The Opinion Cast Round Table: Blackberry Its Past and its Future

This week the topic of choice is about RIM. Our Tech.pinion columnists get together for a lively discussion about Blackberry, the company formerly knows as RIM. We explore how they got to where they are and what they need to go forward. Can they do it? Listen to find out.

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The Enterprise Is Important. Let’s Get It Right.

BlackBerry z10 photo (BlackBerry)

One of the most striking features of much tech writing today is its near total ignorance about corporate software and systems. Except for sites like ComputerWorld and others that specialize in the enterprise, reporting is sparse and when it appears, often wrong.

This tendency has been glaringly revealed in a lot of the writing about the new BlackBerry and the BlackBerry 10 operating system. The heart of the blackBerry business has always been the enterprise and the company’s hopes for revival hinge on its ability to win back customers who have been drifting to other platforms or bring-your-own-device options. But consider this from TechCrunch:

In short, BB10 isn’t built for the way business is done today. When RIM was in its ascendance there weren’t many options for an IT guy. You could install Exchange, sendmail, or Lotus and wait for a crash. BES was a godsend. Now that’s no longer true. 99.9% uptime is the rule, not the exception, and there are hundreds of cloud service providers that can turn a single founder into a mobile powerhouse from the comfort of her phone – her iOS phone.

The writer, the usually solid John Biggs, doesn’t realize that BlackBerry Enterprise Server was never an alternative to Microsoft Exchange or Lotus Notes. It ran (or runs) on top of one of those platforms. BES may have been a godsend, but not for that reason. And major commercial mail platforms such as Exchange or Lotus Domino Mail have provided three nines of uptime for a very long time. and to the extent that I can understand that last sentence, there have been cloud providers for a very long time too, including those that offer hosted BES services.

BlackBerry is making a serious play to regain the corporate market, BlackBerry Enterprise Service 10, released last week, provides two new services: BlackBerry Balance, a software approach that partitions a BlackBerry 10 devices into separate  business and personal halves, and BlackBerry World for Work, a custom corporate app store. It also brings messaging and mobile device management support to Android and iOS devices, as well as BlackBerry 10s.

BlackBerry faces huge challenges and its success in the enterprise is far from assured. But if you want to analyze its chances, it helps to know how this stuff actually works.

Blackberry: The Charge Of The Light Brigade

images-40Yesterday RIM, now renamed Blackberry, introduced the Blackberry 10. Tech.Pinions columnist, Steve Wildstrom, is cheering for Blackberry as are many Tech.Pinion regular readers and millions upon millions of others. Does the new, re-invented, Blackberry stand a chance? Or is Blackberry merely metaphorically repeating the infamous charge of the Light Brigade? In order to answer that question, let’s look at some computing history.

The Personal Computer

In the late seventies and eighties, at the dawn of the age of personal computing, there were scores of different competing computers and computing operating systems. By the eighties, things had begun to shake out. One by one, computers like the TRS-80, Commodore 64, Apple II, Atari ST, Amiga and others took their final bows and left the stage forever. By 1995 the only two players left standing were computers powered by Windows and the Mac. And as many of you know, the Mac was barely standing.

From that day until this, no one has seriously challenged Windows’ leadership in personal computing. For almost three decades, Mac aficionados have insisted that theirs is the superior operating system. Did that help the Mac overcome Window’s dominance and secure the personal computing crown for itself? No it did not.

On February 19, 1996, in an interview with Fortune, Steve Jobs said:

“The PC wars are over. Done. Microsoft won a long time ago.”

He was right.

LESSON #1: HAVING THE BEST HARDWARE AND/OR OPERATING SYSTEM IS NO GUARANTEE OF VICTORY.

LESSON #2: ONCE A PLATFORM IS ENTRENCHED, IT IS ALMOST IMPOSSIBLE TO DISLODGE.

The MP3

In the self-same Fortune interview referred to above, Steve Jobs also said:

“If I were running Apple, I would milk the Macintosh for all it’s worth — and get busy on the next great thing.”

And that’s exactly what Steve Jobs did when he returned to Apple. Apple continues to milk the Mac to this day. And their next great thing was – the iPod.

In the late nineties, there were several companies competing to win the nascent MP3 wars. In 2001, Apple introduced the iPod, but it was really the one-two combination of the iPod and iTunes that eventually won the day. iTunes helped store, organize and deliver your music to your iPod and the it was the iPod – with its clean hardware, its easy to understand user interface and its easy to use click wheel – that helped you to easily find your music and play it.

“Do not renew an attack along the same line (or in the same form) after it has once failed.” ~ B.H. Liddel. Hart, Strategy

It’s important to understand two things here. First, the iPod was not a direct attack on Microsoft Windows. Far from it. In military terms, you don’t conduct a frontal assault against a well-entrenched enemy. In business terms, you don’t defeat the industry standard bearer just by being a little better — or even a lot better — at what you do. The Mac has been attacking Windows since 1984 and it still has only 5% to 10% market share to show for its efforts. (True, the Mac’s consolation prize is that it may garner as much as 35% of the sector’s profits, but that still does not make the Mac anywhere near the industry standard.)

Second, Apple did not win the MP3 wars simply by being better than the existing players from Sony, Archos and others. With the iPod/iTunes combo, Apple leap-frogged the existing market and created a whole new category of device. It was the synchronization of iTunes with the iPod that was its killer feature. And despite all the criticism that iTunes deservedly receives, no other competitor has come close to duplicating its functionality. In military terms, Apple created a whole new front. In business terms, Apple created a whole new category. And once Apple established itself as the standard for the new MP3 category, they never let go their grip. To this day, Apple dominates the MP3 market with over 70% market share and gawd-knows-how-much profit share.

Sony, Archos and others tried to unseat the iPod by providing cheaper devices with more features. Didn’t happen.

Microsoft came late to the MP3 game but they came with what they, and most industry observers, thought was the winning strategy. With PlaysForSure, Microsoft intended to duplicate, in MP3’s, the same success that they were enjoying in personal computing. Microsoft would create the operating system, license it to manufacturers and then watch as their open licensing system inevitably overwhelmed Apple’s closed operating system. Didn’t happen.

After a while, Microsoft tired of not gaining any market share (or any profits), threw their PlaysForSure partners under the bus, and created the Zune. (Kind of reminds me of how Microsoft is handling the Surface. But I digress.) It’s hard to remember now, but most industry observers predicted that the Zune was the beginning of the end for Apple and the iPod. At that time, Apple was a mere upstart and Microsoft was the 900 pound gorilla that everyone feared. What Microsoft wanted, Microsoft took. With the weight of Microsoft behind the Zune, how could it fail to become the industry standard? Didn’t happen.

LESSON #3: WHEN IT COMES TO PLATFORMS AND STANDARDS, TIMING MATTERS. THE FIRST MOVER AND THE FAST FOLLOWER HAVE THE INSIDE TRACK. THE REST JUST REMAIN AT THE BACK OF THE PACK.

The Smartphone

“Do not throw your weight into a stroke whilst your opponent is on guard.” ~ B.H. Liddel. Hart, Strategy

In 2006, Smartphones were ruled by the Palm, Windows, RIM and Nokia. In 2007, Apple introduced the iPhone. By 2013, Palm was gone, Windows Mobile was gone, Nokia was a niche player, dependent upon Microsoft’s new mobile operating system, and RIM was making a bold gamble to regain relevance. What’s important to understand is that Apple’s iPhone was not, as many thought, a more expensive smartphone. Rather, it was an inexpensive pocket computer. Apple did not really make a better smartphone. Instead, they opened a new front, created a whole new category of device, and then dominated that category. Google did an excellent job of fast following with Android and now, between them, Apple’s iOS and Google’s Android sell more than 90% of all smartphones.

Within a year after the introduction of the iPhone, Palm tried to reinvent themselves, but they lacked the resources to make it happen. Windows Mobile re-invented itself into Windows Phone 7, and again into Windows phone 8, and what has that gotten Microsoft? Perhaps 3% market share? Microsoft has all the resources in the world. They have tremendous business connections. They’re patient and persistent. And their Windows Phone operating system is well-respected. Yet they can’t seem to gain any traction in the phone market. If Microsoft, with all its advantages and with a four year head start, can’t gain any traction in the smartphone markets, then what realistic chance does Blackberry have?

LESSON #4: YOU DON’T OVERCOME A MARKET LEADER THROUGH A DIRECT ASSAULT. YOU FLANK THEM.

The Tablet

“Exploit the line of least resistance – so long as it can lead you to any objective which old contribute to your underlying object.” ~ B.H. Liddell Hart, Strategy

In 2001, Bill Gates was touting the advantages of the tablet. Yet in 2010, it took Apple only 7 months to sell more tablets than Microsoft had been able to sell in the previous 10 years. Did Apple do this by simply making a better tablet? No. Apple re-invented the tablet market by adding instant-on, longer battery life and a capacitive touch screen. But most of all, Apple re-invented the tablet by creating a wholly new touch user interface. Apple didn’t improve on the existing Microsoft tablets. They created a new category of device with a wholly new operating system.

By 1995, Microsoft’s Windows dominated personal computing, never to be challenged again. Neither Apple nor any other contender ever did or ever will unseat Windows from its dominant position. Instead, Apple created a new market and dominated it. By attacking Microsoft where it was weakest, Apple did in 7 months in tablets what it could not do in 20 years in personal computers.

LESSON #5: THE ART OF WAR IS THE ART OF AVOIDING A DIRECT ASSAULT AND IMPLEMENTING AN INDIRECT APPROACH TO ONE’S ENEMY. THE ART OF BUSINESS IS THE ART OF AVOIDING THE DIRECT ASSAULT AGAINST A COMPETITOR’S STRENGTHS AND LEVERAGING ONE’S STRENGTHS AGAINST A COMPETITOR’S WEAKNESSES.

Conclusion

Theirs not to make reply,
Theirs not to reason why,
Theirs but to do and die:
Into the valley of Death

~ Alfred, Lord Tennyson, The Charge of the Light Brigade

images-41
Do I hate Blackberry or wish them ill? Absolutely not. I have tremendous respect for what they’ve done. The original Blackberry phones were category busters and a wonder to behold. But the truth is, it does not matter if the Blackberry 10 hardware and software are narrowly better than the iPhone or Android phones. They have to be so superior that customers will be willing to switch. Because remaining the number four, or even the number three, smartphone OS is not going to cut it with developers. And people don’t switch platforms unless the alternative is not just superior but FAR superior to their current platform. Just ask the Mac, the Zune, and Windows Phone 7.

If you want to argue that a fast follower can overtake a first mover, I will agree. If you want to argue that the Blackberry 10 – introduced over 6 years after the iPhone was introduced – is a fast follower, I will respectfully disagree.

In war, you don’t win a frontal assault unless you have overwhelming military superiority. The art of war is, in part, about how to avoid making frontal assaults. In business, you don’t win a war against an establised standard unless you have overwhelming product superiority. The art of business is, in part, about differentiating your product and advancing your strengths against your competitor’s weaknesses.

Blackberry is not creating a new front or a new category. They’re attacking the existing leaders where they are entrenched and strongest. Does anyone honestly think that the Blackberry 10 is so superior to the iPhone, Android phones and Windows Phone 8 that it will overwhelm any of them? If not, the Blackberry 10 is the charge of the Light Brigade all over again…with similar results, but lacking the poetry.

BlackBerry Delivers a Product: Now It Has To Sell It

BlackBerry z10 photo (BlackBerry)Gartner analyst Michael Gartenberg nicely summed up the first day of the rest of BlackBerry’s life: “Good launch,” he tweeted. “Now it’s all execution.”

After what seemed like an interminable pregnancy, BlackBerry (the new corporate name; Research In Motion is history) delivered some very nice hardware running an impressive new operating system. The  all-touch Z10 is available immediately in Great Britain, next week in Canada and in March in the U.S. The Q10, with a traditional BlackBerry keyboard, is due in April.

The new products have a lot to offer. The Z10 looks pretty much like  every contemporary  smartphone–a black slab with a 4.2″ display that puts is between the  iPhone 5 and the somewhat bigger run of Android handsets. But it features a unique gesture-driven, messaging-centric operating system that combines some of the better features of the late, lamented webOS and Windows Phone 8 and which is its main selling point. Unlike the painful compromises of previous BlackBerry software, the QNX-based BlackBerry 10 is fully touch-optimized and is fluid and highly responsive. Its gestures take a bit of learning, but not very much.

But the new BlackBerry is not going to sell itself in a world thoroughly dominated by iPhone and Android. And the marketing message at BlackBerry’s Jan. 30 launch event was a bit muddled. It’s an old truism in marketing that if you are trying to sell to everyone, you are targeting no one and the BlackBerry approach seems somewhat unfocused.

One symptom of that was the announcement that Alicia Keyes would be BlackBerry’s  new creative director, but it was far from clear what her task is. Asked about it at a press conference, she offered something vague about increasing its appeal to the entertainment industry and to women. But one market is too narrowand the other too diffuse to be addressed meaningfully. I suspect Keyes will have about as much impact for BlackBerry as the Black-eyed Peas’ will.i.am has had in a similar role at Intel.

To have a chance of success (which I define, at least initially, as beating out Microsoft to become the No. 3 smartphone platform, a definition BlackBerry seems to share), the new phones have to win over several key markets.

The Die-hards. The  core of dedicated BlackBerry users still hanging on to their Bolds and Torches are the lowest-hanging fruit.  BlackBerry has to migrate them to the new platform as quickly as possible. They will be helped in this effort by the fact that radical as the new software is, it maintains a certain essential BlackBerry-ness. An example: I was annoyed by the fact that the mail program asked for confirmation each time  wanted to delete a message. But I found the toggle to turn that off exacty where I, as a longtime BlackBerry user, expected it to be.

The BYOD Crowd. This is a much tougher audience. Corporate IT managers, while grumbling about the traditional cost of BlackBerry services, have always liked having a  platform that offered unified management and proven security. But they had been forced to accept the iPhones and Androids that esxecutives have brought into the system and now must manage a melange of devices. They are prime targets for BlackBerry but winning them over win’t matter un less marketers can also win back the execs who adandoned BlackBerry in the first  place. One thing that will help is BlackBerry Balance, software that devides a device into a secure business partition and an open personal partition. Another, which could win me mover, is the integration of Evernote, the invaluable note-taking cloud service, into it Remember app, a sort of a cross between OneNote and Tripit.

The Message-centric. BlackBerry has always been primarily about messaging and the new versions do not ignore that heritage. While the rest of the system has been greatly beefed up, messaging remains paramount. If you are the sort of person who wants to know right away when an email message or a response to a tweet comes in–and want quick and easy access to it, the new BlackBerry is for you. The BlackBerry Hub, a central feature of the user interface, is the ultimate unified inbox. Marketing built around the BlackBerry’s messaging prowess could win over this audience.

BlackBerry has all the other smartphone bases covered, but not generally in a way that makes it a must have. The supply of available apps, somewhere between 70,000 and 100,000 depending on who was talking and when, is pretty good for the launch of a new system. Most of the  major categories are covered and those that are missing, including Netflix, HBO Go, and Instagram, are rumored to be not that far off. BlackBerry made it relatively easy for developers to port Android apps to BB10, and approach that accounts for about 40% of the initial offerings. The camera is good enough to be competitive, but isn’t a reason anyone will buy a BlackBerry.

One large group of current BlackBerry customers that will not be served by the new phones is the millions of buyers–many in emerging markets–of inexpensive Curves for whom the biggest attraction is BlackBerry Messenger. The Z10 and Q10 are expected to sell for around $200 on a two-year contract in the U.S., and if BlackBerry has plans to come up with a low-cost model for the Curve market, they aren;t talking about it yet.

The bottom line is that BlackBerry has given it a really good shot. To increase their chances of success in a very tough market, they need to refine their message and focus their marketing tightly on the groups they need to win.

 

 

 

 

 

 

 

 

Business and Social Media: The Good and the Ugly

imagesI had an interesting little experience this morning with how customer services organizations use social media well and badly.

I was headed to New York for the BlackBerry 10 launch and took the first train on the Washington Metro Red Line to connect with the 6 am Acela at Union Station. The trip proceeded uneventfully to the Metro Center station downtown, where we sat, and sat and sat. Finally, they put us off the train and it headed out without passengers. At no time was there any useful communication with passengers, other than the order to get off.

What was a tight connection became an impossible one and despite hitting Union Station at a dead run, I got to the gate just after they closed the doors. I had sent several tweets on the situation, all using Metro’s #wmata hashtag but saw no response.

Then came the interesting part. After settling down to wait for the 7 am Acela, I got a response from @Amtrak reminding me to change my ticket for the later train. The only mention I had made of Amtrak was a tweet, without the “@,” complaining about the endlessly looping security video.

Metro, which uses a Twitter account to post often stale information about its unceasing delays and breakdowns, does not seem to have any interest in a dialog with customers. (Actually, Metro seems to regard itself primarily as an employment program for its workers, who avoid interactions with riders at all costs. If they succeed in moving some passengers, that’s a coincidental benefit.)

Amtrak, by contrast, seems to monitor Twitter aggressively and respond quickly, even when a response isn’t really required. I ride Amtrak to New York fairly frequently, but I’ve never had strong feelings about it, other than that it is preferable to flying Delta or US Airways or taking the bus. But that little tweet this morning made me feel that someone cared, even if it was only an AI bot.

The lesson here is clear. If you are going to have a presence on social media, you create an expectation of real communication. A little effort can go a long way, and the lack of effort can easily antagonize customers you could easily please (or at least defuse their anger.)

Apple and the Burden of Bigness

Apple financials chart

A lot has been written lately about “exponential growth,” nearly all of it wrong. If you want to see what real exponential growth looks like, check out the graph of Apple’s revenues and profits . And this tells an important story about Apple the commentators, including financial analysts who should know much better, have completely missed. Explosive growth over the past few years has transformed Apple from a scrappy underdog into one of the largest companies in the world–it should break into the top 10 of the Fortune 500 this year. And things become very different when you get this big.

Of course Apple’s growth is slowing down. The thing about exponential growth is that it is inherently unstable and unsustainable. If Apple continued along its a 2005-2012 growth track until 2016, its annual sales would be nearly a trillion dollars, a clear impossibility. In fact, the single most remarkable thing about Apple is that it managed to sail smoothly through a growth spurt that would have destroyed many companies. And this all the more remarkable because it simultaneously went through the transfer of leadership from the late Steve Jobs to Tim Cook.

Regardless of how quickly Apple grows over the next few years, the growth that has already occurred has transformed the company in ways that both its fans and its critics ignore. The Apple that introduced the iPhone in 2007 was a middling-sized company with $24 billion in sales and 24,000 employees. It was a cheeky upstart in the phone business, a fifth the size of the AT&T with which it drove a hard bargain to be the exclusive carrier of the iPhone at launch.

Lots of things happen happen to a company when it grows this big, most of them bad. A certain amount of bureaucracy is just required to keep the wheels turning. Corporate functions, such as human resources and legal, swell. Apple seems to have done a splendid job of keeping the bloat that comes with rapid growth under tight control; amazingly Apple’s employment tripled in a period when its sales increased six-fold (meaning, of course, that sales per employee doubled, a spectacular accomplishment.) Above all, the bigger you get, the harder it is to maintain a rapid rate of growth because the absolute size of the increase you must generate explodes.Apple seems to have done a splendid job of keeping the bloat that comes with rapid growth under tight control.

In fiscal 2007, Apple sold 7 million Macs, 51.6 million iPods, and 1.4 million iPhones. In fiscal 2012, it sold 18 million Macs, 35 million iPods, 125 million iPhones, and 58 million iPads. One thing that stood out in Apple’s “disappointing” first quarter of fiscal 2013 is that sales of the iPhone and iPad were constrained by supply. The supply chain appears to have fallen a bit short, but given the growth experienced, it’s a wonder that the supply chain is functioning at all. Think of the number of components that had to be purchased, assembly lines that had to be brought on stream, and finished product that had to be shipped, often half way around the world, to accommodate that growth. And all of this was accomplished without any evidence of the quality problems that usually accompany rapid expansion. The supply issues of the past couple of quarters were probably inevitable; they do not diminish the reputation Tim Cook has earned as a supply chain genius for managing the growth.

What mostly needs adjusting is expectations for Apple. All the speculation about whether Apple has lost is mojo, or its cool, or whatever fails to consider that what Apple has lost is its ability to grow quickly, not because of anything its management is doing wrong but as a function of pure size. Look at it this way. From its 2010 introduction through fiscal 2012, the iPad generated about $57 billion in revenue, about half of Apple’s total revenue growth through the period. But for a hypothetical new product to make a similar contribution over the next three years, it would have to be twice as successful as the iPad in dollar value terms. That’s not likely to happen.

What does all of this mean for Apple’s stock price, the source of so much angst of late? The odd thing is that even when Apple was growing most rapidly and its share price was rising quickly, the market didn’t act as though it expected the growth continue. The ration of the stock price to trailing 12-month earnings last year peaked at just a bit over 15, very low for a company whose sales and earnings were growing phenomenally quickly.

The market was right: The growth had to slow. But even though the stock was priced seemingly in anticipation of slower growth, investors responded to the seeming reality of a slowdown by driving the price down so hard that the P/E fell below 10 (it has since recovered a bit along with the stock price.) There may have been plenty of reasons for the stock price to stop going up, but none but emotion for a 30% decline.

None of which is to say anything about where the price will go next. Markets will do what they do. Apple remains an extraordinarily well-managed company with a very strong product portfolio and, I suspect, the ability to surprise us again with new and innovative products. But I doubt that we will ever see another spurt of growth like the past five years. Apple has just plain gotten too big for that to happen.

Leaving the iPhone- How Windows Phone 8 Stacks Up

Approximately six weeks ago, I made the decision to stop using my iPhone 4s and immerse myself in Android, which I lumia 920did for about a month.  I wrote about that here.  After Android, I wanted to try out Windows Phone 8 for an extended period of time and I want to share my experiences with you. My goal here is provide some insights into how an American, technically astute Apple iPhone user would feel about using Windows Phone 8.  I don’t represent the masses, but do represent the demographics of a an influential block of analysts, press, pundits, etc.  I will talk about the pros, cons, and things that just didn’t matter one way or the other when comparing my iPhone 4s to the Windows Phone 8 powered Nokia Lumia 920.  The 920 is considered by most as the flagship Windows Phone 8 phone and a good representation of the state of the art.

Let’s start out with the Windows Phone 8 (WP8) plusses.

Windows Phone 8 Plusses

Camera: While I know this has more to do with Nokia than WP8, it’s important to talk about it as it’s such a core feature.  To be fair, when I am bragging on iOS, I always talk about the iPhone camera.  Flat out, the 920 has the best camera I have ever used.  It has superior low light capability and nearly every picture was in focus.

Responsiveness:  Amongst Android and iOS, WP8 is by far the most responsive operating system.  Screen flows are elegant and very rarely, if ever, did I feel any stutter.  This says a lot given the immaturity of WP8.  It also says a lot about how helpful restricting true multitasking can be.  I’ll touch on that later.

Live Tiles: Instead of icons, WP8 uses Live Tiles, or large icons that display information without actually having to open the app.  The most useful tiles were mail, calendar, and weather.  It was nice to just look at my phone and get a glance at the latest email and appointment without having to open multiple apps or down-swipe a notifications bar.  Sure, it only saves a few seconds, but our minds amplify time savings, so it feels like a lot more.  It also helps in the car, too where I can glance at my phone at a stop light and see what’s going on.

Stability: Flat out, WP8 never crashed nor did any app I was using.  I find this absolutely amazing, given the immaturity of the OS.  I cannot say the same about iOS 6 or Jelly Bean.

Contact linking: I liked this about webOS and I like it about WP8.  I have close to 7 social media or email accounts. WP8 (like Windows 8/RT) allows you to link contacts together so instead of seeing up to 7 contacts for one person, you see only one.  Some of the Android shells do this, but WP8 is flat-out superior at it.  It’s nice, too, that the linking gets shared to Windows 8 and Windows RT devices.

Calendar and contacts: WP8’s calendar worked really well with Google services, but not as well as Android, of course.  It supported adding attendees, accepting meeting notices from Outlook, etc.  Contact sharing with Google was flawless.   This is an area of intense weakness for iOS and I hope to see improve quickly.

The “back” button: Having a back button may sound like a nit, but it is a genuine time saver versus iOS.  iOS requires the double tap on the home button and a selection of the app versus just tapping the back button.  I was surprised at just how much I liked this.  When you hold the back button down for a second, your a screenshot of your last used apps pops up and I really liked that.

Internet Explorer browser: Very simply, the browser worked on all sites and was very fast, and in fact it felt faster than both Safari and even Chrome.  That’s saying a lot.

Full email search: WP8 allows me to do a full search of my email, where iOS just enables people and email title search.

Spell check: Unlike iOS and Android, WP8 gets it right for me more times than not and automatically makes the change.  This was one of those “wow I didn’t know it could get better” features.

People App: This app is unique in that you can organize people into groups, like Favorites and Family and see real-time info on them, like their social media updates, uploaded pictures and comments.

Full photo and video uploads: Unlike iCloud and iOS, WP8 uploads full size photos and even videos to SkyDrive.  To keep battery and broadband fees to a minimum, WP8 gives you the option to only upload over WiFi.  This is awesome as I never need to connect my phone to my PC, which I could never say about my iPhone.

Now let’s move onto the areas that didn’t make a difference one way or another.

Windows Phone 8 Neutrals

Copy-Paste: Unlike Android, WP8’s  copy and paste worked nearly as good as iOS.

MS Office: With WP8, MS Office files can be flawlessly read and Word and Excel can be editred.  As iOS has decent Office “read” capabilities, this brought nothing to the table, so I am indifferent.  When I was doing more “Powerpointing” in corporate America, iOS did make grievous mistakes with many Powerpoint files.  Seriously, who edits Excel on their phone?

Multitasking: As far as I can tell, there is no way for the user to control multitasking at any fine grain level.  Mail, calendar, and social media will sync in the background, but many apps won’t, and it’s aggravating.  Therefore, I must have the following apps open to sync data: Evernote, SlapDash Podcasts, and even Skydrive.  This is a “neutral” because iPhone isn’t much better with user controlled multitasking.

Windows Phone 8 Minuses

“Page 1” Apps: WP8 lacks in many cases the apps and the depth of apps I want on my phone.  First, there were many apps that were just as good and in some cases better than iOS.  Facebook, LinkedIn, E*Trade, Netflix and Evernote fall into that category.   Many of my preferred apps lacked full functionality, though.  These were apps like Epicurious, Flixster, Yelp and ESPN ScoreCenter which didn’t enable me to login and import saved data or settings.  YouTube wouldn’t let me even upload a video.  The most difficult thing to deal with was some of the lack of my page 1 apps.  These are apps like WatchESPN, Neat, Nike Run, HootSuite, Instagram, Google+, TripCase, Waze, MailOnline, TWC TV, and Pulse.  I use these daily on my iPhone and they were really hard to live without.

App organization: There are two distinct places consumers can organize tiles; the home screen and app screen.  The app screen is a vertical string of apps that is endless.  If you’re like me and use over 100 apps you are left with a string of endless apps to wade through.   This is ridiculous and needs to change. (UPDATE: In app window, holding down a letter will bring up the alphabet where users can pick apps that start with that letter.  Still harder than folders IMO.)

Lack of synced bookmarks: I liked the speed and compatibility of Internet Explorer, but the lack of synced bookmarks felt archaic. In fact, there are no folders for favorites and like lack of an organizing principle for apps, leaves a huge, long and unmanageable list of links.

Phone search: I really like the phone Spotlight Search on iOS.  WP8 doesn’t have the capability and I missed it.  What compounds the problem is that there aren’t app folders and I want to search for installed apps.  Contacts were tough too, because it could take three clicks to search on a contact as I need to go into People, find “all” people, press magnifying glass, then type in person’s name.  The frustrating this is that one of three dedicated bezel buttons is search, but it’s just a Bing search.  I wish they would change that to a phone search.

Maps and nav: Apple Maps severely disappointed me because of the inaccurate or incomplete data, but it had a killer experience. Nokia Maps was the opposite; decent data with a challenging experience.  I must caveat that Nokia maps is still beta and it shows. First, most of the times, GPS got stuck for about 10 seconds before it could tell me where I was.  That was more of my impatience, but it felt forever when you’re trying to find out where you are or how to get some place.

About 25% of the time when I did go to turn-by-turn directions, the phone got confused and wouldn’t do turn-by-turn or any navigation.  It would just sit there, confused.  Finally, when voice directions did say where to go, Nokia maps doesn’t give street names, it uses generics. It will say, “turn right in 1 mile”, not something like “turn right in 1 mile at Main Street.”  This was very, very difficult when you’re driving 65 mph on the highway in a big city when exits are packed on top of each other.  I missed many turns because of it.  I hope during their beta period, Nokia saw others recognizes this and made appropriate changes.

Switching to Windows 8?

I was really impressed with WP8 “feel”, stability and the camera.  Yes, that camera was a real differentiator.  The challenge is there are way too many shortcomings with lack of apps, maps & navigation, and browser bookmark sync for me to make a switch.  When some of the basics are there, I would reconsider, but then again, there will be a new set of “basics” in a year.  I won’t switch from iOS to Windows Phone 8 for now but will now likely switch to Android.  I want to see what Mobile World Congress before I lock into a phone and I will keep you posted on that.

I’ll Take My Hardware With a Side of Software

samsung-fridge-2Despite some people loathing CES, I actually happened to enjoy the show this year. I go to CES mostly to meet with our clients, gather data and market intelligence, and search for trends. CES always includes hidden gems; you simply have to know where to look.

Two things stood out to me as major themes at CES this year.

The Internet of Things on Display

We have talked about the concept of the Internet of Things for several years now. The Internet of Things is the idea that the vast majority of our electronics will be connected to the Internet and/or other nearby devices.

A refrigerator, for example, may have a touch screen on the door and be connected to the Internet, allowing you to remotely access information — things like inventory, temperature, whether or not you have what you need to make a certain recipe. Another example is the Nest thermostat, which is a connected thermostat that allows you to remotely manage your thermostat from your smartphone, tablet or PC. The high-level view of the Internet of Things is a world where nearly every electronic device we own will be connected to something.

In years past, this idea was just an idea — something we said was coming. This year, however, was the first year when I could actually say the Internet of Things was on display. I saw examples of nearly every type of electronics device — from coffee makers, ovens, fridges, cars, clocks, stereos, exercise equipment, and my personal favorite: an LED lightbulb with a wireless speaker built in. All of these devices were connected to the Internet and allowed you to interact with them, store data, access data and more. This was the first year I could see the Internet of Things becoming reality, and it is very exciting for us industry observers.

I’m half-joking but I can’t wait for the year when we see a connected toilet and companion app.

Hardware with Software Accessories

The reality of the Internet of Things coming to fruition brings with it perhaps one of the most interesting developments: the role of software. What become increasingly evident with all the connected devices I saw and played with at CES was that nearly all of them were made significantly more usable and valuable through the use of companion apps for smartphones or tablets.

Some I have spoken with position devices such as connected watches or even the Nest thermostat as accessories to your smartphone. The logic is that because your smartphone is the terminal that all these devices leverage to really make them smart, then the phone must have the more important role. This is true to some degree, because there is no point of having all these connected devices if the experiences are limited to the hardware itself. However, I would still position the hardware as the stand-alone device adding value, while the app on your smartphone is actually the accessory.

At CES, this hardware-software model was on full display in the area of smart health and personal sensors. On the show floor, the pavilion for the smart/connected health area was the biggest I have ever seen it: Several dozen vendors were there showing off the latest in smart health. Every single smart health and body sensor product I got a demo of or gathered info on had a companion app that ran on a smartphone, making the hardware more than just hardware.

This is the world we are headed toward. Because of the unrivaled momentum and rapid worldwide adoption of devices like smartphones and tablets, we have smart devices with us at all times. They perfectly function as the platform to drive the interaction with the hardware around us.

All hardware will be made smarter through not just the use of connected chipsets and next-generation parts, but rather through the applications that add to their value.

Cheering for BlackBerry

BlackBerry invitation header

On Wednesday, Research In Motion will launch its bid to save itself with the redesigned from the ground up BlackBerry. I’ll be at the launch event and I will judge the new hardware and software on their merits, still I have to admit that I am cheering for a BlackBerry comeback.

Apple reinvented the smartphone in 2007, but before that, the most important smartphone innovations came from Palm and RIM. Palm’s Treo (actually, the original version came from Handspring, a company started by Palm’s founders and later merged back into Palm) invented the concept of integrating a mobile phone and a PDA, along with third-party apps. The original BlackBerry, which was not a phone, created true mobile email and calendar. Eventually, this all came together to create the modern smartphone, which Apple took to the next level with the iPhone.

The iPhone did in Palm and nearly killed RIM. The decline of Palm was inevitable. The company was always cursed  by under-financing and a lack of stable, competent management. When Apple turned up the heat, Palm lacked the wherewithal to respond successfully with its reinvention after its purchase by Elevation Partners was too little, too late. Its demise after a horribly bungled acquisition by Hewlett-Packard was a somehow fitting  ending to a very sad tale.

RIM is a very different story. Palm knew what was happening to it but couldn’t do much about it. RIM, riding high as BlackBerry sales continued to soar well into the iPhone era, but lacked the paranoia than Intel’s Andy Grove long ago pointed out was a key to survival in a highly competitive industry. RIM co-CEOs Michael Lazaridis and Jim Balsillie were convinced of the superiority of their product and their business model and failed to respond to the market’s shift toward demanding highly capable handheld computers, not glorified messaging devices.

Fortunately, RIM, unlike Palm, had deep financial resources and significant annuity revenue streams that bought it another chance. It has two reservoirs of strength, the popularity of its low-end devices in emerging markets (where volume sales can be had, but profits are scarce) and enterprises, especially governments and others with the greatest concern about security. Success in neither is a given, but the opportunities exist. And I’ll admit to a long-standing fondness for RIM, particularly Mike Lazaridis’ uncontained enthusiasm when he talked about his newest BlackBerry or showed off a lab at RIM’s Waterloo, Ont., headquarters.

I think that both Android and Apple would benefit from some additional competition. Microsoft, despite heroic efforts, has so far failed to win much traction in the mobile market. Had Windows Phone and Windows RT taken off, there wouldn’t be much room for a RIM comeback. But they haven’t, so there is. It’s going to take a spectacularly good product to succeed in this tough neighborhood. I’m hoping that RIM still has it in them.

What Tech Company is Healthier Than Apple?

When it comes to understanding the stock market, I acknowledge I am no expert. I am not a financial analyst and my research is not directed at those making stock bets. Yet if I was to put myself in the shoes of a financial analyst or someone looking to make long term bets on tech companies, I would have to wonder what company is a better long term bet than Apple? In my opinion there isn’t one.

I do industry analysis and not financial analysis, however, my work often results in very company specific analysis. I do quite a bit of scenario planning as it helps guide our trend and strategy reports. I can say with quite a bit of confidence that as I survey all the current players in the technology industry, Apple is the one I worry the least about. In fact my only concern for Apple is that they are having trouble keeping up with demand. Their earnings call revealed that Apple was supply constrained in almost every product category. Apple could not make enough products fast enough.

What other company has this problem? Apple has this problem in the tens of millions of devices per quarter range and in the foreseeable future hundreds of millions of devices per quarter. The level of scale for the precision engineering of Apple hardware is unprecedented in consumer electronics. I can’t think of a single more elegantly designed piece of hardware that was mass manufactured to the degree of the iPhone.

I remain confident, as I look at the strengths, weaknesses, executive management, competitive landscape, and the core strategies of all the companies in the technology landscape, that Apple is among the few I am certain will still be relevant and in the game 10 years from now and for much longer.

Others Going Vertical

A question I look at as I analyze specific companies is who is building a strategy to be a long term company. Many tech companies develop strategies and create corporate vision in the 3-5 year range. Many also don’t even go that far as they are only planning 1-2 years out. There are a rare few companies who strategize a bit longer and Apple is one of them.

Yet if you look at some of the core strategies of those who I think are thinking longer term, you will note that they are headed down a vertically oriented path—just as Apple is. Microsoft will inevitably get into more hardware business, Lenovo has their own smartphone OS in China, Samsung will invest in its own middleware solution and Google owns a smartphone and tablet hardware company.

Companies today are faced with the reality that a hardware only business model is not sustainable. That business model always results in a ruthless race to the bottom. Companies who can add unique value at the software and services level can protect their hardware efforts. In mature markets the vertical model is the most sustainable and defendable model there is. So it is easy to see why others are on the verge of going fully vertical the same way Apple has been for decades. Which brings up an interesting point and it gets to the question of my columns title.

Almost every major company who is thinking long term is headed in a vertical direction. This is a model that Apple has used since the beginning. To put it another way, Apple has decades of experience executing the very model that many companies are hanging their future on. This does not mean that others will be successful implementing a vertical model, only that they believe it is the way forward.

There is a massive land grab and Apple does not need to own as much land (market share) as others in order to have an incredibly large and profitable business. If Apple simply acquired and maintained 10% of the global smartphone market (when it is saturated) they would ship five times as many iPhones as they currently do. I believe Apple will get and maintain a larger piece of the global pie for smartphones and tablets but I use that number to make a point.

I recognize that investors have a distorted and mostly short term view of the world. So I can’t fault them for being short sighted. But I would encourage them to dig deep down and ask themselves what tech company is more heathy than Apple and better positioned for success in the long run? If Apple isn’t still on the forefront of innovation then who is?

At the launch of the first iPhone, Steve Jobs said this:

“Every once in a while a revolutionary product comes along that changes everything”

Stop expecting Apple to make every once in a while happen every year.

Apple’s Transparency

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I don’t hear the topic of transparency brought up nearly enough. I asked the question in my column today of what company is more healthy than Apple and now I ask what company is more transparent than Apple? The cost of being transparent is that inevitably you will expose some dirt. Most companies want to sweep dirt under the rug. But as I read the latest supplier responsibility progress report from Apple, it hit me that Apple is not just interested in exposing the dirt but actively trying to clean it up.

Now I know many tech companies do this but I have to emphasize that it is a very difficult problem and its not one that a company who is in a commodity race to the bottom would have the time or money to truly invest in. However, this most recent report from Apple released today included something that I thought was extremely interesting.

Take a look at the following core violations Apple found and the action taken.

Screen Shot 2013-01-24 at 4.04.58 PM

The part that stuck out to me was that Apple terminated business with the supplier. This is more than just a small detail. Apple chooses suppliers for very specific reasons largely unique to a product or process. Often times heavily customized processes are in place at these suppliers for Apple’s products thus making a relationship with that supplier more like an investment. For Apple to terminate business with a core supplier could have significant supply chain ramifications. Replacing that supplier is also not an overnight process but takes time and more equity to get a new supplier up to speed.

This is interesting to me because if all Apple was interested in was a pure profit motive, they would not have taken an action like this.

Here was another one I found interesting on the topic of bonded labor or human trafficking.

Screen Shot 2013-01-24 at 4.05.21 PM

Apple actively investigated and worked to resolve accounts of forced (slave) labor in factories that make their products. Again what does this say about Apple and their philosophy as a company? Are these moves a profit at all costs kind of action?

These kinds of things impact change of a positive nature. I know from many sources I speak with in the supply chain that getting a deal with Apple can literally change the fortunes of many overnight. Actions like this will hopefully help those companies bidding for Apple’s business in future product follow ethical principles in their business practices if they want a chance at Apple’s lucrative business.

Fascinating stuff and very encouraging. Obviously global supply chains are hard to manage and often filled with dark secrets most care to keep in the closet. We can only hope that continued work like this and greater corporate transparency becomes common practice throughout the industry.

The Opinion Cast Round Table: Apple and Wall Street’s Distorted Expectations

After a somewhat surprising and somewhat predictable day stock wise for Apple post earnings, the Tech.pinions team share their thoughts on Apple’s earnings. We hit topics like why Wall Street is so backward, what this means for Apple going forward, whether or not Apple is doomed, and the greater picture of the PC industry at large.

As always, we would love any comments or feedback on our Opinion Cast. We want this podcast to be valuable to our readers so please let us know things you like and what we can do better. Also, if you get a chance please rate it in the iTunes store. Enjoy!

You can also subscribe to our opinion cast in iTunes here.

Miscellaneous Musings On Apple’s Earnings And The Future Of Personal Computing

images-39Yesterday Apple released their earnings for the fourth quarter of 2012. It is important to note that Apple had 14 weeks, as compared to the normal 13 weeks, in their year ago fourth quarter. In order to equalize results, all comparisons will be done on a week to week, rather than on a quarter to quarter basis.

(All quotes are from the Apple earnings call.)

(Chart via Ars Technica)

Apple-1Q13-results-unit-sales-history

Mac

Apple sold 4.1 million Macs compared to 5.2 million in the year ago quarter. That’s a decline of 16% on a week to week basis. My initial reaction to this news was that Macs were suffering from the same malaise that is plaguing all notebook and desktop computers. I’m sure that this is somewhat true, but Apple laid the blame squarely on supply constraints. In other words, they couldn’t make their Macs fast enough to meet demand.

…we were significantly constrained with respect to the new iMacs and we’re only able to ship them for the final month of the December quarter. We believe our Mac sales would have been much higher absent those constraints. ~ Peter Oppenheimer

Further, it does not appear that Apple is confident that they will be able to make enough Macs for the upcoming quarter either.

On iMac we’re confident that we’re going to significantly increase the supply, but the demand tier is very strong and we’re not certain that we will achieve a supply/demand balance during the quarter. Peter Oppenheimer

iPad

Apple sold 22.9 iPads compared to 15.4 million in the year ago quarter. That is an increase of 60% on a week to week basis.

Clearly the iPad Mini was a big seller, although Apple didn’t break out the specific numbers. Again, Apple couldn’t make enough iPad Mini’s to satisfy demand and they’re still struggling to make enough, even now.

…the iPad mini was very constrained.

We believe that we can achieve supply-demand balance on iPad mini later this quarter.

One interesting note is that the popularity of the lower priced iPad Mini brought the average sales price (ASP) of all iPads down by $101 on a year-over-year basis.

iPhone

Apple sold 47.8 million iPhones compared to 37 million in the year ago quarter. That’s an increase of 39% on a week to week basis.

Again, for much of the quarter, Apple simply couldn’t make enough iPhone 5’s to satisfy demand. More surprisingly, Apple was unable to make enough iPhone 4’s to satisfy demand and they are still struggling to do so.

If you look at the iPhone sales across the quarter, we were very constrained for much of the quarter on iPhone 5.

iPhone 4 was actually in constraint for the entire quarter…

…supply of iPhone 5 was short to demand until late in the quarter and iPhone 4 was short for the entire quarter.

We believe that we can achieve supply/demand balance … on iPhone 4 during this quarter.

This information, along with reports from Verizon, would seem to suggest iPhone 4 sales were growing in caparison with the iPhone 5. However, we have two statements in the earnings call that seem to counter this conclusion.

…the ASP for iPhone was essentially the same year-over-year in the quarter that we just finished.

If the mix of iPhones was drifting towards the older models, one would expect the average sales price to go down, not remain the same.

…if you looked at the mix of iPhone 5 to total iPhone and then in the previous year you look at 4S to total iPhones towards the top iPhone those mixes are similar.

That’s about as plain as it gets (although I still wish it were plainer).

iOS

All told, Apple sold over 75 million new iOS devices this quarter bringing their total to over half a billion. Kantar estimates that Apple gained 6.3% market share in the U.S. and maintained market share in Europe with growth of only 0.2%

Revenue, Income & Cash

Apple’s revenue for the quarter was 54.5 billion compared to 46.3 billion in the year ago quarter. That’s an increase on a week to week basis of 27%. To put that into perspective:

— Apple generated more revenue in one quarter than Google did in all of 2012.
— Apple is getting close to generating as much revenue in one quarter as Microsoft does in one year.

Apple’s net income (profit) was 13.1 billion. That’s an increase on a week to week basis of 8%. To put that into perspective:

— Apple made over a billion dollars in profit a week.
— Apple made more in profit (13.1 billion) than Google made in revenue (11.34 billion). Further, Apple generated as much profit in three weeks as Google did in three months ($2.89 billion).
— Apple’s 13.1 billion in earnings this quarter was the fourth largest of all time.

Apple’s cash totaled $137 billion compared to $121 billion at the end of the September quarter. That’s a sequential increase of almost $16 billion.

The Future Of Computing In Two Parts

I have a pet theory that mobile computing is breaking into a premium iOS operating system and a commodity Android operating system. Please pardon the following very long quotes from Apple’s earning call, but it appears that Apple is thinking along the same lines:

While other mobile devices and operating systems faced increasing security risks and fragmented inconsistent user experiences iPhone and iOS continue to deliver an exceptional experience that people love. They also provide a secure and trusted ecosystem that IT departments require. iPhone continues to be embraced by government agencies and businesses across the globe.

Many U.S. government agencies are issuing iPhones by the thousands as part of their new mobile strategies. Some examples include NASA and National Oceanic Atmospheric Association, Immigration and Customs Enforcement, and the Transportation Security Administration.

We’re also seeing continued growth iPhone growth in business across the board from companies replacing existing smartphone deployments to businesses adding first-time smartphone users. Companies around the world like Neiman Marcus, Skanska and Volvo are issuing iPhone to their employees to improve interactions with customers and give workers access to essential corporate data.

In addition to the tremendous response from consumers, iPad continues to be the tablet of choice for businesses and government agencies, transforming the way their employees work. Financial institutions like Barclays, Nomura Securities, and Bank of Beijing are deploying iPad to enable employees to better service customers and work securely with financial portfolios and products. In particular, Barclays’ rollout of over 8,000 iPads has generated tremendous employee engagement and feedback, making it the most successful IT deployment in Barclays’ history.

State and local governments in the United States are also rapidly adopting iPad. Court systems, accounting inspectors, and law enforcement agencies use iPad to streamline processes and replace huge amounts of paper. And state legislatures in Virginia, Texas, and West Virginia are all using the iPad to give lawmakers instant access to government documents and information.

Outside the U.S., 10,000 iPads are being deployed as part of broad adoption of the local government workflow solution in Sweden and over 5,000 iPads have been purchased by the government in the Netherlands for the Dutch tax authority and the Dutch court system.

Note the adoption of iOS devices in business, government and education. These were areas where Microsoft ruled supreme but now their dominance seems to be waning. And these are areas where Android is struggling despite its massive mobile market share.

Conclusion

Apple is engaged in a battle for control over the future of personal computing. Microsoft and Intel won the last battle but, in terms of unit sales and potential profits, that battle seems almost trivial. While Microsoft and Intel controlled the desktop and notebook markets, it appears that the combination of the smartphones and tablets is going to eclipse the PC’s numbers and profits by far.

There are many companies vying to become the king of personal computing. Each company has its strengths and each has its weaknesses. Apple has the hardware and software in place, but the future of computing is the cloud acting as the digital hub for all of that hardware and software and Apple has not yet proven its competency in that realm. Google has the most popular mobile operating system in the world but they haven’t figured out how to monetize it…yet. Microsoft is the king of the notebook and the desktop but that market is diminishing and Microsoft can’t seem to get any traction in mobile (smartphones and tablets). Samsung is making money – though not as much money as Apple – but they are not in control of their operating system or their ecosystem. Amazon? Geez, how does one evaluate Amazon? The less profit they make the more successful people think they become.

Tech is involved in its own personal game of thrones. And there are many new contestants waiting for their chance to steal the crown. It’s difficult to predict the future of personal computing but it’s easy to see that it’s going to be fascinating to watch.

Game on!

Apple and Imperfection

Apple-Think Different

Near the end the dot-com bubble, smart investors finally realized that a major problem with tech stock pricing was that dozens of companies were priced to perfection: Their stock prices were so high relative to the underlying financials that only a perfect performance could justify the share price for any length of time. Very few companies could deliver perfection and the house of cards folded.

Apple these days seems to be the opposite of a bubble dot-com. Despite a depressed stock price–it was trading at a very mediocre 11.6 times trailing earnings before accounting for a sharp after-hours post-earnings plunge. Apple has now given up all the gains of the past year,

And while I am no financial analyst, this is ridiculous. The sharp run-up in the stock that ended abruptly this fall was fully justified by the company’s stellar performance and even at its peak, Apple was still underpriced by most fundamental metrics. Two things have been true about Apple’s performance for some time: Its margins and growth rate were both unsustainable. But in a reasonable world, there was room for both to decline, as they have, and for shares to keep rising, as they most certainly haven’t.

Apple has always been a stock that traded heavily on emotion rather than analysis and now is no different. If pessimists want to drive it lower, they mill, despite a P/E heading for single digits and a price that’s just a bit more than three times the cash on hand.

Disclosure: I do not have any direct position in AAPL stock, though funds I invest in may.

 

A Quick Take On The Surface Pro

images-38First, let me say that the Microsoft does not get enough credit for the hardware build on the Surface RT. Microsoft had little experience in bringing out a hardware product and they got the hardware right and they did it on the first try. An outstanding job.

Second, since the Surface Pro is not yet available for independent review, I shall assume, for the moment, that the Surface Pro works as intended.

Having said all of that, I still don’t see how the Surface Pro can be a success for Microsoft. It is clearly a notebook, not a tablet. This was true of the Surface RT and it is even truer of the Surface Pro. (Thicker, heavier, lower battery life, etc.) You can’t hope to hit the target, i.e., tablets, when you’re not even aiming at them.

Finally, I used to believe that the Surface Pro would sell a lot of machines but do nothing to advance Microsoft in the tablet wars. Now that the pricing has been revealed, I’m not even sure that Microsoft will sell a lot of machines. Microsoft lists the Surface Pro at $899 but this is disingenuous since it does not include the cost of a Type Cover keyboard ($130) or a Touch Cover Keyboard ($120). This brings the price up to $1,029, which means that you could buy a MacBook Air, instead, and SAVE $30.

Does this strategy make sense to anyone outside of Redmond?

EDIT: Over at TechCrunch, Matt Burns argues that the Surface Pro is priced just right. What’s your take?

Spectrum: Where It Came From, Where It Goes

Dark Side of the Moon album cover

In the the beginning, wireless spectrum in the U.S. was free. In  1983, the Federal Communications Commission created the first analog cellular networks by assigning two chunks of airwaves in the 800 MHz band. One chunk was reserved for the incumbent local wireline carrier, or Baby Bell as they were then known. This ancient history is important because the leg up that was given to the companies that gradually coalesced into Verizon Wireless and AT&T formed the basis for these carriers’ domination of the U.S. market. The story of spectrum over the past three decades is mostly a tale of the rich getting richer, all the while bemoaning their poverty.

Over time, the government assigned more and more spectrum to wireless voice and (eventually) data. New competitors did arise. Sprint, until then primarily a wireline long-distance operator, created its network out of the 1994 auction of 1900 MHz “personal communications services” spectrum. Wireless phone pioneer Craig McCaw built the Nextel network out of bits and pieces of “special mobile radio” licenses intended for dispatch services. T-Mobile and its predecessors assembled a bunch of smaller carriers using the GSM standard, which was then widely used everywhere but the U.S.

But through auctions and acquisitions, the biggest carriers managed to get even bigger. The last major wireless spectrum auction was the 2007 sale of television bandwidth that had been freed by completion of the transition to digital TV broadcasting. To the surprise of just about no one, the overwhelming winners in the sales  were Verizon and AT&T, which have been using the spectrum in the 700 MHz band to build out their fourth-generation LTE networks.

The problem we now face is that after 30 years of freeing bandwidth for mobile data use, we’ve pretty much run out of spectrum that can be reassigned without a major fight. The only sale on the horizon is an additional 100 MHz of TV bandwidth. But among many other complexities, availability of this spectrum will require some stations to give up their licenses (in exchange for a share of the proceeds from the auction) and others to move to new frequencies to create usable blocks of contiguous spectrum. The convoluted process mandated by Congress means that the sales won;t begin until 2014 (at the earliest) and are likely to yield a good bit less than 100 MHz in many parts of the country.The problem we now face is that after 30 years of freeing bandwidth for mobile data use, we’ve pretty much run out of spectrum that can be reassigned without a major fight.

In the absence of new allocations coming down the pike, Verizon and AT&T have been bulking up on spectrum through mergers and acquisitions. AT&T failed to convince Justice Dept. anti-trusters that its need for spectrum justified its proposed 2011 acquisition of T-Mobile. It announced on Jan. 22 that it intends to acquire the remainder of regional carrier Alltel, the bulk of which was bought by Verizon in 2008. Verizon is buying the spectrum of a consortium of cable companies, which once had dreams of building their own wireless networks.

The incumbent wireless carriers insist that the system is header for crisis without additional bandwidth and the the best, and perhaps only, way to get it is by selling them the rights to spectrum currently held by others. In a post on a the AT&T public policy blog, Joan Marsh, vice-president, federal regulatory, responded to a recommendation that sharing spectrum with federal agencies might be a good way to increase capacity, saying:

The Report [of the President’s Council of Advisors on Science & Technology] found that the new norm for spectrum use should be sharing, not exclusive licensing.  While we agree that sharing paradigms should be explored as another option for spectrum management, sharing technologies have been long promised but remain largely unproven.  The over-eager pursuit of unlicensed sharing models cannot turn a blind eye on the model proven to deliver investment, innovation, and jobs–exclusive licensing.  Industry and government alike must continue with the hard work of clearing and licensing under-utilized government spectrum where feasible.

John Marinho, vice-president of technology and cyber security for CTIA-The Wireless Association, which speaks for the wireless incumbents, wrote:

Trust me, the carriers are deploying and using every single technology and “trick” they can to try to solve the looming spectrum crisis in the near-term, but nothing will solve the problem like more spectrum. Claude Shannon proved that there are practical limits to how much bandwidth capacity is available from a limited amount of spectrum. One has to look no further than the father of information theory to realize that the solution is more spectrum.

I’ll have more to say about Shannon’s laws and its implications for wireless networks in future installments, but the truth is that there are lots of techniques for expanding the capacity of wireless networks that have yet to be deployed in any serious way. Martin Cooper, who built the first cellphone for Motorola before there was a network to use it on, says: “I can tell you that the way not to create more spectrum is to redistribute it. And that is what the government is proposing to do now, take it away from some people and give it to others. That’s not going to do it.”

The next articles in this series will explore some better ways.

 

AMD SurRoundhouse Concept: Future Cure for the CE Industry Woes?

For a run of at least 30 years, the “classic” consumer electronics industry successfully transitioned from one technologyWP_20130110_037 to another.  TVs are a good example.  TVs went from big color tubes to rear projection to flat panels and HD projection to HD panels.  We can’t forget laser disc to Beta to VHS to DVD either.  Consumers ate it up, too, and were pleased to roll the old iron out of the living room into another room and roll the new gear in.

Then things changed with 3D TVs, which were an unmitigated disaster for the industry.  I call it a disaster because for the most part, consumers were not willing to pay more for 3D and in some cases flat out didn’t want it.  HDTV margins collapsed and are still in a funk for many CE markets.  4K TV and Smart TV is NOT the solution either as research I have seen indicates general consumers won’t pay a premium.  There are a few things going on here.  First, already-installed generic 1080P flat panels at 10” will be a very good solution for many years to come.  No one quite knows how long the installed base of displays will last, but it could be 10 years.

Smart TV’s, while valued more than 3D by consumers, isn’t valued at a lot either.  Consumers are getting conditioned, too, to know you can add “smarts” for as low as $50 with the external add-on of a Roku, Apple TV, or DVD player.  So what is the answer to revitalize the “classic” CE industry?  You really need to understand the problem, and the problem is lack of immersiveness and too many constraints.

Certainly,  3D HDTV was more immersive than HDTV, but not enough so for us to spend hundreds more to replace our current 1080P TVs.  Also, 3DTV had too many constraints, or what I like to call “if-thens”. Everyone in the room had to wear 3D glasses to enjoy the content and without it, the content is a blur.  3D glasses aren’t cheap, either, as active glasses were $50-$100 a pair.  Then there is the hassle of charging and making sure every one of them is ready for the big movie. Then there is the nausea some people feel when watching 3D videos.  There are 2.6M results from a Google search result from “3D” and “nausea.”  Passive 3D like LG showed at this and last year’s CES will significantly lower the glasses cost and a few manufacturers showed prototypes of glasses-less 3D TVs, but are many years off and are not very high quality.  3D may not the answer, but what is?

Consumers are looking for immersiveness without constraints which is affordable.  One example of this is a concept AMD showed off at CES.  AMD showed off its “SurRoundhouse” proof of concept which is quite expensive and complex now, but takes the industry in the correct, general direction.  The SurRound house is a “theater” room with 10, 55” HDTVs looking like windows in a house, 32 speakers, and four subwoofers.  The ten LG 1080P HDTVs displayed more than 600 Mp per second at 10,800 x 1,920 resolution, which is 3X the resolution of 4K (UltraHD), albeit spread around the room.  Driving the video and audio was one PC with an AMD FX 8150 8-core Black Edition processor with three FirePro 8000 graphics cards with Digital Multipoint Audio which was amplified by eight AV receivers.

AMD plays what looks like a hostage rescue scene from a video game and shifts audio from stereo to 32 speakers to show the value of high quality, multi-channel, positional audio. Each shift of the audio takes your eye to different windows of the house and as helicopters are flying, crashing, and as multiple machine gun melees erupt, you really feel like you are in a different and very real place.  The content was entirely custom and to it takes work to get games and movies to take advantage of a setup like this.   This is a different class of entertainment, one that could actually motivate to invest, maybe over-invest in new CE gear.

Here is a smartphone video I took of AMD’s SurRoundhouse.  Of course you don’t get the same experience as as the real thing, but you can get somewhat of a sense of the experience below.  Make sure you select 1080P and full screen:

AMD could have improved the experience even more by improving the quality of the graphics in the scenes.  They looked more cartoony than life-like.  AMD says that the goal of the demonstration was to show the experiential difference in the audio, but I’d still like to see max graphics to turn it into a reality show.

So how is a $35,000, 10 display, 8 receiver, 36 speaker setup requiring custom content “without constraints” and “affordable”?  It’s not right now, but if you look ahead to new technologies, the cost curve, and need for CE and entertainment businesses to create radically different experiences, it could very well become affordable and relatively simple.  Let me explain.

First challenge is content.  The entertainment industry has shown that it will make changes if it sees potential extinction or at least a major depression in business.  The film industry started shooting in 4K well before 1080P had mass adoption so the big question would be “if” they see the opportunity to shoot in multi-“frame” and multi-“angle” dimensions to be surround or at least convex.  The next challenge is cabling, but possibly already has a video solution with multi-channel, 60Ghz wireless display technology.  Lower frequency wireless speakers are already available, but the challenge would be to solve amplification at the current frequencies.  The great thing about wireless audio is that you wouldn’t need eight receivers to send the right audio to the right speaker.  Theoretically, you would only need one with a bunch of broadcast antennas.

Then there are the displays…. The current monitor sweet spot this year will be at around 30,” priced around $300.  I can imagine in 5 years that that $300 display becomes 40-50” for a full room display build out around $3,000.  This seems reasonable when you think that LG sells their 89” 4K TV today for $22,000.   Yes, 4K displays will lower in price, but how many years before it gets down to $3,000?

AMD’s SurRoundhouse gives the industry a potential scenario for the entertainment or theater room of the future.  While it doesn’t pass the tests for mass industry adoption today in media rooms, it could, and is certainly more interesting than the same boring, flat experience.  Neither 4K or SmartTV is the solution to the woes of the traditional CE market and I hope they are looking at AMD’s glimpse of the future.

Why RIM Is Not Dead Yet

2013-01-18T161117Z_1_CBRE90H18YX00_RTROPTP_2_US-RIM-SHARESI wanted to share some of my thoughts regarding RIM prior to them having their press event next week. I know there are many who have the opinion that RIM has been circling the drain for some time now and have counted out any rebound chances the company has. While I agree that the hills they face are steep, I am not ready to write their obituary yet. These are my reasons why.

The Sheer Size of the Mobile Market

When I give our platforms and ecosystems presentations to industry executives, investors, and at other public forums, the most common question I get when I talk about other platforms than the current dominant ones, is how many platforms can the market sustain. This is an extremely valid question, but it is one that I believe is asked with a backward looking view and not a forward looking view.

If we are using the PC industry as our example, then this question makes the most sense. There was one dominant platform—Microsoft—who owned the vast majority of platform share. If we look at the size of the market as well as where it was during along both the consumer adoption path and market maturity cycle, then we can explain quite a bit about why Microsoft was dominant, but also why at a certain point in time the door was open to other players. But the most relevant point on this topic was that during Microsoft’s dominance the market was both maturing, using Windows and more relevantly the Internet as the standard, but also not that large on a global scale. The market for PCs is in the hundreds of millions (and potentially shrinking) where the market for smartphones is in the billions. With such a large market it is easy to believe that a number of platform players can and will thrive as they carve out specific segments of the market to focus on.

As we are constantly observing, the one size fits all model simply doesn’t stand up in such a large consumer market and personal preference will only become more personal and specific to the end consumer the further down the adoption and maturity process that both smartphones and tablets go.

You Never Forget Your First Love

Our mobile market intelligence data continually points out positive sentiment toward RIM and the BlackBerry devices in particular. For many mobile professionals today, and even more millennials than you would think, they cut their proverbial smartphone teeth on BlackBerry devices. I can’t tell you how many times during our smartphone interview sessions with consumers we hear the words “I sure loved my BlackBerry.” Granted much of this sentiment was founded in the love of the BB keyboard that so many used for heavy text input. I believe we are past the point of the physical keyboard being desirable for the bigger sections of the market and we are yet to see what RIM intends to do with their hardware in this area. That being said, the level of positive sentiment toward BlackBerry devices is one that I do not believe can be discounted as I have a feeling that at the very least it will lead these consumers who share this sentiment to strongly consider BlackBerry’s new devices.

A Focused Opportunity

The opportunity staring RIM in the face is not the general mass market consumer, rather it is the mobile professional. A number of my colleagues in the field of industry analysis disagree with me and think RIM should go after the low end but I disagree. I feel RIM’s potential is the higher end. Many millions of global industry professionals switched to the iPhone from RIMs devices but also many millions still use them today.

Whenever I talk with folks still using RIM devices today, they acknowledge the fact that they are not the most cutting edge devices, but also point out that they are embedded into their workflow. Something that by itself is a key understanding. Just like how many professionals and corporate workplaces have come to standardize, depend, and are extremely comfortable with Windows and Office in their productive workflow. So are many of these same professionals committed and comfortable to RIM. These devices have helped them be successful and many have not changed yet for that very reason. Even though the iPhone and iOS is penetrating the workforce in rapid numbers I still think there is an opportunity for a second platform player focusing on the mobile professional. Android has not caught on largely due to security and Windows Phone is practically non-existent from current CIO surveys I have seen.

If RIM can bring to market a more modern and competitive solution targeting these individuals, I believe they can have a successful business by focusing on value to the high end on the front of hardware, software and services. Keep in mind this market may not be massive like the mass consumer market but I do believe it is lucrative.

Competitive Hardware and Software

This is the big IF. As I stated above targeting the mobile professional is the key but this hardware has to also be appealing from a consumer standpoint because these mobile professionals are also consumers at heart. So the saying goes “if you want to compete in enterprise, you have to compete for the consumers.” Its the BYOD effect in full swing.

RIM must bring competitive hardware to market. This was the root of Palm’s downfall in my opinion. webOS was an extremely competitive platform from an OS standpoint but the hardware was years behind. If RIM makes this mistake they will certainly go the unfortunate way of Palm.

Secondly the software experience must also be competitive and I don’t just mean a plethora of apps. I am becoming increasingly convinced that a solid list of quality applications is more important than a massive quantity of applications. I find every single app store shopping experience today much too cluttered and difficult to make decisions on which app to install or buy. See my thoughts on the paradox of choice for a more clear idea of what happens when we are faced with too many choices.

I’d rather have a much more curated app experience around the core things I do or applications I care about. By focusing on the mobile professional, this becomes a bit easier. Even Apple has begun to do this and smart platforms will take notice. Apple has many app essentials or app starter kits broken out by genre. This can be games, photography, productivity, social networking, etc., but when you look at these genre specific hubs you don’t see hundreds of apps you see dozens. These are highly curated and that is the point.

I am not downplaying the value of long tail applications, but what I am pointing out is that most consumers at best use 10-12 key applications regularly. They may download way more than that but regular use is much lower. This is why I believe that other platforms can come in with a segmented play and get the couple thousand or so most popular apps but then also begin to curate quality genre specific ones to the market segment they are focused on.

Of course for RIM, or any new platform entrant, there is a chicken and the egg scenario. To attract those key applications and keep attracting quality top tier applications, you need to acquire a critical mass. There is no if you build it they will come motto here. There is only if you sell tens of millions they will come motto. This is where the channel comes in and we will certainly see how serious the network operators are about wanting more platform choice.

I look forward to RIM’s event next week and to see whether it will alter my opinion on their future.

Smartphones Become the New Hub of Our Digital Lifestyles

Screen Shot 2013-01-21 at 7.14.36 AMIn the winter of 2000, Steve Jobs took the stage at MacWorld and laid out what we now consider a very forward thinking idea. He said that the “Mac would become the center of our digital lifestyle.” We did not know it at the time, but he and his Apple team were secretly working on the iPod and a music store that used the Mac to side load downloaded music to the iPod. Jobs literally made the Mac a hub connected to a “spoke” or cable that was then connected to the iPod.

For most of the last decade, the idea of the Mac working as a hub that side loaded content to products like the iPod, iPhone and the iPad played itself out well and made it very easy for consumers to buy digital content and download it on these devices. Over the last few years, Apple has refined this vision and starting making the iCloud more of the hub and wirelessly connecting their online stores to download content directly to their iDevices via the cloud.

While making the cloud the hub in this scenario is still the best way to think about this idea, it became pretty clear to me while at CES last week that in many ways, smartphones are really emerging as the hub of our digital lifestyles. Yes, smartphones are still connected to the cloud in terms of accessing data and transmitting information and even digital commands, but it seems to me that the smartphone in many ways is becoming the one device that is sitting at the command and control center of our lives and is working more like a hub in its own way.

A good example of this is the role my smartphone plays in my connected car. My smartphone uses Bluetooth to connect to my car’s digital display, which has channels for music, data and of course voice. When a call comes in to me, the phone serves as the hub that connects to my cars screen and tells me who is calling and even allows me to use the cars screen to answer the call. My smartphone also is the hub that sends music to the cars audio. At CES, GM showed its Malibu Eco connected to a smartphone that actually started up the car remotely.

In smart homes, the smartphone in many ways serves as the remote control. We can now turn on and off the lights in our home even if we are thousands of miles from where we live. Thanks to the Nest Thermostat, we can use our smartphone or connected tablet or PC, to adjust our thermostat to a higher temp so the house is warmer when we get home. If a burglar trips a motion sensor, a person could be instantly alerted of the break in and immediately call the police. Comcast even has a system that puts cameras in homes and ties it to their network, which lets users see what is going on in the house on their smartphones while sitting at a restaurant or in the office.

Interestingly, CES could have been called the “sensor” show for the hundreds of devices shown that had sensors embedded in products that tied them to the Internet and apps downloaded to a smartphone to remotely control these senor based devices. This was especially evident in the special health exhibit on the CES show floor where 74 companies had various sensor-based health monitoring products tied to smartphones.

One health product that really interested me as a diabetic was iHealth’s wireless blood glucose meter called the Smart Glocometer. It lets diabetics determine their blood sugars and then sends that data to a smartphone app for reading and storing so that they can monitor their daily progress. This product is before the FDA for approval but could be on the market soon.

A small start up named AliveCor has created an iPhone case that, when grasped, records an electrocardiogram on the iPhone screen via its app. And the folks from Nike, Jawbone, Omron and FitBit, to name just a few, were in this smart health area showing off their various health monitoring devices which all have sensors for recording things like steps, sleep patterns, calories burned, etc.

When Jobs introduced the Mac as the hub of a digital lifestyle, I doubt that at the time he envisioned the cloud becoming the big hub in the sky or the role a smartphone could play in becoming a “hub” in our pocket. However, it is clear that Apple has played a major role in defining the concept of a digital hub and allowing other major players to learn from their original vision and expand on it exponentially.

Over the next two or three years, I believe we will see thousands of sensor-based products tied to apps on our smartphone that will make it even clearer that the real hub of our digital lifestyle may actually be our smartphone. It is the one device we have with us at all time and given its increasing power and capabilities, it could emerge as the command and control center of our digital activities and become even more indispensible than it is today.

Would I Buy A Phablet?

img_img01One of the more unique smartphone designs in the market are ones that sport a 5.3″ to 6.1″ screen and are called Phablets by some in the industry. We call them tweeners as they are a cross between a large smartphone and a small tablet but in a single package. Samsung popularized this form factor with its 5.3″ Galaxy Note that was released last winter and they sold about 10 million in 2012. Some analysts believe that Samsung is on track to sell around 20 million Galaxy Note 2’s in 2013. Up to now, the market for these Phablet’s has mainly been in Korea and other parts of Asia and while available in the US, the market for it over here is quite small compared to its demand in Asia. 

At CES, Huawei upped the ante in phablets with the introduction of their Ascend Phablet that sports a 6.1 inch screen, the largest screen used in products in this category. It seems that Huawei is trotting this out to see what the market response will be to it and once they determine if a smartphone this large might fit in the market. Depending on the market response, they could either back it big time or adjust the screen size downward if the sweet spot for Phablets is with screens more in the 5.3″ to 5.7′ range. Like Samsung, Huawei believes there is a market for Phablets and seems committed to building smartphones in this larger size going forward. 

To date, most smartphones have screens under 5 inches and we don’t see that changing anytime soon. Smartphones with smaller screen sizes will have the lions share of the market for many years to come. What is interesting to me is that when I actually held Huawei’s 6.1 inch smartphone in my hand at the Huawei booth at CES, I could actually see myself using it, but not as Huawei might expect. To me this was a small tablet that just happened to have a cell phone radio in it. I would never hold this up to my ear as a phone and if I had one, I would only use it with a Bluetooth headset (this is how I primarily use the iPhone now, paired with a BT headset).   

Since getting the iPad Mini, with its 7.9″ screen, it has become my go to tablet. While I still use my original iPad, it is with a Bluetooth keyboard and I use it more as a mini-laptop in this configuration. What I have learned though is that the iPad mini, or a smaller tablet, is ideal for content consumption but not as ideal for content creation or productivity. While I do appreciate the 7.9″ screen in my iPad Mini, I was just as comfortable with Huawei’s 6.1 Ascend if I used it mainly as a small tablet. 

Markets Driving Phablet Demand

There are two market dynamics emerging that could actually make these phablets important products in various markets. The first one is emerging markets. We in the west would be fooling ourselves if we think that masses of people in emerging markets could afford both a smartphone and a tablet. Even with grey market tablets going for cheap prices, the issue of carrying two devices with them all of the time is just not reasonable. Apparently, Samsung saw this trend early on and has taken aim at the emerging market with their phablets, hoping that the desire for a single device that serves as a smartphone and tablet resonates with them. Indeed, the reason for a forecast of 20 million Galaxy’s Note II’s in 2013 is that most of them will start finding their way into emerging markets and filling a real need, especially if Samsung gets the prices of this product into price ranges acceptable to this market. In these markets, one is better than two.

The second market developing has broader implications for us in the west. If you sit back and try and visualize our digital future, it is pretty easy to see that most of us will have many screens in our digital lifestyles. We will have a screen in our smartphone, tablets, PC’s, TV’s, Car, appliances, etc. If they are all connected to our digital stuff in the cloud, then the screen that is closest to us at our time of need is the one we will most likely use.

In most cases, the closest screen is our smartphones. However, when desiring to access our digital “stuff” or the Web, many of us who have tablets often to go to our tablets for one major reason, it has a bigger screen and is easier to use especially when surfing the Web or reading docs and email and getting other forms of content.

However, this implies that we now carry with us two devices at the very least, a smarpthone and a tablet. What if we could get both in a single device that is highly portable? It that were the case, perhaps a smartphone even with a 5.3-inch screen would be too small; but one with perhaps a very pocketable one at 6.1″ might be just right. I was easily able to put the Ascend 6.1 in my back pocket as I do now with any spare smartphone I happen to be testing at any given time.

One Size Doesn’t Fit All

One other thing we are learning from our research is that one size does not fit all. Based on individuals needs, they may actually need a larger screen on their smartphone because they would be easier to read due to age, eyesight problems, individual choice, etc. As a small tablet, this larger screen size also works well for the same reasons, along with its ultraportablity. We believe it will start to be pretty clear to all device makers that one size does not fit all and that they may need a range of screen sizes in the smartphone and tablets to meet new user demands in the next 12-18 months.

If both of these market trends play out as I suggest here, and the concept of a two-in-one device catches on in emerging markets and demands increase in mature markets, all smartphone vendors may have to seriously consider doing phablets of their own. As strange as this may seem to us western thinkers, there is a real possibility that a market for phablets could actually emerge and become quite important in multiple markets around the world. Yet if we take a step back and look at the vast array of sizes and forms of our current automobile market, then we understand the role personal preference and they need to have a lineup of products to cover a wide range of uses. So in fact vast variance in smartphones and tablets actually makes sense due to mature market characteristics.

CES 2013: Plenty of Innovation – You Just Needed to Know Where to Look

CES-SignI didn’t expect much in the way of OS, phone, or tablet announcements at CES this year, if only because all the key platform drivers stayed home. Apple never attends trade shows, preferring to host its own events. Amazon follows Apple’s lead. Google takes over Mobile World Congress each year, but does not attend CES. Microsoft used to have a keynote and a large booth at CES, but chose to quit the show after last year – which was a mistake. Many device vendors also skipped the show, and some who were there – I’m looking at you, Samsung and LG – held big press conferences without actually announcing much. RIM is staging its big comeback try in New York on January 30. Nintendo is making a big bet on digital entertainment with the Wii U, but it focuses on E3, not CES.

App-Driven Devices

Nonetheless, CES 2013 was a huge show, and not just in terms of sheer size. The biggest trend I identified at the show was easiest to see at the evening press mega-events, Digital Experience (Pepcom), and Showstoppers. Pepcom usually gets the bigger name vendors, but this time, smaller vendors were showing the most unique products, and Showstoppers was actually the better venue because of it. I counted dozens of innovative devices which depend on app and device infrastructure built by Apple and, in some cases, Google. Several gadgets that seemed silly in pre-CES press releases (ex: a connected fork) were revealed to be worthy concepts when I got to see them live. Some examples:

  • The HAPIfork measures how quickly you eat and vibrates if the intervals are too frequent. The companion app collects the data as part of a medical weight loss program. (No, this isn’t for everyone. But it isn’t ridiculous, either.)
  • The Lark Life is a wearable vibrating alarm clock whose app acts as a sleep coach. There were at least a half dozen variants on this concept on display from various vendors.
  • Parrot’s Flower Power gardening sensor works with an app that not only tells you when to water your plant, but what you ought to be planting in that soil instead.
  • Evado Filip’s ViVoPlay is a combination watch, three-way GPS tracker, and limited phone designed to prevent children from getting lost in public places. The companion app enables you to find your child and call them to reassure them – and tell them to stay put or how to find their way back.
  • The DoorBot is a zero-setup WiFi-enabled smart doorbell which sends video of your front door to your phone or tablet when someone rings the bell.

There were literally dozens more (especially in the personal fitness category). Some have been crowdfunded through Kickstarter or Christie Street – which counts as a microtrend of its own. All of them were designed for iOS, with some offering Android apps or promising them down the road. Apple has long had a lead in apps, but as these app-driven devices become more popular it could push more people to iOS over Android. It will almost certainly make it more difficult for Microsoft and RIM to establish Windows Phone and BlackBerry 10 as strong alternatives.

Other observations:

  • TV vendors are still looking for a way to get consumers to shop on something other than price. 4KTV is the new 3DTV – incredibly cool technology with no content (or clear consumer demand).
  • The connected car is a full-fledged category now.
  • Samsung is the industry’s rock star. People started lining up for Samsung’s 2 PM press conference at 7 AM, and even people with VIP passes ended up being turned away at the door for lack of space.
  • The Americans may have stayed home, but Chinese vendors were everywhere at CES. Huawei, ZTE, and TCL (Alcatel) all showed off new high end phones, Lenovo launched a clever tablet/notebook and an innovative – if silly – $1,700 27” Windows 8 coffee table/tablet. On the other end of the pricing and utility spectrum, we saw literally hundreds of cheap unbranded Android tablets from Chinese vendors on the show floor.
  • The OS vendors all skipped CES, but the silicon platform vendors were out in force. Qualcomm delivered an awkward and entertaining keynote, Intel and NVIDIA held press conferences, and Marvell had a huge booth. NVIDIA’s press conference ground to a halt a few times, but NVIDIA did a good job positioning the Tegra 4 as providing better pictures (not just faster performance), and its Project Shield is an ambitious new gaming hardware platform.
  • Dish gets no respect. Its press conference had real news and the most swag of any vendor at the show, but the room wasn’t full. The new Hopper integrates Sling technology for placeshifting, can transfer content to an iPad for offline viewing, and still records all of prime time TV for 8 days with automatic commercial skipping. As if that weren’t enough, during the show Dish also made moves towards launching a wireless network (or, failing that, at least make Sprint’s executives miserable).

Winners/Losers

If there was a winner and a loser at CES, Apple won without showing up thanks to companies large and small building apps, accessories, and app-driven devices for iOS. Microsoft lost because it didn’t show up. Microsoft needed to be at CES this year to show off Surface, pitch developers on Windows 8/RT/Phone, and do damage control on Windows 8/RT’s UI quirks and slow PC sales.

This article is adapted from a full CES Wrap-up report for Current Analysis clients which also contains analysis of specific device launches and recommendations.

Putting Together The Pieces of the Personal Computing Puzzle

images-34As I read other’s thoughts on personal computing, I am sometimes struck by the fact that we tend to view the world the way it was rather than the way it is. Not only are we not good at seeing the future of personal computing, we’re not even very good at seeing its present.

With that in mind, I thought I’d take a look at some of the new pieces of the personal computing puzzle – smartphones, tablets, hybrids and phablets – in order to speculate on how those pieces might be fitting together in new and changing configurations.

Zero Computers

Hard as it may be for us to believe, most of the world – residents of third world countries, children, seniors and those who simply have no interest in computing – still don’t own even a single computing device. (Believe it or not, my thirty-something next-door neighbors do not own a computer.) But this is all rapidly changing.

The smartphone is allowing millions upon millions of former non-users to put the power of the computer in their pocket. The smartphone is small, relatively inexpensive and more powerful than the computers that were used to land men on the moon. Further, the introduction of the touch user interface has made computing more accessible to the young, the old, the computer illiterate and the computer phobic.

“In the fourth quarter of 2012, mobile PC shipments decreased 11 percent while desktop PC shipments declined 6 percent year-on-year,” said Isabelle Durand, principal research analyst at Gartner.

We are inundated with stories of how computer sales are declining. But those are desktop and laptop sales. Sales of personal computing devices – phones and tablets – are booming.

Takeaway #1: Personal computing is growing and growing rapidly.

One Computer

Yesterday, if you only had one computer, that computer was likely to be a desktop. Or possibly a laptop.

Today, if you only have one computer, that computer is likely to be a smartphone. The power of the internet, email, texting, phoning, etc. – all in your pocket, all for a relatively reasonable price. People from the remotest portions of the globe are using smartphones to conduct business and enhance their personal lives.

Tomorrow, if you only have one computer, that computer may be a tablet. A tablet with a dumb phone (data free, no monthly payment) is a powerful combination. The tablet is less portable than the phone but its added battery life and screen size makes it a formidable stand-alone computer.

Takeaway #2: The first computer that most people will own is likely going to be a phone or a tablet, not a laptop or desktop.

Two Computers

In the past, many of us used to own both a desktop and a laptop computer. As laptops came down in price and increased in power and portability, most moved away from desktops and toward laptops as their one and only computing device.

Today, the laptop and smartphone combination is extremely popular – the laptop for our heavy duty computing and the smartphone for computing on the go.

In the future, the two-computer combination of choice will be the smartphone and the tablet. Both the phone and the tablet have the same touch operating system so the learning curve is almost nonexistent and data transfer is a breeze.

Hard as this may be for geeks like us to fathom, the tablet is all the high-end computer that most people need. Spreadsheets like Excel and heavy-duty word processing programs like Word might be de ri·gueur in the Enterprise, but they are anathema to the average computer user. Asking most computer users to buy a laptop or desktop is like asking a gardener to buy a backhoe in order to do their gardening. A backhoe is indispensable for professional construction workers – but most of us aren’t professional construction workers and most of us aren’t professional accountants, programmers or page layout designers either. We don’t need professional computers to do the work we most often do. We just need what works.

As an aside, I am intrigued by the idea of a computer watch and tablet combination. The watch would serve the purpose of making and taking calls, texts, short emails, etc, notifying us of incoming and upcoming events, allowing us to see small snippets of text, graphics and videos, allow us to use voice input when voice input is appropriate and allow us to rapidly reference programs that rely on geofencing and geolocation.

No one is even proposing such a device at this time. I only mention it because I can easily see how such a watch would take care of our low end, on-the-go, computing needs while our tablets would handle the rest of our computing tasks. Whatever the computer watch turns out to be, if anything, I’m sure that it will be as different from what I envision as the long-expected iPod phone differed from the iPhone that Apple finally provided us.

Takeaway #3: The phone and the tablet may be all the computing power that many will ever need.

Three Or More Computers

For those of us capable of purchasing three or more computing devices, the most obvious solution is some combination of smartphone, tablet and laptop or desktop.

If you had told me in 2005 that people would be buying three or more computing devices, each costing $500 and up, I would have argued against it. First, it would be cost prohibitive. Second, it would be counter-intuitive. People want convenience, not complexity. Why buy several devices when one will do?

Yet today we’re moving more and more toward a multi-screen world and – I would argue – more and more away from multi-purpose hybrids. We’re moving toward several computing tools that do specific things well rather than a single tool that tries to do everything well. How can this be?

As to cost, well, we pay for what we value. Smartphones and tablets do some tasks much, much better than laptops and desktops do. It’s not a question of paying for three computing devices. It’s a question of paying for three tools that excel at performing three very differing tasks.

A gardener buys both a shovel and a trowel because they perform very different tasks. He doesn’t regret the fact that he is buying two shovels — one large and one small. He focuses on what he is trying to accomplish, not on how he can use a shovel as a trowel or a trowel as a shovel.

As for convenience, well, it’s perfectly reasonable to think that we should have one computer perform all of our computing tasks. It’s perfectly reasonable – and perfectly inaccurate.

Notebooks and laptops, like shovels and trowels, do very different things. Trying to get one computer to perform both purposes provides us with a compromise, not an acceptable solution. Swiss Army knives are very useful on a camping trip. But when we’re not camping, we use spoons, forks, knives, corkscrews, etc., not a Swiss army knife. Similarly, a hybrid is useful if we’re in a situation where we’re forced to use only one device. Only most of us are never in that situation anymore.

“Tablets have dramatically changed the device landscape for PCs, not so much by ‘cannibalizing’ PC sales, but by causing PC users to shift consumption to tablets rather than replacing older PCs,” said Mikako Kitagawa, principal analyst at Gartner. “Whereas as once we imagined a world in which individual users would have both a PC and a tablet as personal devices, we increasingly suspect that most individuals will shift consumption activity to a personal tablet, and perform creative and administrative tasks on a shared PC. There will be some individuals who retain both, but we believe they will be exception and not the norm. Therefore, we hypothesize that buyers will not replace secondary PCs in the household, instead allowing them to age out and shifting consumption to a tablet.”

This is a fascinating observation. Today, most view laptops and desktops as the one and only possible computing solution. There are even vicious fights on the internet in which commentators passionately deny that tablets are even personal computers at all.

But what about tomorrow? Tomorrow we’ll live in a world where tablets are our 1-on-1 devices and laptops and desktops are shared because of their cost and limited uses.

Takeaway #4: Our computing devices are diverging, not converging. We’re not looking for one tool to do it all, we’re looking to use the tool that best fits the task at hand.

Conclusion

None of this may seem controversial to you…or ALL of this may seem controversial to you. To me, the things I’ve stated are so obvious as to border on the trite. Yet I recognize that many – and probably most – do not share my views. Today we have many new personal computing pieces. How these pieces fit together will determine the future of computing. It’ll be fun to see what this puzzle looks like when it’s finally put together.

Spectrum: The Shortage Is a Crisis, but Not Serious

Dark Side of the Moon album cover

The late economist Herb Stein used to say that “if something cannot go on forever, it will stop.”

A profound economic truth lies behind that seeming flip statement. The world is forever on the verge of running out of vital commodities–oil, food, water, and many more–but somehow we never do. In the worst case, as a commodity grows scarce, its price rises and demand shrinks. The real world, however, human ingenuity triumphs over shortages. We find alternatives to whatever we are running out of, or, better, we find ways to use what we have much more efficiently. So it is with the spectrum we need to move ever-growing volumes of wireless data to our proliferating mobile devices.

In the short run, available spectrum is more or less fixed, creating an atmosphere of shortage. The established carriers, especially Verizon Wireless and AT&T, warn of “exponential”* growth in demand and use claims of shortage both to lobby for new allocations of spectrum for wireless data use and to justify data caps and higher rates. Critics argue that while dedicating more spectrum to wireless data is desirable, much can be accomplished through greater efficiency in the use of what we have.

In this an subsequent articles in this series on spectrum, I will examine the claims and look at possible solutions. Perhaps the biggest issue is just what is happening with demand for spectrum. The truth appears to be that it is still growing very quickly, but at a decelerating rate. Cisco’s Visual Networking Index, which has often been criticized for exaggerating the growth rate, indicates this clearly. It shows the growth rate for mobile data slowing from 133% in 2011 to an estimated 78% in 2014. A growth rate of nearly 80% is still staggeringly fast, but the effect of this deceleration is enormous. At a 133% compound annual growth rate, consumption would increase 240-fold over a decade; at 78%, just 60-fold. The difference: More than 100 exabytes of data per month.Stein’s Law: “If something cannot go on forever, it will stop.”

But even if we discount the more breathless and self-serving estimates of growth in wireless data use, it is clear that the amount of spectrum allocated to wireless data will be, at some point in the not too distant future will be inadequate to meet demand, based on today’s technologies. It is also clear that to meet this demand, we must both find additional spectrum and find ways to use it more efficiently. Fortunately, both are eminently doable.

The actions that can be taken to improve the availability of spectrum for data include:

  • Auctioning spectrum currently used for other purposes. This is the course favored by the incumbent carriers and, to a considerable extent, by Congress and the Federal Communications Commission. The big problem is that it is extremely difficult to get anyone–public or private–who currently holds spectrum to part with it. Legislation passed last year provides for the auction of 100 MHz of unused or under-used television spectrum for  data, with the current broadcast licensees sharing in the proceeds. The rules for these “incentive auctions” are extremely complex. No spectrum will actually be sold until next year at the earliest, and it seems unlikely that the amount freed will ever come up to 100 MHz. Prying spectrum from the vast hoard held by government agencies, particularly the Defense Dept., is even more difficult.
  • Speeding buildout of unused spectrum. Even while complaining of spectrum shortages, the incumbent carriers still have a lot of spectrum in the bank. Neither Verizon nor AT&T has completed the build-out of LTE networks on the 700 MHz-band spectrum they bought in 2007, a Verizon has just acquired considerable additional spectrum in a deal with Comcast and other cable companies. The biggest chunk of barely used spectrum is nationwide coverage at 2.5 GHz held by Clearwire, whose financial woes have allowed only a small portion of the network to be built out. Both Sprint and Dish Networks are bidding for control of Clearwire with the fate of this spectrum in the balance.
  • Spectrum sharing. A lot of spectrum is assigned to entities, usually government agencies, that sue it only sparingly. For example, Defense Dept. operates a scattering of military radars in the 3.5 GHz band. The FCC is currently implementing a plan that will allow commercial use of this spectrum by devices and base stations specially designed to operate only where and when they will not interfere with the radar.
  • White spaces. This is a Wi-Fi-like spectrum-sharing variant that operates on unused portions of the television band. Unfortunately, white space is most available in rural areas and scarce in crowded cities where it is really needed. It is most likely to have its main impact as an alternative to wired broadband service in rural areas.
  • Small cells. The basic principle  of cellular communication is that limiting the range of base stations to fairly small areas allows spectrum to be reused, as long as the cells are far enough apart to avoid interference. Cell sizes, which depend on transmit power and the height of the antenna, range from a radius of 30 kilometers in the country to 1 km or less in dense cities. But reuse of spectrum can be increased greatly by using very small cells in the densest areas.
  • Wi-Fi offload. Unlike other wireless technologies, Wi-Fi operates on spectrum that is free for anyone to use, and Wi-Fi access points serve areas with a radium of 100 m or less. The load on crowded cellular data networks can be reduced greatly if as much traffic as possible is shifted to Wi-Fi, and new technologies are enhancing the ability of this offload to be handled automatically and seamlessly.
  • Smart antennas. While small cells reduce the radius of coverage, smart antennas can reduce the angle of the sector covered. Current cellular antennas typically cover a 120° sector. Smart antenna technology can allow base stations to beam their transmissions to the devices to which they are connected, again allowing for greater resuse of spectrum.

Most or all of these technologies are going to be needed in combination to deal with the growing demand for wireless data,  but the fact is that the spectrum “crisis” is a challenge we can meet with a combination of sound policy and good technology. I’ll be looking at each of these options in more detail in coming articles in this series.

*–Truth in mathematics time. The essential characteristic of exponential growth is that it increases at an ever increasing rate. (For those of you who remember your calculus, all derivatives are positive.) This never happens in the real world, at least not for long, because growth is always constrained by something. As noted below, there is, in fact, evidence that the growth in demand for wireless data is already decelerating.

Leaving the iPhone- How Android Stacks Up

About a month ago, I made the decision to stop using my iPhone 4s with the possible outcome of leaving the iPhone for an Android or motorola-razriWindows phone for an extended period of time.  I don’t want to use the term “never”, because that’s limiting.  As promised, I wanted to share with you my experiences with Android so that you may get a deeper insight into how other users may feel and respond to their next phone purchase and experience.  I want to reinforce that this is, at best, a qualitative research study of one individual; me. I possibly represent a market segment of U.S. mid 40-something males that is technically savvy and enthusiastic about technology.  I will talk about the pros, cons, and things that just didn’t matter one way or the other when comparing my iPhone 4s to Android phones.

I used three Android phones, bouncing back and forth between them to experience  Android.  The three phones were: Samsung Nexus, Motorola Razr HD i, and the HTC One X+ which were provided to me to use.  Let’s start out with the Android phone plusses.

Android Phone Plusses

Instant access to info and controls via Widgets: With Android Widgets I can look at my most often accessed information without even opening up an app.  My most often used app widgets were Mail, Calendar, sports scores, weather, social media updates, and TripIt.  The neat part is that you can actually manipulate the data in the app and there more often than not, don’t need to open the app. This is a big time saver.  My Android control widgets were display settings and hotspot, so instead of three clicks, it takes one.

Free hotspot: This one is very straight-forward.  On AT&T and my iPhone, I needed to pay extra for a Wi-Fi hotspot and with my Android phones I did not.

Easier content sharing: Sharing content like photos to multiple social media sites is very easy.  With my iPhone I need to open the app then I can pull in content like a photo or video with the exceptions of Facebook and Twitter.  With my Android phones I can share a photo or web link to Instagram, Dropbox, Evernote, Sugarsync, Foursquare, Google+, Google Drive, Flickr, HootSuite, Messenger, Picasa, Skitch, SkyDrive, Skype, WordPress, and HTC_One_X_Plusmany more.

Google Voice: As I said in my earlier post, I drive a lot and need speech to text for notes and texts that works really well.  Google Voice just works where Siri does not work well for me.

Flawless sync with Google Services: Google Services like Mail, Calendar, Tasks and maps work flawlessly. They don’t work well or aren’t as feature rich with my iPhone.  Contacts are a great example as my iPhone contacts would not sync with my Google contacts without the need of another app.  We don’t need to talk about Google maps.

Cool tools: I really like some of the very cool tools that come with the phones.  Motorola Smart Actions makes suggestions to automate task like personalizing context aware situations like while sleeping, at home and at work.  HTC has a power saver toggle that really did save power and a very detailed “usage” tab that showed me exactly how much data each app used and would send me warnings based on my pre-set conditions.

Multitasking control: Android lets the user control everything about multitasking, more like a PC or Mac.  This came in real handy when uploading photos in the background to cloud storage or social media sites.  It also works great to have a fully refreshed phone with the latest data from Pulse, Podcasts, and Evernote.  To not kill power, many of the apps give you a choice to only upload during WiFi connection or when plugged in.  Sugarsync is smart enough to stop uploading photos when the battery gets to 25%. My iPhone just doesn’t do this.

Chrome browser: This isn’t the WebKit browser in iOS, it’s the real thing, and I can sync my PCs bookmarks, passwords, and tabs from other Chrome browsers.  Yes, I could do this with Safari, but I preferred Chrome for my PC and Mac browser.

Google Now: I am very impressed with Google Now, primarily the search based cards. It is very helpful to be on a trip out of town and Google Now displays when my plane leaves, the gate, the weather there, hotel details without entering any data.  It’s indexing my emails which a bit creepy, but adds value so I let it do it.

Now let’s move onto the areas that didn’t make a difference one way or another.

Android Phone Neutrals

Same “Page 1” apps: Unlike Android of yesterday, Jelly Bean offer the most popular and trendy apps, they aren’t “ugly” anymore and have very similar feature sets. One exception, Evernote, is still very ugly compared to iOS, but that’s about it.  All my other “page 1” apps look and run just fine.

Feel and flow: I’ve used every version of Android since inception and none ever “felt” as good as iOS… until Jelly Bean.  Project Butter made a very big experiential difference.

Battery life: I didn’t feel and more or less battery life with any of the phones, except the Motorola Razr HD i, which seemed to last longer.  There are a 100 review web sites that can give you exact figures, so I will stop there.

Android Phone Minuses

Camera: However many people told me about the great Android cameras, they all felt short to my iPhone, except in some flash circumstances, where images were white-washed.  All my Android cameras took photos quicker, had more settings, but the pictures never looked as good as the iPhone 4s.

Mail: This is a tough one, one that I waffle on, because I spent the last few years on an iPhone.  I prefer iOS email to Android for reasons that are hard to explain.  Android mail doesn’t look or feel right to me and it’s too hard to find a new folder.  This may have something to do with the fact I have four email accounts, but that’s the way I operate.  The only exceptions are swipes, which you can customize in Android to do what you want, like delete.

Courtesy links: This isn’t the official name in iOS, but I dearly miss the “courtesy links”.  These are the links to addresses, phone numbers in mail, calendar, and web pages that allow you to do something.  Adding a name embedded in an email is torture in Android and pure bliss in iOS.

Copy-Paste: This, like mail, I am a bit torn.  Copying and pasting, a very basic function, and is more challenging for me on Android.  I don’t know if it’s because I spent most of my time on the iPhone the last few years but I get frustrated with Android.

Group text: Unlike the iPhone that presents group texts in order and in-context, Android presented texts to me in an out of order, jumbled way.  We’re 4 years into Android and I don’t understand how this can be.  Android can do better than this.

Next Stop, Windows Phone 8

I really did like the Android phones and none of the minuses turned me off enough to run immediately back to my iPhone.  After using Android phones for the last few weeks, I can see very much why so many people gravitate to it.  It’s more than low price; many of the experiences I found much more enjoyable than my iPhone.  Android felt so more empowering, too, as I am in control of the phone, not the manufacturer.  As my iPhone 4s is sitting in my drawer collecting dust for a while, I’ll be taking the Nokia Lumia 920 and Windows Phone 8 for a deeper spin.  I’ll keep you posted.

For Now, Marketing is More Important Than Innovation

It seems as though the past year I’ve heard a lot of people with early adopter tendencies, especially the media, complain about the lack of innovation coming from the tech industry. It again up again at CES this year. Quite frequently I heard from people that there was nothing ground breaking or truly innovative at the show. Now we can define innovation in many different ways where even simple improvements can be innovative. But I think it is important to point out that true limit pushing, ground breaking innovation is cyclical not annual. We are coming off the re-invention of two primary technologies categories, the smartphone and the tablet. Furthermore we are in the midst of now re-defining what a personal computer is, does, and looks like. Of course I believe innovation is still around the corner but I think there are some important market truths that need to be pointed out.

Innovate Then Communicate

Innovations fail if they can not be marketed. Sometimes I think the importance of effective marketing is taken for granted. I think many industry observers simply assume that when something innovative is released that everyone will magically understand it at a glance. The truth is, even the simplest innovations need effective marketing if they are to be embraced by the mass market.

This is the cycle we currently find ourselves in. This is why it actually becomes much easier to discern the winners and losers by judging not just the product but also the marketing. Great products have the potential to fail to be considered by the mass market with poor marketing while at the same time bad products do not get embraced by the mass market even with great marketing. Great products require great marketing.

There is also the danger of over innovating during a market’s maturity process. When this happens a company tries to add too many bells and whistles and runs the risk of it being too much for the market to handle. Thus their market doesn’t grasp the value of all the new features, or perhaps it just isn’t ready.

Marketing Matters in Mature Markets

Perhaps the most fundamental point for the reason we are in the marketing driven cycle we are currently in is due to the market largely being a mature one. Mature markets function very different than when they are maturing. As a market is maturing it is receptive to more limit pushing innovations. As the market reaches maturity it is more receptive to the marketing of that mature product in order to drive its growth from the early adopters and into the mass market.

Early adopters are important segments for every company to understand because the things they value today will be the things the mass market of tomorrow values in the future. Early adopters rely heavily on new, cutting edge, and innovative features. They appreciate the wow factor, the things that no one else has and they can be the first to embrace. However the mass market is often more down to earth and doesn’t necessarily understand why the flashy, shiny new gadget adds value to their life and is truly useful. Luckily for companies the mass market is significantly larger than the early adopter market. The billions need marketing to help them understand why they need something, the millions need to be wowed by something. Moving from early adopters to the mass market is the fundamental key to a product’s success and that is where marketing comes in.

We also have to understand that the demand to innovate by companies also catches up with technological limits. Many of the things in labs that I have seen that I think can lead to the next round in innovation for smartphones and tablets, like flexible displays, new semiconductor process technology, battery science, etc., are still years away for being ready for mass commercialization. This is why we should simply expect more evolutionary hardware than revolutionary.

This happens all around us, especially in post mature markets. Look at the automobile industry for example. We don’t see revolutionary hardware on an annual basis. If fact we rarely see it at all.

The Myth of iPhone Fatique

I’m in no way saying innovation isn’t important. Just that it is cyclical and we need to understand where we are in the innovation cycle. Maturing product segments require time for original innovations to be adopted by the mass market. To make this point, I’d like to address something I think is interesting. From many early adopters I know, it seems as though they frequently complain that iOS feels dated. For the early adopter this is the challenge. They adopt technologies extremely early and then have to wait for the rest of the market to catch up. As per iPhone fatigue, for many (hundreds of millions of people) they will be experiencing the iPhone and iOS for the first time throughout the next few years. For them there is no such thing as iPhone fatigue. This is the point that many early adopters miss.

Believe it or not, marketing is more important than innovation in the cycle we are currently in. Value needs to be communicated to the mass market. People need to be shown the usefulness of a product or feature and fully grasp the why not the what. Too many companies market the what not the why. Anyone analyzing any company in today’s market needs to heavily evaluate said companies marketing plan as much as the product itself.

Innovation at its best solves problems. Great marketing communicates the value the innovation is bringing to solving a problem people either knew or didn’t know they had. In my opinion there is only one tech company who currently does this well.