Month: September 2011

Anti-Google Coalition’s Strange View of Business

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

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

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

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

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

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

2 Reasons HP Should Not Spin Off The PC Business

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

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

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

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

Hardware Only Business is Dead

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

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

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

We Would Lose a Key US Based OEM

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

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

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

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

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

Metro Could Drive Voice and Air Gesture UI

Last week, I attended Microsoft’s BUILD conference in Anaheim, where, among other things, Windows 8 details were rolled out to the Microsoft ecosystem. One of the most talked-about items was the Metro User Interface (UI), the end user face for the future of Windows. The last few days, I have been thinking about the implications of Metro on user interfaces beyond the obvious physical touch and gestures. I believe Metro UI has as much to do with voice control and air gestures as it does with physical touch.

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Voice Control

Voice command and control has been a part of Windows for many generations. So why do I think Metro has anything to do with enabling widespread voice use in the future, and why do I think people would actually use this version? It’s actually quite simple. First, only a few voice command and control implementations and usage scenarios have been successful, and they all adopt a similar methodology and all come from the same company. Microsoft Auto voice solutions have found their way into Ford and Lincoln automobiles, branded SYNC, and drivers actually are using it. Fiat uses MS Auto technology as well. Microsoft Kinect implements a very accurate implementation for the living room using some amazing audio beamforming algorithms and a hardware four microphone array.

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None of these implementations would be successful without establishing an in-context and limited dictionary. Let’s use Kinect as an example. Kinect allows you to “say what you see” on the TV screen, limiting the dictionary of words required to recognize. That is key. Pattern matching is a lot easier when you are matching 100s of objects versus 100K. Windows 8 Metro UI limits what users see on the screen, compared with previous versions of Windows, making that voice pattern matching all the easier. One final, interesting clue comes with the developer tablets distributed at BUILD. The tablets had dual microphones, which greatly assists with audio beam forming.

Air Gestures

Air gestures are essentially what Kinect users do with their hands and arms instead of using the XBOX controller. When players want to click on a “tile” in the XBOX environment, they place your hand in the air, hover over the tile for a few seconds, and it selects it. Kinect uses a camera array and an IR sensor to detect what your “limbs” are doing and associates it with a tile location on the screen. Note that no more than 8 tiles are shown on the screen at one time, increasing user accuracy.

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Hypothetically, air gestures on Metro could take a few forms, and they could be guided by form factor. In “stand-up” environments with large displays, they would take a similar approach as Kinect does. In the future, displays will be everywhere in the house and air gestures would be used when touching the display just isn’t convenient or desired. I would like this functionality today in my kitchen as I am cooking. I have food all over my hands and I want to turn the cookbook page or even start up Pandora. I can’t touch the display, so I’d much rather do a very accurate air gesture.

In desk environments, I’d like to ditch the trackpad and mouse and just use my physical hand as a gesture methodology. It’s a virtual trackpad or gesture mouse. I use all the standard Metro gestures on a flat surface, a camera tracks exactly what my hand is doing and translates that into a physical touch gesture.

Conclusion

Microsoft introduced Metro as the next generation user interface primarily for physical touch gestures and secondarily for keyboard and mouse. Metro changes the interface from a navigation-centric environment with hundreds of elements on the screen to content-first with a very clean interface. Large tiles replace multitudes of icons and applets and the amount of words, or dictionary is drastically reduced. Sure this is great for physical touch, but also significantly improves the capability to enhance voice control and even air gestures. Microsoft is a leader in voice and air gesture with MS Auto and Kinect, and certainly could enable this in Windows 8 for the right user environments.

See Pat’s bio here or past blogs here.

Follow @PatrickMoorhead on Twitter and on Google+.

HP’s Never Ending Drama: Blame the Board

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

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

HP stock price chart

HP common stock price (from MarketWatch)

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

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

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

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

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

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

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

 

An Apology

I messed up. I owe you an explanation.

Well, not really. I was on a delightful trip to Colonial Williamsburg with my 92-year-old father and hero, Ken Lewis, and took a couple of weeks off from blogging and tweeting. I apologize for not staying in touch.

You see, apologies seem to be trending. One of the emails in my neglected inbox was from Reed Hastings, the CEO of Netflix, which angered customers recently with a blockbuster price increase and a confusing bifurcation of its DVD and streaming movie service.

Hastings began the email with an apology: “I messed up. I owe you an explanation.” He continued:

It is clear from the feedback over the past two months that many members felt we lacked respect and humility in the way we announced the separation of DVD and streaming and the price changes. That was certainly not our intent, and I offer my sincere apology. Let me explain what we are doing.

Did this appease angry customers or impress Wall Street investors? No. A million customers quit the service, and Netflix’s stock price is less than half what it was earlier this year. “Netflix seems to be making a snuff film starring itself,” a Dow Jones Newswire columnist just tweeted.

The Mob Smells Blood

Then, the other day, the New York Times columnist David Brooks apologized for “being a sap.” Specifically, he apologized to his conservative readers for his previous admiration of President Obama’s centrist, willing-to-compromise, pragmatic approach toward Congress. Obama’s sin: Proposing a $4.4 trillion deficit reduction plan that did not completely cave in to the Republicans. Brooks wrote:

It has gone back… to politics as usual… I was hoping the president would give a cynical nation something unconventional, but, as you know, I’m a sap.

Did this appease angry conservatives bitter about Brooks’s earlier tolerance for Obama? No. The flogosphere erupted in a fury of anger, from both left and right.

In an email to The Atlantic, Brooks mused on the value of apologies:

One thing I’ve noticed is that columns in which you admit error generate more hostility than any other kind. I did a series on what I should have known about the Iraq war and the response from the left was more vicious than at any other time, and I was making a few concessions to them.

Either they smell weakness and exploit it, or they feel more self-righteous than ever. In any case, the lesson is that from a public relations perspective, politicians are probably right in never admitting error in public.

Does this hold true as well for business executives? Should you apologize to customers or employees or investors for upscrewing something big? Is the best policy never to apologize at all?

The obvious advice is to avoid upscrewing in the first place. But upscrews happen. The key is to apologize strategically.

Do you hear HP’s Board of Directors apologizing for allowing a once revered Silicon Valley company to spiral into chaos and irrelevance? Or for even considering Meg Whitman as the next CEO? No.

[I started to list companies that ought to be apologizing for something, but that would consume far too much space. I apologize.]

Remember in April when Sony’s sloppy security allowed hackers to steal credit card information from 10 million Sony PlayStation Network customers? Sony had to shut down PSN for 10 days, knocking 77 million customers offline.

Kaz Hirai, Sony’s No. 2 executive, held a press event to apologize. These screengrabs say it all:

 

And remember when Apple cut the price of the new iPhone by $200 just two months after introducing it? Steve Jobs, not otherwise known for contrition, issued a public letter of apology, explaining why customers were ungrateful wretches but offering them $100 credit toward buying more Apple products.

Which reminds me of the delightful Joy of Tech cartoon from 2007:

Anyway, I apologize that this post has gone on so long without a conclusion. I promise to do better next time.

P.S. Hey, Reed, how about an apology for naming it “Qwikster”?

Windows 8 on a Laptop: A First Look

For the past few days, I have been playing with the developer preview of Windows 8 on a conventional–no touch screen–laptop. My initial reaction is that no matter how good the new Metro user interface may be on tablets, it is nothing but a pain on a keyboard-and-mouse PC.

Some caveats are in order. These are very early days for Windows 8 and we are dealing with pre-beta software. The Metro applications included in the release are not very polished or very useful. And by the time Win 8 ships, probably about a year from now, PCs may have changed to take better advantage of the new interface (a MacBook-style touchpad, which effectively simulates a touch screen with gestures, would be a huge improvement over a typical Windows touchpad.) But still, the experience has been sufficiently disconcerting to make me question Microsoft’s strategy of trying to combine tablet and conventional PC operating systems into one package.

Where are my programs? It’s easy enough to move from the tiled, Windows Phone-like Metro UI to a standard Windows desktop. Just move the cursor all the way to the right side of the screen and click the desktop image that appears. The desktop looks sort of normal–until you click the Start button. Instead of seeing a program menu, you are dumped back into the Metro home screen. There is no obvious way to launch a program that doesn;t either have a Metro tile or an icon on the standard Windows desktop.

It would appear that the favored way to launch an app is through the universal search feature. Start typing on the metro home screen and a search box appears. If the search is set to Apps, a list of matching programs appears in the left panel as you type. Click on the one you want and the program will launch. It works, but it is awkward and weird. It feels almost like a throwback to the command line. (Yes, you can also launch programs this way in Windows 7 by typing a name in the Start menu’s search box, but I’ve only used it for obscure system utilities that don’t appear in the program list.)

There are downloadable utilities that let you toggle the Windows 7-style Start menu on and off and a Registry fix that will turn Metro off altogether, but neither is a very satisfactory solution. Microsoft, of course, has plenty of time to fix things, but for now, the conventional desktop version of Windows 8 feels distinctly like a second-class citizen.

Meanwhile, the Metro interface and its associated apps are awkward and uncomfortable on a PC. When I work on a desktop or laptop, as opposed to a tablet, I typically has a lot of windows open and move between them frequently. In fact, the ability to run multiple apps and to move data among them is a primary reason why I work mostly on a conventional computer. (The illustration above began with Windows 8 running in a virtual machine on an iMac. I used the Grab program to create the screen shot, which I then processed in Photoshop, and inserted into this WordPress post in Chrome.)

Metro improves on the standard tablet approach by letting you have two apps open at once, that’s not nearly enough for desktop work. And bad as it is on the 13.3″ laptop screen, it would be much worse on a 30″ desktop monitor. And while I haven;t had an opportunity to try it, I suspect the Windows 8 conventional desktop is every bit as awkward on a tablet as Windows 7 was, because you are dealing with windows, icons, and menus designed for use with a keyboard and mouse.

The bottom line is that Microsoft has not convinced me this two-headed approach to Windows is going to serve either tablets of mouse-and-keyboard PCs very well. As I said, there’s still lots of time to get it right, but there is an awful lot to be done.

 

Is Apple Stock and Customer Satisfaction Tied Together?

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

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

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

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

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

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

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

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

Dear Industry: The Series Introduction

Tech.pinions exists to be a valuable resource for the technology industry. Editors, authors, and contributors to Tech.pinions are all professionals from within the technology industry. Most of our writers are professional analysts whose life work and analysis is designed to be speak to and for the technology industry at large.

Our goal as a site is to be a platform where credible and respected voices can add valued perspective and expertise on all the latest happenings in the world of technology.

Thus enter the Dear Industry series. With this series our aim is to address at a high level big picture topics that need to addressed and wrestled with within the technology industry.

Topics like innovation, strategy, differentiation, competitive advantage and more are all high level topics we intend to address and share our unique perspectives on.

The aim of this series is to, at a high level, be accessible by the technology industry at large using Tech.pinions as the platform.

Like Tech.pinions itself, our goal with the Dear Industry series is that it would be a benefit for the whole of the technology industry.

Bitcasa’s Clever Encryption Trick

A startup named Bitcasa made a splash at the TechCrunch Disrupt conference last week by promising unlimited  backups to the cloud for just $10 a month. Bitcasa said it provided privacy and security by encrypting all files, but was able to offer a very inexpensive service because it avoided the storage of duplicate files, especially music and movies. The savings from de-duplication could be considerable because with entertainment content, large numbers of people tend to have copies of a small number of movies or songs.

But at first glance, these claims seemed to be contradictory. If files are encrypted, no one but the owner, or someone else given the key, has any idea of what the contents are. And if you don’t know what is in files, the sort of de-duping Bitcasa promises seems impossible.

But, as Bitcasa CEO Tony Gauda explains in this TechCrunch interview, the company is taking advantage of a new and very clever trick called convergent encryption. If you want to get deep into the weeds of the technology, it is explained in detail in this paper, but here is how it works.

The trick is to use the file to create its own encryption key. A mathematical function called a one-way hash reduces the file to a relatively short string of digits, typically 256 or 512 bits. It’s called one-way because while each file generates a unique hash (there is a vanishingly small possibility that two different files could generate the same hash), there is no way to reconstruct the original from the hash. The hash is then used to encrypt the file using the Advanced Encryption Standard.

Say Alice and Bob each have the same song on their hard drives and both use Bitcasa. Alice backs up first, so the song is reduced to a hash and then encrypted on her computer using that hash. When it’s Bob’s turn, his computer goes through the same process and creates an encrypted file identical to Alice’s. Bitcasa checks its server records, finds a match, and realizes it doesn’t need another copy of the file. In fact, it could save the cost and trouble of transmitting the file to its data center, but it’s not clear whether it actually does that.

Of course, it’s not quite as simple as that. With normal encryption, all files are scrambled using the same key, so the user only has to hang on to one vital chunk of information. In the convergent technique, each file uses its own key so the system has to include a separate map file that links each user’s keys to the files they will decrypt. Then all the user needs is the key to the map file.

Converged encryption has some weaknesses compared with conventional encryption. One is that it makes possible a sort of traffic analysis. An adversary who has access only to the encrypted files could still learn that Alice, Bob, Carol, and Dave all had copies of the same group of files because they would be storing identical cyphertexts (or more accurately, identical keys to those files.) They might just  have the same taste in music, or they might be collaborating on a secret project. More sophisticated attacks my also be possible, but assuming that it is properly implemented–always a huge assumption when dealing with encryption–the approach does seem good enough for most encryption needs.

 

 

 

How iWant drives iRumors

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

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

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

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

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

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

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

The iPad is Hot in Small Business

One of the most interesting things related to our tablet research of late is what is happening with the iPad in small business.

Apple in their last earnings reports made some points related to the iPad and the enterprise but it is small businesses who are adopting the iPad at incredible rates.

We are still underway surveying small business all over the US but with more than two dozen small business owners already surveyed it is clear the iPad is hot in small business.

This is a significant trend. First of all because the sales of these devices would fall under general consumer sales. So we wouldn’t necessarily be able to track them as specific sales to be used in small business like we can enterprise adoption.

I have a hunch, which would be hard to quantify, that a significant portion of iPad sales are being put to use in small business in some way shape or form.

I have talked to restaurant owners using them to take orders and send automatically back the kitchen. I have talked to financial advice firms using them for notes, organization, and to walk clients through data. We have talked to consultancies, legal firms, small boutique shop owners, automobile dealerships, photographers and a host of other types of small businesses and nearly all of them are finding creative ways to integrate the iPad into their business.

Interestingly so far in our study over 85% of small business owners we surveyed are either using the iPad in some way or plan to purchase and use one within the next year.

A key observation coming out of this research so far is how all of the small business owners using the iPad for business have been using non-customized apps right out of the app store.

This differs from many enterprise solutions where the enterprise or IT department often times creates custom applications. Small business owners don’t have the luxury or resources to have custom apps built to serve their needs so they find apps or combinations of apps that fit their purposes.

Another key finding in the remarks of many small business owners and users of iPads was that they felt the iPad made them competitive. For some, part of their reasoning for buying the device was that their local competition was now integrating iPad and they wanted to stay current.

Another fascinating finding was how many small business owners found that using the iPad as a part of their business gave their customers or prospective customers the perception that they were “with the times” or on top of the trends. They remarked how using technology and specifically the iPad was “cool” and they wanted to send the right message to customers.

Perhaps even more interestingly many also said that they believed that using the iPad actually helped them land new customers. This was especially true when small business owners, like several financial firms we spoke with, compete with larger firms who are not using iPads. These small business owners believed that new customers viewed their use of the iPad in their services business gave them an edge over the larger firm’s reps who still used pen and paper. Apparently it isn’t cool to show up to a meeting with a pen and paper these days. Ebay mobile is currently running a commercial that makes this point.

Lastly although we have only spoke with just over two dozen small business so far, many remarked on how many iPads they are seeing by small business in their towns by friends and even competitors. It is clear the trend of iPad in small business may be larger than most anticipated.

When asked about Android tablets price and lack of key apps for their business needs were the biggest factors keeping them from considering anything other than iPad at this point. That and they kept hearing glowing reviews from other small business owners about iPad and mixed results if any about Android tablets.

The iPad phenomena is so much more than just consumption. Small business owners, who can claim the iPad as an expense, are finding new and creative ways to integrate iPad into their workflow.

My sense tells me that we are barely scratching the surface of iPad in enterprise and small business. I believe the next year will shed much more light on the potential for iPad and business.

If you are a small business using iPad in unique ways feel free to share with us how you are using iPad in your business.

Intel and Google – Who Needs Who?

Android is very popular and has made great inroads in the market in smart phones (with more than 50% share) and is beginning to pick up traction in tablets as well with a plethora of new devices due out shortly. But Android itself has not always been that good a performer, and some of the SW choices Google has made while developing the various versions have been troublesome.

It is clear Android can use some assistance in optimizing the code and user experience (one of the primary reasons Google is buying Motorola is for its engineering talent that has had a major positive impact on the design and tuning of Android). But Google needs assistance in improving future versions of Android, and has a broader vision for Android than today’s phones and tablets.

Although not well understood, Intel is one of the largest SW companies in the world (they have many thousands of SW engineers). It has a unique ability to make SW and particularly OSes run extremely well and have been doing so for many years, and not just with Windows. It is a leading provider of development and compiler technology. While Intel won’t necessarily help Android run better on ARM, it can certainly make Android run great on the Intel architecture. It is already well down this path with the Android code porting and optimization work it’s been engaged in for some time.

But Google has greater ambitions for Android than powering current mobile devices. Google ultimately wants to be a leading OS provider across the board and on many form factors, including on the x86 platform powering PC and PC-like devices, and competing with Microsoft and Apple. This is an extension of Google’s “service in the cloud” strategy with clients powered by Android and Chrome and productivity apps being “optimized” for its own environment.

So the relationship between Google and Intel is key to both their long term strategies. It’s a win-win relationship if done right. It’s quite conceivable that by the time Intel is through optimizing Android code, it will run substantially better on its chips than on ARM. But any help Intel provides Google for Android reliability and performance optimization on x86 will most likely also help it running on ARM since the efforts will be repurposed, and this ultimately helps Android on ARM as well.

The bottom line is both companies actually have a great deal to benefit from a close relationship. Intel gets to show of its upcoming devices for mobile form factors running a highly optimized (for its chips) version of Android. And Google gets a path to higher end systems and optimized code to access its services. And users get choice and a more compelling experience. So there really are no “junior partners” in this relationship. Both have much to gain.

The Apple Brand Is a Powerful Selling Point

At the Intel Developer Forum this week I saw a number of interesting products and product concepts from a wide range of manufacturers.

As I looked over many of these products, some from known brands and some from more obscure brands, which are known as white labeled laptops, I started thinking about how important the role of the brand is as it relates to consumer purchasing decisions.


Currently my consumer research focus is North America, so I can’t speak for the other regions, but in the west consumers resonate with brands.

I saw many very thin and very light notebooks called UltraBooks from Acer, Asus, Toshiba and a slew of others.

Many of the UltraBook designs that I saw were poorly attempting to look like the MacBook AIR. One from Asus came incredibly close. However it was that product that got me thinking about the role of brand.

My thesis, which is and has been evolving, is that Apple’s brand is a major factor in the overall appeal of their products. This is something that can not be created or duplicated overnight by competitors.

Of course Apple makes great products but these products fall under a very distinguishable and relatable brand.

I see a lot of interesting UltraBook designs coming from manufacturers. Intel wants to get these prices down so the lure of one of these products over the MacBook Air would be price.

But here is the problem. A growing number of American purchasers don’t want cheap. Our research is showing that the value and premium segment of the market is growing at an alarming rate. And, with that segment, brand matters.

In the US and perhaps even in growing segments all over the globe, the strength of the Apple brand is unparalleled in computing currently. That causes real problems for companies like Acer, Asus, Lenovo, Toshiba etc who don’t have nearly the brand strength as Apple.

I view what is happening in personal electronics similar to what has been happening with fashion. People make brand or style centric decisions based on what they feel reflect them as a person. Again in this reality brand is very important.

Never before did this hit me with such truth than when I was doing consumer market research for a PC OEM who was struggling in the consumer segment.

My goal of the research was to explore the role of design with the younger more influential early adopter audience. The issue of design as a personal statement hit home when I showed the current non-Apple notebook design to a college student and asked for his thoughts. Calmly and quickly he said to me “I wouldn’t be seen in public with that notebook.”

Consumers in the west are now making conscious decisions about the tech products they buy and how carrying that brand around is a part of their self-image. Because of that, brand matters.

The Apple brand is just one part of a fast and deep collection of competitive advantages.

We will be doing more research on this subject soon, but I have a hunch that if you stuck any of the current UltraBooks next to the MacBook Air and asked which product would these customers would buy, a very large group of them would choose the Air and the Apple brand would play a role in that decision.

Many could argue that price matters. To this I would agree however I don’t believe that in the US, where PC’s are a mature market, that price is the only factor in that decision. Even if UltraBooks come in at $200 or more less than the MacBook Air, I don’t believe in any way that threatens Apple’s growth going forward.

RIP, Flash (and Silverlight too)

Flash iconWhen Apple introduced the iPad last year without support of Adobe Flash, Steve Jobs was accused of everything from crippling his own product to pursuing a personal vendetta against Adobe. Events have proven the Flash ban, like so many of Jobs’s decisions, to be prescient. But if Jobs needed any vindication, he has now gotten it from, of all places, Microsoft, which has stuck a probably fatal blow to both Flash and its own competing technology, Silverlight.

In a post to the Building Windows 8 blog, Internet Explorer development chief Dean Hachamovich made clear the IE 10 browser in Windows 8 will not support plug-ins. That means that neither flash nor Silverlight will run in IE (though other apps, including other browsers, may support the Flash and Silverlight players.) Instead, Microsoft will follow Apple’s lead and rely on native HTML 5 for rich web applications and media play.

There are two big problems with Flash. One is that the plug-in has a nasty destabilizing effect on browsers. A large percentage of the browser crashes that I have experienced have been attributable to Flash misbehaving. Second, it is an awful resource hog. This is a minor issue in a modern PC with processing power to burn but is a huge problem on more constrained tablets. The ability to run Flash was supposed to be a big selling point for Android tablets, except that it turned out that they didn’t actually run Flash very well. The fact the Windows 8 is supposed to work on both PCs and ARM-powered tablets was clearly a major consideration in Microsoft’s decision.

The absence of Flash on the iPad has been a minor nuisance–and the popularity of the Apple tablet has greatly accelerated the development of HTML 5 alternatives. Microsoft is betting that by the time Windows 8 ships, probably about  year from now, HTML 5 will have matured to the point where Flash and Silverlight will not be missed.

Flash was an immensely useful technology in its day. It both enhanced media play–it’s not clear how YouTube might have happened without it–and enabled the development  of richer web pages than were possible with existing HTML techniques. So let us mourn its impending passing and celebrate the folks at Future Wave, Macromedia, and Adobe who developed it. And let us move on to a better HTML 5 future.

 

 

How Google Can Learn From Microsoft

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

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

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

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

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

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

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

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

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

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

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

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

How Microsoft is Starting Over With Windows 8

One of the things that I have been observing as we have seen bits of Windows 8 get shared publicly, is the drastic re-thinking of the OS and the role of the OS by Microsoft.

Obviously the most glaring sign is the Metro UI which presents information in an entirely new way. The other somewhat obvious but somewhat subtle observation is around touch. Given that Microsoft has been thinking about touch as it relates to Windows for quite a while now, it is surprising that they actually got it right as late as they did.

Regardless of how long it took I actually think Microsoft has finally nailed touch at least in the area of the operating system. The next question will be can they and their development community nail touch with applications.

The last interesting observation is around Windows on ARM. There is still very little information regarding and being shared with WoA (Windows on ARM), which may not be a good sign, however we do know that new applications created using MSFT’s tools are supposedly able to cross both X86 and ARM versions of Windows.

There is still the question of legacy applications written for X86 and whether they will work on ARM. As far as I can tell from talking with industry folks the consensus is no, they would need to be re-complied or written again from scratch. Another early observation and perhaps needed clarification is whether or not the non-Metro UI version of Windows is available on ARM. I am yet to get a clear answer on that point but some trustworthy sources tell me only the Metro UI is Windows on ARM.

Now if that is true that existing Windows applications are not backwards compatible with ARM and the Metro UI is the only way you experience WoA then I am left to conclude that Windows 8 on ARM is essentially a brand new operating system.

It is an entirely new look and feel, it requires brand new apps with no support for existing ones, therefore an entirely new third-party development ecosystem needs to cultivated. If that is true then how can we not consider it an entirely new OS platform?

So why doesn’t MSFT call it something other that Windows? The answer I believe is because WoA and Windows 8 holistically is Microsoft’s best attempt to completely start over with Windows.

Windows on ARM is clearly a re-start of Windows, assuming my claim of a new OS is valid, and they are pushing the Metro UI as a larger part of the overall Windows experience while downplaying the more familiar start bar, program, task manager, application bar part of the Windows UI.

I don’t think it is any industry secret that Windows has continued to maintain many of the same fundamental OS technologies for over a decade. Some of those things like the registry for example may not be the best ways to go forward. This is why I believe Microsoft knew they needed a fundamental rebuilding of the OS at a functional and fundamental level and Windows 8 is their best attempt at a re-start.

If they can successfully transition their partners to a new OS that is built to thrive in the PC and the Post-PC era then it will benefit them greatly.

I actually applaud this work of theirs to scrap many of the things they clung to from Windows of the past and look more to the future role Windows will play in the personal computing ecosystem.

In fact if you think about it there is no better time for Microsoft to have a fundamental re-start of Windows than now. My ONLY hope is that they execute on this platform and that they get it right the first time.

I do not believe Microsoft can withstand the “third times a charm” syndrome they have faced in the past given how fast this market is moving.

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

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

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

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

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

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

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