January 2013 – Page 2

Introducing the Chinese Grey Market Android Tablets

Buckle up because this is going to get interesting. What I am going to elaborate on is perhaps one of the most disturbing and potentially disruptive things that I picked up on at CES. As many of our readers know, I have been studying and compiling data for my Creative Strategies reports around the Chinese consumer technology market. I shared some high level thoughts around the market for Android smartphones in this column where I layout how Android in China is the wild wild west. Yet that market looks fairly organized compared to what is happening with low-end Android tablets in China.

What are Grey Market Tablets

You might be wondering what I mean when I say the grey market tablets. This means several things. First they are made up largely by white box tablets coming to market by a no name brand. A company or shelter company was started to simply take entry level ODM tablets and bring them to market. These devices come with stripped down versions of Android (AOSP). Meaning its basically stock with just a few simple apps pre-loaded and stripped of Google services because they are irrelevant in China. These devices don’t come with any services, including Google’s or from any other like Tencent, 360, Baidu, etc. Consumers who buy these tablets need to go download a local app store (or several) and customize them with the local services they choose. Lastly, the grey market also means how they are sold. Let me explain this last part.

When Tim and I were in Shenzen a few years ago by random accident we happened upon one of the more interesting things I have ever seen. We entered a building that looked like an indoor mall and what we saw was four levels of flea market style booths and tables all selling cell phones and smartphones. The place was bustling with people shopping for phones. As soon as we walked in I knew what we stumbled upon and tried to take my phone out and take a picture. To no surprise the second I tried a nearby guard said I couldn’t take any pictures.

What happens in these technology flea markets is buyers come in loaded with boxes of smartphones and tablets inventory and sell them for extremely low cost (often negotiated rather than fixed). Sometimes hard to find devices make it to they grey market here and go for prices well above retail. This activity is legal but unregulated. When vendors sell out their inventory they close up and come back the next day with more. Given the amount of commerce and the amount of people I observed, I would approximate that many tens of thousands of devices change hands in each of these locations every day and who knows how many of them their are all over China. The grey market sales channel also includes smaller local Chinese shops selling these devices as well. The key thing to understand it that the grey market is parallel to the traditional sales channel but less regulated. This is a simple picture of the grey market in China.

[UPDATE] Engadget’s Chinese Editor Richard Lai shared this link and photo where he was able to get a picture of one of these markets.

How Cheap and How Many?

While I was at CES, I talked to a vendor mass producing several versions of these low cost tablets at volume in China. This particular vendor had the lowest cost 7” Android tablet I could find and it was $47 dollars (292.51 CNY). Nearly every vendor I spoke with was around this range offering Android tablets starting at 7” and going to 10.1” for a range of $47-$60 for 7-inch all the way to $150 for 10-inch. There is unquestionably a massive and rapidly growing market for extremely cheap Android tablets in China. How big this grey market is hard to quantify and I know I am not the only analyst currently trying.

The challenge is that these are being built by many second or third tier manufacturers. Many of these are off the radar but are sourcing older generation materials from many of the usual component manufacturers. Although these second and third tier manufactures don’t have massive capacity, there are many of them popping up all over the place. They are sourcing later generation components like SoCs, memory, and displays, which have dropped in price, have higher yields but are also looking to be moved in volume by the source to clear inventory for newer products. Also, because these are moving in volume through non-traditional parallel channels, it makes it that much more difficult to track.

However, through some trusted sources in the supply chain who have common parts across these devices, I think I can approximate its size potential. Toward the later half of 2012 these tablets sold into China and grey market, super cheap, locally made Android tablets were creeping up on 20 million a quarter. This segment is gaining steam and I believe the market for tablets in China could be as high as 200 million units in 2013 largely driven by the grey market and super cheap Android tablets. I know this seems shockingly high and is much higher than other firms estimates. But it is these super low-cost Android tablets that could bump the number up and lead China to pass the US in tablet sales next year. If this scenario plays out as we believe it means that we could be looking at total worldwide tablet sales of over 400m in 2013. Meaning if we count these low end Android tablets we could sell more tablets than PCs in 2013. Also based on overall triple digit tablet growth in China, which is line with many supply chain forecasts I have seen, this number is plausible. There is of course the question of local manufacturing being able to meet demand but as I said sources are popping up all over the place as this is beginning to smell like a gold rush.

Significant Implications

This of course has significant implications on many levels. First of all legitimate brands are going to be challenged to compete with dozens upon dozens of upstarts looking to trade margins for volume just to make a quick buck. These off brand white box companies do not have sustainable businesses but it sure has the potential to make some people fairly rich overnight. Get in, ride the wave as long as possible, get out.

This growing movement has the potential to thwart the growth opportunity for many legitimate brands trying to build legitimate products and add value around hardware, software, and services specifically for the APAC region. Of course many legitimate brands will still do well in China because the market is so big, particularly in the tier one more developed regions of China. However, those buying these cheap tablets are likely not also buying ones from a major brand. So arguably, these low end devices are stealing customers from the legitimate brands.

Although all of this sounds crazy and like a hot mess (which it is), it is potentially a good thing for the China tablet market. These grey market tablets will help develop the market for tablets at large. As Chinese customers experience these products for the first time and potentially refresh them several times a year, these consumers will become accustomed to their needs, wants, and desires with regards to tablets and then begin to shop for products who are innovating and adding value. This is where the brand comes in, because as value is established in the mind of the consumer, they are willing to pay more for the function and convenience.

Many of us in the developed world are extremely accustomed to many technologies like smartphones, tablets, and PCs. We understand, for the most part, what we want and why we want it. Billions of consumers in China do not and that is the point. This market is extremely immature and undeveloped. There are huge problems to be solved in that region but those buying grey market products do not know that yet. The hope is that over time as they experience the pain points for themselves, that those who are investing in adding value and solving those pain points will begin to reap the rewards.

Why Hardware, and CES, Still Matter

An odd notion that hardware no longer matters has lately taken hold in the world of tech commentary. For example, in a well-argued piece explaining his decision not to attend the Consumer Electronics Show, Buzzfeed’s Matt Buchanan writes:

[S]oftware and services have become the soul of consumer technology. Hardware (seriously doesn’t the word “electronics” in the conference’s dusty title make your eyes instantly droop a bit?) has become increasingly commoditized into blank vessels that do little more than hold Facebook and Twitter and the App Store and Android and iOS. And the best and most interesting vessels, increasingly, are made by the very companies making the software.

It’s true that the relationship between software and hardware is changing, but this is happening in much more complicated and interesting ways. If hardware were a pure commodity, sales of phones, tablets, and PCs would behave the way commodity markets do, with all business flowing to the lowest cost and no-name Chinese manufactures of good enough handsets, tablets, and PCs dominating even in advanced economies. Instead, the premium producers, especially Apple and Samsung, are winning. (Samsung makes lots of low-end phones, but it is enjoying its greatest success with its top-of-the-line products.)

What is happening is that hardware and software are becoming more and more integrated, to the point where it is difficult to tell where one ends and the other begins. This integration is at the heart of Apple’s success and the need for it is driving Google and Microsoft into the hardware business and may push Samsung to break with Google’s control of Android or to develop an alternative to it.

The integration of hardware and software also makes the meme started by Google’s Eric Schmidt and repeated by many others, that the only companies that really matter to consumers are Apple, Amazon, Google, and Facebook. Of these four, only Apple comes anywhere close to full vertical integration. All of them depend on a sprawling infrastructure of companies, including Intel, Qualcomm, Nvidia, and ARM Holdings, that design the non-commoditized components on which everything else depends. These companies, as it happens, were very well represented at CES.

Tech is a complicated business. But the tech commentariat is hopelessly addicted to simpleminded generalities. The consumers of punditry would be better served if we all stopped to think a bit more.

An Homage To The Tablet

Tablet PC shipments are expected to reach more than 240 million units worldwide in 2013, easily exceeding the 207 million notebook PCs that are projected to ship, according to NPD

Amazing.

The only thing greater than the resistance to tablet adoption has been how quickly tablets have overcome that resistance.

SPEED OF ADOPTION

The modern tablet was reinvented in April 2010 with the introduction of the iPad. It’s now two years and 8 months old. No personal computing technology has been adopted faster than the tablet. And that’s saying something. The tablet is being adopted at almost twice the rate that the smartphone was.

TOUCH USER INPUT VS. PIXEL USER INPUT

The key to understanding why the tablet has taken off is touch. Prior to the iPad, tablets used desktop interfaces. The genius of the iPad was that it used the finger – not the mouse or a stylus – as the primary user input.

TABLETS VS. HYBRIDS

Despite the unprecedented success of the tablet, many people think that the tablet is flawed – that the tablet would be perfect if only it were…a notebook.

It is my belief that the tablet and the notebook are inherently separate computing tools because their primary user inputs are incompatible. The tablet and the notebook use two disparate user inputs that cannot be successfully integrated into a single user interface.

This is highly controversial. If I’m right, then hybrids will always be niche products, struggling to serve two masters. But I could be wrong. Times change and technology changes. Perhaps a unified user input is possible. But it’s certainly not available in today’s market place.

PERSONAL AND INTIMATE

That which we touch, we love. The tablet is a personal, intimate device. It’s revolutionizing every aspect of our computing lives, but I think the tablet is going to have a particularly strong impact in education. We’re about to move from a computer for each classroom to a computer for each student. And that’s going to change everything.

Today we can’t imagine leaving our homes without our phones. Tomorrow, we’ll feel the same way about our tablets. I can, in fact, imagine a day where we wear our phones on our wrists, like watches, and our tablets take care of most of our other computing needs. But that’s a discussion for another day.

CONTENT CONSUMPTION VS. CONTENT CREATION VS. PRODUCTIVITY

Many artificial barriers have been constructed in an attempt to understand and/or dismiss the importance of the tablet. For example, arguing whether the tablet is a content consumption or a content creation device is about as helpful as debating how many angels can stand on the head of a pin. It’s a false dichotomy. There is no mythical line of demarcation between content creation and content consumption. The question should be, which tool is right for the job. And when you put the question that way, silly distinctions like content creation and content consumption simply fall away.

Similarly, questions of “productivity” suffer from two flawed ways of thinking. The first is to assume that the term “productivity” should be defined by comparing the tablet to the PC. You don’t compare a tool to a tool, you compare the tool to the job it is being asked to do. A screwdriver makes for a lousy hammer, but it’s pretty useful when you want to use a screw instead of a nail. Similarly, a tablet makes for a lousy notebook computer – but tablets aren’t trying to be notebook computers.

A second flaw is the myopic manner in which we define “productivity”. Most people define productive as “the things I do” and unproductive as “the things that other people do”. Don’t make the mistake of defining the productivity of others using your standards. Tens of millions of people are being productive on their tablets, even if their definition of productivity dramatically differs from your own.

BIG PHONES VS. TABLETS

Even though every flat computing device bigger than a phone is being defined as a tablet, there are very big differences between tablets that run big phone apps and tablets that run apps optimized for larger screens. Anyone who has used an iPad can vouch for this. The difference between an iPad specific app and a double sized iPhone App is night and day.

Further, most everyone is lumping all 7 inch tablets together. The truth is that there is a big difference in screen size between most 7.0 inch tablets and Apple’s 7.9 inch iPad Mini. (I’m sure that Apple would love to say that the iPad Mini was an 8 inch tablet in order to highlight the difference.) Most 7 inch tablets run big phone apps. The iPad Mini runs tablet apps. That’s a big differentiator that’s going unnoticed by pundits but seems to be taken into account by tablet buyers.

WHERE DO WE GO FROM HERE?

We live in a world of multiple screens: phone, tablet, notebook, desktop, TV. We start a task on one screen and finish it on another. We consume content on one screen while simultaneously initiating queries on another screen. The television is the screen in our living room. The phone is the screen that fits in our skinny jeans. The notebook and the desktop are the screen that we use when we have to engage in multiple screen, processor intensive or pixel specific tasks.

The tablet? The tablet is the default screen – the screen that we turn to when we have a choice between it and a phone or a notebook. And that makes the tablet the future of computing.

The ThinkPad X1 Carbon Touch: Windows 8 Is Tough Even on a Great Windows 8 Laptop

I have been using Windows 8 through its several beta and preview versions on equipment designed for earlier editions, and I have been wondering for many months whether my unhappiness with it resulted from shortcomings of the hardware. I’ve now had a chance to spend some time with a first-rate Windows 8-optimized touchscreen laptop and while it works much better than older hardware, the new operating system remains an uncomfortable two-headed beast.

If you want a conventional clamshell laptop with a touchscreen, Lenovo ThinkPad X1 Carbon Touch (from $1,349) strikes me as an ideal workhorse. It features a 14″ 1600×900 display, an Intel i5 or i7 processor, and SSD storage to 256 GB. It weighs 3.4 lb., is .74 in. thick–just a hair thicker than the non-touch version–and provides a solid 5 hours of battery life. The keyboard is outstanding, as you would expect from a ThinkPad, and both the multitouch display and the big trackpad work very well with the full repertoire of Windows 8 gestures (there is also the traditional ThinkPad TrackPoint stick, which remains great for pixel-precise pointing.)

Windows 8 is certainly happier on the X1 Carbon Touch experience than any older laptop I have tried. Most important is that the swipe-from-the-side gestures so important to effective use of Windows 8 now work flawlessly on both the screen and the trackpad. But that’s not nearly enough to overcome the essential clumsiness.

Windows 8 still feels like two operating systems loosely bolted together. In fact, what the experience of working both in the traditional Windoiws Desktop and what, for lack of a better name, I still call Metro, most felt like was switching between virtual machines under a system such as Parallels or VMware. The two user interfaces share storage and a clipboard—and not much else.

This separation manifests itself in many annoying ways. For example, if you start typing while in the Metro start screen, you initiate a search for applications, including Desktop apps. Indeed, with the disappearance of the Start button, this is the standard way to launch Desktop applications not on your task bar or desktop. You would expect that if you put the cursor outside any desktop window and began typing, you’d get the same search. Instead, nothing at all happens.

Then there is the failure of of Metro and Desktop apps to communicate. The Metro Calendar and People apps and Outlook don’t seem to know anything about each other. So adding an appointment or contact in one has no effect on the other unless you sync through an external service.

The usefulness of the touch display is badly damaged by the wildly inconsistent behavior of applications. For example, pinch and stretch works just as you would expect in the Desktop version of Internet Explorer. But in the Google Chrome browser, the gesture works on the trackpad, but not on the screen.

Adobe Photoshop CS6 would seem to be an application that could benefit greatly from touch, but it just plain doesn’t work. You can use touch to select items from menus or palettes. But when you touch the screen inside a picture, whatever tool you are using simply disappears and moving your finger has no effect at all. The tool cursor reappears as soon as you touch either the TrackPoint or trackpad.

Obviously, this situation will improve if and when third-party software vendors add proper Windows 8 touch support to their products. But it’s not as though Windows 8 sneaked up on them, and their failure to work properly with touch is depressing.

Microsoft hasn’t done that great a job itself with making its most important applications touch-ready. Office 2013 works better with touch than earlier versions, but that’s not saying much and the effort has a half-hearted feel to it. For example, the “ribbon,” Office’s do-everything menu bar offers a choice between “touch” and “mouse” modes. In the latter, the menu items and icons are bigger and further apart and therefore much easier to hit accurately with your finger. But the same courtesy does not extend to other interface elements. In particular, context (right-click) menus are much too small for comfortable touch use. (In general, context menus are evil with a touch interface.)

Office applications also have a strange proclivity to pop open an onscreen keyboard, for example, in Outlook whenever a search box is selected. This makes sense on a pure tablet or a convertible or hybrid when the physical keyboard is not available. But it makes no sense at all on a laptop where the keyboard is permanently attached, and Windows ought to know better.

I think the conventional touch laptop ought to be a truly useful tool. The undoubtedly will become more common since Intel has decreed that touchscreens will required for the next generation of lightweight notebooks to carry the Ultrabook label. I’ve spent enough time working with a tablet and a keyboard that the idea of reaching to touch the screen no longer feels odd. But the deficiencies of the software keep the hardware far short of its potential. This will change in time, though there is no excuse for Microsoft launching either Windows 8 or Office 2013 half-ready for touch. For now, the fact that you pay a $200 premium for the touch version of the X1 Carbon–other touch models carry a similar premium–is a bet on the come.

Where’s The Windows 8 “Buzz”?

With all the news coming out of CES this week, I couldn’t help but be struck by the lack of “buzz” surrounding Microsoft’s Windows 8 tablets. Microsoft and its partners just introduced a slew of new hardware and software products, but the response at CES has been muted, at best. In fact, it seems to me that the start of 2013 has been very negative for the technology giant from Redmond.

— Apple’s falling stock prices have been getting all the attention, but while Apple’s stock ended the year up 30%, Microsoft only had a year long gain of 2%.

— Sales of Windows 8 tablets have been tepid, at best.

— According to NPD, overall Windows sales dropped 11% during the holidays.

— And next year isn’t looking any better with Sterne Agee analyst, Shaw Wu, projecting a 2% growth rate for the PC side of the industry.

— Windows 8 tablets have been criticized as being “confusing” both by analysts and some of Microsoft’s manufacturing partners.

— Windows Phone – which was already struggling — has an industry low 37% repurchase rate. (EDIT: This low number may be a reflection of discontinued Windows Phone 7 devices.)

— Microsoft even had to suffer the indignity of having thieves break into one of their offices and only steal Apple products — ‘No Microsoft products were reported stolen’

“Redmond, We Have A Problem”

Here’s Microsoft’s real problem: They shot their bolt with Windows 8 and they badly missed the mark. They looked at the wildly successful Apple iPad and decided that it was a flawed product. Instead of creating a tablet, Microsoft created a hybrid with the basic assumption that what the market really wanted was a tablet that could act as a notebook PC. It’s still early, but so far the marketplace is telling Microsoft that they got it wrong.

“Microsoft doesn’t have a credible response” to expensive tablets like the iPad, or cheap tablets like the Kindle Fire, Google Nexus, or iPad Mini, and that’s what’s hurting Windows consumer sales.” ~ Shaw Wu

While Microsoft Fiddles, Their Monopoly Burns

Nero was famed for fiddling while Rome burned. And like Nero, while Microsoft fiddles with hybrids, their business monopoly is burning. Businesses aren’t waiting around for Microsoft to get their mobile act together. They’re moving on and they’re moving away from Windows.

— Trip Chowdhry, a managing director at Global Equities Research, has put out a research note estimating that Apple sold between 3 million and 4 million iPhones to businesses over the past quarter.

— In a recent analyst survey, the percentage of CIOs who said they’d conduct “broad” tablet rollouts jumped to 15 percent for this year from just 4 percent last year.

— Companies have also found they can save money by letting staffers use their own personal smartphones and tablets at work. Combine that with the corporate trend of avoiding new PC purchases and it paints a very bleak picture for Microsoft’s personal computing efforts.

Conclusion

“Apple’s iPad…now has a starting price of $329 with the entry-level iPad mini. … Windows 8 hardware priced between $500 and $1,200 is ‘uncompetitive’ compared to lower-priced options from Apple and even Google’s Android. ~ Sterne Agee analyst, Shaw Wu

In the fall of 2012, Microsoft planted the seeds for their future in personal computing. If the early signs are any indication, they may not be pleased with what they reap.

NVIDIA’s Project SHIELD Connects Disparate Gaming Worlds

Even before CES 2013 officially began, NVIDIA announced a new product that rocked the gaming world. NVIDIA announced Project SHIELD, an NVIDIA-branded mobile gaming device that connects different world of gaming, across modes, displays and content.

My first visual impression of SHIELD when I saw it was that it looked like a high end portable game controller used with an XBOX with a 5”, fold out display. The user holds it with both hands, pistol-grip style, with access to all the different kinds of buttons you would expect. While the controller does look very cool, what is most interesting is the gaming flexibility it provides.

Connects Small and Large Display Gaming

Gamers can display their games on two displays, the integrated display and to an HDTV. The integrated display is 5”, 1,280×720 resolution, and is adjustable for optimal viewing angle. When not gaming, it folds down to protect itself. Gamers can also display on the big screen, too, up to a 4K display. This can be done wirelessly or via an HDMI cable. Wireless display is accomplished via a dongle that connects into the HDMI port of the HDTV. Essentially, the gameplay is encoded into a an H.264 video stream and sent to the TV in a similar fashion as Apple AirPlay.

Connects Android and Windows PC Gaming

One of the biggest differentiators in gaming is that players can play Android and Windows PC games. Android gaming is very straight-forward. Just download a game from Google Play and you play it. If you ever had an Android device like a Nexus 7 or HTC One X+ Android phone and purchased a game there, you can also play that same game on SHIELD.

SHIELD also plays Windows PC games, too, which is very distinct, something no other portable game device can do. NVIDIA’s desired PC experience is straight-forward, while the technology behind the scenes is complex. In SHIELD-mode, the gamer slides the carousel to “PC” games where they are presented with a list of PC games. They click the game and they play it, it’s that simple. The user never sees Windows Metro or the start screen or anything that resembles a PC.

Behind the scenes, the game is actually being played on a remote PC in the house and images are being transmitted to SHIELD or the HDTV. It uses technology similar to that used on remote desktop applications, where the image is encoded into an H.264 video. The games are screened by Nvidia to make sure that they work well on the HDTV so the quality of service is better. Small text could be a bit of a challenge in some games, but as devs realize they can expand their gameplay to SHIELD, they will accomodate by scaling the text to be used on the 5″ display.

I very much hope that the experience is as smoothe as NVIDIA desires, because if there are a few hiccups, gamers will stop using the Windows PC gaming function, one of SHIELD’s biggest differentiators.

Connects Portable and Console Gaming

Finally, when you add up the fact that SHIELD can operate on the small screen, big screen, can be used as comfortably in the living room as it is in the car, it really is as, as NVIDIA’s Jen-Hsung says, a “portable console.” While first designed as a portable gaming device, it really does beg the question on why you would need a gaming console as long as SHIELD works as planned and has access to the best titles. Many hard core gamers will have both SHIELD and a gaming console, but where money is tight or consumers want just one device, they may choose SHIELD.

NVIDIA’s SHIELD a Success?

SHIELD is undoubtedly a major disruptor, but there are many things we don’t know yet, like price and distribution, to yield a market verdict. What I can say is that if the experience is as good as presented, there will be very high levels of interest across “gamers” and consumers who really like to play games. Nvidia plans to ship SHIELD in Q2 of this year and as soon as I get my hands on one, I will let you know about the quality of the experience.

Conflicting Data

As an analyst I continually come across data. Much of it is often conflicting and discerning what is an accurate reflection of the market is not always easy. Such data has come out today that I think is fascinating due to its suggestions either way if true.

Venture Beat published an article referencing an Accenture study which stated that 66% of phone, tablet owners don’t really care if they run iOS, Android, or Windows. Venture Beat quoted Kumu Puri, a managing director at Accenture saying:

“Overall, our survey found there is not widespread loyalty among consumers about operating systems used on their smartphones, tablets and PCs,”

Really, they don’t care at all? I find it extremely hard to believe. That’s like saying the vast majority of consumers don’t care what care they drive, what clothes they wear, what brands they support, etc. If this is true then RIM, Windows Phone, and Tizen all have a viable shot in the market. As should have Palm with the Pre. The bottom line is personal preference matters and software is a part of that preference.

Yet we have Kantar releasing stats today that share AT&T (the original exclusive iPhone carrier with Apple) had half (51.7%) of their iPhone user base upgrading to a newer iPhone.

66% are saying they are not loyal yet 51.7 percent of AT&T’s iPhone subscribers updated to the newer iPhone. Personally I believe there is much more platform loyalty, particularly to iOS than the Accenture survey is showing. My experience from surveys is that you can get consumers to say whatever you want if you ask the question the right way. This is why we don’t do them anymore and instead focus on observational research crossed with real world market patterns.

The Accenture survey sounds like it was targeted at a much more mature and early adopter user base. Market behavior data we have of the early and late majority (a market that is massively larger than the early adopter market) validates our conviction that loyalty is there. Also it shows there is more loyalty to iOS than any other platform.

While I am on the subject I want to point something else interesting out about the Kantar data and it relates to Verizon. According to their data:

“First-time smartphone buyers upgrading to an iPhone led to iOS becoming Verizon’s top selling OS for the first time. Verizon, who has the largest featurephone user base, saw 44% of their featurephone user base upgrade to an iPhone, compared to 38% of AT&T’s featurephone user base.”

iOS is already among AT&T’s top selling smartphone platform, with over 50% staying loyal and they have had it for over five years. Verizon is going on its third year selling the iPhone and it is now their top selling smartphone. Could that with Verizon’s sizably larger feature phone base and the data point that most upgraders from feature phones to smartphones chose the iPhone highlights the headroom still available in the US for the iPhone. I also believe Verizon’s iPhone customers will show similar loyalty patters as AT&T’s. As iPhone subsidies get stronger in other parts of the world my gut is that similar patters will emerge.

All in all real world market habits don’t validate Accenture’s study in my opinion but that’s just my .2c.

Big Thinkers, Disruptive Technologies at CES

This will be my 10th year moderating a Super Session at CES called “Big Thinkers, Disruptive Technologies.” Anyone going to CES can attend any Super Session’s as these are the only major conference sessions open to all attendees. http://cesweb.org/Conference-Program/SuperSessions.aspx

Each year I get to look at a whole host of technologies that are considered disruptive and chose 3 or 4 to present in our super session. That’s the good news. The bad news is that since the session is only an hour, I can only choose 3 or 4 and deciding which one’s to include is one of the most difficult things I have to do each year.

This year I was asked to add a gaming emphasis to our session, although all of the technologies represented on the panel can be deployed across the board in our digital world. Over the last year I got to see a lot of things in the labs that I consider very disruptive, but most cannot be shown publicly at this time. And this session’s emphasis has to be on products that are in the market or close to release impacting our world of tech in the next 12-18 months.

With that in mind, here are the three technologies that we will discuss in our session.

1. The Future of Displays

Jams Clappin, the president of Corning’s Glass Division will be talking about their advancements in next generation displays. Last March, Ben and I went to Corning’s HQ in Corning, NY and got to see first hand some of the things Corning is doing with displays. Below are links to two videos we saw that gave us a glimpse of the future of glass displays.

http://www.youtube.com/watch?v=6Cf7IL_eZ38

http://www.youtube.com/watch?annotation_id=annotation_424843&feature=iv&src_vid=6Cf7IL_eZ38&v=jZkHpNnXLB0

He will be giving us an update on these new glass technologies that can be flexible, rolled out and seen through to deliver a whole new way to view our digital content and interact with and collaborate with friends, family and business colleagues.

2. Augmented Reality

Casper Thykier, the Managing Director of Zappar, will be showing how augmented reality will soon be impacting how we use technology to get access too much more info and content that is already shown on our mobile screens. In my TimeTechland column a few weeks back, I profiled Zappar and shared how they are working with game companies, movie studious and consumer brands to make our mobile devices indispensable in the near future.

The links in this column will give you a good idea of what AR is, but you really need to see these demo’s and similar one’s from Aurusma (http://www.aurasma.com/#/explore) in person to really understand how this technology will be disruptive.

3. Using Android Apps on Windows PCs

Rosen Sharma, the CEO of Bluestacks, will be showing how their technology allows a person take any Android app and run it on Windows PC’s as if it is a Windows app. This is a really cool technology that while on the surface makes Window’s products better but the underlying technology behind what Bluestacks offers suggests a day soon where any app can run on any OS using their core architecture. What they have could finally deliver on the promise of write once, run anywhere and could by quite disruptive for the future development of applications for all digital devices.

4. The Wrap up

After these three presentations and demo’s, Brian Cho, a partner at Andresson Horowitz, who handles their research into investments in gaming and related technologies will share what he sees as being disruptive in this space.
(http://www.crunchbase.com/person/brian-cho)

A former executive at Ubisoft, Brian is well versed in the world of gaming and can share a lot of light on what he technology he sees impacting the future of games, video and digital entertainment.

If you are at CES, please come and join us as I believe this will be a most interesting and provocative session.

Tuesday, January 8, 11:00 AM at LVCC…room N255-N257.

If you’re not attending CES feel free to share what next generation technologies you are excited about that could be coming in the next 10 years.

Google vs. Microsoft: Just Cut It Out

Hostilities between Google and Microsoft are heating up, and users are being caught in the crossfire.

Microsoft, of course, has spent the last couple of years trying to bring the wrath of the federal government down on Google. This campaign failed last week, when the Federal Trade Commission let Google off with a mild admonishment because it did not have a case it thought it could win.

There’s no way to know if this is retaliation, but Google seems determined to make life difficult for Microsoft customers. The latest evidence is Google’s apparent decision to block access to Google Maps from Windows Phone 8 handsets. The issue is shrouded in a bit of confusion. Gizmodo first reported the blockage. Google responded by saying that the problem was that the mobile version of Google Maps is designed to work with Webkit browsers and the Windows Phone 8 browser is based on the non-Webkit Internet Explorer. But this explanation fell apart when Microsoft pointed out that the Windows Phone 8 browser is essentially the same as the Windows 8 version of IE, which works just fine with Google Maps.

App developer Matthias Shapiro seemed to settle the argument with a YouTube video that shows calls from Windows Phone 8 to Google Maps failing until the browser-agent string is changed to disguise the browser. With the phony browser-agent string, Google Maps worked just fine (in what appears to be a Windows Phone 8 emulator).

Fortunately, Windows Phone 8 users have other mapping options. I supposed Google has the right to deny its Maps service to any device it wants to block, but this just seems dumb and petty.

In other Google annoyances, yesterday I entered a search string in my Chrome browser and when the search page came up, I got an odd popup asking me if I wanted to share my results on Google+. Thinking that no one could conceivably be interested in my search for information on Fermat’s Little Theorem, I closed the window, unfortunately before I thought to capture a screen shot. I have not yet been able to replicate this behavior, but Google popping up a G+ interstitial every time I do a search could just drive me to Bing.

Should Apple Make a Hybrid or Convertible PC?

In a Tech.pinions piece I wrote a few weeks back, I stated that in our talks with IT directors they have been sharing with us their interested in the hybrids or convertibles that are just starting to get into the marketplace. Products like Lenovo’s Yoga or HP’s Elitebook Convertible are attractive to them for various reasons, but the main one is that instead of having to support a separate tablet and laptop, these converged products give them both in a single package.

An IT capable tablet might cost $600 or $700 and an IT grade laptop might cost upwards of $900- $1300 depending on configurations. These convertibles or hybrids are priced around $900-$1300, which is cheaper than buying a separate laptop and tablet combined. Thus, cost of support and cost of ownership is reduced and with IT budgets being stretched these days, lower priced, yet highly functional devices like these hybrids or convertibles makes a lot of sense to them.

We are also seeing some real interest in hybrids and convertibles with SMB and some consumers as well. The compactness of having a 2-in-1 device seems to be of real interest to them as well. At a personal level, I have used a Bluetooth keyboard with an iPad for over a year and in many cases, this has replaced my laptop. However, I still need my laptop to handle what we call heavy lifting tasks like managing my media, doing large spreadsheets or complex documents.

Looking to the Future

In my 2013 predictions column last week, I suggested that hybrids and convertibles could be a sleeper product next year and could catch on with business users in a big way. However, in this same column I made a bolder prediction that Apple would create something I called the AirPad or iPadAir that possibly would be ultrathin like the current MacBook Air and be more like an actual laptop but the screen would detach and become an iPad. Since I made this prediction I have had a lot of calls and emails from people who today have iPads, but tell me they would love to have an iPad/laptop combo device and they would be first in line to buy it.

There is one big problem with my prediction of an Apple hybrid though. Apple CEO Tim Cook has gone on record saying that Apple does not believe this type of device makes sense. They appear heavily opposed to this idea and seem to stand strong around the idea that a laptop is a laptop and a tablet is a tablet. At the moment, you can’t argue with their logic as they are selling a record numbers of MacBooks and iPads, and they may be right. Hybrids and convertibles from the PC crowd have only been out for a short time. Microsoft’s Surface product being the poster child for hybrids also clouds this issue since it acceptance in the market has been lukewarm at best.

Given the type of work we do at Creative Strategies, we get to see a lot of products behind the scenes before they ever hit the market. Over the last three months, we have seen about a dozen hybrid’s or convertibles that will hit the market in Q1 or Q2 of 2013 and some of them are stunning in their design and functionality. On some of them, the screens stay attached and either slide down over the keyboard to become a tablet, or they twist and fold down to also become a tablet in its own right. In our work, we define these types of products as convertibles.

We have also seen a lot of what we call hybrids, in which the screen completely detaches from the keyboard and becomes a much lighter stand-alone tablet. In both cases, some of these are ultra-thin and extremely well designed and I can’t help but believe that when these products hit the market interest by business users and consumers will be piqued. Hybrids dual functionality as a full laptop as well as a real tablet, along with lower pricing than if you bought the tablet and laptop separately, will resonate with many people.

I have also been hearing that the PC side of the house is very bullish on these two-in-one designs and since most of them fall under Intel’s ultrabook designation, they will be heavily promoted next year as part of an increased campaign to get people to buy Ultrabooks. Because of the innovative designs in hybrids and convertibles, which are really eye catching with most priced under $1000, this duality of design and functionality should get a lot of attention next year.

What if the Market for Hybrids Takes Off?

If our prognostication that hybrids and convertibles are correct, and they really take off, Apple will have to look harder at possibly creating a similar type of product for their customers. Today they just let them go out and buy a third party keyboard and force their users to piece together their own hybrid solutions. We have talked to a lot of people who have done this and just love the fact that in a very small package the iPad becomes a powerful productivity tool as well as one that they can use for consumption of media, pictures, etc.

There is strong precedent as well that a product Apple said they would never do they eventually bring to market anyway. Steve Jobs said Apple would not get into phones. And he also said he believed 7” tablets were worthless. However, market dynamics have a way of changing Apple’s position on products they dismiss as not being viable for them to do.

That is why I believe that if hybrids and convertibles really strike a chord with consumers, Apple will have to respond to this possible threat to them, especially in business markets where these types of products are garnering a lot of interest now. Imagine a MacBook Air like design with an iPad tablet that detaches. Given Jony Ives brilliant design acumen, I could imagine an Apple hybrid that would not only be competitive with the PC crowd, but one that would re-define the market for these types of products in the future.

We are in the very early stages of bringing hybrids and convertibles to business users and consumers, so it is too early in the cycle to predict with any certainty the level of adoption of hybrids. But our early research in this area continues to point to the fact that these types of products could be attractive to a large amount of users, and if they do take off and become a threat to Apple, it would not surprise me if Apple responds in kind and creates a product that could turn this market upside down.

The Opinion Cast Round Table: 2013 Predictions and CES

Steve, Tim, and Ben discuss their tech predictions for 2013 and give some insight into this years CES. We are looking forward to an exciting 2013!

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.

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

Qualcomm and the Birth of the Smartphone

Qualcomm CEO Paul Jacobs’ appearance on the Charlie Rose Show brought back memories of the earliest days of smartphones. Jacobs told rose that he originally proposed adding a cellular radio to the Apple Newton MessagePad. When Apple demurred, Jacobs headed to Palm, then owned by 3Com, where he negotiated a license for Qualcomm to build a phone based on Palm OS.

The original Qualcomm pdQ wasn’t very good–I later described it as “a Palm glued to a phone.” It had all the functionality of a Palm 3 PDA and a typical CDMA phone of the late 1990s, but virtually no integration between the two sets of features. As I recall, you couldn’t even dial the phone by looking up a contact on the Palm and tapping the number. The only real advantage was that you got to carry one big device instead of two smaller ones. Needless to say, it sold poorly.

The followup pdQ a couple of years later was a more interesting product. By then, Qualcomm had sold its handset business to Kyocera, including the in-development pdQ 2. The revamped pdQ was a much more appealing product. It was much smaller than the original and offered some real integration of PDA functionality. It also borrowed the primitive Web-browsing capability of the Palm VII. Data communication in those days was limited to a theoretical maximum of 14.4 kilobits per second and you often did much worse than that, so the Palm system relied on pre-digested an condensed web snippets.

Interestingly, in the same BusinessWeek column in which I wrote about the Kyocera pdQ, I also dealt with what turned out to be the true ancestor of the modern smartphone. The Handspring VisorPhone was pretty terrible product from the company set up by Palm’s founders to build licensed Palm-compatibles. The VisorPhone, $299 with contract (!), was a GSM phone module that slid into the accessory slot of a Visor PDA and added phone and SMS apps to the standard Palm repertoire. Not many people bought it, but Handspring used the design experience to build the Treo 300, the first trule integrated smartphone, and the Treo 600, the first successful one.

CLARIFICATION: Turns out folks at Qualcomm in addition to Paul Jacobs have fond memories of the pdQ. Engineers who worked on the project point out that there was some significant integration between the phone and the Palm including the ability to place a call from the Palm Address Book, a “find and dial” search for phone numbers across apps, Address Book search from the phone dialpad, and APIs to give third-party Palm developers access to pdQ phone features. These features don’t sound terribly exciting today, but they were breakthroughs in 1999.

4 Technology Trends, 5 Technology Predictions

Prediction is very difficult, especially about the future. ~ Niels Bohr, Danish physicist (1885 – 1962)

Trend #1: Two Seperate And Incompatible Types Of User Interfaces

Personal computing will be divided into two types of user interfaces:

1) Touch; and
2) Pixel-specific (surface-required)

Touch will require the use of only a finger for user input and will work best on the go. Pixel-specific will require the use of a mouse or trackpad which, in turn, will require the use of a flat surface. These two user inputs are inherently incompatible with one another – and that has consequences.

Prediction #1: There Is Little Room For A Category Between The Tablet And The Notebook

I do not think that there is room between the touch-only tablet and the mouse/trackpad-only notebook for the new category of computer that Microsoft is trying to create with Windows 8 tablets. Tablets are becoming more capable. Notebooks are becoming ever thinner and lighter. There is little room for the hybrid. Hybrids will survive as a niche – but they will not thrive as a category.

Many disagree with this opinion, including some who write for Tech.Pinions and everyone who works for Microsoft. That’s the beauty of free speech and free markets. Time – and sales numbers – will tell the tale.

Prediction #2: Tablets Are Going To Be Even Bigger Than We Thought

Tablets are the future and in a much bigger way than even I had imagined.

They are not just becoming an equal to the pixel-input, surface-only devices, they will soon be the default, go-to device of choice. We’ll use our tablets whenever we can, our phones whenever we’re traveling and our surface bound devices only when we absolutely have to.

Pixel input personal computing devices will become like land line phones. They will persevere but with an ever shrinking base and and ever decreasing significance to our lives.

Prediction #3: Apple Will Create A New iPad Mini In The Spring

This is really a sub-set of prediction number two, above.

I believe that tablets are going to be huge in education. Last year, many school districts tested the waters with tablets. This year, many are going to move from trial programs to initiating programs designed to eventually put a tablet in the hands of every single student. This is a profound computing shift which will have a profound effect on education. By 2014 and beyond, the flood gates will have opened and tablets in schools and colleges will be accepted as the new norm.

Apple knows that they currently have an in with the education market. Educational institutions make most of their buying decisions in the Spring. In my opinion, Apple is not going to let the Spring go by without refreshing the iPad Mini.

Trend #2: Two Phone Operating Systems

In the Ninties, there were only two personal computer operating systems that mattered – Windows and whatever Apple was running on the Mac. Windows dominated, but the Mac survived and, in terms of profits, thrived.

Simiarly, there are going to be two operating systems that matter to smartphones. But this will be a duopoly with a difference. Google is not a strong and domineering operating system shepard the way Microsoft was. iOS has 500 million users and is self-sustaining. This time, iOS will be the premium operating system while Android will be the majority operating system.

Prediction #4: iOS will become the premium model, Android will take the rest

iOS will appeal most to businesses, government and education. (The irony of predicting Apple as the preferred operating system for business is not lost on me.) Android will take the rest.

Both operating systems will unhappily co-exist with developers flocking to iOS and cost-concious buyers flocking to Android. The dollars will continue to flow to Apple and the market share will continute to flow to Android and both sides will continue to insist that the other side doomed.

In the meantime, RIM and Nokia will continue to fade and Microsoft’s Windows Phone 8 will stubbornly cling to third place. But a licensed operating system does not fare well as a minority player.

Trend #3: Freemium v. Premium

The chief divide between tablets will not be their size, but their business models. Amazon and Google follow the freemium model. Samsung and Apple follow the premium model. The Freemium’s give away their hardware at or near cost and seek to make money on the sale of content and services. Apple’s premium model seeks to sell their hardware at a profit and encourage those sales through the use of both content and services.

Prediction #5: Samsung Will Be Forced To Create Their Own Ecosystem

In a world where your operating system provider (Google) is undercutting you by selling hardware at cost and taking in all the content and service dollars, there is simply no other choice — Samsung needs to create their own content and services ecosystem. Samsung has been preparing for this moment for quite some time. And we’ll see the fruits of their labor in 2013.

Trend #4: Multiple Screens

I think the biggest trend that is receiving the least attention is that of multiple screens. In 2001, we had one computer screen and it sat on our desktop. In 2006, we had, at best, two computer screens – our desktop and our notebook. In 2013, we have 4 computer screens – our phones, tablets, notebooks/desktops and TVs. And the when and why we use those screens is going to help to shape the future of computing.

I’m going to cop out here and not make any predictions other than to predict that this trend is going to change everything. People are already using two screens – a television and a phone or tablet – to watch TV. And the way we rapidly switch from phone to tablet to notebook and back again is already baffling that way pundits think about categorizing and pigeonholing our computing buying and using habits. Multiple screens deserve not just a simple prediction on our part but ongoing examination and analysis. It is not an emerging trend but an existing trend. It is the consequences that we haven’t yet fully fathomed. Expect to see us talk a lot more about the effects of multiple screen computing in 2013 and beyond.

CES 2013: Where’s the Excitement?

Next week, as I have in early January for I can’t remember how many years, I’ll head for Las Vegas and the International Consumer Electronics Show. I’ll admit I don’t much like either Vegas or CES, but this year, I’m anticipating the endless cab lines and paying $350 for a $150 hotel room with even less enthusiasm than usual. That’s because the prospects for anything resembling news from CES are pretty grim.

This is less a rap on CES than a comment on the current state of the industry. True, CES is to some extent a victim of its own success, a cacophony of announcements, most of them of little interest to anyone beyond the people making them. And with the shift to mobile, some of the attention has moved to Mobile World Congress, the annual February phone fest in Barcelona.

The fact is, however, that the tech industry has a problem: There undoubtedly will be a Next Big Thing, but it isn’t in sight at the moment. There aren’t even rumors about it. Television sets have long been the preeminent product at CES, dominating the massive “booths” of Samsung, LG, Panasonic, and Sony. But it’s really hard to generate any excitement about TVs at the moment. The industry featured 3D sets with much fanfare in 2011, but consumers have been lukewarm at best and the hoped-for flood of 3D content has failed to materialize. 3D is now just another feature of high-end sets, not a new and exciting product category.,The 4K “super HD” format is interesting for the future of very large displays but the high cost and lack of content make it mostly a curiosity for now.

“Smart TV,” another big industry hope, also hasn’t gone much of anywhere. Many TVs come with apps and internet connectivity to access over-the-top services, but poor user interfaces and limited programming choices have left users less than excited. The industry my be ripe for disruption, but the content owners and distributors remain in firm control. Maybe some day the long-awaited Apple TV will materialize to reinvent television. Or maybe the rumors about a big Intel TV effort will amount to something. I’m hoping, but I’m not holding my breath.

Since the death of Comdex a decade ago, CES has become, more or less by default, the country’s premier PC show. But the PC business is in the doldrums and without the presence of either Apple, which has never been a CES exhibitor, or Microsoft, which ended its heavy presence after last year, there is little prospect for major news. Besides, the major PC manufacturers unveiled all their new products for early 2013 in conjunction with the Windows 8 launch last fall.

For the past two years, CES has been overrun by dozens of tablets, most of which are never seen again, at least outside of China. I’m sure the same will be true this year. But the big players won’t be making any news.

Automobiles have become rolling computers and I don’t follow the area as closely as I should. I’m looking forward to catching up with the latest in automotive electronics and informatics. Of course, I could probably learn more and save a lot of time and money by skipping CES and going to the North American International Auto Show in Detroit the following week.

I still expect to learn a fair amount at CES. I always like to prowl the smaller, less expensive booths on the fringes of the big exhibit halls. Mostly, they are populated by component manufacturers showing products that could only draw someone with a deep interest in connectors or power supplies but every once in a while, something offbeat and novel turns up. And I’ll cruise the show-within-a-show exhibitions put on by Pepcom and ShowStoppers that allow a sort of a speed dating view of dozens of products, many of which won’t turn up on the CES floor. If I find anything interesting, I’ll be sure to let you know

Why Mourn the Death of Pirates?

At some level, I have a bit of grudging admiration for CNET for publishing an article so obviously hostile to the the interests of its corporate parent, CBS. But on the other hand, it is long past time for anyone who want to be considered a responsible commentator on tech to praise common thievery. Christopher MacManus writes:

For many years, Installous offered complete access to thousands of paid iOS apps for free for anyone with a jailbroken iPhone, iPad, and iPod Touch. Think of it as being able to walk into a fancy department store, steal anything you want, and never get caught.

In my personal experiences with the app, I could often download the latest iOS applications and games for free from a variety of sources within mere seconds. After downloading, you could then install the app on your iDevice as if you purchased it from Apple’s App Store. Additionally, during its prime, it wasn’t unrealistic to expect expensive App Store apps hitting Installous mere hours after release.

I suppose it would also be nice to be able to shoot people I don’t like, but we don’t allow that sort of thing. Folks who download commercial apps they haven’t paid for don’t even have the lame excuse of those who torrent movies or TV shows that aren’t otherwise available for download or streaming. It is stealing pure and simple, and most of the time it isn’t ripping off some big corporation (another lame excuse for theft) but picking the pocket of a developer.

Maybe CNET intended this as some sort of New Year’s joke, in which case it isn’t very funny. MacManus identifies himself as a freelancer, so I imagine he expects to be paid for his work. He should extend the same courtesy to others.