September 2012 – Page 2

Do Consumers Really Care About Wow?

I am fascinated by the amount of media and bloggers who said that what Apple introduced in the iPhone was incremental and did not have the “wow” factor”. They complained because they wanted support for NFC (not even close to being ready for prime time) and dissed it for its new connector, as if it would cause great harm to their lives.

Grow up people! From 30+ years of following Apple I have learned that when Apple designs a product, everything they do is related to how “they” want to use the products themselves. Every edge designed into the product and every component is done for a reason. They don’t listen to the media or rumor sites that say they want this or that feature. Instead, they create products they would love to use.

I remember talking to Steve Jobs about this on a couple of occasions and he made it clear to me that Apple is about creating great products and writing world class software and the motivation was always based on how he and the team would like the product and how they would use it. They don’t do focus groups. They don’t do consumer research and instead, they create products they would love and believe that in the end, consumers will love them too. Never once did he say to me “Apple is shooting for the wow factor.”

They also have to live with the laws of physics. Although I believe the iPhone is the most elegantly designed to date, everything they did to enhance it, whether it is to the case itself and all components inside, literally pushed the law of physics to the edge of what can be done. At the same time, they made sure it was recognizable as an iPhone. Keep in mind, Apple has spent the last 6 years branding its look and feel and to create a new design that maybe looked like a banana, wallet or any other form factor did not make sense.

Thankfully, consumers see past the drivel that comes from some media and bloggers who write about what “they” wanted Apple to do or why “they” are disappointed in Apple. In fact, Apple seems to get this right every time they introduce the new iPhone.

The major reason for this is that Apple does not develop products for the media and bloggers. That is a good thing. If they did, iPhones would have 30 i/o ports and look like a can of spray paint. And they seem to hit the right nerves with each new model.

While media and bloggers are complaining about the lack of wow, consumers who seem smarter then many of these writers, just go out and buy Apple products in huge numbers. Apple is the most profitable company in America and they did not get this way from listening to the media and bloggers.

But they did get to be this profitable by adhering to their core beliefs that is ingrained into the Apple DNA. They create products they themselves would like to buy and use and believe that consumers will buy them too.

Why Apple Couldn’t Go to Micro USB Charging

No feature of the new iPhone 5 has come in for as much criticism as Apple’s decision to drop the venerable 30-pin iPod connector in favor of a new, reversible 8-pin plug called Lightning.

Some people, especially those with a lot of iPod/iPhone/iPad accessories were understandably upset that they have suddenly been rendered obsolete. The $29 price for a Lightning-to-30-pin adapter doesn’t help, although that cost will undoubtedly come down as soon as third-party accessory makers bring theirs to market. The problem is that the nearly decade-0ld 30-pin was obsolete and too big, and was becoming a real design issue for Apple.

A more serious question is why Apple did not go to the micro USB connector that is supposed to be a standard in the phone industry. While the decision is surely due in part to Apple’s sense of esthetics and in part to Apple’s desire to control the accessory market through licensing of the proprietary Lightning connector, there was a truly compelling reason: The iPad.

Here’s the problem: The micro USB pins are very small, and the power-carrying connectors, pins 1 and 5, are rated to carry 1.8 amps at 5 volts DC. That means that the maximum charging power that can safely flow across the connector is 9 watts. But the iPad wants 10 watts to charge. It will charge on as little as 5 watts, the output of most USB 3 ports and the specially modified USB 2 ports on newer Apple products, but needs 10 watts for fastest charging.

Depending on the circuitry involved, there’s some danger that attempting to charge a USB iPad, if such a thing existed, would cause the connector to overheat. But the more likely result would be a 10% slowdown in the iPad’s charging rate, an especially unfortunate outcome on the already slow-charging third-generation device.

Apple has promised a micro USB-to-Lightning connector to comply with European Commission regulatory requirements. But I bet it will generate a warning regarding iPad use when the next generation of Lightning-equipped iPads appears.

iPhone Naysayers

It’s interesting to sit back watch tech pundits and some bloggers trip over themselves to write negative articles after an Apple launch. It’s nothing new, it’s been going on for years with the same result — they’re wrong.

The launch of the iPhone 5 was no different. The interesting thing to note about these naysayers is that its usually the same group of people predicting the demise of the iPhone or Apple, or maybe both.

What usually happens is that Apple sells a gazillion iPhones while these same people yap their gums about how bad it is.

Here is the cold hard truth about the iPhone — if people thought the device was lacking in any way, they wouldn’t buy it. Apple has proven over and over again that people do want the iPhone with the features they put in it.

I’ve heard people talk about the design of the iPhone 5 and that it didn’t change much. My immediate question is, “why did it need to change?” The only answer seems to be that they expected, or wanted, something different.

Change for change sake is not a good design decision. Taking the design you have and making it better is a good decision — that’s exactly what Apple did with the iPhone 5. While the outside of the iPhone did receive some tweaks, Apple spent a lot of time on the innards of the device, changing almost all of the components.

The iPhone has the ability to connect to a variety of networks, including LTE. It’s built with anodized aluminum and glass inlays, and lighter and thinner than its predecessor. The iPhone also comes with the A6 processor, sporting twice the processing and graphics performance. There’s more, but you get the idea.

These are actually things you will notice when you use the iPhone 5. The extra power will allow developers to build better apps, making our lives as consumers that much easier.

The bottom line is this: will people buy the iPhone. Judging from today’s news about the iPhone pre-orders, the answer is a resounding yes.

Ultimately, HP, You’ve Got To Do Something

Via All Things D:

“We have to ultimately offer a smartphone…” ~ Hewlett-Packard CEO Meg Whitman

When exactly is this “ultimately” going to be?

“My mantra to the team is: ‘Better right than faster than we should be there.’” ~ Meg Whitman

What? Say what?

(W)e’re working to make sure that when we do this, it will be the right thing for Hewlett-Packard, and we will be successful. ~ Meg Whitman

Are you also planning on jumping in on the hot new “horseless carriage” business? Or investing in the Pony Express? In case you haven’t noticed, the smartphone market isn’t waiting around for you to “ultimately offer a smartphone.”

There’s a time and place for things and this is no time to be telling us that you’re “ultimately” going to be making a phone.

Stop telling us that you’re going to do something. Do something.

Can iPhone 5 Really Boost Economic Growth? [Not much]

JP Morgan analyst Michael Feroli made some news this week with a three-paragraph research report claiming that the introduction of the iPhone 5 could boost U.S. economic growth by as much as half a percentage point. It would be really great if Apple could get the U.S. economy out of the doldrums just by releasing popular new products, but Feroli seems to missed the part of Econ 101 where they discussed how economic growth is actually calculated.

The problem with his argument is breathtakingly simple: He fails to consider the possibility, actually the near certainty, that a fair amount of the spending for new iPhones–$200 per qualified consumer with an extra $400 or so of subsidy kicked in by the carrier–will merely displace other spending. Only the spending in excess of what would have occurred otherwise makes any difference. For purposes of juicing the economy, if not of improving anyone’s balance sheet, it would be best if all the money spent on new iPhones were borrowed by consumers and carriers.

Borrowing, through a process far too complicated to be explained here (but here’s a very simplified explanation), creates money out of thin air. That’s how John Maynard Keynes could famously suggest that the government might boost the economy by paying workers to dig holes and fill them up; he assumed that the government would create the money to pay them.

In the real world, consumers mostly will buy those iPhones by forgoing the purchase of something else. And some portion of the subsidies the carriers will be paying Apple will be money that doesn’t go to Samsung or Motorola for Android phones.

Initial indications based on pre-orders are the the iPhone 5 launch will be very strong, but the overall economic impact will be muted. The U.S. economy is vast, and it’s going to take more than the sale of a few million iPhones to make much of a dent. In the end, the indirect effects of the new iPhone could be stronger than the direct impact. To the extent that iPhone 5 upgrades drive AT&T, Sprint, and Verizon to boost capital investment in their LTE networks, the effect would be far more significant. Expanding consumption is nice, but capital expenditures drive a lot more bang for the buck.

iPhone 5 Design As a Killer Feature

As Steve pointed out in his article this morning, the sentiment that the iPhone is underwhelming steaming from many of the tech press lacks serious understanding of the consumer market. It is true that the iPhone does not have things that other phones have. Things like the largest screen of any phone, or NFC (I point out why here), or a number of other features. In the whole discussion of what the iPhone doesn’t have people are forgetting that Apple’s philosophy of what you leave out is just as important as what you put in. Many of those things the tech media is complaining about for not being in the iPhone 5 were left out on purpose. And I think its clear that Apple knows what they are doing.

But one thing the iPhone 5 does have that is unmatched in the smart phone market today is industry leading industrial design. In my opinion only Nokia comes close to Apple with its passion for industrial design. I’ve been using the Galaxy Nexus since June and there are many things I like about it. I used a Galaxy S3 for a short time a few weeks ago and it is nice as well. But I continually find the build quality, and attention to hardware design detail sorely lacking across the board, with the exception of Nokia. Design is a feature, that should not be ignored or discounted.

Many smart phones have a plastic, and cheap in my opinion, feel even though the screens are made of glass. Many of the most popular smart phones today are in fact made mostly of plastic. But there is a fundamental reason why these design decisions are made and holistically why most major smart phone OEMs do not pay the same attention to detail and industrial design of Apple.

Android Handset Depreciation

For Android to compete with Apple it takes an army of Android devices. Although Apple has several products on the market, they only have one current generation smart phone. Android OEMs launch dozens or more every year. Although the Galaxy S3 outsold the iPhone 4S briefly last quarter, its hard to believe that is a long term trend since many consumers held off for the iPhone 5.

The Android army can only succeed by flooding the market with Android devices. Some are very good but many are not. The key, however, is that to survive in that market and actually compete you need to constantly put new products in the channel and be very aggressive with price. Android devices depreciate faster than any other product on the market. What I mean by that is they start at inflated price points then very quickly get to $99 or even buy-one-get-one-free.

The Galaxy Nexus, one of the better devices on the market and the one that I am using until next Friday, is already $99 dollars with many carriers with a buy-one-get-one-free offering at that price point.

Some carriers around the world are also already offering similar deals for the Galaxy S3, Samsung’s flagship smart phone. Soon that device as well will be offered at extremely aggressive prices in every carrier around the world.

The iPhone however holds its value and does Apple does not need to drop the price of its flagship phone every three or six month’s to continue to outsell any single other device. Apple has never dropped the price of their current generation iPhone nor has any carrier needed to offer a buy-one-get-one-free deal in order to move tens of millions every quarter. I find this fascinating.

Further points on how the iPhone holds its value is in trade in or resell offers. I don’t see companies offering high value trade nearly a year after its release with any other product than the iPhone. This simply goes to you how the market value for the iPhone is drastically different than any other smart phone on the market.

This is where the design is the key. Because of the unprecidented attention to detail the iPhone does not just hold its value, it is valued by the market. More so than any other smart phone. Premium design is valued and don’t let anyone tell you any different.

Design is a premium differentiator and the fact that Apple keeps such a premium designed product at an entry level price with contract at $199 should continue to impress people.

I stated this in my article on the iPhone 5 earlier in the week but this new product will stand out like the crown jewels at a garage sale at every retailer where it is sold.

What Do iPhone 5 Critics Want?

Apple’s announcement of the iPhone 5 has unleashed a remarkable wailing and gnashing of teeth in the tech media (for example): Apple has failed to hit us with shock and awe. Apple has become the new Microsoft, resting on its laurels and letting its platform petrify. Apple can’t innovate anymore.

Most of this nonsense seems to be the work of jaded writers who simply don’t have a whole lot to say. What almost all of this criticism fails to do is tell us what the new iPhone ought to have been other than something different from what it is. The complaints seem to boil down to “Apple failed to wow us in some way we didn’t expect.” But as I and many others have pointed out, the smartphone market is maturing fast and changes that add value, rather than changes made for their own sake, are getting harder to come by.

Some writers complained that Apple failed to overhaul the user interface. This is true, but what is the argument for changing what remains, five years after it first challenged the limits of BlackBerry and Palm and the horrors of Windows Mobile, an exceptionally intuitive and elegant design. Apple has been very careful in evolving the iOS interface. But it hasn’t been static. For example, it solved the problem of modal notifications in iOs 5. Should it add live tiles? Of course, this would require a completely new UI. And if the best argument for live tiles is Windows Phone, that platform’s failure so far to make any headway is not much of a case for the appeal of that approach.

Apple has been roundly criticized for failure to incorporate NFC. But as my colleague Ben Bajarin points out, NFC is a mostly solution in search of a problem. Especially in the U.S., there has been little movement by retailers to install the infrastructure needed to support NFC,

The new iPhone screen size has been the subject of rather odd criticism, since the company is accused of imitating Android by going to a larger display when the particular display size it chose is unique. Apple deliberately avoided the sort of mega-screen that had graced recent high-end Android phones, going instead for a screen that is taller than the current iPhone but the same width. One reason Apple avoided a wider display is to maintain the ability to operated the iPhone one-handed, especially for people—like many women—with smaller hands.

I can’t explain just why but the new phone feels very good in hand. It’s actually only a bit lighter than the iPhone 4, but the difference seems more significant, perhaps because the long, relatively narrow design, makes it better balanced. The differences are subtle, but the new aluminum back and precision-machined sides just feel right.

Of course, there are two major changes in the new model. One, which no one is criticizing, is the addition of high-speed LTE wireless. The other is the replacement of the venerable 30-pin dock connector with a new design, dubbed Lightning. (Dan Frakes at Macworld has an excellent rundown on Lightning’s capabilities and deficiencies.)

Lightning has inspired the collective ire of tech writers. Slate’s Farhad Manjoo, for example, calls it “incredibly irksome.” It’s unfortunate that it orphans nearly a decade worth of cables and accessories based on the 30-pin design, and even more so that Apple plans to charge $30 for a Lightning to 30-pin adapter (I expect cheaper third-party versions are not very far away.)

On the other hand, the 30-pin’s time was up. The connector, always a rather fiddly bit, just claimed too much precious device real estate. Manjoo and others criticize Apple for not using the standardized micro-USB connector, and this objection has some merit. But Lightning has distinct advantages over micro-USB. It’s sturdier and reversible. I found I could easily insert it with my eyes closed on the first try, something difficult if not impossible to do with micro-USB.

Probably the oddest complaint is that Apple no longer surprises us a product announcement. First, this isn’t really true. Although all the salient features of the new iPhone were known before the Sept. 12 unveiling, both the details of the new iPod touch and the existence of a redesigned iPod nano were not known in advance. The lack of secrecy about the iPhone, though, is now inevitable. By scheduling the announcement just 10 days before it expects to ship millions of phones, Apple has to deploy a vast supply chain on a scale that makes its former secrecy impossible.

I know that in my decades as a journalist, I never complained about my success in finding out things that the people I was covering didn’t want me to know about. Hearing people other than Apple executives complain the secrets were found out suggests that some writers don’t have enough real work to do.

Why NFC is Irrelevant To the Mass Market

NFC technologies have been around for quite some time. Many years back my firm did some market analysis on NFC for Philips Semiconductor about the time it was spun off to become NXP. In doing this we spoke with retailers, merchants, payment gateways, etc., in order to better understand the infrastructure change necessary to fully deploy NFC. Without going into that in depth analysis, I will tell you that it is difficult and costly.

What Problem Does it Solve?

Due to the fairly extensive new infrastructure that would need to be deployed in order to broadly deploy NFC, retailers would need to be convinced that it would lead to more transactions in their stores AND not be something that goes by the wayside to some new technology in just a few years. Many retailers are already struggling and faced with significant challenges that need to be solved. They recognize that the mass majority of consumers are not out there clamoring for NFC nor even recognize the need or have the desire for a new payment process.

But the key to addressing NFC is to look at what problem it solves. Perhaps even better stated, does it solve a pain point in the payment process today. I would suggest that it does not.

Humans are creatures of habit. Keeping a number of credit cards in a wallet or purse and pulling out the correct one to make a purchase is not a massive inconvenience for many. The challenge with NFC is that its value proposition is only to replace credit cards in a commerce market. That is the only process it is addressing in a retail environment. Retailers have much more pressing problems to worry about. Like consumers using their stores to showroom and then go and buy online. Or other retailers rigorously competing to steal loyal customers, etc.

I am more interesting in technologies or opportunities to completely revolutionize the shopping experience. This is something NFC does not address.

Let’s Change the Shopping Experience

When thinking about how the future of shopping may be shaped, I like to use Apple stores as an example. It is possible with the Apple Store application to explore, learn, get help, and more, all from an application. This application is designed to make the in store experience more helpful and more engaging. Apple has also integrated into the application an easy pay method that allows you to scan the product you want to buy, and pay for it right there using your iTunes account. So without NFC, and no new infrastructure, Apple has integrated a simple and engaging experience as well as an opportunity to complete a transaction all without NFC. Apple is deploying more of a “closed-loop” payment system using their trusted relationship with the consumer and iTunes as a gateway. Exploring how apps and these “closed-loop” systems may benefit retailers is an interesting scenario to think though.

If I was a retailer would I rather invest in a massive amount of new infrastructure that only solves a payment gateway problem or invest in experiences like the one possible in Apple stores that keep my customers engaged with my store and the products I carry?

The reality is there is nothing that can be done with NFC that can not be done by an app and a connection to the Internet.

Changing the in-store shopping experience in a way that address the challenges retailers are having is not something NFC solves. I believe in mobile payments and I believe in machine to machine communication. I am just not sure NFC is the way forward when their may be better solutions readily available. NFC may have a role in that environment but it is not in the foreseeable future.

8 Questions For Windows 8

“Make no mistake about it, this is the year for Windows,” ~ Microsoft Chief Executive Steve Ballmer

Microsoft CEO, Steve Balmer, has declared this “The Year For Windows”. Is he right? Or is that just wishful thinking on his part? Let’s ask ourselves a couple of pertinent questions and see if we can suss this out.

Question #1: Is The Nokia Hardware Special Enough To Kickstart Windows 8?

First, some analysts don’t seem to think so:

“Microsoft still needs to jump start their mobile business,” UBS analyst Brent Thill told MarketWatch. “I’m not sure Nokia is their battery.”

Second, the markets don’t seem to think so either as Nokia’s shares slumped after the announcement of the Lumia 920.

Third, in the short term, the Nokia Lumia 920 is a non-entity. With no price, no ship date and no working models, it’s more vaporware than savior.

Fourth, and most importantly, when it comes to platforms, hardware – even if it’s the best hardware – is not going to be the deciding factor. Remember Betamax v. VHS? Remember the Mac v. the PC? Having the best hardware is a good thing but it’s far from being the DECISIVE thing.

When it comes to computing platforms, developers – not hardware – is where the value is. Hardware is important. Developers are crucial. The Nokia hardware – vaporware though it is – holds great promise. But it’s just an empty promise without Windows 8 platform developers.

Asking Nokia hardware – no matter how good it may be – to save a platform is like asking a swimmer to save a sinking ship. It’s not going to happen.

Nokia’s hardware can’t save Windows 8. It’s the other way around. Windows 8 has to be a success for Nokia’s phones to even stand a chance.

Question #2: Will the “Re-imagined” Microsoft Windows Help Sales Of The Windows Operating System?

“We have re-imagined Windows from the ground up.” ~ Steve Ballmer

It’s true enough that Microsoft has re-imagined Windows from the ground up. But is that a good thing? There are, in my opinion, at least three issues with the “re-imagined” Windows 8.

First, Windows 8 is a wholly unfamiliar user interface and people hate the unfamiliar. This may well slow adoption. Ultimately, I think this understandable reluctance on the part of the consumer can be overcome. Windows 8 may be an acquired taste but, in time, people will get used to it and their initial reluctance to try the operating system will fade and be forgotten.

Second, while Windows 8 for the phone and for Windows RT appear to be wholly consistent user interfaces, Windows 8 for the Intel tablet, notebook and desktop subject their users to two completely different computing experiences.

Advocates of Windows 8 say that this is the best of both worlds. Microsoft argues that “Windows 8 brings together all the power and flexibility you have in your PC today with the ability to immerse yourself in a Metro style experience.”

Critics, however, say that it is not the best of both worlds but an unfortunate collision of two worlds – a disconnected, disjointed and disconcerting experience – a Jekyll and Hyde existence – a computing environment that subjects it’s user to a brain tax at every switch between the desktop and the tablet metaphors.

Who is right? And will this matter in the long run? Today’s partisan rhetoric is so heated that it is almost impossible to tell what is subjective and what is objective. We’ll just have to wait and allow the more casual users to give us the final verdict on this question in their own time.

Third, I think that Microsoft is “re-imagining” Windows for the wrong reasons. Microsoft is not really “re-imagining” Windows so much as they’re hoping to “re-educate” their existing Windows user base. Their goal isn’t to create the best user experience, optimized to the form factor they are using. Far from it.

Microsoft’s goal is to familiarize their desktop users with the “formerly-known-as-Metro” user interface, in the hope that familiarity will breed adoption of their Windows phone, Windows RT and Windows Tablet offerings. This explains why the Windows desktop operating system incorporates so many unnecessary and counter-productive tablet elements.

The “re-imagined” Windows isn’t about what the end user needs, it’s about what Microsoft needs. The end user needs a great user experience. Microsoft needs to have Windows 8 running on every form factor. When the two come into conflict, Microsoft has sacrificed the former in the hopes of achieving the latter.

Achieving a great user experience is hard enough when you’re really, really trying. It’s nigh on impossible to achieve when it is not your primary objective.

Question #3: Will Moving Windows Phone 8 To the Windows Kernel Give Microsoft An Advantage?

Moving Windows 8 Phone to run on the Windows 8 kernel will most certainly make it easier for developers to port their apps between Windows smartphones, tablets and desktops. However, Apple has been running both iOS and OS X on the same kernel since 2008. Android doesn’t even have a divided operating system to begin with.

Moving Windows 8 phone to the Windows 8 kernel is a good move – heck, it’s a great move. But it hardly gives Windows an advantage. It’s more a case of Microsoft finally catching up…after being a full four years behind.

Question #4: Will Microsoft’s Unified Platform Give Them An Edge Over The Competition?

“Perhaps more importantly than anything else, we bring a developer platform and a store that’s common to both Windows 8 and Windows Phone 8,” ~ Steve Ballmer

Is Steve Ballmer seriously calling Windows 8 a “common” developer platform?

Windows 8 has a common name. And it has a common initial appearance. But the operation of Windows Phone 8, Windows RT and Windows 8 for tablets, notebooks and desktops is not at all the same. And the code base is not at all the same. And the applications are not at all the same.

Windows 8 is, in fact, three wholly separate, three wholly incompatible, operating systems. And just because Steve Ballmer insist’s on CALLING the three different operating systems by the same name doesn’t make them a “common” platform. Not by a long shot.

Microsoft is pursuing a strategy of taking three wholly different platforms, giving them similar names and similar initial user interfaces and hoping against hope that consumers won’t notice and will consider them to be one and the same thing. This may work in the short run but in the long run it’s bound to create consumer confusion and frustration as users discover that the Apps they have purchased to run on one “Windows” platform won’t run on other “Windows” platforms.

Developers – God bless ’em – won’t be fooled at all. They’ll well know that they have to develop three different versions of the same program no matter how closely the three platforms are named or how closely the three platforms resemble one another in appearance.

Is Windows 8 a “common” developer platform? Not hardly.

Question #5: Will Developers Flock To Windows 8?

“Those devices running Windows 8 and Windows Phone 8, I’m quite sure, represent the biggest single opportunity available for software developers today. Four hundred million per year is unrivaled. I’ll bet you that the next app developer to hit it really, really big will be a developer on Windows.” ~ Steve Ballmer

Steve Ballmer is betting that the next app developer to hit it really, really, big will be on Windows. I’m betting that he’s really, really wrong.

Why? When was the last time you heard of something “hot” being developed for Windows? The platform is stagnant and all the action is taking place in mobile.

“That means Lumia … that means Surface … devices introduced in Berlin last week … those devices I’m quite sure represent the largest single opportunity for developers today,” ~ Steve Ballmer

Yeah, only here’s the thing. The developer developing for the Lumia; the developer developing for the Surface, the developer developing for the Windows 8 desktop; that developer will be creating THREE, not one, programs running on THREE separate, look-alike platforms.

Developers don’t care what a platform is called or what it looks like. They have to write the actual code and they will know beyond a shadow of a doubt that they are writing for three platforms, not one supposedly monolithic platform.

Question #6: Will there be 400 million new devices running the Windows Operating System one year from now?

“One year from now, between Windows phones, Windows tablets and Windows PCs, we’ll see close to … 400 million new devices running those new operating systems.” ~ Steve Ballmer

400 million is one very big number and a nice benchmark by which to measure Windows’ progress. But given the size of the existing Windows PC base, 400 million is certainly doable.

400 million Windows devices sold would be nice – in fact, it would be far more than nice. It would be extremely lucrative for Microsoft. However, if a goodly percentage of those Windows users are not on Windows 8 phones, Windows RT tablets and Windows 8 tablets, then Microsoft will have utterly failed in its Windows 8 mission. Sales of Windows 8 on the desktop will be a short-term financial windfall but a long-term financial disaster for Microsoft. Here’s why.

Fools, knaves and naysayers may not understand the importance of computing’s shift to tablets, but you can be very sure that Microsoft does.

Microsoft desperately needs to migrate their operating system from desktop devices to mobile devices. Microsoft controls the desktop (including notebook) market, but the desktop market has peaked and is starting to decline. All the action, all the growth, all the money is in mobile devices (phones and tablets). In mobile, Windows is nowhere to be found. Even if Windows 8 is an overwhelming success on the desktop, if it is also an underwhelming failure on phones and tablets, then it is a failure for Microsoft, no ifs, ands or buts about it.

Microsoft NEEDS to move to mobile. They need it very badly and they need it right now. We’ll see if Microsoft has 400 million copies of Windows 8 in play by this time next year. But more importantly – MUCH more importantly – we’ll see WHERE those operating systems are located. If Microsoft hasn’t made significant penetration into the phone and tablet space by this time next year (or has rapidly accelerating sales in those areas), then it’s all over but the shouting. Their OS will be trapped on an every shrinking desktop base and Windows will be locked out of the future of personal computing.

Question #7: Can Microsoft Overcome Their Very Late Start?

Windows (smartphone market share) — 5.4 million units, 3.5 percent share (2.3 percent a year earlier) ~ via nbcnews.com

Right now, Microsoft’s Windows 7 for phones is the third horse in a two-horse race. And Microsoft hasn’t even started the race in mobile tablets yet. Windows Phone 7 has excellent hardware but that has not been enough to garner market share. Microsoft believes that they have the better mobile phone operating system but their operating paradigm hasn’t been embraced by mobile phone buyers. Microsoft has an excellent overall mobile phone platform but they can’t seem to attract developers. Despite their very deep pockets and their extensive connections, Microsoft can’t seem to get any traction in the mobile markets at all.

In perhaps the irony of all ironies, Windows 8 now finds itself playing the roll that the Mac played vis a vis Windows in the eighties and ninties. Windows 8 for mobile, like the Mac, is the (subjectively) better platform that no one will buy.

Frankly, Microsoft has no one to blame for this but themselves. The iPhone was introduced in 2007 but Microsoft’s second attempt at re-booting their mobile phone operating system won’t be operable until October of 2012. Apple introduced the iPad in 2010 but Microsoft won’t be introducing Windows RT and Windows 8 tablets until the fall of 2012.

This has often been Microsoft’s pattern. They start so very far behind and think that they can catch up simply by being “better” than the rest. It didn’t work with the Zune. It didn’t work with Windows Phone 7. And it’s unlikely to work with Windows 8 either.

The “best” runner may always win the race but only if he starts the race at the same time as all the other contestants. What good does it do Microsoft to be the “best” runner in a race if they’re starting a full two and a half years behind the pack?

The only way to win a race like that is to stop chasing the leaders and start a new race. That’s what Apple did with the iPhone. There was no way that Apple was going to catch up to Palm, RIM, Nokia and Windows Mobile in Smartphones. So they started a new race in pocket computers instead.

Starting a new race is what Apple did with the iPad too. There was no way that the Mac – considered by many to be the “best” personal computer – was ever going to catch up to PC’s powered by Windows. Apple stopped chasing Windows PCs and they started a new race in touch tablets.

Microsoft needs to stop joining races that are already in progress and start running their own race.

Question #8: Will This Be The Year Of Windows?

“Make no mistake about it, this is the year for Windows,” ~ Steve Ballmer

So is Steve Ballmer right or is he wrong? Will this be the Year of Windows? Or will this be the year that we discover that Windows is likely to ever remain the third of three in mobile computing? Let me put it this way.

Microsoft Windows has had a great fall. Not the hardware, nor the software, nor the kernel, nor the platform, nor the developers, nor 400 million desktop sales, nor all the kings horses and all the king’s men are going to put this operating system on the throne again.

Let’s meet back here in a year from now and see what time hath wrought. It should be fascinating.

Is There Room in Apple’s Lineup for an iPad Mini?

The iPhone 5 was the big news from Apple. But the rollout of a new iPad Touch was important in its own right. The big question it raises is whether Apple has left room in its product lineup for the much rumored iPad Mini.

With a 4″ Retina display, iOS 6, improved camera, and Siri, the Touch is more than ever a phoneless iPhone. In terms of functionality, there is plenty of room between the Touch and the existing 9.7″iPad for a smaller tablet with a 7″ or 8″ screen. The problem is pricing.

The new Touch, which will ship some time in October, is priced at $299 for a 32 gigabyte model and $399 for 64 GB. The new iPad starts at $499 for a Wi-Fi-only 16 GB model while the iPad 2 can be had for $399.

It would make little sense for Apple to introduce an iPad for less than $350. And depending on just how Apple chooses to configure this still totally hypothetical product, that price might be necessary if Apple wants to maintain its customary margins. The difficulty is that if Apple wants the Mini to be a smaller iPad without defeaturing it, the bill of materials would not be all that much lower than for the existing iPad. The display of a 7.9″ tablet is about two-thirds the area of a 9.7″. Assuming that Apple would want a Retina display with the same pixel density as its big brother, it would save some cost, but not all that much. The battery would be somewhat smaller and thus a bit cheaper. But the rest of the innards would cost just about the same.

But a $350 price tag would make the smaller iPad cost $150 more than either the Google Nexus 7 and the Amazon Kindle Fire HD, and that is potentially a very tough sell. Now Apple has lots of experience selling premium products at premium prices. But a price nearly 80% higher is an awful lot of premium. It have little doubt that the iPad would be better designed and better built than the Google or Amazon products with better software and a superior ecosystem, but Apple would have to convince consumers that it was vastly better.

Th upshot of all this is that I am a lot less certain than I was a day ago that Apple will go forward with an iPad Mini. We’ll see in a month or so.

iPhone 5: The Most Beautiful iPhone Yet… and More

As a leader in personal computing, Apple product launch events often bear the burden of too much hype. Then as they launch new products that set new sales records, customer satisfaction levels, and needed health into the consumer electronics industry, people always seem to ask “have they done enough?” My stock answer is yes, and I am sticking with it.

The headroom to grow in the smart phone market is enormous. Smart phones are maturing as a market but we are far from market saturation. The global customer base is still ripe for the picking and Apple has raised the bar when it comes to the iPhone 5.

The Most Beautiful iPhone Yet

There is no doubt that there are smart phones in the market with larger screens than the iPhone 5. There is however no doubt that the iPhone 5 is the most beautiful smart phone on the market by a large margin. The iPhone 5, when you feel it, see it, and hold it, feels like a fine piece of jewelry. The quality and craftsmanship surrounding the iPhone 5 must be appreciated no matter what your opinion of Apple.

I often think that many underestimate the value of design when it comes to consumer markets. I have written extensively about how Apple turns technology into art and the iPhone 5 may be the ultimate manifestation of this observation.

Design plays a key role for those who sell hardware because well designed products stand out from the pack and captures consumers attention. The new iPhone 5 is going to be the crown jewel of every retailer who showcases in their store.

iPod–Don’t Call it a Comeback

Perhaps the part of today’s event that took most by surprise, was Apple’s injection of innovation back into the iPod line of products. Many have long assumed that it was inevitable for Apple to phase out the iPod line of products. The iPod line has been on a steady decline quarter after quarter but perhaps that is all about to change.

Although the iPod is no iPad or iPhone in terms of growth opportunity, it still fits strategically. Keep in mind that Apple is still the undisputed leader in the portable music player market. Some may argue that the portable music market is shrinking or disappearing but what if it is simply because no major upgrades have happened in this space Apple is looking to change that specifically with the new iPad Nano with its 2.5 inch multi-touch screen and bringing many of the same innovations of the iPhone 5 to the new iPod Touch.

Strategically both products exist to extend the Apple ecosystem for sections of the market who value a dedicated media player. Believe it or not, the world is not in a uniform move to converged devices only. Just look at Amazon’s Kindle e-Reader strategy to see this point. Tremendous market opportunities exist for those who create products that cater to specific customer needs. This is why the iPod line will still stay relevant for some time.

Also, there may be a lot of people who may never buy an iPhone and opt for Android but still want the rich features and media ecosystem that Apple offers their users. Now that the 4-inch iPod is similar to an iPhone, including Siri support, there could be a lot of Android customers who may buy iPods to supplement their Android phones that cannot not match Apple’s exceptional music, TV and movie content.

An interesting thing to think about is with the quality of the new iPod’s camera perhaps many may elect to purchase it as a point and shoot camera that does a whole lot more. Perhaps the new iPod is targeting the point and shoot camera market. With the inclusion of the Apple iPod Loop which is a camera strap, I think Apple feels the same way.

New To Apple Customers

There is an important perspective here that is worth remembering. Apple’s priority is keeping their customers happy. Apple is often criticized for integrating into their products features and functions that exist in competing platforms or hardware. That is all fine and good but for many consumers (over 400 million of them) they are not customers of competing platforms, they are customers of Apple. What matters is that Apple keeps their customers happy. These customers have invested time, money, and energy into Apple’s ecosystem and have no desire to leave.

That is exactly what they have done with the iPhone 5. They have brought key new features and functionality to their customers base. A customer base which I am convinced has extreme pent up demand for this new iPhone. Existing Apple customers will be extremely pleased with the latest generation iPhone and I fully expect the iPhone 5 to shatter all previous iPhone sales records. However, upon seeing this amazing new piece of hardware, I expect Apple to welcome many new members to the family.

It’s Getting Harder for Apple To Change the World

The last time I felt that an Apple product announcement would fundamentally change the tech landscape was in early 2010 when Steve Jobs unveiled the iPad, a dramatic new product class at a an unexpectedly low price. The products announced since then, the upgrades to iPads, iPhones, and Macs, the new versions of iOS and OS X, have been very, very good and very, very successful. But unlike the original iPhone and iPad, they have not been revolutionary, nor are they likely to be again in the foreseeable future.

This is not a forecast of doom or even gloom for Apple. Continual improvement of already excellent products is a very sound business model. The new iPhone to be announced today and the smaller iPad expected later this fall are as close as new products can get to guaranteed hits. After an expected surge in the current quarter, Apple’s growth is likely to slow from the ferocious recent pace of, but should continue to outpace the industry and the profits will keep rolling in.

But a near- and perhaps medium-term future of incrementalism seems inevitable for several reasons. Apple has already disrupted the music and phone businesses and invented the tablet market; it’s not about to disrupt them again. There is a lack of any buzz about dramatically new products. In other markets Apple’s entry into the phone market was preceded by at least two years of increasingly convincing speculation. The same was true for the iPad. If Apple is working on a new product in that league, it is keeping it a much better secret than its usual very high standard of silence.

Then there’s TV. Of course, the new world that Apple does want to conquer is television. For almost a year, we have been wondering just what Steve Jobs’s deathbed statement to biographer Walter Isaacson that Apple had “cracked” the problem of TV meant. Whatever that breakthrough was, it has yet to reveal itself in a product.

The challenge of TV is vastly different from anything Apple has faced before, and one where success may very well elude the company. In the TV market, as the sports writers like to say, Apple does not control its own destiny. Winning in TV will require the cooperation of some extremely reluctant partners.

This is a new world for Apple. Its success in iPods and the iPhone required partnerships, but of a much simpler sort. Apple launched the iPod with no cooperation from the music industry—the iTunes store didn’t come along until a year or so later. The record companies had no desire to play with Apple and went along only when it became clear to them that the alternative was death at the hands of millions of file sharers.

Wireless carriers also had no desire to let Apple disrupt their industry. But all Apple had to do was strike a deal with one wireless carrier in the U.S. Apple persuaded AT&T to accept the iPhone on its terms and the phone’s runaway popularity soon drove other carriers around the world to sign on (though they did force Apple to drop the innovative subsidy-free revenue sharing AT&T deal in favor of a more conventional arrangement.)

For an Apple television venture to go beyond the relatively insignificant Roku and Xbox competitor that is the current Apple TV and become a dominant force in the industry, the company needs to do deals with a good percentage of the players that control television content and distribution.

What It Would Take. For an Apple TV product to change the world, it needs to offer a user interface that combines the linear content delivered today by cable and satellite with the wealth of over-the-top content available over the internet (the means of delivery is irrelevant unless you happen to be in the video infrastructure business.) Google tried to accomplish this without cutting deals with either carriers or distributors. Google TV was a hideous kludge that no one would buy.

Content owners have been slowly moving their products to the internet, but they have been doing it in a way that protects their lucrative arrangements with distributors. Time-Warner’s HBO Go and Disney’s ESPN 3 offer prime content, but these services are only available to subscribers who already have access to the channels through the likes of Comcast or Verizon FiOS. They have no particular incentive to change those arrangements.

The cable and satellite operators, some of whom have reportedly been talking to Apple, have a strong incentive to resist. They have seen how Apple tends to suck the lion’s share of profits out of any business it enters. Perhaps more significant, they have watched while Apple turned AT&T and Verizon and Vodafone phone customers into Apple customers.

I have absolutely no doubt that Apple could supply a viewing experience vastly better than what I am getting from my Motorola FiOS DVR box. (I had hoped that when Google acquired the set top box operation as part of its purchase of Motorola Mobility that it actually do something with it. But it has made no moves and now reportedly is seeking a buyer for the operation.)

The problem is that it is very hard to see why they would open the door to Apple disruption. Cord-cutters, people who get all their video over the top or over the air, do not yet pose a very significant threat to the cable operators’ business model. And to the extent that cord cutters are moved by economic considerations, it’s not clear they would be lured back by an Apple service that is almost certain to be more expensive (otherwise, no one will make money from it.) They will talk to Apple because they have no reason not to, but the chances of a deal any time soon look grim. (One possibility: Apple strikes a deal with a satellite provider and the service is so good and so popular that the cable operators are forced to go along or face mass defections. There are a number of reasons why this is unlikely.)

I suspect Jobs may well have found a way to crack the TV user interface problem. But Apple’s lack of progress with both content owners and distributors suggest that he didn’t come close to cutting the Gordian knot of business challenges. Apple continues to make its existing products enough better to stay on top of the markets it dominates. But without a TV breakthrough, Apple at the moment seems a bit short of new worlds to conquer.

Why The New iPhone Will Be Roundly Panned And Why It Will Still Sell Like Crazy

What would you say the new iPhone’s greatest feature or features will be? Will it be the hardware? The operating system? A new service like maps or passbook? Nope. It won’t be any of those things. The truth is, the new iPhone’s greatest feature already exists right now, today, before the iPhone has even been announced.

The greatest thing about the new iPhone will be the very same thing that Apple’s customers love about their current iphones – every added feature will work seamlessly with the whole. The iPhone is not about its parts, it’s about making the whole greater than the sum of its parts.

PUZZLED PUNDITS

Analysts, journalists, and industry observers always seem bewildered by this.

They’ll look at the new iPhone and say: “It’s the same old design” or “It doesn’t have as many features as my phone does” or “Its operating system is looking old and dated” or “It doesn’t allow me the freedom to run any content or any app I want”. Then they will be dumbfounded that a phone that they’ve deemed wanting will have such stellar sales. “That can’t be right,” they’ll say. “That phone is inferior to mine. It’s not rational. iPhone customers must not be rational. iPhone customers must be stupid.”

PARADOX RESOLVED

Here’s the resolution to the seeming paradox that haunt’s the iPhone’s critics: Apple doesn’t WANT the phone with the best features – they want the phone with the features that work best together. It’s not about the quantity of features, it’s about the quality of the experience.

SATISFACTION

Pundits may not get this, but iPhone users sure do. They consistently give the iPhone satisfaction ratings so high that they are in nose bleed territory.

UNDERSTANDING

With the iPhone, it’s not about how the features work, it’s about how the features work together; it’s not about any one thing, it’s about the whole thing; it’s not about the phone, it’s about the Apple ecosystem. The critics may not see it that way, but the potential buyers sure do. The secret to understanding the iPhone is to understand that people aren’t buying a phone they’re buying Apple. And that makes all the difference.

The Purpose of Design Patents

Much of the initial reaction to the Apple v. Samsung trial was based more on emotion than critical thought in my opinion. The discussion over whether it is good or bad for consumers was interesting but again I felt mostly emotional. In all reality how is a challenge to uniquely innovate bad for anyone? As interesting as that element of the discussion was I thought the debate around design patents was a bit more interesting.

As a part of our market analysis I keep a keen eye on what specific companies do to differentiate themselves in what I like to call the sea of sameness. To get a more holistic understanding on how differentiation may happen in the sea of sameness, I like to study how its done in other industries. Particularly ones that have been around for longer than the computer industry and also ones that are highly saturated and mature. We can make some interesting observation from industries like automotive and consumer packaged goods. It is observations from those industries that help us understand the importance of design patents and more importantly design consistency.

You Can’t Patent Rounded Corners

One of the least thought through elements of the whole trial was the part about rounded corners on specific products. In a post trial statement representatives from Samsung stated:

“It is unfortunate that patent law can be manipulated to give one company a monopoly over rectangles with rounded corners,”

It seems as though there is a fundamental lack of understanding of the purpose of design patents. To explore this thought I think it would be helpful to look at a company with an interesting iconic design in Coca-Cola.

It is not just Coke’s logo which stands out but also the design of both their glass and plastic bottles. Coke owned a patent on the design of their glass bottle design in 1915 and the designs of their bottles have evolved but remained consistent in overall look and feel. It is this specific and unique design of the Coca-Cola bottle that helps it stand out in the sea of sameness.

If you went into a grocery store and looked at a wall of beverage containers, all without the labels, you can easily pick out the one which is a Coke bottle and that is the point. It is iconic, consistent, and easily identifiable.

Round Corners As a Design Philosophy

Now perhaps those engaging in the you can’t patent round corners debate have either no appreciation for consistent design philosophy or never taken a step back and looked at all of Apple’s products. Because when one does take a look at all of Apple’s products you will see that every piece of hardware follows the four perfectly asymmetrical rounded corners design.

This design philosophy has been in place for quite some time. One could argue that the rounded corners on a screen started with the first colored iMac’s. From that point on the four asymmetrical rounded corners began to become a consistent theme of all Apple hardware.

apple_evolution_1976_till_2009 — Image Credit TechChunks

The goal again of these “rounded corners” is to maintain a unique, consistent, iconic, and easily identifiable Apple product. To carry on my point about the Coke Bottle, if you were to look at a table full of notebooks, all without logos, Picking out the one that is Apple’s would be easy. This is not something I can confidently say with regards to any other PC OEM with the exception of Lenovo.

Most other vendors who make hardware change their design theme from year to year based on what the trends are. Because of that often they change so drastically from year to year that is it clear no overall design theme is being employed. In fact I would contend that for the average consumer no designed personal computer hardware is more easily identified than Apple’s.

This is true in the smart phone and tablet space as well. That I feel is what Apple was trying to protect with their claims that Samsung’s 10.1 tablet had corners that were rounded identically to the corners on all other Apple products. Apple is deploying a design philosophy that is consistent and intentional. Samsung, with regards to tablets, is not, and that was the point.

Understanding the design philosophy from Apple becomes interesting as we think about future products. The only reason you would defend a design philosophy or design patent for that matter, is if you intend to stick to it for the foreseeable future.

This is clearly one way Apple intends to help its products stand out in the sea of sameness–at least from a design perspective. Sticking to this design philosophy and maintaining the consistency of size, shape, and colors, will continue to make Apple’s products not only be objects of desire but also easily recognized year after year by consumers. Which is all part of the strategy.

What I Like About Amazon’s Kindle Strategy

For the 12 years that I have been studying the technology industry, within my role as an industry and market analyst, I have tried to understand the strategic elements of this industry that often go overlooked. This is probably why I have spent so much time thinking about the strategic role hardware plays in Amazon’s business model.

We have written quite a bit here at Tech.pinions about how Amazon’s business model is potentially disruptive, but more importantly a foreshadow of a model we may see more of in the future. Namely, how hardware as an extension of a service may represent the ideal way to consume said service.

While on stage at Thursday’s Kindle launch, Jeff Bezos continually emphasized that Amazon at its core is a services company. In this regard Google and Amazon are very similar. They are both fundamentally services companies. They are also similar and unique, in that they both approach software and hardware with a services first mentality. What I mean by that is that they start thinking strategically with their services, then to software, then to hardware. Other companies in the industry take a hardware first approach. Some take a software first approach. Apple being vertical in all areas of personal computing puts equal emphasis on hardware, software, and services, and in this regard are unique as well.

For Amazon, starting with a services first mentality, allows them to do things others simply cannot do. They build hardware not to make money but to be the best platform for their services. This allows them to create compelling hardware but offer it at a lower cost than a similar company making identical hardware but needing to make money off the hardware itself. This scenario is the only one where I feel price as a competitive advantage is valid. Generally speaking, a hardware only company whose goal is to be the first to the bottom of the price pyramid, is going to be the first to go out of business.

Amazon has the fundamental business of being a services company to back up and justify a hardware as a service strategy. It is not a strategy that will work for everyone. And even though I find this strategy compelling, it is not the one I like the most.

The strategy Amazon is using that I do like the most is that they are solely focused on a certain type of customer–the Amazon customer. With every generation of Kindle product, Amazon has constantly made things better for their customers. This type of strategy generates loyalty and trust; Something Amazon has with their customer base. Not only is Amazon focusing on their customer, they are also constantly learning about their customer. Customers needs may change, develop, mature, etc., and constantly learning and observing how to develop better solutions for their customers is a very smart approach and one Amazon is doing well.

This is what stands out to me most when I look at Amazon’s product portfolio. Each product is designed to focus on a set of problems and offer solutions to those problems, which are important to a specific set of customers. This customer centric strategy is one that I feel will clearly resonate with Amazon’s customer base.

Because of this strategy, I feel that it is easy for Amazon’s customers to perceive value. They will look at the Kindle offerings and somewhere in there find things that they value and consider investing. And because of Amazon’s hardware as a service mentality, the price barrier to entry is lower.

It is clear that companies that are taking an ecosystem approach to their products and solutions are in strong positions for the future. Consumers are beginning to invest in ecosystems whether they know it or not. Ecosystems are sticky and Apple and Amazon have two of the strongest ecosystems in my opinion.

I feel Amazon has one of the stronger strategies to compete with Apple, who is the clear market leader in tablets. Amazon is in this for the long run. They understand the tablet market is a marathon not a sprint. They understand it is a very big market which can sustain more than one player. But by focusing on their customers needs I think they have the right strategy for the long haul.

Kindle Fire Free Time and the Future of Family Computing

Tablets are one of the more uniquely positioned personal computer products I have ever seen. Largely because they have aspects of personal computing traits the same way a notebook does. However, they also have a more shared screen or communal set of traits which notebooks do not have. Desktops have evolved in a way where they have become more of a communal or family PC. But they are big, stationary, and most households only have one. Tablets however are more mobile and for that reason get passed around to other members of the family more easily. Just look at how many parents pass their iPads to kids to use in a variety of ways and you can see how a tablet can also be a shared personal mobile computer.

Tablets start to get very interesting when you think about them in the context of a family or a larger community. This is exactly the kind of thinking Amazon has begun and the beginnings of this trend can be found in a new experience they launched with the newest Kindle Fire’s called Free Time.

Kindle Free Time is a customized experience on both new Kindle Fire’s for kids. It comes with parental controls built in that allow parents to monitor and set limits with the child’s screen media time. For example, a parent can set no time limit for reading (because who doesn’t want their kids to read more) but set a limit for how many minutes a day the child can play games or watch videos. Non children’s content is locked out of Free Time mode and the browser is as well. The color theme on the screen is blue, where the main Kindle Fire mode is black. This way the parent can quickly glance at the tablet and make sure the child is still in Free Time mode and hasn’t hacked the password.

This kind of thinking around software customizations for a shared computing mode is encouraging for me as I look at ways personal computing solutions evolve to support family computing models.

I still debate in my head heavily the degree that tablets are personal computers vs. shared computers. I think the answer is that they are both and software that allows this multi-modal experience will be well received by the market and in particular families. Interestingly it is Amazon’s creation of the Whispersync network that will enable this. I can envision a scenario as this strategy evolves where it doesn’t matter whose Kindle Fire HD I pick up, I can just log in and pick up any game, movie, book, etc., right where I left off. This is not how it works today but thinking in terms of communal and family computing, I think it will evolve this way.

I hope many tablet manufacturers and platform providers are taking note of Kindle Free Time and begin to think more about family computing modes with their solutions.

Amazon Is Poised to Become A Powerhouse in Tablets

During the last year, Amazon ventured into the world of tablets with the Kindle Fire. It clearly represented their first salvo in this market and according to their extrapolation of current tablet data, this aggressively priced tablet now has 22% of the US tablet market.

Today Amazon became an even bigger player in tablets with three new models that are set to shake up the Android tablet market in a big way. And at the moment, they could even have an impact on Apple’s sales, at least until they introduce the highly rumored iPad mini later this year.

Amazon also introduced a new version of their eInk Kindle eReader that is sure to become the standard in eBooks. Amazon says they have sold over 10 million Kindles already and I believe that the newest model will help them bring more converts into the world of dedicated eReaders.

By now you have probably read many blogs and news reports about the actual products Amazon unveiled today in Santa Monica, CA but there are three products I specifically want to highlight. The first is the new Kindle eReader with what they call the Paperwhite backlit screen. This is a very thin model with an innovative eInk screen that basically triples the data resolution because of the way it renders fonts. And, there are a lot of new fonts you can choose from as well as font sizes that can be customized for individual reading styles. The backlit Paperwhite eInk display is clearly the best screen I have ever seen in an eBook reader.

This one will be a huge seller with people who want a dedicated eReading device. Also, Amazon introduced a new thinner Kindle with the existing eInk screen but with higher resolution that is now priced at $69.00.

The second product I want to highlight is the new Kindle Fire HD. They did show a Kindle Fire that looked much like that last version but with an updated processor, more RAM and new software. But the one that will set a new standard for 7” tablets is the HD version of the Kindle Fire.

The Kindle Fire has a 1280 X 800 resolution screen with a true white polarizing filter, and the new TI 4460 processor. It also has a no air-gap laminated display that includes Gorilla glass. Amazon officials say this gives it 25% less glare than the iPad screen. Since HD content is larger it will come in 16-or 32-GB models . A new DSP chip will support MIMO radios, delivering 40% faster WIFI throughput.

But one feature that makes this the best 7″ on the market, bar none. Amazon has included the new Dolby Digital + sound system that adds greater sound dimension. We got a chance to see it demoed in the Dolby offices two weeks ago and were stunned by the increased sound quality it gives a tablet. Dolby is licensing this to other tablet vendors, but the new Fire is the first to hit the market and the Kindle Fire’s sound quality with its new speakers really sets it apart.

Amazon also includes an enterprise-class Microsoft Exchange-compatible email client and calendar, giving it greater versatility within an Android based OS. In fact, one of the big complaints about Android is its poor email client and Exchange support and the Kindle Fire HD with true Exchange support solves this problem.

Although Amazon has done some great new work with the hardware, they are also innovating in software. And one of the more significant software offerings is Kindle Free Time, a parental control that allows parents to set the time that kids can use the Fire. It also and allows parents to pin only kid-friendly content to this area, barring children from the main Fire content. This is extremely important since 7” tablet are finding their way into more educational settings and these controls are a godsend for parents and schools.

We believe that products that cater to how families use these devices together as a community will be well received in the market place.

But the big surprise in today’s announcement was the new Kindle Fire HD with an 8.9” screen. This larger tablet has a 1920×1200 resolution and sports the new TI 4470, an extremely fast low-voltage processor. It is very thin–just 8.8 mm thick–and is 8% lighter than Apple’s current iPad. A 4G LTE version with 32 GB of storage will be priced at $499, well under Apple’s current pricing for a similar 4G configuration of the iPad. It will ship just before Thanksgiving.

There had been rumors floating around that Amazon was working on a larger Kindle Fire but the details took most of us by surprise. Although not as large as Apple’s 9.7 inch iPad, it will give Android users a larger option to view content on and because of the true Exchange support, they might even want to use in for productivity.

From an analytical viewpoint, the new Kindle Fire HD should have Google very concerned since it easily trumps their new Nexus 7 tablet. Plus, it is tied to Amazon’s great ecosystem of content and in fact, any Android vendor with 7″ or 10″ models should be quaking in their boots if they have to go against Amazon and these new Kindle Fire HD offerings.

Amazon says they still have a ways to go to even come up to where Apple is with the iPad, but even Apple has to look at these new offerings from Amazon and be impressed. Of course, this edge for Amazon especially in the smaller screen tablets could be short lived if Apple does introduce their own version of a mini iPad at very aggressive prices. And we don’t know what Apple has up their sleeves for a new iPad that will debut early next year. Yet, the Kindle Fire 7″ will hold its own thanks to increased media available to Amazon Prime customers and at the very least will be a worthy competitor to any smaller iPad Apple might eventually introduce.

There is no question in my mind that Amazon is in the tablet/hardware business for keeps. They clearly understand the value of owning the hardware, software and ecosystem and are clearly on track to emulate Apple’s own strategy of owning and controlling their hardware, OS and services strategy.

These new offerings from Amazon, especially the 8.9inch model, should also compete with Windows tablets thanks to the Exchange support and should undercut Windows 8 tablet prices considerably. And while Windows 8 tablets will be squarely aimed at businesses, if the 8.9” Kindle Fire HD picks up steam with consumers, it could become a candidate for BYOD at some point, which could make it even more competitive with Windows 8 tablets in IT.

This new offering puts Amazon on a whole new map in the tablet world and has now become a force to be reckoned with in this market. And with extremely aggressive price points starting at $199 for the HD 7″ and $299 for the Fire HD 8.9 they are making a compelling case for the Amazon hardware ecosystem.

The Greatest Show In Tech

You can’t tell the players without a program

It’s like the circus has come to the world of tech. Over the next 30 days or so everybody and his brother is going to be announcing a spanking new tech product. And like the circus, there will be a wide variety of acts. Some will be strongmen, some will be clowns. There will be metaphorical elephants in the room. There will be high-wire acts, balancing acts, jugglers, contortionists, snake charmers and freak shows. There will be illusionists and magic acts. And if some of these product introductions go wrong, a couple of tech company CEOs may play the role of human cannonballs as well.

It’s going to be quite a fall for tech. And for some unfortunate devices, it’s going to be quite a fall from tech too.

I’m no prophet, but I like to play one the internets

“The groundhog is like most other prophets; it delivers its prediction and then disappears.” – Bill Vaughan

Since we know so little about these products, there’s not much point in analyzing any of them – but I’m going to do it anyway. Rather than take a deep dive into the bewildering array of new product offereings, I thought we’d go on a shallow swim instead. So get ready for a fact-free, thought-free, light-on-analysis, heavy-on-snark romp through the circus of tech.

“A little snark, properly directed, can change the world.” – Shannon Hale

Grab your popcorn, and pull up a chair, the show’s about to begin.

“I prefer to make up my own quotes and attribute them to very smart people, so that I can use them to win arguments” – Albert Einstein

1.0) MP3

It’s hard to believe, but Apple introduced the iPod just 11 short years ago in 2001. The iPod rocketed Apple to relevance but now the category itself is rapidly moving towards irrelevance.

However, the category is not dead quite yet. Apple continues to make a boatload of money from the dwindling MP3 space. And the iPod Touch remains Apple’s stealth iOS device. So what is Apple going to do to its iPods in the coming days?

Who knows? Who cares? Apple controls that market. They can do what they damn well please.

2.0) PHONES

2.1) Windows Phone 8

“Four or five frigates will do the business without any military force.” -– British prime minister Lord North, on dealing with the rebellious American colonies, 1774

Talk about a slow motion disaster.

In 2006, Microsoft’s Windows Mobile was one of THE premiere players in smartphones. In 2007, Steve Balmer was laughing at the iPhone. In 2008, Microsoft realized their mistake, reversed course and started work on Windows Phone 7. In 2012, Microsoft abandoned Windows Phone 7 and prepared the debut of Windows Phone 8.

My perilous prediction? iOS is Coke, Android is Pepsi (except that they have way more market share) and Windows Phone “whatever” is destined to remain the un-cola of smartphones.

2.2) Nokia Lumia

“If you board the wrong train, it is no use running along the corridor in the other direction.” – Dietrich Bonhoeffer

A year and a half ago, Nokia CEO Stephan Elop announced that Nokia was, metaphorically, jumping off a burning platform into the frozen North sea. And now people are surprised that Nokia is drowning?

People don’t seem to get this. Nokia has a problem. They’re not in control of their fate. It doesn’t matter how good their product is. If the Windows Phone 8 platform that they’re standing on fails, they fail.

2.3) Samsung Windows 8 Phones

A very, very big fish in a very teeny, tiny, Windows 8 Phone pond.

2.4) HTC Phones

1% of the sector’s sales. Maybe less.

How the mighty have fallen…

…and how they’ve fallen mighty rapidly.

2.5) Motorola RAZR

So, Google owns Motorola but they still can’t put out a phone that runs the most current version of Android. Unbelievable.

Google Motorola is not yet a threat to anyone…but themselves.

2.6) Amazon Phone

Just one question:

“Why?”

2.7) iPhone Whatever

Before a Tsunami makes landfall, it gives warning by causing the waters to recede from the shore. This is called a “drawback”. Drawbacks have been known to last for 10 minutes or more. The longer the drawback, the larger the impending wave.

The drawback for the iPhone Whatever has lasted for some three months.

You’ve been warned.

2.8) RIM

Never saw off the branch you are on, unless you are being hanged from it. – Stanislaw Lec

RIM has nothing to announce…

…and that’s all you need to know about RIM’s prospects.

3.0) E-BOOK READERS

3.1) Amazon Kindle

Not everyone sees the need for the Amazon Kindle. I think the Amazon Kindle is a unique and uniquely useful product. It fills a niche. People love it. I’ve got nothing snarky to add.

3.2) Barnes & Noble Nook

A few months ago, Microsoft was suing the Barnes & Noble Nook product. Then Microsoft turned around and announced an agreement to work on a joint Nook product instead. Keep an eye on this space. Could be interesting.

3.3) Sony

Is Sony still even in electronics? It’s just sad to see how far this once great company has fallen.

4.0) 7 INCH TABLETS

“Economists give their predictions to a digit after the decimal point to show that they have a sense of humor” – Anonymous

4.1) Nexus 7

When you lose, don’t lose the lesson. – Author Unknown

The Google Nexus 7 stole a march on the industry by arriving in mid-summer. The Nexus 7 has fine hardware and excellent software but it’s about to get a lesson in the importance of ecosystem.

4.2) Android Tablets

Don’t ever take a fence down until you know why it was put up. – Robert Frost

The Nexus 7 gutted the 7 inch Android tablet market. Rest in peace. Or in pieces. Or whatever.

4.3) Amazon Fire

This category reminds me of an old joke about the two hikers who stumble upon an angry bear. As one hiker turns to run away the other hiker says: “You can’t out run that bear.” The first hiker replies: “I don’t have to out run the bear. I just have to out run you.”

If the rumored 7 inch iPad arrives as predicted, we’re going to find out which one can out run the other – the Nexus 7 or the Amazon Fire.

4.4) Apple iPad Whatever

One should always play fair when one has the winning cards. – Oscar Wilde

The Nexus 7 is a bigger Android phone. The iPad Whatever will be a smaller iPad. And that distinction will make all the difference.

5.0) Full Screen Tablets

5.1) Apple iPad

Nothing to see here, move along, move along.

5.2) Windows RT Tablets

Very nice operating system. Very few Apps. Very difficult road ahead.

5.3) Windows 8 Operating System on a Tablet

“I was not predicting the future, I was trying to prevent it.” – Ray Bradbury

A desktop operating system masquerading as a tablet operating system so that it can pretend that there’s no difference between a desktop and a tablet.

5.4) Windows Surface Tablet

The Windows Surface is a great looking piece of hardware but its focus is on taking a tablet and turning it back into a notebook. That makes no sense unless one simply doesn’t understand what is currently happening in the tablet space.

“The essence of strategy is choosing what not to do. ” – Michael E. Porter

And Microsoft’s creation of its own hardware and its attack on its own licensing business model isn’t a strategy – it’s a sign that they lack a strategy.

5.5) A Gaggle of Windows 8 Hardware Offerings

Wow, we’re seeing a plethora of Windows 8 devices hit the market. Convertibles and hybrids and phablets, oh my!

What we’re really seeing here is the anti-Surface. Every OEM is working around the Surface tablet so that they don’t have to directly compete against it. And no OEM knows exactly what to do – so they’re doing everything.

Throwing things up against the wall in order to see what sticks may work with spaghetti. But it’s awfully tough on hardware.

6.0) NOTEBOOKS & DESKTOPS

6.1) Ultrabooks

All of those Windows 8 tablets that want to be a notebook and all of those Ultrabooks that want to be as thin and light as a tablet, are fighting over the same space. And it’s not that big a space.

6.2) Windows 8 Desktop Operating System

A desktop operating system, welded to a tablet interface, just so that Microsoft can pretend that touch inputs and mouse inputs aren’t entirely separate things but that those two divergent input elements can be conflated into one and the same thing.

Good luck with that.

Just remember, there’s a right way and a wrong way to do everything and the wrong way is to keep trying to make everybody else do it the right way. – M*A*S*H, Colonel Potter

CONCLUSION

“Be careful what you predict. It may come back to haunt you… or laugh at you.” – Annonymous

We’re about to get a lot of questions answered. Or we’re about to get a lot of answers questioned. Or both.

The problem with knee-jerk reactions is that they can make you look like a jerk. – John Kirk

Fasten your seat belts, it’s going to be a bumpy ride.

Apple as Innovator: Four* Contributions That Changed Computing

Reading the comment threads on Tech.pinions’ many posts on Apple v. Samsung and iOS vs. Android, I have been struck by the recurring charge that Apple is nothing but a clever marketer that does nothing but copy (impolite version: steal) and repackage the work of others. To anyone knowledgeable about the history of the industry, this is pure nonsense I’m not sure that evidence will do much to persuade the doubters. Nonetheless, here are three critical Apple innovations that reshaped the tech industry:

Desktop Publishing. The laser printer was invented by Xerox in the late 1960s and developed in the 1970s by Canon, Ricoh, and Hewlett-Packard. But in the mid-80s, nearly all “letter quality” printers relied on typewriter technology. Apple had the vision to combine the capabilities of the laser printer, the new Macintosh, and Adobe’s PostScript page-description language to put something resembling professional page composition on the desktop. Apple’s LaserWriter printers were not terribly successful and the company decided to leave printing to HP and others after a few years. But Apple’s early commitment to the technology set the stage for the desktop publishing revolution that not only made gave every computer user the tools of the graphic artist but revolutionized commercial publishing.

The legacy-free computer. In 1998, every computer was expected to have a floppy drive. Windows PCs came with PS/2 ports to connect a keyboard and mouse, a parallel port for a printer, and a serial port for other chores, such as syncing a Palm Pilot. Macs replaced those connectors with the proprietary AppleDesktop Bus and LocalTalk ports. That spring, Steve Jobs, who had just resumed the helm of Apple, introduced the original iMac. In addition to looking completely different from any computer anyone had ever seen, the iMac dispensed with both the floppy and all legacy ports, replacing them with Universal Serial Bus connectors. USB had been around for a while and was standard equipment on all Intel motherboards, but since Windows didn’t reliably support USB until Windows 98 Second Edition in mid-1999, they were barely used. Apple, which was still in very shaky financial condition, got scathing criticism for its leap into the future. But while floppies and legacy ports persisted on Windows machines for years, the iMac was a runaway success and suddenly all those indispensable legacies became dispensable indeed. (The iMac’s USB “hockey puck” mouse was a less brilliant idea and was soon replaced by a more conventional design.)

Wi-Fi. No, Apple didn’t invent Wi-Fi, or, as it was originally called, wireless Ethernet. That honor goes to AT&T (later Lucent) Bell Labs. But Apple began putting AirPort cards (actually rebranded Lucent Orinoco PCMCIA cards) into Macs, including some desktops, in 1999, before the IEEE even completed the agonizingly slow process of ratifying the 802.11b standard that it was based on. (Here’s a 1999 article I wrote on Apple’s offerings.) Slower versions of the 802.11 standard had been around for a while for commercial and industrial use, but Apple took the blindingly fast version (a theoretical 11 megabits per second, up from 2 mb/s) and turned it into a consumer product. Although others, particularly Intel, were later to play an important role in making Wi-Fi ubiquitous, it was Apple that had the vision that freed our computers from their network tethers.

WebKit. It’s easy to foget how awful mobile browsing was before the iPhone. Not only did most devices have minuscule displays, but the browsers on Palm, Symbian, BlackBerry. and Windows Mobile devices were just terrible. The WebKit browser engine that was the basis of the iPhone version of Safari totally changed the game by bringing desktop-class browsing to a handheld. Even though the original iPhone, which lacked 3G support, suffered from slow connections, it provided a vastly better browsing experience than anything we had seen before. Even better, it’s open source (not entirely by choice; WebKit was based on the KDE project’s open source KHTML) so it is widely used by other company’s browsers, including Google Chrome.

Purists can complain that Apple didn’t invent any of these. But that’s the difference between invention and innovation. And while the cleverness and insights of the inventor are essential, we need the daring and vision of the innovator to move forward. The iMac in particular was an extremely gutsy move by Apple; Steve Jobs bet the company on a novel design and its failure would almost certainly have meant the end of Apple.

Even during Apple’s darkest days of the mid-1990s, Apple remained a remarkably inventive company. For example, the Newton MessagePad was a failure, but no one can say that it did not break significant new ground. There are many things you can fairly criticize Apple for, but the charge that the company fails to innovate is just plain silly.

*-There are three kinds of mathematicians–those who can count and those who can’t. The original headline said “three.” While writing the piece, I added the section on the LaserWriter, but forgot to change the headline.

The New OS Wars: The Variety of Android Boosters

The verdict in Apple v. Samsung unleashed a flood of commentary on the relative merits of Apple and Android, and the one thing that has struck me as I read through the posts and comments is the passion of Android supporters. I’ve been following OS wars for 25 years or so since the heyday of Mac OS vs. MS-DOS and I’m still surprised at how invested some people get in their choice of software, the code equivalent of fans who show up at Lambeau Field in December with their half-naked bodies painted green and gold.

I spent years being taken to task by Apple advocates any time I said anything less than totally favorable about any Apple product, often being accused of being on the Microsoft payroll. Today, the Android fans (please don’t call them, or anyone else, fanboys. It’s a childish epithet) seem to be the most passionate. In reading their views, I have identified several sub-species of Android enthusiasts.

The Makers. This is the group I find most appealing. They are inveterate tinkers drawn to Android because what others see as chaos in the Android world they see as opportunity. To them, the most important characteristic of a new Android handset is the ability to “root” it to circumvent whatever restrictions Google, the phone manufacturer, or carrier may have placed on it. They will sacrifice convenience and even functionality for freedom and are repelled both by Apple’s “control freak” approach to apps and the closed Apple software/hardware environment. Tinkering is the mother of innovation and let us not forget that Steve Jobs and Steve Wozniak got their start as phone phreaks. The Makers’ principal sin is failing to realize that they represent a tiny slice of the market and assuming that their views are far more widely held than they are.

The Open Source Hardliners. This group is related to the Makers, but not nearly as much fun. The truest believers find the idea of making money from software morally repulsive. Their problem is that while Android may look open in comparison to iOS, Android’s open source cred is a little shaky. In theory, anyone can take Android code and use it freely under an Apache license. In practice, most of the major OEMs (Amazon, hardly a paragon of openness itself, is the leading exception) have chosen to use Google’s official versions of Android and to play by Google’s rules. The principal practical difference in openness between iOS and Android as they come from the factory is that Android requires only a simple change in preferences to install apps that do not have Google’s official sanction while an iPhone requires a warranty-voiding “jailbreak.”

The Underdog Backers. There seems to be something in human nature that causes people to back an underdog. And even though Android is backed by a powerful Google and Android handsets have been outselling iPhones for a while, it is still seen by many as David to Apple’s Goliath. Some of this same sentiment worked in favor of Palm’s webOS, even after Hewlett-Packard bought it, and actually strengthened for a bit after HP killed it. (Death is the ultimate underdog status.) Somehow, though, back-the-underdog sentiment hasn’t done much for poor Research In Motion, and viewing Microsoft as a spunky challenger seems to make people’s heads explode, even if Microsoft is a very distant third or fourth in the business.

The Apple Haters. This is the group, in some sense a more hard-edged and nastier version of the Underdog Backers, that I find most troubling. It almost seems as if a whole group of people who used to hate Microsoft have transferred their animus intact to Apple. Strangely, the complaints are almost exactly the same. Folks used to denounce a greedy Micro$oft. Now they complain about a greedy Apple’s prices. They regularly denounced Microsoft as a bully using its power to crush competitors; now they say they exact same thing about Apple. There’s at least a bit of truth in this charge. What is much stranger is the charge that Apple is brilliant at packaging and marketing but provides no innovation and develops its products by copying, or in the less polite version, stealing. Of course, the exact same charge used to be leveled at Microsoft. It wasn’t true of Microsoft and it most certainly is not true of Apple. If Apple had done nothing but the iPhone, it would still be one of the most innovative companies in history. I have trouble figuring out just what motivates the Apple haters, but I imagine I’ll be hearing from plenty of them.

Of course, the great majority of Android buyers don’t fall into any of these classes. The are buying Android for a large variety of reasons, ranging from supersized displays to super-low prices. Some carriers push Android hard because they don’t have an iPhone to offer. Some with iPhones in their portfolios push Android anyway because it is more profitable or more in line with their strategy. Verizon, for example, has been soft-pedaling the iPhone because it made a strategic decision to push only phones that support its massive investment in LTE technology (this is likely to change with the release of the next iPhone.) Of course, most of these people also don’t write or comment on blogs. They just buy, use and, I hope, enjoy their phones, whatever device they have chosen.

A Smartphone Patent Pool: A Way Out of the Litigation Thicket

Photo of Gene Quinn from IP Watchdog — Gene Quinn

One major misconception arising from Apple’s legal victory over Samsung is that Apple now has some sort of monopoly over critical components of smartphone touch screen interfaces. Patent lawyer Gene Quinn of IP Watchdog explains the problem with this view in considerable detail, but a quick and dirty way to look at it is that patents almost never are issued for broad, sweeping ideas. Instead, as is the case with the Apple claims in dispute, most patents cover small, incremental improvements in existing ideas. The design of smartphones is covered by hundreds if not thousands of such patents, distributed over a large number of patent holders.

The parties could spend an inconceivable amount of time and money trying to litigate their way out of what Quinn calls a “patent thicket.” Or they could turn to a solution that has resolved such messes in the past, a patent pool. The idea of a patent pool is simple: Each player with a relevant patent contributes it into the pool. Anyone who wished to use any of the patents buys a license. And the royalties are divided among the contributors by formula. Anyone who needs the patented technology can use it and everyone who owns patents gets paid.

Pools have been used with considerable benefit in the tech industry. For example, the development of digital entertainment media was greatly facilitated by patent pools covering CDs, DVDs, and MPEG, among other technologies. People grumbled about paying for the licenses, but development proceeded with little litigation.

Of course, a patent pool for smart phones is more easily talked about than created, especially when many of the players are at each others’ throats. Coming up with an equitable licensing arrangement is a challenge and agreeing on a formula for distribution of the proceeds is a bigger one. The fact that Apple and Microsoft are likely to be the biggest winners, at least regarding touch interface patents, will not sit well with many.

But pieces of such an arrangement are already in place. Microsoft and Apple have an intellectual property nonaggression pact dating back to 1997, when they agreed to end their numerous IP disputes with a broad cross-licensing agreement. And most Android phone and tablet makers have already agreed to license Microsoft’s patents.

But hard though it may be, establishing a pool serves everyone’s long term interests better than the present litigation free-for-all. Says Quinn: “Eventually a patent pool is almost certainly how this will resolve. If you look at the history of so-called patent thickets, the players fight and fight for a while and then, as more and more innovation occurs, they enter into a patent sharing arrangement of one kind or another. Patent thickets lead to a tremendous growth in innovation. We will see that in the years to come. Likely not too far off if you ask me.”

Android v. iOS Part 6: The Future

RECAP

Last week, we took a deep dive into the Android and iOS operating systems, looking at market share, profits, developers and platforms. Today we wrap up the series and attempt to peer into the probable futures of these two great mobile operating systems.

The truth is, seeing the futures of Android and iOS isn’t so much about following the signs – there’s plenty of them and they’re almost all pointing in the same direction – it’s much more about unlearning some of the lessons that we’d thought we’d learned. When it comes to Android and iOS, it’s not what we don’t know that hurts us so, it’s what we “know” that just ain’t so. Once we free our minds from past preconceptions, the scales will fall will from our eyes and the broad outlines of what is and what is about to happen will become clearer.

1) It is a mistake to assume that the “best” operating system will “win”

“Best” is a subjective opinion, one of the weakest forms of evidence.

“Best” is contextual. What’s right for one may not be what’s right for another. A school bus is a poor form of transporatation- unless one is a school bus driver. What’s “best” needs to be what’s best for the user, not what’s best for you or me.

“Best” is often irrelevant. Betamax may have been the best video recording device on the market, but it didn’t win out over the VCR. Things such as distribution, production, costs, marketing, first to market, and a slew of other factors often trumps “best”.

Let’s take our focus off of our subjective opinions as to what is “best” and rest our gaze, instead, on objective, measurable, factual information.

2) It is a mistake to assume that any operating system will “win”

Android v. iOS is undoubtably a platform war, however, not every platform war ends with a single standard.

— Musical records split into two standards with the 33 1/3 being used for albums and 45’s being used for singles.
— Gaming consoles are currently split into three different standards.
— Petroleum is split into two standards, with gasoline (the American term) being used for most cars and diesel being used for most trucks and other heavy commercial vehicles.

All of these standards exist side-by-side and serve different markets. And that is what is happening with Android and iOS too. We need to stop focusing on the idea that one mobile operating system is going to serve every market and, instead, start focusing on which markets are being best served by each operating system.

3) It is a mistake to let the exception swallow the rule

An exception to a rule does not invalidate the rule. So long as something is true most of time, it’s worth noting. Too often we focus on the exceptions and let those exceptions blind us to the overall patterns.

It’s important to recognize the exceptions to a rule. But it’s even more important to recognize which is the rule and which is the exception.

4) It is a mistake to assume that market share equals profits for Google

Whenever it’s pointed out that iOS is making a lot more money for Apple than Android is making for Google, or when it is pointed out that that iOS is making a lot more money for iOS developers than Android is making for Android developers, we’re told that Google has a different business model than Apple – that Google is selling eyeballs (advertisements) and that market share matters because every Android device is another pair of eyeballs consuming Google services and Android advertisements.

That’s a fine theory and all except for one thing: It’s simply not happening.

Google’s business model is no where near as profitable as Apple’s. Google gives away Android in order to make money from Google services and Google ads on a per device basis. It is estimated that Google makes $6.50 per device. Apple, on the other hand, makes an estimated $300 per iPhone and Apple sells apps and ads on top of that. For Google’s Android to come close to matching Apple’s, Android devices would have to outsell the Apple’s iOS devices by a factor of 30 to 1. (Source)

Further, Google’s mobile ad model is not working all that well. There is little correlation between Android’s market share and Android’s ad revenue. According to e-Marketer, Google earned $125 million in mobile display ad revenues in the US last year, compared to $92 million by Apple. While that’s 30% more ad revenue than Apple, Google has acknowledged that two-thirds of their mobile revenues come from iOS, not Android, devices.

All in all, Mobile ads are simply not shaping up to be the same kind of money maker for Google that desktop ads are. According to research by Internet Retailer, Invodo, and Comscore, mobile video appears to be a more effective than display ads in converting potential customers into paying customers. And 70% of the retail videos accessed by mobile devices are accessed by an iOS devices, not Android devices. (Source)

An even more disturbing trend for Google is the migration from search to apps. Users are increasingly using apps rather than search, and Apple leads in the app market by the number of apps, the amount of money made in apps, the number of developers developing apps and the “buzz factor” surrounding new apps too. (Source)

Flurry Analytics reports that on mobile devices, 94 minutes per day are spent on apps compared to 72 minutes on the web. Mobile users are spending more and more of their time going directly to an app that gives them exactly the information they want and they are spending less and less of their time searching the mobile web. (Source) That’s good for apps. That’s bad for Google search revenue model.

Android may have market share, but that market share is not translating into dollars – not for Google and not for Android’s developers either. With mobile users trending toward the use of apps and away from the use of search, despite Android’s greater market share, it’s going to become more and more difficult for Google to keep up with Apple’s revenues and for Android’s developers to keep up with the revenues being made by iOS developers.

One final point on profits. I can anticipate the argument that it is unfair to compare Google to Apple – that Google’s business model and Apple’s business models are nothing alike – that Google gives away the Android operating system; that Apple sells both the operating system and the hardware; that, of course Apple makes more money than Google. This argument complete rubbish.

There’s nothing fairer than comparing profits to profits. Profits are the great equalizer. The top lines of companies can often be quite different, but the bottom line is how every company is ultimately measured. It’s not unfair to compare profits – it’s exactly what we SHOULD be comparing.

It is true that Google and Apple have very different business models. So what? Business models are a strategic decision made by the companies themselves. Google chose it’s business model. Now that have to live with the results.

5) It is a mistake to assume that market share equals retention

One argument for the value of Android’s greater market share is the contention that Android gets to new smartphone owners first, builds unshakable loyalty in the Android brand and locks iOS mobile devices out of the market thus insuring iOS’s demise and Android’s future market domination. Only thing is, all of the existing evidence points in to the exact opposite conclusion.

— iOS has a 75% satisfaction rating with Android coming in a distant second at 47%. (Source)

— iPhone has topped J.D. Power’s semi-annual satisfaction list 7 straight times. (Source)

— iPad has an astonishing 98% satisfaction rating. (Source)

— iPhone owners are the least likely to switch from their carriers – even when that carrier’s service is deemed to be just awful. (Source)

Goldman Sachs recently conducted an extensive consumer survey of over 1,000 Apple iOS users and reported that:

— 71% of respondents are “highly likely” to choose an Apple device for their next tablet or smartphone purchase, while 23% are “likely” to stick with the platform. In other words, 94% of respondents are “highly likely” or “likely” to purchase their next tablet or smartphone from Apple. Only 1% of respondents said that their next device purchase was “unlikely” or “highly unlikely” to be from Apple. Further, a surprising 21% of respondents to the survey said: “there isn’t a discount that would make it worthwhile” to leave the Apple platform. Now that’s brand loyalty.

— A study by Gene Munster at Piper Jaffray indicates that only 47% of Android users expect to buy another Android device and 42% expect to buy an iPhone. (Source)

— Another study by Gfk in the UK indicated that 84% of iPhone users will repurchase an iPhone compared to just 60% who would repurchase an Android phone. (Source)

— A survey of more than 2,000 smartphone users by Robert W. Baird analyst William Power shows that 48% of Android smartphone users plan on buying another Android device for their next smartphone while 17% say they plan to buy an iPhone and 34% say they’re undecided. The story is much different for fans of Apple’s smartphone, however, as 77% say they plan to buy an iPhone for their next smartphone, with just 5% planning to switch to Android device and 18% still undecided. (Source)

Android may be winning the race to the new smartphone consumer, but Android is not retaining those users. Switching is primarily a one way street, with Android users going from Android to iOS, but iOS user seldom leaving the iOS platform.

6) It is a mistake to assume that market share domination equals app ecosystem domination

When it comes to platform, developer share – not end user market share – is what matters. And iOS dominates Android in developer share.

iOS developers are paid better, develop for iOS first and iOS customers buy more apps and pay more for them.

It has been argued that Android’s platform is every bit as good as the iOS platform. That is demonstrably untrue.

— iOS overall developer revenue is six times greater than Android developer revenue. You don’t generate that much more revenue without having first generated much more value to your customers.

— There are over 43 thousand Apple iOS developers and 10 thousand Android developers. 33 thousand additional developers add a lot of value to the iOS platform.

— There are seven iOS apps for every three Android apps. Arguing that more apps has no more value than less apps is not an argument, it’s an assertion that reality doesn’t exist.

Argue as loudly as you like that the Android platform is as good as the iOS platform. The iOS developers, the iOS apps and the iOS buyers will shout you down.

For additional details and sources, see: Android v. iOS Part 4: Developers

Some day, all this may change, but if it does change, it will be because of a change in developer share, not a change in market share.

ANDROID IS THE SUPERIOR SMARTPHONE DEVICE. IOS IS THE SUPERIOR PLATFORM

Android and iOS have different inherent strengths and weaknesses and instead of fruitlessly trying to decide which operating system is going to win everywhere, we should be focusing our efforts on determining which markets each OS is destined to dominate. Neither Android nor iOS is going away. Instead, each OS is going to go their separate ways.

Android’s value is in the device. iOS’s value is in the platform. Android will take the low end of the market. iOS will take the high end.

Android will appeal to third-world nations, emerging markets, tech aficionado’s who admire the virtues of “open”, those who require more freedom, those who require more options, those who require more diversity, those who use a single device, the cost conscious, and those who admire the value of free.

iOS will appeal to more established nations, maturing markets, non-technical users who admire the virtues of easy and intuitive, those who require more security, those who require more consistency, those who require more integration, those who need multi-device management across multiple device form factors, the quality conscious, and those who fear Google’s ad-supported business model.

iOS will appeal to Enterprise, businesses, governments, institutions, organizations, and other entities that require more structure and control. (As one who lived through the Windows v. Mac wars, the irony of this statement is not lost on me.)

THE ONCE AND FUTURE PRESENT

“It’s tough to make predictions, especially about the future” – attributed to Yogi Berra

The truth is, we’re already living in the future of the Android and iOS operating systems. Both are well along on their respective paths. The future is going to be much the same as the present – only more so.

Android will continue to grow like a weed. iOS will continue to grow like a well tended farm.

Android will continue to rapidly iterate their hardware and their operating system. iOS will continue to relentlessly integrate their hardware with their software and their platform ecosystem – methodically moving both their iOS and their OS X software platforms forward together in lock-step.

Android will continue selling a mind-numbing array of diverse products. iOS will continue selling products like the three year old iPhone 3GS because iOS’ value is found primarily in the platform, not in the the device itself.

These two great operating systems actually complement one another. The Yin to the others Yang. And one unintended consequence of that symbiosis is that they will continue to hold the dogs of anti-trust at bay. No one is going to sue Apple for anti-trust so long as Android has most of the market share. And it’s going to be awfully hard to say that Android has a monopoly on mobile phones when Apple’s iOS has most of the profits.

Android and iOS is less about which one is superior and more about their relative strengths and weaknesses. It’s less about how they compete with one another and more about how they complement one another. It’s less about their radically different futures and more about how the future is going to be an extension of the present.

The future is uncertain and there are sure to be lots of twists and turns along the way. But don’t expect this war to come to a head any time too soon. The two sides are too evenly matched and yet too divergent in form. Like Britain and France during the Napoleonic wars, Britain ruled the sea and France ruled the land and seldom did the twain meet. But unlike the Napoleonic wars, don’t expect there to be a decisive battle of Waterloo. A lingering, uneasy state of detente is far more likely.

Without Metro Apps, Innovative Touch-based Windows 8 Consumer Hardware is Meaningless

Last week at IFA in Berlin, Germany, HP, Dell, Samsung, and Sony announced some very unique hardware designs for Windows 8. They included touch notebooks, convertibles, sliders, flippers, hybrids, and tablets that can take advantage of Microsoft’s Metro touch-based UI. The hardware was very impressive and it was obvious that a lot of thought and effort went into the design. Will these be successful? It’s impossible to say at this point because two huge questions have yet to be answered: device price and the number of high quality Metro applications. Device prices will be announced by Windows 8 launch on October 26, but I want to dive into the applications question. Without many high-quality Metro-based application details on the horizon, it’s hard to get excited about the hardware.

Let’s first look at the diversity of products.

Touch-based Hardware for Windows 8

There were many innovative devices launched at IFA to take advantage of Windows 8 touch for the Metro environment. Here are a few that appeared innovative:

HP SpectreXT TouchSmart– Premium 15.6″ HD touch display Ultrabook with Intel Thunderbolt technology.
HP ENVY x2– Ultrathin notebook whose 11.6″ HD display can be removed and used as a tablet.
Dell XPS Duo12– Premium Ultrabook with 12″ touch whose screen flips around to be used as a tablet while in Metro-mode. The design includes use of machined aluminum, carbon fiber, and Gorilla Glass.
Dell XPS One 27– Premium All In One with a 10-point touch enabled, Quad HD (2560×1440) 27″ display. The all in one will lay flat as well, enabling multiple users to use it at the same time.
Sony VAIO Duo 11– Slider with an 11″ display that operates as a notebook and a tablet when the HD display is slid onto the keyboard.
Samsung ATIV Tab– Windows RT tablet with 10″ touch display. It’s thin at 8.9 mm and light at 570 grams

As you can see, the diversity of Windows 8-based touch devices was very wide, which, given a wide variety of high quality apps, would usually mean that something would stick. The problem is, few really know the true state of Metro-based touch apps, including most PC and chip makers.

Ecosystem Losing Confidence in Metro Application Delivery Timing

Nearly ten months ago, Microsoft held its BUILD conference for Windows 8 software and hardware ecosystem partners. Microsoft also launched their development platform for Windows 8, called Visual Studio 11. Every attendee went home with a robust Samsung developer tablet and keyboard with Visual Studio Express Beta, intended to spur development of Metro-based applications. As of April 2012, six months later, 99 applications were available. As I outlined here, this was way behind where Apple was but far ahead of where Android was.

So where does that leave the state of Metro apps? Microsoft is now seven weeks away from launch and virtually no one has much of a sense for how many compelling Metro apps will be available at launch. Here were some key milestones that Microsoft has anounced:

April 18, announces developer submission locales from 5 to 38 markets, but limited to select partners; app catalog at 21 markets
May 31, “hundreds of preview apps in the catalog-including the first desktop app listings”; app catalog increases to 25 markets; Share contract added
July 20, Microsoft outlines how to monetize and get paid for apps
August 1, RTM Windows store opens; “qualifying businesses can submit apps”; 54 new markets and 24 app languages added

As of today with my version of Windoes RTM, I can only see 844 Desktop + Metro apps in the Windows 8 store. I do not see most of my favorite apps, including Facebook, Path, LinkedIn, Pinterest, Google+, Netflix, Hulu+, Amazon Video, HBO Go, ESPN Video, Time Warner Video, CNN, Flipboard, Pulse, Nike Running, MyFitnessPal, Pandora, Flixter, or E*trade. I am concerned and many ecosystem executives are telling me that they are very concerned with the state of Metro-based applications. Should we really care about how many Metro applications will be available at launch given Windows 8 is a five year investment?

Why Should We Care About Apps at Launch?

Having microscopically observed and participated in the launch of the Motorola XOOM, HP TouchPad and the BlackBerry PlayBook, there were some common threads that led to their failed launches and quick retreat. These issues included:

Incomplete hardware: hardware features did not work or were not available, including SD cards, and LTE support.
Incomplete paid content: lack of support for paid movies, music, games and books.
Sluggish and buggy: experience was slower than expected and/or included many bugs
Lack of high quality apps: few applications were available that consumers recognized or were compelling. In some cases, basic apps were missing like calendar, mail and contacts.
Priced at iPad: tablets even with issues above were priced on top of the iPad, an already known and successful product with a great consumer brand

Many of these issues were addressed shortly after launch, but it didn’t make a difference. The damage was done and in most cases, irreparable. What developer wants to write apps for an ecosystem or platform that just got slaughtered by the press, analysts and consumers?

What about post-launch? Some issues still exist even for 10″ Android tablets. Android 10″ tablets have come a long way with ICS, Jelly Bean and paid content, but still suffer from a lack of high quality apps, which still number in the 100’s. Remember, part of the the success of the Google Nexus is that it leverages the Android phone applications, not those designed for tablets. And, let’s not forget it is priced at half of the iPad. I believe Windows 8 will launch with #1 complete hardware via PC makers, #2 paid content via XBOX Live, Netflix and Kindle and so far it looks that even #3 Windows RT will have acceptable performance. As for #4 and #5, well no one know yet and if we can learn anything from Android tablets, a robust supply of touch-based applications are required for success, which eludes them almost 2 years later.

I’ll say it again…… innovative consumer hardware for touch-based products is meaningless without thousands of high quality, compelling and popular apps.

Tech.pinions Recommended Reading

I hope our many American readers are enjoying a day off celebrating Labor Day. To our many readers in other parts of the world happy Monday! Since today is a holiday in the states we didn’t plan an official column for today but rather wanted to highlight some other articles we thought deserved to be read.

Apple Never Invented Anything by Jean-Louis Gassée

Gassée had an interesting post and comment thread on his post called The Apple Tax, Part II. He followed it up with this excellent article where he point out the many flaws in the Apple never invented anything argument many seem to be fond of making. Gassée uses a great analogy of a Chef to help us understand the difference between innovation and invention.

I believe the Chef analogy is one of the stronger ways to understand innovation. It demonstrates how something new can be created from things which already exist.

Who Inherits Your iTunes Library? by Quentin Fottrell

I found this article in MarketWatch and found it to bring up a question I had not yet thought through. Namely what happens with our digital assets after we die? This is an interesting question to wrestle with and it is one unique to the time period we find ourselves in. To some degree many of our digital assets are not locked to our person or an account service. But there are certain cases where they are locked to a service and may be even more tied to services in the future.

There is a great deal more to be explored and wrestled with related to digital assets but we will have to tackle that subject another time.

Why Apple Needs to Lose the Samsung Appeal by Vivek Wadhwa

I don’t agree with every point Vivek makes in this column. I for one am not worried about innovation in Apple or even Silicon Valley for that matter. Anyone living or working near Palo Alto and can feel the startup energy wouldn’t either. But the issue or fear of startups being sued out of business as well as issues with patent trolls are very real and of concern.

Vivek makes some interesting points and we must make sure that even in the midst of these patent battles that innovation stays safe.

How Many Kindle Fires Were Sold? By Horace Dediu

On the heels of a major product launch event this week, Amazon had some interesting press regarding the official sell out of the Kindle Fire. Obviously when you keep taking orders for a product but stop making it earlier in the year one would assume you would eventually clear inventory. That is exactly what happened with the Kindle Fire.

Horace makes some good points and I feel he is accurate about the 5 million Kindle Fire estimation. It sure would be nice if everyone was open with their shipment numbers as Apple.