning on operating system that would provide HP with Apple-like control over both hardware and software. They even announced a version of webOS for PCs, though they never provided more than the vaguest of details. But they said, they knew it would be a long fight, years not months, and they were ready for it.

At first Apotheker, whose background is all in enterprise software, seemed to be fully behind the plan, but I suspect his heart was never really in it–or any other parts of the Personal Systems Group that HP is now looking to sell or spin out. By the time the TouchPad actually launched the TouchPad in July, the company seemed to have lost most of its enthusiasm for the product. It had failed to do the one thing that might have given it a shot at success, line up a rich array of apps, perhaps because the company wouldn’t provide the funding needed to buy developer support. Given the lack of conviction, the fact that it lasted less than two months on the market is shocking but not surprising.

I don’t know that HP could really have challenged Apple–someone recently called the company “the place good products go to die.” But it was an exciting idea and for HP, webOS products offered it a chance to break out of the no-margin commodity PC game. But sadly, HP’s senior management never gave the idea a chance.

 

 

 

5 Reasons Why HP Would Spin Out the PC business

There are various reports out today that HP will announce at earnings that they will spin out their PSG unit or their PC business. If they do this it is for a couple of major strategic reasons.

1-Leo Apotheker, HP’s CEO, is a software guy.
He understands software and services and knows that this is the most profitable tech business on the planet. Software and services have margins of 50% to 80% on average. This is the direction he wants and needs to take the company and put all of its energy on this focus. IBM came to this conclusion in 2005 and sold off their PC business to Lenovo for the same reason. And now, if HP is to really compete against IBM, Dell, Oracle etc, in this business it needs to put all of its efforts in this space.

2-They needed to get PSG off of their books.
Although PSG is still profitable, its profits are very small compared to HP’s other businesses. If they kept PSG on the books, even if their other businesses were doing well, it would continue to impact their total earnings numbers and threaten their overall earnings growth. This would be an important strategic move to keep their operating margins up and make sure they are more profitable in the future.

3-PSG would now have its own P&L.
This would allow them freedom to create other types of PC products as well as be more aggressive with the WebOS licensing. And they would still be the key supplier to HP for PC’s in any HP IT bids. But they would be free to sell their PC’s to IBM and others who need PC’s for their own IT projects as well. The PC business is a low margin cutthroat business and if PSG is to stay viable, it needed to be free to sell even to HP competitors.

4-The PC market is going through a great transition now.
PC’s are still viable for use as productivity tools. And we think that we still will sell between 350 and 400 million PC’s a year for a while. But they are commodity products now. They are almost all the same. HP’s PSG may need a lot of partners and different products that would not be in HP’s overall corporate thinking and this gives them more flexibility if they are unshackled from PC’s

5-Tablets will continue to dominate as consumer consumption devices.
While PC’s can still be used for consumption, they are not ideal for a lot of media consumption, especially since people are increasingly mobile these days. At the moment, there is an iPad market and we are not sure when a tablet market that will pan out. HP is already struggling with their TouchPad and they may need to focus on their webOS software as a key market product and as an alternative to iOS and Android, especially in light of Google buying Motorola as the Android vendors may start looking for an alternative. On their own, they could be much more aggressive with webOS, even if it meant not being in the hardware business.

It will be interesting to see what the details of the spin-out will be if it is announced later today. But there are a lot of good reasons HP’s board might have decided to let it go off on its on.

Once the formal news is out and we have reflected on the details we will publish a more formal analysis including the details of the announcement.

Why non- iPad Tablets Aren’t Selling Well is Fundamental

So why aren’t non-iPad tablets selling as well as the iPad? I read a very interesting article Wednesday from James Kendrick at ZDNet. His contention is that one of the biggest issues is competing with Apple’s “consistent marketing experience”. I agree that’s a big issue, but I think there’s an even more basic core issue here and it starts with consumer risk, the considered purchase process, the influencers and the product experience.

Tablets are a Risky and “Considered” Consumer Purchase

Consumers, regardless of demographics and psychographics, share some common behaviors. When they are posed with a risky, considered purchase, they are looking for reasons to reject products and not look past their warts. And tablets are a risky, considered purchase. For a time, tablets started at $499, well above the starting prices of a notebook, desktop, or smartphone. Tablets don’t run programs or content like the PC that consumers are familiar with. And they are very fragile when compared to other devices.

Consumers Research to Mitigate Risk

As I said above, when posed with an expensive, risky purchase, it is “considered”, meaning they will research it or find a brand which “buffers” the risk. By researching it, I don’t mean doing a master’s thesis. I mean doing a few web searches, going to a recommended tech site, asking a few “geek” friends and tossing a few questions out on Twitter or Facebook. What consumers heard back were some positive and some negative things about non-iPads. Even more importantly though, is that very few if any negatives ever came back from their iPad research. Worst thing you might hear back about the iPad is that it doesn’t run Flash, it doesn’t have SD memory upgrade, and it’s expensive.

So was it some conspiracy that the negative things were being said or were they just the facts of what actually shipped at launch? The fact is, the clear majority of non-iPad tablets at their launch suffered from many issues as it related to the iPad, which established the bar of a successful tablet.

Tablets Lacked Convenient, Paid Content at Launch

Many media tablets launched without a whole lot of media:

  • Lack of video services like Netflix, Hulu, movie rental, or movie purchase capabilities
  • Lack of music services like Pandora, Spotify, or music purchase capabilities
  • Lack of book services like Kindle or BN Reader

This issue is being slowly solved, but the damage had been done at launch.

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Tablets Lacked Stability and Responsiveness at Launch

Many tablets launched with multiple application crashes, hangs and were intermittently unresponsive. When apps would become unresponsive, the users would get a message asking them what they want to do, similar to the way Windows alerts the user. The iPad 2 launch experience was responsive and stable. Yes, the iPad 2 does still experience some app crashes, but it’s less frequent and when it does, it just closes the app.

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This issue has been solved for all non-iPad tablets with OS updates, but again, the damage was done at launch.

Tablets Lacked Premier Applications at Launch

I don’t believe consumers are fanatical about the 100’s of thousands of apps that should be on a tablet. I do believe that they want to have the most popular applications that they care about, though. Most non-iPad tablets launched without premier apps, like premier news, sports, and social media apps. One tablet even shipped without a built-in email and calendar client and research shows that email is the #1 tablet application. Android tablets shipped at launch without a Twitter app.

Only Android 3.2 tablets have addressed this issue so far, but again, the perceptual damage was done.

Tablets Shipped at Launch with Hardware Challenges

Not only were there software issues at launch, but hardware as well. Tablets shipped with inoperable SD card slots and USB ports that didn’t work properly. Even competing with the physical iPad 2 design was a challenge. Some tablets were nearly twice as thick as the iPad, used plastic design versus aluminum, and one tablet even shipped with a case that blocked major ports like power, USB and HDMI.

Some of these issues have been addressed, but the damage was done.

Should Everyone Else Just Quit?

With all of these issues at launch and challenging sales so far, should everyone except Apple just quit and concede to Apple? Absolutely not! This is the first inning in a nine inning game, and the game hasn’t been lost. In short order, every tablet will be thin and light enough and power efficient enough until it’s inconsequential. Most apps will move to web apps virtually eliminating the app barrier, and everyone will have the right paid content. Apple obviously won’t stand still and I agree with Ben Bajarin when he says, “success will only come to those who want to compete with the iPad by thinking fresh and taking bold and innovative risks.” I have had the honor to work for companies who slayed goliath and I have been slayed myself, so I have seen both sides. It takes courage and conviction and I believe the tech industry can and will do that.

Pat Moorhead is Corporate Vice President and Corporate Marketing Fellow and a Member of the Office of Strategy at AMD. His postings are his own opinions and may not represent AMD’s positions, strategies or opinions. Links to third party sites, and references to third party trademarks, are provided for convenience and illustrative purposes only. Unless explicitly stated, AMD is not responsible for the contents of such links, and no third party endorsement of AMD or any of its products is implied.

See Pat’s bio here or past blogs here.

Follow @PatrickMoorhead on Twitter and on Google+.

Should Tablet Makers Concede the Market to the iPad?

Recent reports, news and analysis have come out that underscore an industry cliche, there is not a tablet market only an iPad market.

From news on the rather weak sales of Android tablets from vendors the last few quarters to the recent news that HP TouchPad sales are dismal, it is clear that the masses have spoken loud and clear – they want iPads.

Those who make tablets entered this market for a variety of reasons. One however I heard often was that they were afraid Apple would “iPod them” in the tablet market. Years ago there was a similar analogy that went “there isn’t an MP3 market just an iPod market.

The logic was if they could get into the market early enough they could hopefully not get “iPoded.”

However this is exactly what we are observing happen today. I believe this will be the case for the next few years. So the question is for the time being should the vendors concede this market and commit those resources to other areas where they have a chance to compete, like Smart Phones for example. Or perhaps they themselves can focus more on RND and create new product categories and innovations all together.

Jim Dalrymple at the Loop makes a great point:

“Apple has spent 10 years working on the iPhone, iPad and the integration with iTunes for app, music and video downloads. The competition would have us believe that in a few short years they too have perfected all of this.”

The bottom line is at this point in time the barrier to entry to the tablet market is actually quite high. There are market forces at work that explain why other tablet makers are having a hard time competing and succeeding.

Harvard Business Review in a foundational strategy article called “The Five Competitive Forces That Shape Strategy,” highlight seven essential points on barrier to entry. I’d like to focus on three that relate heavily to why the barrier to the tablet market is quite high.

Incumbency Advantages

“No matter what their size, incumbents may have cost or quality advantages not available to potential rivals. These advantages can stem from such sources as proprietary technology, preferential access to the best raw material sources, preemption of the most favorable geographic locations, established brand identities, or cumulative experience that has allowed incumbents to learn how to produce more efficiently.” – HBR Five Forces

In this point the HBR article points out how the incumbent has advantages not available to new entrants. Things like brand, forcefully constraining supply chain, holistic experience, preferential access to the best raw materials (at favorable prices), efficient manufacturing and scale, and more are all in Apple’s favor.

Unequal Access to Distribution Channels

“The new entrant must, of course, secure distribution of its product or service.” – HBR Five Forces

Retail is and will continue to be one of Apple’s strongest competitive advantages. I’ve wrote extensively about this “Apple Retail is Key to Their Competitive Advantage.”

By controlling their own retail store, which is in extremly convenient geographic locations all over the world, competitors simply have unequal access to distribution channels.

Also more simply put, in a big box retailer you see vendors competing with each other for retailer and consumer attention.

Walk in to an Apple retail store and you will find zero Apple competitors.

That is what I call unequal access to distribution channels.

Demand-side benefits of scale

“These benefits, also known as network effects, arise in industries where a buyer’s willingness to pay for a company’s product increases with the number of other buyers who also patronize the company. Buyers may trust larger companies more for a crucial product: Recall the old adage that no one ever got fired for buying from IBM (when it was the dominant computer maker). Buyers may also value being in a “network” with a larger number of fellow customers. Demand-side benefits of scale discourage entry by limiting the willingness of customers to buy from a newcomer and by reducing the price the newcomer can command until it builds up a large base of customers.” – HBR Five Forces

This is a big one. Look around and you see tablet makers offering extremely aggressive price promotions. It seems like the prices of competing tablets drop every month. Yet Apple has not lowered the price of their latest generation iPad one single time. What’s more competitors make razor thin margins less than 10%. Let’s just say Apple’s margins on the iPad are significantly more.

In short the cost cutting strategy to undercut the incumbent and gain market share is simply not working.

If competitors are making little to no money, struggling to get distribution, and overall struggling to compete in general how long can they stay in this market?

Conclusion
The reality is the lure of the bright shiny new tablet market is too attractive for vendors to concede to Apple. That however does not change the fact that competing will be monumentally difficult. Even if they did concede I would recommend it only be until the market matured. At which point new entrants have a chance to succeed as the market fragments and consumers begin to shop based on preference. The evolution of consumer markets show us that a standard technology brings a market to maturity and then that market fragments allowing for a more vast variety of consumer choice. The tablet market will mature at some point and at that point consumers may desire a more wide variety of choices.

The brilliance however of Apple in this regard is worth noting. Apple has strategically lured those who compete with them in categores like PC’s and Smart Phones into competing in a category they have no chance in for the foreseeable future.

The result is that Apple competitors are allocating invaluable resources away from other product segments that could be significantly more profitable and competitive for them.

I believe that success will only come to those who want to compete with the iPad by thinking fresh and taking bold and innovative risks.

An Intimate Discussion with Brenden Mulligan, CEO of OneSheet, the One Stop Solution for Artists

A few weeks ago, I was very fortunate to interview Brenden Mulligan, the CEO of OneSheet. For those of you who don’t know, OneSheet is a completely free website which allows musicians to connect their existing social networks and services, creating a basic and graphically exciting site that includes music, videos, photos, concert dates, social streams, mailing list signups and online stores.  Although it literally JUST moved out of beta, Onesheet already has more than 10,000 recording artists signed up, including major label artists like Paramore , Mat Kearny and Owl City.

OneSheet has the added feature of working with many of the most-used musician’s online services, including Tunes, Beatport, Topspin, Bandcamp, YouTube, Tumblr, Songkick, FanBridge and SoundCloud.  It’s also compatible with ArtistData, a popular syndication tool for musicians to post information across the web, which was also started by founder Brenden Mulligan.

Brenden Mulligan:  For a long time now, artists have been asked to create profiles on all of these different services, and one problem I felt was there was that there wasn’t necessarily an easy way to weave these together.  What I wanted to do was make it incredibly easy for an artist to create a maintenance free web presence, something that would take them only a few minutes to do and be totally affordable.

OneSheet isn’t only a one-stop-shop solution for artists, it’s also been very collaborative. Founder Brenden Mulligan has made many adjustments based on the feedback of artists.  For instance, users can remove the Onesheet header, customize the navigation bar and rename concerts to tour, live, appearances, events or shows, etc. Most importantly, Onesheets can be assigned a custom domain name, which is a great asset in today’s world of uber branding.

Brenden Mulligan plans to add a premium paid service will add additional features and customization. “Mobile optimization is another feature we may charge for. What kind of artists use Onesheet and how they use it, will drive what we do next.”

To hear my entire interview with entrepreneur and CEO, Brenden Mulligan, go to http://bit.ly/BrendenMulligan

 

Why the Open OS Model Failed in Smartphones

Fifteen years ago, when Microsoft ruled the world and Apple was near death, the tech world was convinced that the conceptual batter between Windows and Mac–open operating systems available to all comers vs. closed systems–had been decided firmly in favor of open. But what applied to PCs in the 1990s does not appear to work at all for smartphones in the 2010s, as Google’s planned purchase of Motorola Mobility marks the beginning of the end for the open OS approach.

BusinessWeek cover

A major reason for this is that phones–and tablets–are very different from PCs even though they perform many of the same functions. A phone is a much more tightly integrated device in which it is very difficult to tell where the hardware ends and the software begins. Getting the user experience just right is both harder and more critical, because quirks that are a minor annoyance on a PC–or which can be remedied through an accessory such as a better mouse or keyboard–become killer flaws.

It’s easy to forget today that the first real winner in the smartphone market was Research In Motion’s BlackBerry, a closed system. RIM’s accomplishment was to provide a tightly controlled, secure mobile email device (the earliest models offered neither voice not internet service) that provided seamless access to corporate mail servers.

RIM could make this work because it controlled the hardware, the software, and the BlackBerry Enterprise Server middleware. Its rivals in those early days were the Palm Treo and Microsoft Windows Mobile. Palm was a bizarre beast that never really worked. Its owner, 3Com, first licensed the Palm OS to other manufacturers, then spun its software unit off into a separate company, PalmSource. The Treo was developed by one of those licensees, Handspring, which had been started by Palm’s founders. Palm eventually bought Handspring and reacquired some rights to the Palm OS, but it never had full control of the software. That’s a major reason why Palm and PalmOS gradually became non-competitive.

Microsoft’s mistakes were different, but illustrative of the traps inherent in an open phone operating system. In the best Windows tradition, Microsoft gave its handset manufacturers a lot of design freedom. It ended up with phones with a variety of screen sizes and configurations, with and without touchscreens, with and without physical keyboards. The hodgepodge of hardware made it impossible for Microsoft to provide a consistent–or particularly good–user experience on all Windows Mobile devices. And third-party software developers had a very hard time writing applctions that worked well, or sometimes at all, on all devices. In a final irony, until almost the very end, BlackBerry did a much better job of providing mobile access to Microsoft Exchange servers than Windows Mobile did.

Apple, of course, changed the game completely with the 2007 introduction of the iPhone, and again in 2010 with the iPad. Apple controls every aspect of the ecosystem, Apple software running on Apple hardware that can load only Apple-approved applications. This has horrified fans of open systems. such a Cory Doctorow and Jonathan Zittrain, but the mass market’s love for these devices has allowed Apple to suck up the lion’s share of profits in the handset industry and to define the tablet market to the point where it has no effective competition.

Except for Android, the open model has now all but collapsed. Nokia never achieved widespread adoption of Symbian by other manufacturers. Linux-based LiMo went nowhere, as did Nokia’s Maemo, Intel’s Moblin, and their love child, MeeMo.

The status of Windows Phone is uncertain. After the Windows Mobile nightmare, Microsoft set very tight design standards for its attempt to rejuvenate the platform. OEMs have a limited choice of display size and a physical keyboard is optional, but other specs must comply with the reference design. And Microsoft’s tight alliance with Nokia could result in, effectively, a line of “official” Nokia-built Windows Phone products. It’s nominally still a market where Microsoft offers its OS to any willing license, buy Redmond really controls the game.

Android’s openness has been a blessing and a curse. The free-to-all-comers OS has allowed the platform to gain a great deal of market share very quickly. It has also proved extremely frustrating to consumers, with a proliferation of designs and software versions all with different capabilities and no consistency in their ability to run third-party apps. With an iPhone, you know you will always be able to run the most recent version of the iOS software and any product in the App Store (with minor exceptions for some older models that lack some hardware features of more recent ones.) With Android, you just never know.

I suspect this will change in significant ways as a result of the Motorola Mobility acquisition. Google is never going to become Apple, but I suspect that the Android market is going to look a lot more like Windows Phone does today, with Motorola playing an even more central role than Nokia will for Microsoft. This sort of hybrid of open software with an official hardware maker is novel and largely untested; Palm and Nokia both nibbled at it, but neither was a fair test.

However it turns out, however, it looks like any attempt to build smartphones on the PC model is over.