January 2012 – Tech.pinions

2012: The Year Google Fixes Android or Loses the War

The end of 2011 brought about some interesting market developments. Both Nielsen and NPD shared data that the once so dominant Android actually declined in market share over the holiday quarter of 2011. Both Nielsen and NPD also shared that during the same quarter iOS, mostly due to the iPhone, closed the gap on overall Android market share.

Now, with all of these quarterly market share reports, we have to keep in mind that this data only reflects the current quarters data and not the annual or overall installed base. Still, it is important to note that during the holiday quarter (perhaps the most important quarter) Android market share declined and iOS jumped dramatically. This reality should concern Android partners and Google.

We sensed this trend early on and shared with our clients last fall the fact that Android could be headed for a decline in market share. In my TIME column in October of last year I outlined many of the ways that Google was mis-handling Android and unfortunately further straining their already strained relationship with their partners. If Google does not get a handle on not only the fragmentation issues but also their relationship with their partners (by being more transparent and trusting with them) then I anticipate the decline in Android market share to continue. Not solely based on more consumers choosing iOS but by Android’s partners vesting more resources and upping their commitment to Windows Phone.

I don’t expect any Android vendors to completely dump Android but I could see them shipping fewer Android devices overall as a part of their product mix in favor of Windows Phone, which inevitably would lead to fewer Android devices on shelves at any given time, which would lead to even further Android market share decline. I firmly believe that Android device volume is its strongest competitive advantage. Right now Android currently has the bigger share of OEM resources and overall device mix per OEM. However, that could all change very quickly and in 2013 Microsoft will have a compelling story around Windows Phone and Windows 8 for their partners. If Google does not adjust their strategy with Android quickly they run the risk of OEMs shifting the balance of their resources more toward Windows Phone (or something else) and away from the Android platform.

If you line up all of these underlying trends it could spell real trouble for Android. My biggest concern for Android overall is that the platform itself creates no significant hardware loyalty. That is a dangerous truth for any of Google’s hardware partners. The same can be said of Windows Phone, or any other horizontal platform for that matter. If you are going to be in the hardware game you have to differentiate and more importantly create a partner ecosystem that creates customer stickiness.

Lastly, on my point that Android’s competitive advantage is volume of devices in channel at any given time. NPD shared their data on the top devices sold over the Oct/Nov time period. If you look at the chart you see that the top three are iOS devices. Note these are three different phones. If Apple does continue to diversify their products on the market and leave legacy devices in channel at lower price points, they will themselves be creating their own iPhone army of devices that could further hurt Android’s market share over the long haul.

Why the PC Industry Cannot Ignore Smartphones

When HP abandoned their smartphone and tablet business and webOS last August, many in the industry were disappointed in the speed of the Palm acquisition and the quick dismantling of it. Some who consider themselves "business-savvy" said it was the wise approach as it wasn’t core to HP’s corporate mission. They said that smartphones were a distraction to competing with IBM and even Dell. We won’t know until 3-5 years from now whether it was a good decision or not.

I believe though, that just as PC companies fought to stay away from the sub-$1,000 PC market in the 90’s, PC makers who don’t embrace smartphones could be out of the client hardware business in 5 years.

Some Context

Over the last 20 years, PC hardware and software have done this little dance where one is ahead of the other. New software came out that required better hardware, then the new hardware outpaced the old software and the cycle continued. With the better hardware and software came new features and usage models like multimedia, desktop publishing, 3D games, DVD video, videoconferencing, digital photography, the visual internet, and video editing. Then Microsoft Vista was launched and it seemed no matter how much hardware users threw at it, issues still existed. Microsoft then spent the next few years fixing Vista and launched Windows 7 instead of developing environments for new rich client usage models. Windows 7 actually took less hardware resources than Vista, the first time a Microsoft OS could say this. Microsoft is even publicly communicating that Windows 8 will take less resources than Windows 7. So what happened? Did the industry run out of usage models to consume rich PC cycles? No, there are many usage models that need to be developed that use rich PC clients.

What happened was netbooks, smartphones and tablets. Netbooks threatened Microsoft and forced them to re-configure Windows XP for the the small, cheap laptops. This was in response to the first netbooks, loaded with Linux, getting shipped into Best Buy and direct on the internet. In retrospect this wasn’t a threat to Microsoft, as those netbooks had a reported 50%+ return rate. After netbooks came MIDs and after MIDs failed came touch smartphones and the iPad. Once the iPhone and iPad showed strong sales it was clear that the center of design was moving to mobility even though needs the rich client PC could solve didn’t just go away.

Windows 8 and Rich PC Clients

Windows 8 was clearly architected to provide a tablet alternative to the iPad and stem the flow from Windows to iOS and Android. Most of the work has been to provide a new user and development environment called Metro, WinRT and to enable ARM SOCs. None of these investments does a single thing to propel the traditional rich PC client forward, maybe with the exception of enabling touch on an all-in-one desktop. Without Microsoft making major investments to propel the rich client forward, it won’t move forward even to the dismay of Intel, AMD and Nvidia. I want to be clear that there are still problems that the rich client PC can solve but the software ecosystem and VC investment is enamored primarily with tablet, smartphones and the cloud. Without Microsoft’s investment in rich PC clients, thinner clients like phones and tablets will evolve at a much faster rate than rich PCs.

The Consequences of Not Investing in the Rich PC Client

With the software ecosystem driving "thin" clients at a much faster rate than "rich" clients, the consequences start to emerge. We are seeing them around us every today. Users are spending more time with their tablets and smartphones than they are with their PCs. Savvy users are doing higher-order content creation like photo editing, video editing and even making music with GarageBand. That doesn’t mean that they don’t need their PCs today. They do, because neither smartphones nor tablets can do everything what a PC or Mac can do…. at least today. Display size, input method and lack of software modulraity are the biggest challenges today.

Enter Smartphone Modularity

Today, many users in traditional regions require at least a smartphone and a PC, and a tablet is an adder. Tomorrow, if users can easily attach a keyboard to a tablet via a convertible design, they may not need a PC as we know it today. It’s not a productive discussion if we debate if we call this a PC with a removable display or a tablet with a keyboard. What’s important is that some users won’t need three devices, they’ll just need two.

What about having just one compute device, a smartphone, and the rest of the devices are merely displays or shells? Sounds a bit aggressive but lets peel this back:

Apps: If you believe that the smartphone ecosystem and apps moves a lot faster than the rich client ecosystem, then that says that thin clients at some point will be able to run the same rich apps as a PC. Then the question becomes, "when".
OS/Dev Environment: iOS, Windows, and Android are all becoming modular, in that their goal is that you write once and deploy everywhere. Specifically, write once for a dev environment and deploy to a watch, phone, tablet, PC and TV or console.
Hardware: Fixed function blocks and programmable blocks on tablet and smartphone SOCs are taking over many of the laborious tasks general purpose CPUs once worked on. This is why many smartphones can display a beautiful 1080P video on an HDTV. This is true for video decode, video and photo cleanup, and natural user interfaces too. 3D graphics will continue to be an important subsystem in the SOC block.
Display: With WiDi, WiFi Direct, and WiFi AC on the mainstream horizon, there’s no reason to think that a user cannot beautifully display their apps from their 4" smartphone display to a 32" high resolution PC display. Today with my iPhone 4s I can display 1024×768 via AirPlay mirroring with a little lag but that’s today via a router and WiFi network. I can connect today via hardwire and it looks really good. In the future, the image and fonts will scale resolutions to the display and the lag will disappear, meaning I won’t even need to physically dock my smartphone. It will all be done wirelessly.
Peripherals: Already today, depending on the OS, smartphones can accept keyboard, mouse and joystick via Bluetooth, WiFi or USB. The fact that an iPad cannot use a mouse is about marketing and not capability.

Smartphone Modularity a Sure Bet?

As in life, there are no sure things, but the smartphone and cloud ecosystem will be driving toward smartphone modularity to the point where they want you to forget about PCs. Apple, Microsoft, and Google are building scalable operating systems and development environments to support this. Why Microsoft? I believe they see that the future of the client is the smartphone and if they don’t win in smartphones, they could lose the future client. They can’t just abandon PCs today, so they are inching toward that with a scalable Metro-Desktop interface and dev environment. Metro for Windows 8 means for Metro apps not just for the PC, but for the tablet and the Windows smartphone. The big question is, if Microsoft sees the decline of the PC platform in favor of the smartphone, then why aren’t all the Windows PC OEMs seeing this too? One thing I am certain of- the PC industry cannot ignore the smartphone market or they won’t be in the client computing market in the long-term.

Made in China: Why Boycotting Apple Would be Wrong

If you have been reading the articles from the New York Times about the working conditions at some of the factories that Apple and other big tech companies use to make their products, you can’t help but get upset and concerned when you learn about the abuses mentioned in the report. Apple has publicly shared how they are trying to combat these abuses and has even gone as far as joining a third-party monitoring group to get independent help to deal with these problems. Clearly, Apple has to put even more pressure on all of their suppliers to improve these conditions and rally all of the other tech companies who use these same suppliers to help with this cause.

The New York Times articles pointed out correctly that the human toll due to these abuses is a serious issue. But there is another side to this story that is not getting enough press and it is equally important to this discussion. I have traveled to China for 25 years and worked on many sourcing projects and have had to deal with Asian manufacturing issues for some time. One of the first things I learned about manufacturing in China is that the majority of factory workers come from very poor areas in central or eastern China. They covet these manufacturing jobs to get them out of their abject poverty.

In 1996 I visited an extremely rural area of China and saw first hand how they lived and the poverty they faced. I was shown a cement home that could not have been more than 10’ X 12’ and was told that two families as well as an aging grandmother lived in this place. And that their only earnings came from their field work if they could get it. I was also told that the parents in these areas pushed their teenage children to try to get the new manufacturing jobs that were just starting to emerge back then. Millions of families in China still live in this type of poverty and these manufacturing jobs are actually a life saver for them as these kids send some of the money they earn back home to help support the family.

There is an even darker side to this. The parents in these regions don’t have a lot of options and in some cases they actually sell their kids into prostitution as ways to support the family. So they see these manufacturing jobs as a better way for their kids to better themselves and still help the family. Although they only make $17.00 per day, this is at least 10 times what they could make a day in the fields if the work is even available.

And there have been reports of underage kids in these factories. But I know for a fact that the poverty is so bad in some areas that it is the parents who push these kids to lie about their age to get them into these jobs. A very sad fact is that the age of the kids sold into prostitution average 13-15. While hiring kids at this age for factory work is still wrong, you can see how when parents get desperate they could push their underage kids to the factories instead of some of the seedy alternatives available to them.

With this in mind, the call for boycotting Apple products would be just plain wrong. Apple selling less products would translate into the loss of jobs for these workers and force them back into levels of poverty and working conditions that would be even more difficult than the one’s they have in the factories.

“This American Life” quoted New York Times columnist Nicholas Kristof, a noted human rights crusader, as defending the Chinese labor system as a positive step in the evolution of the country’s economy. “I think it’s useful to be reminded about how grim the conditions are,” Kristof says in the show. “But again, I just think that if you try to think how you can fight poverty most effectively, and what has fought it within China, then I think sweatshops are a key part of that answer.”

I have actually visited some of the high-tech manufacturing factories in three regions of China and the term “sweatshop” actually does not apply to them. Because of the precision work and need to keep things very clean when making these products, these places are well-lit, air-conditioned and efficiently designed. That said, the work is tedious, and the long shifts can become exhausting. And any reported abuses must be dealt with aggressively.

But the call to boycott Apple would be irresponsible on our part. Apple’s success has created ten’s of thousands of jobs for these workers and these factory jobs are a lifeline to them and their families. Yes, these types of manufacturing jobs have gone offshore and as Steve Jobs told President Obama last year, they are not coming back.

In fact, Thomas Friedman wrote a great piece on the fact that for most American companies their customers have become world customers now and the need to manufacture and sell to them has become a global business issue.

While we might not like that Apple has created so many jobs in China, the reality is that, as the NYT’s articles pointed out, the type of manufacturing needed to make things like the iPhone and the iPad are not available in the US anymore.

The answer to dealing with these abuses is not to boycott Apple products. That would directly impact the lives of thousands of workers in a very negative way. Rather, it will be for Apple to step up their efforts and get as much help as possible from the Chinese government and other tech companies to put pressure on all of their suppliers to deal with these abuses and adhere to the rules demanded by their customers for good wages and good working conditions. They also need to find other creative ways to make the working conditions better for those who work in these factories. Let’s hope that Apple and others can make this happen soon. But boycotting Apple would be the wrong way to solve this problem.

We Need Electronic Health Records Now: A Personal Tale

Last week, shortness of breath after exertion led to an urgent visit to the doctor. What I first thought was a recurrence of bronchitis turned into an up close a personal encounter with medical technology and a much-maligned system that at its best works very well indeed. It also left me convinced that, while I still doubt that electronic medical records can be the big money saver that advocates claim, EHR can definitely improve the quality of care and save lives.

CT scan of pulmonary embolism — CT scan of a pulmonary embolism. (Wikipedia)

I have been a member of Kaiser Permanente Mid-Atlantic for many years and my experience began in urgent care at a Kaiser facility about five minutes from home. After I described my symptoms, they put me on oxygen and began tests. When blood tests suggested the possibility of a clot but a chest x-ray was inconclusive, they gave me an injection of the anticoagulant Lovenox and shipped me by ambulance to a second Kaiser facility equipped with a CT scanner.

Because Kaiser has an excellent EHR system (developed at great cost and after a couple of painful false starts) and requires doctors and nurses to document everything in the system, the staff at Kaiser Capitol Hill knew everything that had happened at my neighborhood facility. They continued the tests and treatment and when the CAT scan showed a dangerous pulmonary embolism, they decided I belonged in the hospital.

Another ambulance ride took me to Holy Cross Hospital in Silver Spring where I spent an uncomfortable day and a half being poked, prodded, tested, and generally well cared-for. Holy Cross is heavily used by Kaiser and is hooked into their system, so again the staff instantly knew everything that had been done. (It was also kind of cool to get the results of tests run the night before on my iPad, including the good news that a cardiac enzyme test for possible heart damage was negative, while lying on my hospital bed.)

I realized how useful the EHR system really was when I got a new roommate after I had been declared stable and was waiting for my wife to come fetch me. A man in his 80s and apparently suffering from some level of dementia was brought in, though neither he nor the hospital staff seemed to know exactly why (there is absolutely no privacy in a hospital room.) He remembered that he had suffered an allergic reaction to penicillin during World War II, but wasn’t sure what led to his being taken to the hospital. Without good access to his medical records, the nurse was having a bad time just trying to figure out what meds he was on. Both he and the hospital staff were at a huge disadvantage because they had no history to work with.

It’s going to take a while, and a lot of money, before the U.S. health care system comes close to matching the EHR systems of organizations such as Kaiser and the Veterans Administration. Both have the enormous advantage that their doctors are employees, not affiliates, and therefore can be required to use the system. But building a national EHR system is vital work, and the much-maligned Affordable Care Act should help spur things along.

As for me, I’m happy to say that I’m doing well. The anti-clot treatment seems to be working as the shortness of breath is gone. I’ll be on blood thinners for some months and I’ll be a lot more careful about flying once I get back in the air. Flying, especially long flights in cramped conditions, are a well known risk factor for the deep vein thrombosis that leads to pulmonary emboli and the nine legs I flew, including two of more than 12 hours, in the month before I landed in the hospital, certainly didn’t help.

On a personal note, I want to thank the urgent care staffs of Kaiser Permanente Kensington and Capitol Hill and the staff of the monitoring unit at Holy Cross Hospital for the treatment I received during this adventure. I don’t think I could have asked for better care.

Apple’s Enterprise Invasion: Why Winning in Consumer Means Winning in Enterprise

There used to be a time when I would go to tech industry events, trade shows, internal company meetings, etc. and I was one of the few in the room with a Mac. I took great pride in that fact, but now the Mac is gaining everywhere. It’s in schools, hospitals, labs, construction sites, restaurants, consumers’ homes, coffee shops, and now increasingly in the enterprise.

With this observation in mind it should come as no shock that Apple blew the doors off their latest earnings and recorded all time sales of Macs. My analyst colleague, Frank Gillet at Forester, shared his research which showed that 1 in 5 Global workers now use an Apple product for work.

So what is fueling this trend?

Apple Products Cost Less to Support

When I worked at Cypress Semiconductor, I moon-lighted from time to time and helped our IT department by solving Windows problems. I prided myself on the fact that I could troubleshoot Windows with the best of them. I could navigate my way in and out of all of the different and common Windows conflicts. Then a funny thing happened. I switched to the Mac and all of a sudden troubleshooting became a thing of the past. That reality is now hitting the enterprise IT departments.

A recent survey by the Enterprise Device Alliance which surveyed IT professionals in large enterprise environments that have a mix of Macs and PCs overwhelmingly found agreement with IT managers that Macs cost less than PCs to support. IT managers noted that Macs presented higher up front acquisition costs, but also noted that the long-term benefits were worth the tradeoff.

When it came to Mac adoption in the enterprise, ease of technical support and lower total cost of ownership were among the top reasons for the switch. Number one on their list–employee preference.

Bring Your Own Device To Work

If you follow this industry even a little bit you keep hearing about the “consumer-ization of IT” or the “Bring Your Own Device” trend. Yes, both trends are real and IT managers are diligently working to allow employees to use whatever devices they want at work.

We recently interviewed SAP’s CIO Oliver Bussman. He shared with us that inside SAP they have 14,000 iPads and 8,000 iPhones deployed. That is a total of 22,000 iOS devices compared to the 20,000 Blackberries deployed to his workers. SAP, like many other companies is working to cater to their employees’ device preference. And Mr Bussman shared an interesting perspective with us. He said that he now has to pay closer attention to what is going on in the consumer market because if he doesn’t, he would not be able to stay ahead of the game. His workers use and learn how to make things like the iPad work for them at home. Then they come to him and say they want to use it in the office as well. After his visit to CES, Mr. Bussman recorded a video of his thoughts on the consumer-ization of IT and it is worth watching as he has a very important perspective on the subject.

The Right Product for the Right Job

In the construction industry they say that “every job is easier with the right tools.” Perhaps for too long, due to the Windows monopoly on most businesses, IT managers have been forced to have workers use the same tool to get a multitude of jobs done. But now devices like the iPhone and iPad in particular are proving more effective in many situations like field force and sales force automation.

During our interview Oliver Bussman also shared with us that he was able to deploy 300 iPads to his global sales team in just 4 weeks. In many enterprise solutions, the iPad, and touch computing in general, is just a better tool for the job.

IT managers need to effectively empower their workforce to be productive and equipped with the tools they need to be successful. Apple products are now becoming a critical part of the enterprise tool set.

Apple’s focus has not been the corporate IT accounts. Apple has always been a consumer product company waiting for a pure consumer market to mature. Now that the consumer market for personal electronics has matured, it appears to also be an enterprise strategy. Demand for Apple products is at an all-time high with consumers and their latest earnings prove this. What no one really could have predicted was that to win in enterprise you had to also win in consumer. It seems logical, but hindsight is 20/20. That reality is now fueling growth in Apple’s favor from every corner of the technology sector. The scary thing for Apple competitors is that they are just getting started.

Marketing to Moms – a Language Barrier

Before attending the recent CES Show in Las Vegas – my 12th consecutive visit to this, the annual tech pilgrimage. I ventured a prediction to my husband: “As much as I hope this is not the case, based on the PR barrage I have received prior to the event this year, I think many of products aimed at women at the Show will STILL be mostly pink”.

Although I can admit this was not entirely the case and the MommyTech section of the Show encompassed almost exclusively fitness gadgets, nail polish machines, and rhinestone accessories for my smart phone and tablet, my disappointment came from a different source.

Tech marketers are still only speaking in speeds and feeds.

With a few notable exceptions – new technologies demonstrated by consumer electronic brands – large and small, highlighted exclusively the power of the processor, the water-resistant casing, the speed of the memory and more – but I seldom heard “and this is what it means to consumers”.

Why is it is so difficult to make that translation? Tech retailers do the same thing. At a recent experience in Best Buy looking to buy an SLR camera, the salesman focused on the quality of the lens, talking about pixels, the number of crystals and even explained how the light is processed inside but he never said: “And all this means that you will confidently take the best, most pristine pictures to capture your most special memories”.

It is 2012 people. Women and moms in particular account for two-thirds of consumer purchases and they are speaking up, engaging brands, sharing their experiences and recommending products they love on Twitter, Facebook and pinning pictures on Pinterest.

Speak to us in plain language; highlight the benefits of speed, durability, and reliability in terms that support our daily life. Such as: “it will be fast and ready when you need to make that call”, or “it will endure the wear and tear of 11 YO triplets at home”.

Even geeks like me, need to hear how your technology will enhance our lives.

Oh and please, drop the “best of breed” – I can’t even translate what that means to me!

Copyright and 3D Printing: A Fight the Makers Can Win

Will homemade 3D objects be the next intellectual property battleground. Perhaps, bit this time the fight will be very different because the makers, not the owners, have the legal high hand.

Photo: MakerBot Replicator — The MakerBot Replicator

3D is one of most exciting technologies to emerge in a long time. Machines using inkjet-like technology lay down precise layers of material. If you can create a file describing an object, and programs such as Autocad and Mathematica can do this automatically, you can print it.

High-end printers can create objects in aluminum, stainless steel, and ceramic. Simpler units, such as the $2,000 MakerBot Industries Replicator can print objects in two colors of ABS plastic.

The Pirate Bay blog waxed rhapsodic about the prospect:

We believe that the next step in copying will be made from digital form into physical form. It will be physical objects. Or as we decided to call them: Physibles. Data objects that are able (and feasible) to become physical. We believe that things like three-dimensional printers, scanners and such are just the first step. We believe that in the nearby future you will print your spare parts for your vehicles. You will download your sneakers within 20 years.

But it turns out that replicating objects is far from piratical for the simple reason that no existing form of intellectual property protection covers most physical objects. The only 3D objects off any sort on the Copyright Office’s list of protected works are sculptures and architecture. You can trademark something like the Nike swoosh and the concept of trade dress provides some protection to designs, but the fashion industry learned decades ago that neither copyright nor trademark could stop design knockoffs, such as a mass market version of a couturier dress. Patents could provide limited protection but it is very hard to use a patent to protect a part.

In the past, this gap in IP coverage wasn’t much of an issue. Skilled machining and toolmaking were too expensive for knockoff parts to be economic. Only where there was a opted rial for large sales, such as automotive crash parts that mimicked original body panels, did copying parts make sense.

The coming of 3D printers and other equipment, such as inexpensive computer numerically controlled (CNC) machine tools has drastically changed the landscape. I think it is unlikely that printed objects will ever be cheaper than standard mass production, but scanning and printing replacement parts, profitable items for many manufacturers, will become common.

I’m sure there will be attempts to restrict scanning and copying of physical objects. (Efforts to win copyright protection for objects such as laser printer toner cartridges by embedding chips with ostensibly copyrightable code have failed miserably in the courts.)But one important lesson of the (so far) successful fight against the Stop Online Piracy Act is that it is a lot easier to stop a law than to pass one. This time the makers sand a good chance of winning.

Where Have All The Profits Gone? Gone to Apple, Every One

A few years ago, folks in tech used to worry that all the profits in the PC industry were being scarfed up by Microsoft and Intel and that the crumbs left to PC makers would be insufficient to fund any innovation. For companies not named Apple, those were the good old days.

Apple’s blowout December quarter was stunning enough viewed in isolation. But it is even more striking in comparison to the rest of the industry. Apple’s revenues of $46.2 billion blew past Hewlett-Packard’s $32.3 billion to make it the industry leader by sales. But the real story is profits. Apple’s net of $13.1 billion was just a hair less than the earnings of Microsoft, Intel, HP, and Dell combined.

For a little historical perspective, in 2006, Apple earned just under $2 billion on sales of $19 billion for the entire year. Microsoft and Intel combines for sales of $80 billion and profits of $18 billion. (M.G. Siegler at TechCrunch has a host of other Apple-industry comparisons.)

Apple’s growth and stunning profitability is obviously wonderful news for the company and its shareholders. And there are no signs that its remarkable run is over. The growth rate of the December quarter is unsustainable, but that is a reflection of the strength of one three-month period, not an indication of any weakness.

But the concentration of the tech industry’s profitability in one company is a potential problem for the industry as a whole. Apple is a wonderfully innovative company that has, year after year, come out with the most interesting products in tech. And the iPhone and iPad have spawned a whole ecosystem of successful third-party products.

Innovation, especially in hardware, requires talent, imagination–and money. Apple’s cash hoard–by now over $100 billion–allows it to do things that competitors cannot even think about.

It’s not a healthy situation to have all the innovation coming from one company, no matter how brilliant. But the razor-thin margins of Apple’s competitors make risk taking difficult. Consider the sad case of HP and the TouchPad. Executives of HP’s Personal Systems Group saw webOS and the TouchPad as a way to both challenge Apple and to free the company from the domination of Microsoft. PSG chief Todd Bradley saw this as a fight of “years, not months.” But looking at startup costs in the billions and a lack of instant success, HP’s top management got cold feet and killed the project before it had a chance. A lot of this had to do with HP’s tumultuous internal politics, but the fact that the company earns eight cents on every dollar of revenue while Apple nets 29 cents has to have been an important factor in its skittishness. The problem is the vicious cycle, in which a financial squeeze cripples innovation which damages the prospects for growth.

It’s hard to see how this situation changes anytime soon. Perhaps Google, which has margins even better than Apple’s though it is a much smaller company, can use some of its profits to turn stodgy Motorola Mobility into an innovation engine, assuming that it completes its planned purchase. Maybe the partnership of Nokia and Microsoft will produce something wonderful. But for the foreseeable future, expect Apple to expand its dominance.

Even With a Huge Quarter, Apple is just getting Started

– Apple’s $13 billion quarterly profit is second-biggest in U.S. history. Only topped by Exxon’s $14.8 billion in 2008

– 97.6 billion in cash that AAPL has is higher than the market value of 476 of the companies in the S&P 500

– Apple sold more iPads than HP sold PCs. – HP PC sales 15.123m, iPad 15.43m

– 315M iOS > 250M Android

Quotes from Tim Cook:

“I believe there will come a day when tablet market by unit is larger than the PC market”

“Apple TV is not just a product but a strategy for the next decade. ”

“There is cannibalization of the Mac by the iPad”, but Apple thinks the cannibalization is much worse on the Windows PC side.

I think it’s remarkable that we’ve sold 55m iPads and we’ve only been in the business since April 2010.

After Apple’s blow out quarter, setting records in nearly every category, there is going to be talk and speculation that Apple is peaking. But really, how can Apple beat this quarter they just had? Especially with such fierce competition right? Wrong, Apple is just getting started.

Think about this last year and quarter for Apple. Apple had a record blowout quarter on incremental product upgrades. What if Apple release all new Macs, iPhone, and iPads in 2012? Tim Cook answered the question of how Apple can keep this up. The answer–innovate.

There are still industries for Apple to disrupt. | Four Industries Apple Can Still Disrupt | There are still new products to be made for new types of customers. We are only half way through this 50+ year journey of bringing technology to the masses.

Not to mention new markets. Apple is just scratching the surface in Asia and the Apple brand is one of the most desirable in all of Asia. Consumers in Asia, and China in particular, have an insatiable appetite for Apple products. One could make quite a compelling argument that China consumer may even have more demand for Apple products than the US.

What is my biggest take away from this call? Lots of OEMs better get their tablet strategies in order.

The Dell XPS 13: An Ultrabook that Could Steal Customers From Apple

If you are in the high-tech industry and haven’t heard of the term “Ultrabook”, you’ve probably been on sabbatical or have been living under a rock. Intel introduced an industry-wide initiative to re-think the Windows notebook PC, which they have dubbed and trademarked the “Ultrabook”. Launched at Computex 2011, Ultrabooks are designed to be very thin and light, have good battery life, have instant-on from sleep, be more secure and have good performance. If you want to see the details on what constitutes an Ultrabook, let me direct you to an article I wrote in Forbes yesterday. Does this sound a bit like a MacBook Air? This is what I thought about the entire category until Dell lent me their Ultrabook, the Dell XPS 13, for a few days. I have to say, I am very impressed and believe they have a winner here that could take some business from Apple. I don’t make that statement lightly as my family is the owner of three MacBooks and I do like them a lot.

Dell plays hard to get
When Ultrabooks were first introduced in July, Dell was somewhat silent on their intentions. Typically Dell is locked arm in arm with Intel many steps of the way. When they didn’t introduce an Ultrabook by the back to school selling season, “industry people” started to ask questions. When Dell didn’t release one by the holiday selling season, people were asking, “what’s wrong with the Ultrabook category”, or “what is Dell cooking up”?

I thought they were waiting for Intel’s Ivy Bridge solution that was scheduled for earlier in the year. Whatever Dell was waiting for doesn’t matter, because they did nothing but impress at CES. During the Intel keynote with Intel’s Paul Otellini, Dell’s vice chairman Jeff Clarke, stormed on-stage with some serious Texas swagger. The video cameras at the CES event didn’t do the Dell XPS 13 justice as it’s hard to “get” the ethos of any device on camera, but with Jeff Clarke and Paul Otellii on stage, you knew it was important to both companies. In my 20+ years as PC OEM and technology provider to OEMs, I believe the only way to really “get” a product is to live with it as your primary device for a few days. And that’s just what I did.

Industrial Design
It’s apparent to me that Dell took their combined commercial and consumer experience and put it to good use. Rather than just follow Apple, HP or Lenovo, they put together what I would call the best of both worlds. The machined aluminum frame adds the brawn and high-brow feel, while the rubberized carbon-fiber composite base serves to keep the user’s lap cool and reduce weight. The rubberized palm rest provides a slip-proof environment that adds serious precision to keystrokes and trackpad gestures. It also provides a slip-proof mechanism for carrying the unit across the house, the office, or into a coffee shop. In a nutshell, Dell solved my complaints about my MacBook Air and made it look, feel and operate premium.

Instant-On
I give Dell and Intel credit for working together to make Windows 7 PCs almost “instant on”. The XPS 13 turned on and off very quickly thanks to Intel Rapid Start and Dell’s integration. I wasn’t able to use Smart Connect, but when I can use the XPS 13 for a few weeks I want to try this out. This is essentially a feature that intermittently pulls the XPS out of sleep state and pulls in emails and calendar updates. While this is as close a PC will get to “always on, always connected”, it is a decent proxy.

Ingredient Branding and Certifications
Historically, the typical Windows-based PC with all its stickers looks like a cross between a Nascar racing car and the back of a microwave oven. That doesn’t exactly motivate anyone to shell out more than $599 for a Windows notebook. There are no visible stickers on the XPS 13 and the only external proof of Intel and Microsoft is on a laser-etched silver plate on the bottom of the unit. Underneath the plate are all the things users usually ignore like certifications.

Keyboard and Trackpad
I never quite understood how little evaluation time users spend on what ends up being one of the most important aspects of a notebook; the keyboard and trackpad. I already talked about the rubberized palm rest that gives the XPS 13 a stable palm base for the keyboard and trackpad. My palms slip all over the place with my MacBook Air. The XPS 13’s keyboard is auto backlit and the keys have good travel and a firm touch. The trackpad feels like coated glass and supports all of the Windows 7 gestures. Clicking works by either physically clicking the trackpad down or gently tapping it. It’s the user’s choice.

Display
The display is 13.3″ at a very bright 300 nits at 1,366×768 resolution. It’s an edge to edge display (or nearly), which allowed Dell to design a 13.3″ display into around a 12″ chassis. I compared it to a MacBook Air and it is in fact narrower with the same dimension display. That is very impressive. I would have preferred a higher-resolution display but I don’t know if many users will make a huge deal out of this. The display is coated with Gorilla Glass which gives some extra added comfort knowing it will be up to the task of my kids accidentally scratching it up.

Ports
Compared to some of the other Ultrabooks, I applaud Dell for removing some of the ports that I am certain primary research said were “must-haves.” Must haves like a VGA port, 5 USB ports, and an ethernet port. (yawn) Users get a Displayport, one USB-3, one powered USB-2, and a headphone jack. The only port I would have preferred was a mini or micro HDMI port. Displayport guarantees that I will need to buy a cable or an adapter I don’t have. I can live without the SD card reader but it sure would have been nice if they could have fit it inside.

Battery Life
I am still very skeptical on most battery life figures of any battery-powered product. One exception is the Apple iPhone and iPad, where Apple goes out of their way to provide as much detail as possible for different use cases. With that caveat, I do believe the Dell XPS 13 will have very respectable battery life figures versus other Ultrabooks and the Apple MacBook Air. Dell says the XPS 13 will achieve nearly 9 hours of battery life, well above Intel’s target of between 5 and 8 hours.

One of the sexier features harkens back to the days of Dell batteries, which had buttons to gauge how much was power was left. Like the Dell batteries of yesteryear, press a small button on the side (not back) of the XPS 13 and it will light up circles to show how much battery you have left. That shows a dedication to useful innovation, not penny pinching bad decisions made in dark meeting rooms. This is the kind of small thing that demonstrates attention to detail that Apple quite frankly has dominated so far.

Consumer and Commercial Applicability
Whenever I hear that one product serves two different markets I usually cringe and jump to the conclusion that it will be mediocre at both. I also take a very realistic approach on the “consumerization of IT”, in that I believe we are a long way off until 50% of the world’s enterprises give their employees money to choose their own laptop. In the case of the Dell XPS 13, I believe that it will provide a good value proposition to both target sets. Consumers are driven by style, price, aesthetics and perceived performance at an certain price point while businesses are more interested in TCO, services, security, and custom configurability. The Dell XPS 13 provides all that. They may run into challenges with IT department and sealed batteries, lack of VGA and Ethernet ports, but then again a few IT departments would require serial ports if you let them spec out the machine completely.

Pricing and Specs
The Dell XPS 13 starts at $999 and includes an Intel Core i5 processor, Intel HD 3000 graphics, 128GB SSD hard drive, 4GB memory, USB 3.0, and Windows Home Premium. For a similarly configured Apple MacBook Air, buyers would pay $1,299. With the Mac, you get OS X Lion, a bit higher resolution display, Thunderbolt I/O, and an SD card slot. And yes, for the record, I know PCs don’t primarily sell on specs but they are still a factor in the decision. If it weren’t, Apple wouldn’t provide any specs anywhere, right?

Possibly Taking Bites from the Apple
From everything I experienced with the Dell XPS 13 evaluation unit, I can safely say that they have a potential winner. Why do I say “potential”? First, I’m using an evaluation unit, not a factory unit with a factory image. As a user or sales associate, if I start Windows and I start getting warning messages for virus protection, firewall and 3rd party software, the coolness factor will be for naught. The first consumer impression will be bad. I hope this doesn’t happen with the factory software load.

Many success factors go into successfully selling a system and creating a lasting consumer bond. Great products must align with great marketing, distribution and support. Controlling the message is key at retail. If, and I mean “if” Dell can effectively pull their messages through retail and somewhat control merchandising at retail, this will be a solid step in connecting the value prop with the consumer. This is very hard, especially in the U.S., where Best Buy rules brick and mortar. What will the Best Buy yellow shirt say when someone asks, “whats the difference between the MacBook Air and the Dell XPS?” If they say “$300” that is a fail. Retail will be important, more important than direct for Dell, because industrial design doesn’t translate well to the web. Seeing the XPS 13 image doesn’t impress as much as holding it does, so retail cannot be minimized.

I see the XPS 13 doing well in business and enterprise, again, given aligned messaging, channel, sales training and support. IT departments now have a design that is every bit as cool as the MacBook Air and arguably more productive plus the added benefits of TPM and Dell’s customization and support.

Net-net I see potential consumer and business buyers of thin and very light notebooks looking at Apple’s MacBook Air and many choosing the Dell XPS 13 Ultrabook instead. This won’t just be based on price, but all other benefits I’ve outlined above. I also believe Apple’s MacBook Air sales will increase during 2012 but they would have sold more had it not been for Ultrabooks, especially the Dell XPS 13, the best Ultrabook I’ve used so far.

You can get more information on the Dell XPS 13 Ultrabook here on Dell’s website.

An iOS Laptop is a Compelling Idea

Our friend Harry McCracken wrote in his CNET column yesterday about why he believes the world needs an iOS laptop. James Kendrick of ZNET shared his thoughts on Harry’s article pointing out that it is a good idea but that he doesn’t think it will happen anytime soon.

Both Harry and James have formed opinions on this matter largely because of the latest Zagg Folio case for iPad 2. As a part of our own research, we have been using this case as well for sometime and have been bringing this solution up in our conversations with industry executives.

Our opinion is that the limitations of touch computing in terms of text entry, formatting, etc are largely offset with the combination of a keyboard. That being said there are still significant challenges with this approach which need to be addressed.

Firstly, an iOS laptop, or any tablet/ laptop combo will be storage limited. Due to the nature of the tablet form factor and use cases there will simply not be hundreds of gigs of storage in these devices for some time. The case can and should be made that consumers who purchase a iOS laptop or tablet/hybrid may not be buying these devices to fully replace a notebook but for many it will suffice none-the-less. Therefore cloud services could be a requirement for devices like an iOS laptop or tablet/PC hybrid to be fully embraced.

The biggest failing I have found in using the iPad 2 with the Zagg Folio case is text formatting and document editing. Going back through and fixing words, deleting sentences or paragraph’s is still a cumbersome experience using touch only. It is not impossible, but this is one area where I prefer a mouse and pointer.

In reality an iOS laptop or tablet/PC hybrid could very well find its niche in what was formerly the Netbook category, a category that at one time was selling 30 million units a year.

Tim points out in his column today, that we could see a resurgence of the Netbook like category with new ultra-thin PC(which are not UltraBooks) that are specifically targeting the low end, basic PC user category.

We remain convinced that there is still a large opportunity in the sub $500 range for a class of computing product. It may very well be that we see a range of form factors target this market and the tablet/PC hybrid being one of the centerpieces. Tim wrote in depth about this new hybrid category in his PC Mag column titled “Make Way for Hybrids” a few weeks ago.

This could be one of the most exciting categories to watch as we see vendors experiment with the combination of touch and mouse and keyboard computing. I agree with James, in that if Apple did do something in this area it probably would not be soon, meaning this year.

Obviously, I would love to see what Apple could do in this area of a iOS/Laptop combo. However, they are also smart enough to be aware of some of the challenges that remain in order to make a device in this category that does not feel cheap, or present a sub-par user experience. For now, personally, I would accept being able to run iOS apps on my Macbook Air.

We do expect innovation in this category as well as fierce combination and hopefully creative innovation. What do you think?

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Are Netbooks Poised for a Comeback?

The answer to this is no, and yes. Let me explain.

In 2007, Netbooks took the market by storm. These small low-cost laptops hit the market at the beginning of the recession and were instant hits. Although first versions with Linux were panned once a low-end of Windows was made available they really took off. By 2010, we were selling about 30 million a year.

But in 2011, demand for Netbooks took a major hit. Many attributed this to the intro of Apple’s iPad and other tablets but in truth, the real reason for the decline is that once the vendors realized there was serious demand for low powered, low-cost laptops, they went full-bore in creating full-sized laptops in this price range. Last I checked you could get a 15.6 inch AMD Dual Core E-300 accelerated processor based laptop for around $329. Although Netbook customers liked their small sizes and low weight, they valued even more laptops that had extra power and full keyboards.

But if you try hard, you can actually trace Ultrabooks back to Netbooks. Indeed, at the WSJ D conference a few years back, when Netbooks were all the rage, the late Steve Jobs told Walt Mossberg that nobody really wants a Netbook. While he did not downplay demand for a smallish type laptop, he felt that people wanted a small laptop with a full keyboard and the same power as their mainstream laptops. Three months later, he and Apple introduced their first MacBook Air and of course, this successful product is the reason all the vendors are creating Ultrabooks now.

But Ultrabooks have one big problem. On average, they will be mostly in the $699-$999 price range and well outside of the realm of what we call value PC pricing. That range is from $299-$599. But to say there is still demand for an ultra-thin and low-cost laptop in this value price range would be an understatement.

What you can expect to happen is, in a way, the rebirth of the Netbook in the form of value priced ultra-thin PCs. These will not meet any of Intel’s Ultrabooks specs, but instead, will have low-end mobile processors, perhaps the home version of Windows 7 and a low-density hard drive. But they could be relatively thin and really cool, just with lower end chips and low-cost screens. In many ways, these will speak to the same audience who wanted a Netbook, namely those who desired a really low-cost laptop for basic computer usage.

This low-end category could get an interesting boost later in the year in the way of Windows on ARM. Arm chips are already low-cost, but with long battery life and some pretty good processing power. You can believe they will shoot for use in ultras-lims as well.

So while Netbooks as we know them are mostly dead, expect to see them return in the form of ultra-slims, ultra-thins, or some type of name the vendors will give them that targets this low-end value segment of the market. While I don’t believe it will have a heavy impact on the more full featured laptops in the value end today since these will sport much better processors, higher quality screens, etc. these low end thin laptops will hit the nerve of a part of this value market and could actually become big hits on their own.

The RIM Story: In Praise of Mike and Jim

Micke Lazaridis photo — Michael Lazaridis

The departure of Research In Motion co-CEOs Michael Lazaridis and Jim Balsillie was, as amply noted by just about everyone, long overdue. Given the shipwreck that RIM has become, it’s understandable, but more than a little sad, that the coverage has paid so little attention to what Mike, Jim, and RIM accomplished during their glory years.

More than any other company, RIM mobilized business, first by offering the first truly practical two-way messaging device, then by providing enterprises a reliable and secure way to get messaging onto mobile devices.

In my years of reviewing gadgets, the original BlackBerry 850–a two-way pager–was one of the few that I fell in love with at first sight. The concept of a two-way pager was not new; there were products on the market from Motorola and others. But the original 1999 BlackBerry had a keyboard you could actually use to type a message, a keyboard unsurprisingly similar to the ones found on current BlackBerry models. And RIM offered a straightforward way to get mail from a Microsoft Exchange server to the BlackBerry.

That service evolved into the BlackBerry Enterprise Server, a powerful tool for companies to move mail, secure Web browsing, custom apps, and instant messaging onto mobile devices. Security was built in from the beginning, so BlackBerry’s developed a massive following in government and in the heavily regulated finance and health care industries and made RIM a massive success in the last decade.

The recent sins of RIM’s management are large. They failed to respond adequately to the iPhone, the app revolution, and the consumerization of mobile. Microsoft’s steady improvements to Exchange ActiveSync gradually ate into BlackBerry Enterprise Server’s advantages, and Apple’s quiet work with Microsoft to enable secure Exchange mail on the iPhone allowed iPhones to displace BlackBerrys.

But while it is easy to blame Jim and Mike for their failings, we should not forget their accomplishments. They played a huge part in making the mobile industry what it is today.

The Potential Losers if Ultrabooks Win

(Originally published on Forbes)

Ultrabooks were one of the most discussed form factors at this year’s CES 2012. This was due not only to Intel’s CES marketing push, but by all of Intel’s ecosystem demonstrating their prowess by showing their latest and greatest designs. OEMs like Dell, HP, Acer, Asus, Toshiba and Lenovo showed their new designs with different industrial design, color, keyboards, displays, Intel processors, storage, and proprietary software and cloud services. One question I have received often since CES is, “who loses if Ultrabooks are successful”? We must first start by defining an Ultrabook then move on to a complex discussion with many scenarios.

What is an Ultrabook?

Ultrabooks were introduced by Intel at last year’s Computex 2011. Intel owns the Ultrabook trademark, which means only those who license it and abide by its restrictions can use it. This becomes important as it relates to receiving Intelmarketing and design funds. If OEMs, ODMs and retailers don’t abide by the Ultrabook definition, they will not be eligible for those funds.

An Ultrabook is a notebook computer that has the following characteristics:

Thin: 21mm or less. As a comparison, the 13.3″ MacBook Air is 17mm at its thickest point.
Battery Life: 5 to 8 hours. The 13.3 MacBook Air, per Apple, gets 7 hours of “wireless web” browsing.
Start up: Intel describes that “the system wakes up almost instantly and gives users quick access to their data and applications.” There are storage, boot, sleep, and BIOS implications to this.
Secure: Intel states that “bios/firmware is enabled to expose hardware features for Intel Anti-Theft Technology (AT) and Intel Identity Protection Technology (IPT).” This means the hooks must exist in BIOS that can talk toIntel AT and Intel IPT
Processor: Intel Core Processor Family for Ultrabook.

Storage Implications

Most of today’s notebooks use spinning storage, specifically a 2.5″ hard drive. On the spot market, you can buy a 1 TB 2.5″ hard drive for $145-110. This is very inexpensive and enough storage to hold just about everything a user may need unless they’re a videophile. The downside is that physical hard drives are slower and consume more power than SSDs. To achieve the battery life and more importantly start up requirements, Ultrabooks require some form of SSD. SSDs can come in the form of an SSD drive or a hybrid drive which has a combined SSD and physical hard drive. A 128GB SSD drive on the spot market is around $175-200. A 500GB hybrid drive with 4GB flash costs $150 at retail.

The potential losers here are traditional spinning 2.5″ hard drives. Hybrid drive-based Ultrabooks are just hitting the market and it’s too early to say whether they will dominate over the more expensive, responsive and power saving SSD drives. Seagate is already in the market with their Momentus XT brand hybrid drives but Western Digital has yet to show up with a consumer solution.

Discrete Graphics Implications

Two different kinds of PC graphics exist, discrete and integrated. Discrete are a separate graphics chip that is either soldered on the mainboard or most likely a separate card inside the notebook. Integrated graphics are inside the SOC (System on a Chip) with the CPU and memory controller or it exists in what’s called the “tunnel” or the companion chip to a CPU. Intel provides integrated graphics only and is the PC graphics market share leader pulled by their CPU franchise. AMD provides discrete cards and chips, formerly branded ATI, and also provides integrated solutions with their Fusion-based SOCs. Nvidia serves the PC graphics market solely with discrete graphics cards and chips.

The potential losers here are discrete graphics. It’s not they are “banned”, but the Ultrabook specifications make it very challenging to integrate discrete graphics into designs. The two challenges are height and power draw. Adding a discrete card and keeping inside the 21mm restriction is difficult but not impossible. Two major players, Lenovo and Samsung have already announced Ultrabooks with discrete graphics. The announced Samsung Series 5 contains the AMD HD 7550M and the Lenovo ThinkPad T430u will ship with Nvidia Geforce 610M.

Discrete graphics from AMD and Nvidia will again get challenged when Intel unveils Ivy Bridge that has Intel HD 4000 graphics that support Direct X (DX) 11. AMD and Nvidia have managed to weather the risk through Intel’s DX 9 and DX 10 and I expect a similar kind of battle here. The ending could be different if AMD and Nvidia cannot effectively market the value of more gaming graphics or GPU-compute horsepower.

Processor Implications

By definition, Ultrabooks must contain Intel Core processors for Ultrabooks.

This means AMD, or for that matter, ARM-based processors from Nvidia, Qualcomm, or Texas Instruments cannot be inside an Ultrabook. This requires a bit more of an examination as it is regulated by the Ultrabook definition. AMD atCES 2012 was discussing their “ultrathin” plans and will reportedly enter the market with their Trinity platform. Press reports describe that AMD will leverage their graphics capability and also enable much lower price points than the $1,000 Intel price point many Ultrabooks sell at. I expect to hear more from AMD at their Financial Analyst Day next month.

ARM-based SOC suppliers Nvidia, Qualcomm and TI argue they already provide Ultrabook-like benefits with products like the Transformer Prime. The Asus Transformer Prime is a 10.1″ convertible powered by Nvidia’s quad-core Tegra 3, gets 18 hours of battery life, is super-thin at 16.3-18.7mm thick, and is instant-on with Android 3.2 moving to 4.0 OS.

Security Implications

Intel Anti-Theft Technology and Intel Identity Protection Technology come with the Ultrabook package. OEMs arent required to support every feature, but many of the features are tied to specific solutions. For instance, Intel Anti-Theft works with Winmagic, Computrace, and Symantec. Don’t see your provider? Well you are out of luck and more than likely the company unless they build to Intel’s spec and APIs. Because many of the Ultrabook security features are hard wired into the CPU and chipsets, by definition, it has potential implications for AMD. The potential impact is yet to be seen because AMD has not played their “ultrathin” hand yet.

Marketing Implications

Intel owns all rights to the Ultrabook name. With that, they have the right to enforce how people use it. This, tied with the 100s of millions of dollars that will be invested in Ultrabooks, will be very impactful to the ecosystem. AMD cannot use the name Ultrabook without Intel’s expressed permission, something I doubt either party would explore. If Intelcan make Ultrabooks a household name and consumers then buy online, Ultrabooks have a built-in advantage. BestBuy.com and even HP.com have a separate digital aisle specifically for Ultrabooks that won’t include anything from AMD. Amazon currently, on the other hand, does not. AMD is at the least risk at retail where the “ultrathin” specifications could be evident. Consumers will see OEM brand, design, thinness, weight and battery life. Time will tell how powerful the Ultrabook brand will be at physical retail.

Like AMD, no one in the ARM ecosystem like Nvidia, Qualcomm or TI can use the Ultrabook brand either for their Windows 8 clamshell designs. So that fancy Asus Transformer Prime? Not an Ultrabook in the ads, product reviews nor will Asus receive any engineering or marketing funds. Would Best Buy rather stock a margin-neutral, 13″ (hypothetical) $599 Asus Transformer Prime or a $699 Asus Ultrabook that gets $50 dollars marketing money per unit? You know the answer.

So Who Potentially Loses if Ultrabooks Win?

As you can hopefully see by the analysis above, there are many scenarios that must play out before all the winners and losers can be tallied. There are not any clear-cut answers. This is a highly competitive market and historically, AMD and Nvidia know how to play the game well and have much more experience at it then Qualcomm and Texas Instruments. Qualcomm and Texas Instruments have little or no experience fighting Intel at their own game.

Spinning hard drives without flash are extinct on the Ultrabook but adding flash to a hard drive to make a hybrid isn’t rocket science. So even Western Digital cannot be counted out yet.

Net-net, there are no simple Ultrabook winner-loser answers but what is for certain is that Intel has shaken up a sleepy Windows PC ecosystem, and that’s a good thing for consumers and the PC industry.

Apple’s iBooks Author EULA Restriction is Dumb, Not Evil

Apple created a fair stir around the internet with a provision in the end-user license for its new iBooks Author software that requires that content created using the tool can only be sold through iTunes. ZDNet’s Ed Bott called the move “greedy and evil” while even the normally Apple-friendly John Gruber denounced it as “Apple at its worst.”

In fact, that EULA language is merely stupid not evil. Apple is not asserting any sort of control over the contents of your book, just the formatted output of iBooks Author. That output can only be used to create an iBook and iBooks can only be sold through iTunes, so the language doesn’t actually create any restriction that isn’t already inherent in the software. Besides, no one has to use iBooks Author; there are other tools for creating iBooks.

But while the language of the Apple license may be ineffectual, it is not meaningless. In asserting this sort of control, Apple violated a longstanding principle of software: A program may not impose restrictions on the content it is used to create. Even the Free Software Foundation’s General Public License, in many ways one of the most restrictive licenses around, doesn’t try to prevent conventional copyright terms on say, a book written using the GPL-licensed emacs editor. And certainly neither Microsoft nor Adobe has ever attempted any control on the output of Word or Photoshop. Tools should be just that; the uses of their output should be solely up to the creator (subject, as in the case of iBooks Author, to purely technical restrictions.)

Perhaps the best face you can put on this mess is Gruber’s interpretation: “Let’s hope this is just the work of an overzealous lawyer, and not [Apple’s] actual intention.”

Looking Forward to the Next Round of Innovation

I was surprised by a number of conversations I had while at this years CES. More than once the conversation turned to the staleness of innovation shown at the show. It is true there wasn’t too much to get excited about this year, but the remarks I heard seemed to indicate that there is a belief that we may be headed for a period where innovation is stagnant. I have to say that I disagree.

On Monday I wrote in my column about why I believe the PC landscape is about to change. I pointed out that the barrier to entry to create consumer electronics has dropped to an all time low. Making it feasible for any company with enough cash and a market strategy to start creating electronics of all shapes and sizes. My overall point was that consumer electronics is ripe for new entrants. More specifically new entrants with fresh ideas.

That being said we have to look at innovation as pillars. There is hardware innovation, software innovation, and services innovation. One could also throw in experience innovation as a pillar as well but it is intertwined with hardware, software, and services. Each of these pillars feed off each other and spur parallel innovations.

There are countless examples of how this chain of events works. We could look at examples from the first land line phones, to the PC, to the smart phone and more. However I am going to use the iPad as an example.

The iPad was a hardware innovation (not a conceptual innovation) that integrated all the right pieces of hardware into a touch computing package. The iPad then set in motion the opportunity for software innovation and eventually we will see more innovation in services as well. This leads us to what we can expect in this next round of innovation. Namely that it will come more from the software and services pillars.

This is not to say there will be zero hardware innovation. I simply believe we will see more innovation come from software and services which will take advantage of the hardware platforms that gain mass market attraction. Namely around devices like the PC, tablet, smart phone, and TV. All of those devices represent the platforms of the future. So although we will see some hardware advancements in those devices I don’t believe they will be monumental but more incremental. Screens will get better, semiconductors will get faster, devices will be go through design evolution, etc.

All those hardware platform innovations will continue to lead to new software, services, and experience innovation. Take yesterday’s news from Apple about iBooks 2.0 and the new interactive e-book experience. Tim stated that Apple just re-invented the book and he is right. The point that needs to be made, however, is that without the iPad and the platform innovation of tablets, it would never have been possible to even think about re-inventing the book. The hardware innovation created this possibility. Tim also rightly pointed out that if publishers are not careful they could be disrupted quite easily. The hardware platform innovation leads to not just the re-birth of something like a book but the re-birth of the publishing industry. This can also be said of the music industry, motion pictures, network TV, magazine, and perhaps even government or politics? All of these industries have the opportunity to re-invent themselves in light of new and innovative hardware.

The opportunities will be endless, and again, I am not saying that hardware innovation is dead, perhaps only that it is cyclical. The next cycle of innovation will be more focused on software and services rather than ground breaking new hardware. We could discuss new computing hardware like the smart watch, automobile and more, but perhaps those are more extensions of existing platforms rather than platforms themselves. I will leave that topic for another column.

Apple Just Re-Invented Books

This morning’s announcement from Apple about creating tools for interactive textbooks is actually a landmark announcement for four major reasons.

The first is how these tools can impact education. Ben wrote a good piece on this so I won’t elaborate on this too much here, other than to say that these tools will completely re-define how textbooks can be created and distributed. It is ideal for higher Ed textbooks but Apple and their major publishing partners are even doing high school level interactive books that should push iPads into education circles even faster.

The second thing iBook Author does is lay the groundwork for non-education publishers to create interactive eBooks as well. But, as Phil Schiller pointed out at the iBook 2 announcement event in NYC today, this tool can be used to create any book of any kind, not just interactive books. This free authoring tool is a major step towards making Apple not only a publisher in their own right but a distributor as well as delivering the hardware platform optimized for enhanced eBooks in general.

While the first push with these tools will be to educational authors, it won’t be long until mainstream authors start using these tools and use the iBookstore as their preferred distribution medium. And since these tools are so easy to use, authors who only write text-based content will begin playing with the integration of color drawings, illustrations and other media to enhance their story lines, which will only work properly on an iPad.

The third thing these tools do is give Apple a serious competitive advantage over other tablet vendors. The iPad is already the leading tablet, but by developing these rich authoring tools for creating interactive and enhanced eBooks for the iPad, it makes the iPad even more interesting to consumers and eBook readers from all angles. To date, Apple has sold about 70+ million iPads and we expect them to sell at least that many in 2012. This means that they are rapidly increasing their user base, which in turn becomes more attractive as an eBook publishing and distribution platform for all types of authors. This move really distances them from any other tablets on the market

But the 4th thing these tools could do is quite interesting. It has the potential of doing to the publishing industry what Apple did to the music industry. Although Apple did not invent the MP3 player, they re-invented it and then created the iTunes store, which with the iPod, became the # 1 vehicle for digital music distribution. Today, Apple owns 75-80% of the MP3 player market even though many others have tried to duplicate their success. But they created the iPod, the tools and the distribution medium for digital music that helped Apple own that market. Yes, music is now available on smartphones, but it took Apple’s competitors almost a decade to replicate their success and even then, it had to come on a completely different digital device.

Now Apple has a chance to re-invent eBooks by delivering a complete eco system of hardware, software development tools for creating next generation interactive eBooks, a publishing and distribution medium and a powerful hardware device for delivering this optimized content. On the surface this looks like a major move to get Apple more entrenched into the education market. But I see it as Apple’s first move to disrupt the entire publishing industry. If Apple’s does this properly, they could become the largest publisher and distributor of eBooks and in many ways, change the economics and overall distribution of eBooks in the future.

One more thing. If Apple was concerned about Amazon’s Kindle Fire and even Amazon’s role as a publisher and distributor of eBooks, they aren’t anymore. In fact, this is Apple’s response to the Kindle Fire and Amazon’s overall position as an eBook distributor. The key reason is that with these tools, Apple will completely raise the expectations of what should be in an eBook in the future by pushing the idea that all eBooks should have some type of rich interactive format that delivers an enhanced reading experience.

Of course, the Android or even Windows 8 tablet crowd could respond in kind, but at the very least, Apple has a two-year head start on them and given the competitors track record in trying to catch Apple that lead in this area could even be longer.

I also think that this probably signals that a lower cost iPad is on the way. For Apple to really get iPads into education and leverage this new interactive eBook development platform, they will need to have some models with lower prices. Given the tight budgets of schools and families who could really use something like this to help their kids education, iPads will need to be much more affordable if Apple is going to “own” this segment of the tablet market.

How the Apple iTV is Accelerated by Samsung

(originally published at Forbes)

Back in September, I wrote an analysis on why Apple should build an HDTV. The premise was that there are huge experiential issues Apple could solve and they could strike a deal with the MSO’s and satellite companies. That was a big premise, but ironically with what Samsung showed at CES, it’s apparent Samsung will accelerate the likelihood ofApple launching an “iTV”.

Samsung 2012 Smart TVs at CES

At this year’s CES, Samsung made a very impressive showing in consumer electronics. They showed off an array of devices from intelligent refrigerators to thin and energy sipping OLED displays to phones to Smart TVs. Two major themes came out of the HDTV launches; smart interfaces, apps and cable and satellite content.

Smart Interaction, Kind Of

Samsung showed in controlled demonstrations their next generation of TV interfaces. Samsung calls it Smart Interaction, or the ability to control the TV through voice commands and far-field air gestures. Voice commands andthe air gestures work in a similar fashion to Microsoft’s Kinect. Get the TV’s attention with your voice and tell it to change channels, turn the volume up or down, go to apps, etc. Air gestures allow the consumer to use their hand as a virtual mouse clicking on an icon, or using the hand as a consumer would use their finger on a tablet by swiping or grabbing.

All of this is great in theory, but one of the challenges that I saw at CES was that it just didn’t work well. The demoer was having a very hard time with the system getting it to work. I talked to others at the show to see if in fact this was an anomaly, but it wasn’t. Smart Interaction didn’t work well for those I talked to either. This was a public demo in a controlled environment so I expected to see a better response, especially because you know everyone will compare it toMicrosoft Kinect and Apple’s Siri.

To be clear, what Samsung showed was a glimpse into their 2012 product line and not on shipping platforms, but was still concerning because perfecting these interfaces takes years, not months. Apple is proof of this in that Siri, the voice-control mechanism on the iPhone 4s is still beta three months after public launch.

Samsung Cable and Satellite Content Deals

Samsung also launched an impressive amount of U.S. content deals with Comcast, DIRECTV, Verizon, and Time Warner Cable. The vision is classic IP-TV, or removing the set top box and just plugging the Ethernet cable into the TV. In theory, this provides the consumer with a much more integrated TV-content experience.

Comcast will provide its Xfinity services directly to a new Samsung TV without the need of an STB. DIRECTV will give the new Samsung TVs to access to live and stored content from the satellite content provider. Verizon said it will provide Samsung the Verizon FiOS TV app which gives users access to 26 live TV channels and access to VOD titles through Verizon Flex View. Time Warner Cable and Samsung did show a demo of a user accessing stored content from a set top box in the home and said apps would be available “later this year.” While these announcements are complex and not as simple as saying, “all STB content now available on the new 2012 Samsung TV”, it was a step forward from last year where cable companies weren’t all that excited about this IPTV premise in a world where they are an icon next to Netflix and Hulu.

Samsung’s Smart Interaction Accelerate Apple iTV

Samsung demonstrated two things at CES 2012 related to Smart TVs in general. First, they showed how not to demo the next generation of TV user interface. Messing with the TV interface is dangerous in that it is the primary pathway to get to content. Users blame themselves when they lose the remote, but when users get an error with voice control or air gestures, they will blame Samsung and stop using it. Then they will tell 10 friends about it. Yes, it will improve over time, but from what I saw, there is a lot of improvement to do. This enables Apple, with an iTV, to perfect the user interface. Apple would undoubtedly leverage Siri for voice control and leverage local iOS devices to do this. Leveraging the huge base of iPhones, iPads, and iPods allows voice control to be better, in that the microphone is 10 inches away from you, not 10 feet. This helps block out more noise and generally could provide a much better experience. I believe it will work much better than Siri given the “dictionary” is smaller. The smaller the “dictionary”, which in this case will be content, the higher the likelihood it does what you want it to do.

Envision how this looks at a Best Buy. You will have a Samsung TV on one side of the store and an Apple iTV in theApple store within a store. The Samsung voice control may not demo well based upon what was shown at CES, and theApple voice control will “just work.” Net-net, by Samsung launching Smart Interaction before it’s ready provides a clear and demonstrable pivot-point for Apple to differentiate from. This is in a similar way to how Apple’s capacitive touch screen interface “just worked” and other phones didn’t just work well back when the iPhone first launched.

Samsung’s Content Deals Accelerate Apple iTV

The second thing Samsung demonstrated, and demonstrated well, was that they could cut deals with the cable and satellite guys. This breakthrough is important because it shows that there is a deal to be done. When a TV can blend cable, satellite, and OTT content, this is the “holy grail”. Even better is when the user can have one program guide or one database to find the content they want with a precise, by-user recommendation engine like Netflix and Amazon.

By Samsung breaking some newer ground with Comcast, DIRECTV, Verizon, and Time Warner Cable, this at least givesApple the most concrete idea of what it would take to for them to do a deal. Yes, Apple has been trying to cut deals with them forever, but Apple certainly doesn’t want Samsung to get too entrenched as it could dull some differentiation with an Apple iTV. Just as the iPod and iTunes got credit for aligning the music industry, Apple wants to get credit for aligning the cable and satellite providers and in turn, deliver a great experience to the users.

While Apple was not at CES 2012, their impact and industry reaction from Samsung will help accelerate development and launch of an Apple iTV. Samsung has provided Apple with an experience to pivot and differentiate off of, and has helped provide a basis point for Apple’s own deal with the cable and satellite companies. Samsung has helped accelerate Apple’s iTV. Ironic, yes?

Why the iPad is an Investment in Your Child’s Future

Whether or not Apple uses this positioning, it is perhaps one of the best angles for the iPad. When friends, family, colleagues, or anyone who asks me, asks for my recommendation about iPad, I always add the benefit to kids – if they have them.

From the first iPad, and ever since, I have marveled at how my kids have taken to the iPad and more importantly how I have been able to use very helpful apps to assist in building critical skills. My kids both used the digital version of the popular “Bob Books” to help them prepare to read for kindergarten. I have been able to find apps at nearly every level of their education to let them engage more with relevant age-based subject matter.

I can say with conviction that the iPad has helped my kids learn to identify objects, colors, learn to read, build critical observational and critical thinking skills and more. This is not to say they could not have built these skills without the iPad, of course they could, only that the iPad has made the process more engaging, fun, and natural.

Touch Computing is the Future
When I was young, everyone was pushing to teach kids how to type as well as overall computer literacy. If you think about it, touch computing as well as things like the iPad in general, make computer literacy instant. My kids didn’t need to go sit through computer literacy classes to start using an iPad and begin computing. They picked it up and from day one used it to its full potential – for them. I would argue this is the case with any age group.

I have written extensively on the subject of touch computing, constantly highlighting its importance to our computing future. I believe touch represents the most natural computing paradigm, along with speech computing (which has not fully come to fruition). Touch breaks down traditional barriers to computing that a mouse and keyboard had traditionally created. Mouse and keyboard computing paradigms are still relevant, but have been designated to task specific usage.

Although touch computing is natural, exposing children to it at a young age will set their expectations for computing higher and potentially help create the next generation of leaders. Growing up with touch computing as the driving computer paradigm will lay an important base for our children’s future.

Re-Inventing The Book
Today Apple took that truth one step further with their announcement of iBooks 2 and the Author toolset. Today’s announcement on the surface is re-inventing the textbook and providing next generation publishing tool kits. It is however, quite a bit more. This announcement lays the foundation for the complete and total re-invention of books in general.

Up to this point, I have been disappointed with the publishing industries strategy to simply re-purpose books in e-reading form. Last year I wrote about the need to re-invent the book and to date it still hasn’t happened.

Hopefully with the toolkits Apple has developed and will continue to develop, publishers will get savvy and start being more creative with how they create package content. Which is essentially all a book is—the packaging of content. This packaging of content was limited to static words on a page, but with iPad the packaging of content is taken to a new level.

Publishers will get disrupted if they do not embrace this wholly and quickly. What is to stop smart people with a great idea to create the next era of interactive books? If the publishing industry is not careful, they could face the same fate as the music industry but perhaps to an even bigger extent.

Interactive books are the future and the iPad is the perfect platform for them to thrive. We will soon hopefully have not only next generation text books, but next generation children’s books, novels, graphic novels, biographies, and more.

For now, I intend to purchase these new interactive books for my kids and get them engaging with educational content. Since I truly do believe that having them use the iPad and integrating it into their educational routine is an investment in their future.

Related Columns Mentioned:
Re-Inventing the Book in the Digital Age – at SlashGear

Reflections in a Yellow Box: The Inevitable Fall of Kodak

Kodak’s filing for Chapter 11 bankruptcy has inspired a swarm of commentators to blame the company’s management for failing to catch the digital wave, leading to a long decline and possible demise. Kodak’s management was indeed uninspired. But even with perfect hindsight, it’s hard to see what even brilliant managers could have done to reverse the course of history.

Kodak did not fail to see the digital revolution. It was an early pioneer in the development of the electronic light sensors at the heart of digital cameras. It was a pioneer in displays, inventing the organic LED. It knew many years ago that digital would replace film. But it is entirely possible to see the future and still not be able to do much about it.

Kodak’s fundamental problem was that its business was not photography, but the manufacture and processing of film and photographic paper. After the Brownie years, it was not very big force in cameras and was never a serious player in professional equipment.

Furthermore, the economics of digital photography are radically different from film. A 32 gigabyte memory card costs less than buying, developing, and printing two rolls of color negative film; it holds thousands of pictures and can be reused many, many times. Kodak’s business was built around the recurring revenue of film purchases, and there is nothing like that in the digital world.

It’s easy for critics to say that when the digital revolution began, Kodak should have moved swiftly to get out of film and into the new technology. But film wasn’t easily gotten out of. The film and paper businesses were immensely profitable. Even more significant, Kodak had a vast capital investment in manufacturing. In fact, for years a popular, if grim, form of entertainment in Kodak’s home of Rochester, N.Y., was watching the company blow up former Kodak Park film manufacturing buildings that it no longer had a use for. The inability to shed its vast investment in film manufacturing and processing probably made an eventual bankruptcy inevitable, and perhaps the most serious criticism of Kodak management is not facing the music sooner.

The biggest players in digital photography never were burdened with this sort of legacy. Nikon, Canon, and Olympus are optics specialists, and optics are optics, whether for digital cameras or film. Panasonic and Sony, of course, are huge diversified consumer electronics companies. Only the much smaller Fujifilm has its roots in the film business.

I hope Kodak can emerge from bankruptcy as a viable business, stripped of its costly legacies. There’s still a business for film as a specialty product and people are still printing pictures, albeit in nowhere near the number they once did. But it will be a much smaller company.

Maybe Apple Can Fix Television; Someone Has To

Not long before his death Steve Job famously told biographer Walter Isaacson that he had “finally cracked” the problem of television. No one knows quite what he meant, and Apple has shed no light on the subject, but for the sake of the future of TV, let’s hope Steve left something important behind.

Photo of LG booth — The LG booth at CES 2012

At the International Consumer Electronics Show, the overwhelming feeling I got about television is stasis. My colleague Patrick Moorhead has a solid piece on TV makers’ experiments with new user interfaces. But those remain experiments, with no commitment to when, or if, we will see them on TVs you can actually buy. And the user interface, while desperately in need of improvement, is only one piece of a much bigger puzzle.

Related Column: How Sony can beat Samsung and LG on Smart TV Interfaces

The sad truth if you had told me that the TV displays in the Panasonic, Samsung, and Sony booths were actually left over the the 2011 show, I wouldn’t have argued with you. The main difference was much less emphasis on 3D, which the makers now realize is just a feature, not a revolutionary product. Only LG’s booth showed real commitment to 3D, and not necessarily in a good way. Its booth was a jarring riot of gimmicky 3D images coming at you from all sides, an effect allowed by LG’s move to passive, battery-free glasses that don’t need to sync to a particular set. Both LG and Samsung showed 55″ OLED displays, each claiming the world’s largest, but to my eyes OLED remains oversaturated, garish, and a dubious improvement on LED-backlit LCD or plasma.

Even the internet connected TVs, which the makers promoted as this year’s big thing, seemed tired. Basically, they build the capability of a Roku box or other internet-connected device directly into the set. It’s an improvement in convenience, mainly though getting rid of one remote, but hardly enough to send anyone out to buy a new TV.

The fix TV desperately needs is an integrated solution. I want to get all of my TV–the stuff I get over cable as well as the content streamed over the internet in a single box that seamlessly combines all the sources. I don’t much care whether this is built into the set or done in a separate box–the box would have the advantage of allowing ample local storage, while a TV solution would probably have to rely on the cloud to save recorded programs. The difference in convenience is not very significant.

Such a solution would require a new user interface, something much better than Google managed for Google TV. But much more important, and much harder, it requires an entire new business model for content distribution. As I have written many times, the biggest impediment to a this breakthrough is not technology, since the technology needed to make it happen is available today, but breaking the iron triangle of content owners, networks, and cable and satellite distributors who are prospering under the status quo. Can Apple succeed where everyone else has failed? I rather doubt it. But I’m cheering for them anyway.

How Sony can beat Samsung and LG on Smart TV Interfaces

As I wrote last week, Samsung and LG are following Microsoft’s lead in future interfaces for the living room. Both Samsung and LG showed off future voice control and in Samsung’s case, far-field air gestures. Given what Samsung and LG showed at CES, I believe that Sony could actually beat both of them for ease of interaction and satisfaction.

HCI Matters
I have been researching in one way or another, HCI for over 20 years as an OEM, technologist, and now analyst. I’ve conducted in context, in home testing and have sat behind the glass watching consumers struggle, and in many cases breeze though intuitive tasks. Human Computer Interface (HCI) is just the fancy trade name for how humans interact with other electronic devices. Don’t be confused by the word “computer” as it also used for TVs, set top boxes and even remote controls.

Microsoft recently started using the term “natural user interface” and many in the industry have been using this term a lot lately. Whether it’s HCI or NUI doesn’t matter. What does matter is its fundamental game-changing impact on markets, brands and products. Look no farther than the iPhone with direct touch model and Microsoft Kinect with far-field air gestures and voice control. I have been very critical of Siri’s quality but am confident Apple will wring out those issues over time.

At CES 2012 last week, Samsung, Sony, and LG showed three different approaches to advanced TV user interfaces, or HCI.

Samsung
Samsung took the riskiest approach, integrating a camera and microphone array into each Smart TV. Samsung Smart Interaction can do far field air gestures and voice control. The CES demo I saw did not go well at all; speech had to be repeated multiple times and it performed incorrect functions. The air gestures performed even more poorly in that it was slow and misfired often. The demoer keep repeating that this feature was optional and consumers could fall back to a standard remote. While I expect Smart Interaction to improve before shipment, there’s only so much that can be done.

LG
LG used their Magic Motion Remote to use voice commands and search and to be a virtual mouse pointer. The mouse

pointer for icons went well, but the mouse for keyboard functions didn’t do well at all. Imaging clicking, button by button, “r-e-v-e-n-g-e”. Yes, that hard. Voice command search worked better than Samsung, but not as good as Siri, which has issues. It was smart to place the mic on the remote now as it is closer to the user and the the system knows who to listen to.

Sony
Sony, ironically, took the safe route, pairing smart TVs with a remote that reminded me of the Boxee Box remote which has a full keypad one side. Sony implemented a QWERTY keyboard on one side and trackpad on the other side which could be used with a thumb, similar to a smartphone. This approach was reliable in a demo and consumers will use this well after they stop using the Samsung and LG approaches. The Sony remote has microphone, too which I believe will be enabled for smart TV once it improves in reliability. Today the microphone works with a Blu-ray player with a limited command dictionary, a positive for speech control. This is similar to Microsoft Kinect where you “say what you see”.

I believe that Sony will win the 2012 smart TV interface battle due to simplicity. Consumers will be much happier with this more straight forward and reliable approach. I expect Sony to add voice control and far field gestures once the technology works the way it would. Sony hopes that consumers will thank them too as they have thanked Apple for shipping fully completed products. Samsung and LG’s latest interaction models as demonstrated at CES are not ready to be unleashed to the consumers as they are clearly alpha or beta stage. I want to stress that winning the interface battle doesn’t mean winning the war. Apple, your move.

The PC Landscape is About to Change – Here’s Why

One of my favorite quotes about change is:
“Life is a journey, and on a journey the scenery changes.”

The technology industry is also on a journey and on that journey the scenery will change. Whether many industry insiders recognize it or not the scenery is changing and it’s happening quickly.

The line is blurring between what is a PC and what isn’t. Devices like smart phones and tablets are proving to many that computing can take place on a number of different form factors. It is important for those who watch the personal computing industry closely to realize that the landscape as we know it is about to change drastically.

Tablets Take the Computing Challenge
It all began with the iPad. In as many times, in as many years, Apple again released a product that challenged the industry and forced many companies to turn introspective and re-think their product strategy.

The iPad has done quite a bit more than just challenge the industry, it has also challenged consumers to re-consider what exactly a personal computer is and what their needs are with one. What I mean by that is that our research is indicating that many consumers bought an iPad as a partial PC replacement. Meaning they were in the market for a new PC but instead bought an iPad, relegating their old PC as a backup for when they need a mouse and keyboard experience for certain tasks. What is interesting to the last point is that once integrating an iPad consumers realize they need the PC less and less for many tasks, especially when the iPad is paired with a keyboard. There are however, a few tasks like writing long emails or using certain software that these consumer still want a traditional mouse and keyboard experience for, only their observation is that those use cases do not occupy the majority of computing time for them on a regular basis. For that they remark the iPad suffices for their needs the majority of time.

As those in the industry who make PCs are already figuring out, tablets are a viable computing platform and having a tablet strategy is essential for anyone currently competing for PC market share.

We expect quite a bit of innovation in hardware, software, and services in the category over the next few years. Tablet / PC hybrids, which is a tablet with a detachable keyboard, could be one of the most interesting form factors we will see over the next few years. This product, if done right, will give consumers a two-in-one experience where they can have a tablet when they want it and a traditional mouse and keyboard experience when they want it, all in the same product. The big key – if done right.

Anyone Can Make PCs
Tim made the observation last week in his column that a fundamental issue within the technology industry is that the bulk of consumer product companies are simply chasing Apple rather than emerging as leaders themselves.

As companies look to duplicate the iPad and the MacBook Air this point becomes increasingly clear. What this creates is the opportunity for new entrants to create new and disruptive computing products by bringing fresh thinking to the computing landscape.

Perhaps a glimpse at this reality is Vizio’s announcement that they are getting into the personal computer game. With much of the hardware design for electronics moving into the hands of the ODMs, it makes it possible for anyone with a brand, channel, and cash to start making any number of personal electronics.

This is perhaps the biggest evidence about the change we are about to see in the PC landscape. The reality that the traditional companies, who were historically the leaders in this category may get displaced by new and emerging entrants.

Simply put, those who we expected to lead the PC industry may not be those who lead in the future. The truth is innovation does not stand still and if the traditional companies don’t want to do it someone else will.

The Simple Reason for Apple’s Success

Back in 1984, one of the major PC companies, who was spectacularly successful with their business PCs, decided that they could be just as successful if they created PCs for consumers. But they wanted them to be different from their business PCs since they knew a consumer model would have to be priced much less than their business models.

So they created a consumer PC that, for all intent and purposes was a “wounded” version of their business models, with a lousy keyboard, very weak processor and the cheapest monitor they could dig up. To say that it was a failure would be an understatement. To make things worse, the only OS they had at the time was MS/DOS so that meant they were giving consumers an OS that was hard to use and difficult to learn from scratch. But they reasoned that since so many business users had their PC with DOS at work, they would gladly buy a similar model for their home and since they knew DOS from the office, it only made sense that they could use it on their home PC.

Interestingly, when it failed, they were dumbfounded. They were certain that they had a winner on their hands and some of the top management kept pushing to re-design it and take a new model back to the consumers the following year. But to their credit, some of the people in the group questioned its potential and turned to outside experts to give a 3rd party opinion on the potential of a PC for consumers at that time.

I was lucky to be one of the few outside persons asked to weigh in on this subject so I went back to their HQ on the east coast two times to give my thoughts on the subject. In my presentation and documentation I gave them, I pointed out the major difference between business and consumer users were that business users had serious motivation to go through the hassle of learning a text-based OS, while the mainstream consumer did not. At the time, PCs pretty much only had software for business use. I argued that for PCs to take off, there would have to be a major reason for consumers to buy them, and emphasized areas like using PCs for educational purposes as well as possibly entertainment as well. I also told them they needed to be cheap.

I drew them a picture of the traditional marketing pyramid and showed that at the top we would find the truly early adopters, which at this time were quite IT driven. I then told them the second layer would possibly come from the worker bees whose IT leaders would push them to learn DOS and harness the PC to make their work more productive. But I told them the third layer would come from what today we call prosumers and, even at that time, I felt it would take at least 3-5 years to get these folks excited about PCs and get the PCs to a price point that they could afford.

And at the bottom layer of the pyramid, which is always the largest audience, I said they would find the mainstream consumer, but pointed out that I felt it would take at least 10 years before this crowd would finally buy into the PC vision.

I never found out how much my outside work on this project impacted their decisions but I do know that a week after I made this presentation, their consumer PC was killed off for good.

But there was another key point that I emphasized in this document. I said that the OS had to be easy to use and the PCs had to be simple enough so that consumers did not need a degree in engineering to run them. And if you know the history of the PC business, you know that consumer interest in PCs for the home did not kick in until Windows 95 hit the market, exactly 10 years after this company killed their consumer PC.

Ironically, even though our PCs have gotten spiffy new user interfaces and are clearly easier to use, to the point that PCs have penetrated pretty much every home in the US in some way or another, the fact remains that they are actually more complicated to use. Consumers not only have to deal with the plethora of desktops and laptops to choose from, they now also have to deal with Internet connections to the home, wireless connectivity, security, identity theft, multiple passwords, personal data in numerous non-connected files, and most recently, this new thing called the cloud.

But in the end, consumers want things simple and some handholding when things go awry. I am convinced that this is really at the heart of Apple’s success. They have one phone–the iPhone. They have one tablet–the iPad. They have two laptops but except for sizes and optical drives in the Pro models, they are actually all the same. And they have one major desktop–the iMac. Even in the iPod line, they have streamlined it to the iPod Touch and the Nano. If a person needs help, they have their Genius Bars and 24-hour hotlines in which the people on the other end actually now how fix your problem.

By comparison, there are now over 80 Android phones to choose from as well as at least 5 versions of an Android OS to deal with. And in the PC space, if something goes wrong, people don’t know who to go to for help. While some of the mainstream PC vendors do have 24 hour hotlines, my experience with them has been only marginally successful. And I have even stumped Best Buys geek squad a few times over the last year with problems with Windows laptops.

While we can point to Apple’s powerful OS, industrial designs and ecosystems of products and services as key to their success, I actually think, that at its heart, the real reason for their amazing success is Jobs’ own mantra to his team, which is to keep things as simple and intuitive as possible. And he was smart enough to know that even with that, given the nature of technology and the fact that things get more powerful and complex over time, provide a place for people to get help that is easy to access and stock it with people who can help when a problem arises.

As I walked the floor of CES recently, I saw over a dozen phones at one vendor, nine new PCs from another vendor and five tablets from another vendor, all with different versions of Android on them. While choice is great, I really think that keeping things simple and easy to understand–and buy–is even more important than choice. While Apple has powerful products in many categories, the real reason for Apple’s success that they just keep things simple.

Lessons for Tech from the SOPA Fight

It’s too early for opponents of new laws giving the government sweeping new powers to fight internet piracy by cutting off access to web sites to declare victory. A my colleague Peter Lewis points out, these forces are in fact preparing to take the fights to new levels.

Pareick Leahy photo — Senator Patrick Leahy

But the fact is that the once seemingly inevitable march to passage Stop Online Piracy Act (SOPA) in the House and the Protect IP Act (PIPA) in the Senate now seems very much in doubt. The laterst blow came when Vermont Democrat Patrick Leahy, the author of PIPA, said he would need to reconsider the provisions that would allow the government to block access to offending sites.

How did the tech industry turn what looked like certain defeat into a likely victory? And what can it learn from the effort.

Perhaps the biggest takeaway is that a concerted and noisy effort can sway public opinion—and congressional votes. Some of the claims of SOPA opponents were overstated to the point of hysteria. It was a very bad piece of legislation, but only under a government both malevolent and stupid would it have caused “the end of the internet as we know it” or led to the destruction of sites such as Facebook or YouTube. But hyperbolic claims are, alas, the stuff of political debates and the supports of the bills were guilty of equally gross exaggerations.

The tech industry was way too passive during the early stages of the fight. Legislators of both parties are anxious to please the entertainment industry, which was the driving force behind the bills, and PIPA was able to collect a bipartisan roster of 40 Senate sponsors before the tech world mounted an effective response. Some major tech companies let their historic fear of software piracy blind them to the much greater threat posed by the proposed legislation. Both PIPA and SOPA seemed well on their way to passage before the Business Software Alliance, dominated by companies such as Microsoft and Adobe, was shamed into withdrawing its support.

But the industry mounted an effective, if loosely coordinated counterattack that took full advantage of opponents’ tactical errors. House Judiciary Committee Chairman Lamar Smith (R-Tex.) made an embarrassing mistake when he scheduled just one day of hearings of PIPA and allowed only one opposition witness, Google. He then compounded the error by trying to drive the bill through committee in the rush to the Christmas recess. Smith and his allies defeated efforts to strip or modify some of SOPA’s more extreme provisions, but even as they seemed to be railroading the bill, support was eroding. The first drafting session adjourned without a final vote in committee, and efforts to revive the markup before yearend failed.

The industry, for once putting up a united front, also found its voice as numerous tech luminaries spoke out against the legislation. Vint Cerf, Google’s chief internet evangelist and an unquestioned expert on how the internet works, having invented a good bit of it, was particularly effective. Opponents of the bills also learned to work with key legislators whom they do not always regard as their closest friends. Rep. Darryl Issa (R-Calif.) played a critical role in halting SOPA’s march to passage. And a massive grassroots campaign added to the pressure on lawmakers.

SOPA and PIPA are by no means dead and Hollywood and its allies will make a concerted effort to to revive the bills when Congress returns later in January. But the passage that once looked certain now seems like a 50-50 chance at best—and a much more industry-friendly alternative backed by Issa and Senator Ron Wyden (D-Ore.) appears to be gaining momentum.

The tech industry should play close attention to what happened in this fight. It will not only help finish the victory, but could be very important in the inevitable policy fights to cpme.