February 2013 – Page 2

The Galaxy Note 2: One Giant Step for Android Phones

If you have read much of what I have written here or at TIME, then you may be surprised at some of the conclusions my analysis of the Samsung Galaxy Note 2 have yielded. I have not been shy about my affection for the iPhone. The iPhone is by far the most elegant, the most simple, and the most sophisticated mobile phone I have ever used. However, to keep a keen eye on the mobile landscape, I try and use all the flagship Android phones for a period of time as my primary smart phone. Up until the Note 2, I have never felt that Android, or larger phones for that matter, every really presented any significant value to me over the iPhone. That is until the Note 2.

I wrote a somewhat detailed analysis of Apple’s 4” iPhone vs. Android 4.7” phones last year. My conclusion from that analysis was that an Android phone in the 4.5-4.7” range did not present enough value for the tradeoff of one handed navigation. My conclusion is different since using the Note 2.

In that analysis I did with the 4” iPhone vs. a 4.7” Android phone I looked mostly at how information was presented. I looked at the web, email, twitter, FB, etc., and found that in most cases the amount of information displayed between the two OSes and screen sizes was roughly the same. The only major difference was that on the 4.7” screen the information was slightly larger. Again my takeaway was that although most information was larger, I didn’t see the value in the tradeoff of one handed navigation and or the robustness of iOS. It simply wasn’t a big enough difference in my opinion. That analysis led me to the conclusion that Android devices between the range of 4.5-4.7 inches were not worth the trade-off of one handed navigation.

Size Does Matter

This realization became clear to me in comparing the Samsung Galaxy GSIII to the iPhone. I used the GSIII for a few weeks but had the same feeling as I did when I compared the iPhone 5 to the Galaxy Nexus. Conclusion being the value of the larger 4.7″ screen was lost on me and it wasn’t worth the trade-offs. However, the Galaxy Note 2 is a different story.

After a few days of using the Note 2, I was struck by how good the experience of Android was on a phone over 5 inches. Oddly enough, it was a similar feeling to how I felt with the Nexus 7. Then these two experiences collided in my mind and I made a realization. I genuinely dislike Android on devices smaller than 5-inches and larger than 10-inches. Yet I like it a great deal on it on devices between 5-7 inches. It is an anomaly I know but that is exactly how I feel. It is almost if Android’s clearest differentiated value over the competition is in the 5-7 range. Both size ranges where iOS is not. Granted the iPad Mini comes close to the Nexus 7 in size, and the iPad Mini is significantly better than the Nexus 7 in my opinion, but I can see why people like and choose the Nexus 7. It is a good value and good experience for the price. Not the best, but for the price, good enough.

The Note 2 size range, however, feels to me like the area where Android really has a clear and distinct differentiated advantage. Again, part of this has to do with the fact that Apple does not offer an iOS device in this range so it is hard to compare. But its still a significant point from a competitive analysis standpoint.

The One Handed Mode Tradeoff

The strongest argument against these size phones is the one-handed operational trade-off and it is a very strong point. If one handed operation is important to you then stay away from devices 4.5-inches and above unless you have Lebron James size hands. But the key conclusion I made is that the trade-off of one-handed operation feels like less of a trade-off with the Note 2 than with any other 4.5-4.7” Android phone I have used. Any phone larger than 4.5” is going to require a trade-off of one-handed operation anyway so why not just go larger and get more value.

Interestingly, I had discussions with folks who owned the Note 2 and specifically many women. They told me that since they have smaller hands, most phones were already hard to use with one hand and therefore they simply wanted the biggest screen possible because they found that valuable. Many were overwhelmingly pleased with the Note 2. This makes my point that if one handed navigation is not that important to you then the value of the screen size experience of the Note 2 is significant.

Although much of my analysis of the 4.7” screen holds true with the Note 2 about information displayed, it is with the Note 2’s size range where bigger actually does feel better. Take Facebook for example. Comparing the Facebook app experience on the iPhone 5 vs. a 4.7” Android phone yields only slightly larger photos and media making the size difference moot in my opinion. However comparing the Facebook experience on the iPhone 5 vs. the Galaxy Note 2 yields much larger photos and media which resulted in quite a different experience. An experience that was definitely more tablet like than phone like.

Web browsing is another good example. I pointed out in my screen size analysis the web experience was nearly moot with the iPhone 5 and other Android 4.5-4.7” devices. However, with the Note 2 the difference in web browsing was significant. Not only were mobile sites larger and easier to read but so were full desktop sites. In fact with the Note 2, I set it to always bring up the desktop site. Never before have I done this on any non-iOS devices. Here is a side-by-side screen shot to scale of the Note 2 and the iPhone 5.

It was examples like these where the bigger screen truly brought value. What really struck me is that the experience with the Galaxy Note 2 is more tablet like than phone like. This is probably a key point in why I think this form factor is so interesting. It is also one that makes it very hard, for the first time, to actually compare an Android phone with the iPhone.

Samsung has also done some interesting things in software to enable more ease of one hand use which led me to the conclusion that larger phones present the most opportunity for new hardware and software innovation.

Conclusion

In all the cases where I found the value of the Note 2 clearly differentiated was with regards to media. Photos, videos, games, social media apps, and other places were media was a key part of the experience. This is a key point because the use cases I identified where value is clear in a giant phone are exactly the ones that matter the most to the mass market.

My personal conviction is that the value of the 5” plus phones are worth some of the trade-offs of one handed navigation where 4.5-4.7″ devices are not. The primary point being that for devices where one-hand navigation is already difficult like ones above 4.5”, consumers are better off going larger in my opinion.

5″ smart phones are an are where a lot of innovation in hardware and software exists. Perhaps more so than any other smart phone form factor. Particularly around voice automation, smart sensors, gestures, and software.

So am I leaving the iPhone? No, for reasons I finally believe I can articulate and will share in a column soon. However, after using the Note 2, I can honestly say it is the best Android phone I have ever used and the only one I could identify tangible differentiated value.

For some deeper audio context to this column, click the play button below to listen to my interview on the Galaxy Note 2 and whether Apple should make a larger phone.

The Mobile Train Has Left The Windows 8 Platform Behind

Yesterday, Canaccord Genuity, came out with a report on the profits taken in by the mobile phone sector and Canalys came out with a report on the market share in the tabet, notebook and desktop sectors – and all anyone could talk about was whether Apple and Samsung could take in more than 100% of a sectors’ profits or whether the tablet was truly a PC or not.

Please. These are accounting and verbal semantics that are as meaningless as asking how many angels can stand on the head of a pin. Let’s focus on the implications of these reports and ignore the bickering over irrelevant rhetorical flourishes.

Handset Profits

According to Canaccord Genuity, Apple took in 69% of the handset (all mobile phones, not just smartphones) profits in 2012. Samsung took in 34%, HTC accounted for 1%, BlackBerry and LG broke even, Motorola and Sony Ericsson both acounted for minus 1 percent and Nokia brought up the rear with a negative 2 percent of the industry profits.

No one not named Apple or Samsung is making any meaningful profits from the handset sector. Considering that both Microsoft and Google’s Android are based on a licensing model, this is more than a little shocking. Licensing is supposed to encourage variety among hardware manufacturers. Clearly, that is not happening.

Many industry observers have the handset market all wrong. They opinie that Andoid is destroying iOS. What is actually happening is:

1) With 69% of the profits, iOS is doing just fine. More than fine, actually.
2) Android destroyed every phone manufacturer not named Apple (BlackBerry, Nokia, Palm, etc.).
3) Samsung destroyed every Android phone manufacturer not named Samsung (HTC, Motorola, Sony Erricson, etc.).

Pundits like to predict the imminent demise of iOS, but those profit numbers say just the opposite. And even as Android’s market share has increased, iOS’s profit share has increased too. Market share is no guarantor of profits. This should be self-evident. But apparently, it’s not.

The big losers here are Palm, Nokia, BlackBerry and Microsoft. Palm is gone and Nokia and Blackberry’s market shares and profits have fallen off a cliff. And Microsoft? After three years of flailing, Microsoft’s Windows 7 is dead and Windows 8 phone manufacturers are all in the red.

Tablet, Notebook and Desktop Market Share

Worldwide PC shipments increased 12% year-on-year in Q4 2012 to reach 134.0 million units, with pads accounting for over a third. ~ Canalys

There are two things that we can take from this statement. First, personal computing sales are growing at a respectable rate, however all of that growth is coming from tablets, not from notebooks and desktops.

Second, tablets now make up one-third of the mix of tablets, notebooks and desktops. In fact, several groups are now predicting that tablets will outsell notebooks and desktops by the end of 2013. This is a monumental shift in form factors and not everyone is making the changes necessary to stay abreast.

Companies like HP, Lenovo and Dell missed the shift to smartphones and now they’re missing out on tablets too. But of all the companies being hurt by the rise of smartphones and tablets, I think that Microsoft has been hurt the most:

…only 3% of pads shipped in Q4 2012 used a Microsoft operating system. The software giant’s entry into the PC hardware market was something of a non-event. High pricing, poor channel strategy and a lack of clarity regarding its RT operating system led to shipments of just over 720,000 units. ‘The outlook for Windows RT appears bleak. ~ Canalys

Who Is Selling All Of The Tablets?

According to Canalys, Apple – despite being supply constrained – sold 22.9 million tablets for 49% share, Samsung shipped 7.6 million tablets, Amazon shipped 4.6 million tablets for 18% share, and Google’s Nexus 7 and 10, combined, shipped 2.6 million tablets.

Again, companies like HP, Lenovo and Dell are almost non-existant in the 10 inch tablet space and Windows 8 tablets aren’t even competing in the rapidly growing 7 inch tablet space.

As an aside, Canalys seemed impressed with the Google Nexus numbers but I’m not. If you’re selling your hardware at cost and making it up in content and advertising sales, then your sales numbers should be much, much higher. And it has to be an embarrassment to Google that the Amazon tablets – which have the same business model as Google – are far outselling Google’s tablets.

Who Will Be Selling The Tablets Of Tomorrow?

‘Those who control ecosystems, such as Amazon and Google, can obtain revenue from content sales, but pure hardware OEMs must accept decreasing margins or exit.’

Samsung made impressive growth in tablets this year, but their tablet future seems uncertain. With Amazon, Google and Apple all able to supplement their tablet incomes with App and content sales, Samsung is left out in the cold.

It’s still early days for Windows 8 tablets, but it’s not looking good. I expected there to be an explosion of Windows 8 tablet sales last quarter due to pent up demand and holiday buying. The question in my mind was whether Microsoft would be able to sustain its large initial sales momentum.

That initial sales explosion didn’t happen. Windows 8 tablet sales were more than disappointing. An ill omen if ever there was one. And as I’ve stated before, regardless of how well the Surface Pro sells, it is a notebook, not a tablet, competitor. In a world where tablets are clearly the next big thing, Microsoft is still insisting that what people really want are hybrids, not pure tablets.

Conclusion

Smartphones and tablets are growing and notebooks and desktops are stagnant or declining. Only Samsung and Apple are competing in phones. Only Amazon, Google, Samsung and Apple are effectively competing in tablets. The mobile “train” has left the station and companies like HP, Lenovo, Dell and Microsoft are standing on the Windows 8 platform, watching it pull away.

Spectrum: Sharing Nicely Can Go a Long Way

Sharing has been part of U.S. spectrum policy from the beginning. When the government started handing out AM radio licenses in the 1920s and 30s, a relative handful of stations were assigned “clear channels” that they did not share with any other broadcaster in North America. There were allowed to operate at up to 50 kW and on nights when the atmospheric conditions were right, could be heard hundreds of miles from their transmitters. The rest of the stations got just a local monopoly on their frequencies. This worked fine in daytime, but some broadcasters had to shut down as soon as the sun set to avoid interfering with neighbors.

Still, the model for spectrum use in the U.S. and the rest of the world has been exclusivity. If you had a license, whether you were a TV station, a taxicab company, or a wireless phone operator, no one else within range to interfere was allowed to operate on your patch of spectrum. This worked fine as long as spectrum was relatively plentiful, But as noted in the earlier articles int his series, demand for wireless bandwidth is rising fast and we have run out of spectrum to assign. The tendency has been to view spectrum allocation as a zero-sum game: Anyone’s gain had to be someone else’s loss.

But this may well be a self-defeating process. If every megahertz of bandwidth assigned to wireless data has to be pried from the hands on an incumbent, it’s going to be a very slow and painful process. As the President’s Council of Advisors on Science & Technology (PCAST) put it: ”

PCAST finds that clearing and reallocation of Federal spectrum is not a sustainable basis for spectrum policy due to the high cost, lengthy time to implement, and disruption to the Federal mission. Further, although some have proclaimed that clearing and reallocation will result in significant net revenue to the government, we do not anticipate that will be the case for Federal spectrum.

The saving grace is that much of the spectrum currently assigned is not used very intensively. Some, for example, is assigned nationwide, but used in only specific locations. The government reserves a chunk of spectrum in the 3550 megahertz band for radar use, but it is generally used only in locations along the Atlantic and Pacific coasts. One approach to freeing this spectrum for wireless use would be to set up large coastal exclusion zones and issue wireless data licenses for the middle of the country. Unfortunately, this would exclude the most densely populated parts of the country. A better approach, endorsed by the and being actively pursued by the Federal Communications Commission is to take advantage of advances in technology to allow much finer grained sharing by allowing wireless data operations where the spectrum is not being used for rader. There are two possible “smart radio” approaches: One is to have a mobile device check its location against a database and operate on those frequencies only in areas known to be safe. Another is to actively seek out the radar signals and back off if they are detected. The 3500 MHz shared spectrum is likely to be used primarily for small cells, and idea I will explore in the next installment of this series.With those who hold spectrum fighting hard not to give it up, sharing must play a key role in meeting growing demand.

Another form of sharing is utilization of locally unused channels in the large swath of 600-800 MHz spectrum reserved for broadcast television. The FCC hopes to scavange spectrum for Wi-Fi-like unlicensed use in two different way. One, an idea that has been around for several years, is to allow the use of “white spaces”–televisions channels that are unassigned in a given location. The problem is that different channels are free in different places. The FCC is an fairly advanced development of rules for the use white spaces. However, base stations and and devices will be responsible for checking which frequencies they can safely use. White spaces are not likely to do much in the biggest cities, where dense channel assignments leave little spectrum available for sharing. In the end, the most important contribution of white spaces is to provide high speed broadband to rural areas, where TV channel allocations are sparse and good alternatives are few.

A second source of shared spectrum is part of the FCC’s plan to consolidate and sell off unused broadcast spectrum. The analog tuners used for many years in TV sets had a poor ability to reject signals in adjacent channels, so the original channel assignments set up wide “guard bands” to protect signals from interference (these are common throughout spectrum assignments.) New digital tuners are much more precise and the FCC proposes to free TV guard band channels for unlicensed use. Again, exactly which frequencies will be available will vary from market to market.

(A Washington Post story created much excitement around the internet by suggesting that the FCC has a plan to turn this new unlicensed spectrum into a nationwide free Wi-Fi service. The FCC has proposed nothing of the sort. There may be more Wi-Fi-like service available–it would not technically be Wi-Fi and would not work with existing Wi-Fi devices–but it won’t be national and it most likely won’t be free.)

The incumbent carriers continue to prefer exclusive spectrum assignments. It’s the way they are used to operating and besides, their ability to controls lots of bandwidth forms a powerful barrier to entry for potential competitors. They also remain deeply ambivalent about Wi-Fi and unlicensed spectrum schemes, not being quite sure whether they are threats or potential saviors for overcrowded networks. As Joan Marsh, AT&T vice-president, federal regulatory, wrote in response to the PCAST recommendations:

The Report’s core recommendations, however, have generated significant controversy. The Report 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.

Notwithstanding these misgivings, AT&T, T-Mobile, and Verizon have agreed to cooperate with the Defense Dept. in studying approaches to sharing spectrum in the 1750 MHz band, prime wireless real estate adjacent to frequencies currently used for wireless data. Since no one is willing to part with spectrum they currently hold, one way or another spectrum sharing has to be a key component of any plan to meet growing demand.

A Private Dell is a Stronger Dell

In one of the worst kept secrets out there over the last few weeks, Dell announced this morning that it will go private in a deal with Silver Lake Partners, Microsoft, Michael Dell’s investment company, and Michael Dell himself. The question is, is this better or worse for Dell? Based on the way Wall Street views Dell, its competitive position, and its enterprise growth ambitions, this is the right move for Dell. I want to break down some of the reasons why a private Dell is a better Dell, starting with secrecy.

Secrecy

Public companies are bound by SEC disclosure regulations that say they must make material changes to the company public within a reasonable amount of time. Literally, any time public companies makes a material investment, an officer or director buys or sells stock, a layoff happens, misses quarterly guidance, etc., all must be disclosed.

It also has annual and quarterly disclosure obligations as well in the forms of 10-K (annual) and 10-Qs (quarterly). These 10-Xs aren’t unimportant as they give insights into profits margin structures, product costs, net pricing, discounts, major suppliers, major customers, major contractual commitments, business risks, legal risks, etc. Having run competitive analysis teams, the first place the teams would start with were the SEC disclosures as you can pickup 75% of the needed information there. The information is accurate, too, because if it’s not, companies can be subject to fines and even imprisonment of officers. This risk is why these documents are left to the CFO and chief legal counsel, signed by the CEO, and not left to the marketing.

A private Dell could fly literally under the radar screen of competitors.

Speed

In addition to being secret, private companies are faster, as SEC regulations described above slow a company down. Public companies spend a lot of time asking for permission and insights from stakeholders like the SEC, directors, shareholders, accountants and a lot of lawyers. Lots of lawyers….

Private companies still have boards, lawyers, and accountants, but there are a whole lot less of them. There are a lot less steps, too, as you don’t have to deal with the SEC. One good example are acquisitions. It literally takes 5X the time as a public company to make a najor acquisition as it does a private one. Divestitures are another good example. The market typically needs months of pre-conditioning before major moves can be made. Otherwise, the market could hammer you. This means months and months of hints, planned leaks, etc. to get people ready for a major move. If Dell decided to exit or sell the PC business, for example, they would need to pre-condition everyone. Look at HP and what happened to what they needed to disclose that they were “exploring options” with PSG.

A private Dell would be a faster Dell.

Business Flexibility

Publicly-traded companies are under the minute, hourly, daily, monthly and annual scrutiny of the Wall Street trading machine. Financial analysts set expectations on nearly financial vector and make these expectations public. After earnings disclosure, the press machine kicks in where you see headlines ranging from “beat”, “meet” and “fell short” of expectations.

In response to going through the Wall Street wringer, companies pander to them by doing everything they can to “market” to them. Companies many times make bad long-term business decisions to meet those expectations.

Hitting revenue is a great example. If a company is short on revenue going into the end of the quarter, the CEO, COO and CEO ensue to hammer the business units and sales to hit their numbers. This makes sense as commitments need to be made, but many times those end of quarter deals aren’t the best deals financially. Customers are trained by the cycle and know they can get better deals by doing business at the end of the month. To get the business, companies will do anything from cutting prices, pay for shipping, extend payment terms and stuffing the channel with more product than it needs. This may be good to make the quarter, but not necessarily good for long term profits.

Another example is layoffs. Many times companies will plan, announce, and execute layoffs just to show Wall Street they are serious. Wall Street loves layoffs… just ask your CFO. The problems is, many times the layoffs weren’t really needed and the people normally cut are those working on future products and initiatives, the future life-blood of the company. The first people to go in a layoff are anyone not directly tied to today’s revenue, which limits future growth, not to mention the personal toll it takes on families and employees.

A private Dell will have a lot more business flexibility.

Final Thoughts

There is a lot of upside for a private Dell, namely increased secrecy, speed and business flexibility. It’s not all wine and roses, though. Private companies need to spend more on marketing if they want to continue to be top of mind in awareness, familiarity, and even to drive preference. Sure, it’s great not to be in everyone’s face every second of trading hours, but you can’t fall off a cliff either. Incenting employees become a challenge as well, as you can’t pump publicly-traded stock options out. Like Twitter does today, there can be an internal “brokerage” but the process is just so much more complex. Dell stock hasn’t done well in a decade so it’s not all downside for employees, but they will need to compensate differently for the employees to share in the upside.

Net-net, this is a really good move for Dell. Given the lost love with Wall Street and the public markets, there’s little downside. A private Dell will be better able to complete their enterprise transition, do it faster, and compete more fiercely with HP, IBM and Cisco. To smooth the transition, they need to make some very quick announcements regarding their PC business and their commitment level, otherwise their competitors will pick them apart.

BlackBerry’s Super Bowl Ad Was Awful. Is There An Ad That Could Have Worked?

I’m a big Redskins fan, so when people asked who I was rooting for in the Super Bowl, they didn’t know whether I’d choose San Francisco (a city I visit so often I’m practically a resident) or Baltimore (a city not far from where I grew up). Still, I don’t think anyone was expecting my answer: I was rooting for BlackBerry. I knew that the company had a big ad planned for the game, and while I’ve been using the phone since before its launch last week, BlackBerry had not shown me its marketing campaign. I like the Z10. I like the people at BlackBerry. I like competition in the industry – it’s good for consumers and, to be completely honest, it’s good for my client base. I was rooting for BlackBerry to win. But my team lost – and it was a blowout.

If you missed the ad, here’s a link.

Summary: a man walks down the street using a BlackBerry Z10, random wacky things happen, and an announcer intones, “in 30 seconds, it’s quicker to show you what it can’t do. The new BlackBerry Z10.”

This ad is not as bad as Palm’s webOS ads where a vampire uses mind control on people doing tai chi or Sony Ericsson’s 2011 Super Bowl ad with dismembered thumbs; those were not just bad, they were creepy. I’m sure the BlackBerry folks in Waterloo love their ad – how couldn’t they? It says that the Z10 is so awesome that there’s no point in describing how awesome it is! Plus, it has a jackknifed tractor trailer turning into rubber duckies! That’s cool, right?

There are two problems with the ad:
1. The cardinal rule for successful technology marketing is to sell benefits, not features. This ad does not even sell the features! It just promises that there are features in there somewhere. (What are they? Who knows. Why should you care? No idea.)

2. BlackBerry is in serious trouble – it needs great marketing. John Kirk is correct; attacking Apple and Google head on once they have established their platforms is suicide. Running a $3.7 million ad that says, “we do lots of stuff,” is a waste of money. You know which other phones do a lot of things? More things than BlackBerry 10? Apple iPhones and Google Android phones.

Ouch. Is There A Way for BlackBerry To Succeed?

First, let’s define success. BlackBerry 10 does not need to propel the company back to its market share peak; if that is the short term standard for success, there is no hope. The smartphone market is now much larger than when BlackBerry was king; to be successful, the company needs to reverse its subscriber declines, and return to profitable growth. (The same is true for Nokia and Motorola.) If BlackBerry gets that far, its next challenges will be broadening the line to allow its base of BBM-centric Curve users in emerging markets to upgrade, and carving out a unique space with application developers and service providers so that the BlackBerry 10 gets unique apps and experiences first, not after iOS and Android.

However, getting there is an enormous challenge. BlackBerry is not a safe choice for consumers. It cannot compete with the depth and breadth of Apple and Google’s mature ecosystems. It’s not just that BlackBerry’s ad forgot to explain why anyone should buy a BlackBerry; the company seems to assume that as long as it builds a decent product, everyone will flock to it. (That was probably true in 2008, before Android was a juggernaut, but RIM missed that window. The BlackBerry Storm was not a decent product.) Today, building a good product is not good enough, because there is nothing broken in iOS or Android that BlackBerry 10 fixes.

Instead, BlackBerry needs to narrow its focus – and its message – to consumers who share its brand heritage: an obsessive, almost compulsive need for real time information and control. Amazingly, the BlackBerry 10 platform actually does prioritize these brand attributes, with the Hub, the core peek gesture, unique virtual keyboard, and the Reminder app. There are some off-message features, too, but on the whole, BlackBerry 10 was designed with a clear user in mind. The ad wasn’t.

The smartphone market leaders make excellent products and have tremendous supply chain execution, but they really set themselves apart in their marketing. Apple sells beautifully designed products that “just work” to people who believe they deserve just that. Samsung sells phones with the world’s best displays to people who don’t think of themselves as hipsters. Microsoft initially tried selling Windows Phone by focusing on a similar productivity-oriented message, but it botched the execution with ads that showed how much people loved their iPhones and Android phones. Today, Microsoft is mostly trading on celebrity endorsements, distinctive physical design, and remaining positive Nokia brand associations in Europe.

BlackBerry needs to get people who identify with its brand characteristics to buy a Z10 instead of an iPhone or Android phone, whether they owned a BlackBerry in the past or not, and whether they are security-conscious business users or soccer moms. It will not succeed by selling features, either. BlackBerry should not sell what the product does, it should sell why it does it.

The BlackBerry brand is damaged in the U.S., this is a complicated message, and you’ve only got one Super Bowl to do it. So don’t start by handicapping yourself with a 30 second window. Pony up, and give yourself 60 seconds of breathing room. It can be creative or simple, but the ad needs to reintroduce the brand, acknowledge past mistakes, explain the promise of the new platform, and ask like-minded consumers to join the tribe. Here’s my version:

Remember BlackBerry? [Show pictures of movie characters using BlackBerries, celebrities, and President Obama] We made the first smartphones, and empowered people to stay connected wherever they were and to keep on top of what drives them.
[blank screen] But we lost our way. Browsing, apps, and big touchscreens are important, and Apple and Google came and did those things well. Most people think that’s good enough. For most people, it is. But for people like us, there’s something missing.
So we started over.
[show features] The BlackBerry Z10 has a great browser and a beautiful screen. It has a store that sells 70,000 apps, music, and movies. But BlackBerries are created by and for people who believe in always seeing a message the second it arrives. On the Z10, all your email, text, and social network messages are in one place, and you can peek in on them without leaving your game, map, or movie. Our keyboard is amazing – type a few letters, and BlackBerry will suggest the whole word. And that’s just the beginning.
[text reads: BlackBerry Z10. Available soon at AT&T, Verizon Wireless, Sprint, and T-Mobile]
Not everyone needs to be in control like this. But we do. And if you’re like us, it is time to join the BlackBerry tribe.

That’s my BlackBerry ad. What’s yours?

Is Apple Finished Disrupting Markets?

One of the things Apple has demonstrated over its lifetime is that it has become the great disruptor. When the Mac came on the scene in 1984 and introduced computer users to the graphical user interface, it shook up the text based DOS OS market so dramatically that it forced Microsoft to follow their lead quickly in order to stay relevant. Now GUIs are the norm on all PCs.

18 months later, Apple pushed the Mac as a disruptor to the publishing market with the introduction of desktop publishing. Marrying the Mac, a desktop laser printer and Aldus’ Pagemaker software, Apple championed a desktop publishing solution that completely changed the publishing world by letting people create content on demand and publish it without the help of big publishing’s big iron solutions. Today, personal publishing at the desktop or on the Web has its roots in Apple’s disruptive Desktop Publishing blitz.

In late 2000, Apple upended the music market with the introduction of the iPod and its radical and easy way to access, buy and play music on the go. While pirating music was the real disruptor to the music industry back in the late 1990’s, only the tech literate went online to get MP3 files. While early MP3 players came out to make digital music playback more portable, it took Apple with iPod and iTunes to really disrupt the digital music market and bring it to the masses.

Then in 2007, Apple disrupted the cell phone market with the iPhone. While Apple did not invent the smartphone, they reinvented it in ways that completely disrupted the carrier’s way of managing and controlling their own programs and added the element of a truly intelligent OS and apps to the smartphone landscape. The iPhone has literally redefined what a smartphone is and has dramatically disrupted the entire world of telecommunications around the world.

In 2010 Apple introduced the iPad. They did not invent the tablet. They reinvented it and in the process reinvented the personal computer. Now the iPad has become a major disruptive force in changing the dynamics and fortunes of the traditional PC industry. Thanks to the iPad and tablets overall, PC and laptop sales were off around 10% in 2012. Our estimate is that PC and notebook sales will be off at least 10% in 2013 and it could see an even steeper drop as tablets gain more ground in business and consumer markets. A more interesting projection is that for the first time, tablets will outsell notebook computers worldwide in 2013.

The disruptive nature of the iPad was not predicted by anyone except perhaps Steve Jobs, who clearly understood the impact the iPad would have on the market. To all PC makers chagrin, they too did not see tablets coming and were not prepared to make the transition from a high volume PC business to the next big personal computing device for the masses. Although they are trying to play catch up with Apple and Samsung, the Wintel crowd is behind in tablets and I am not sure they will ever really gain ground against Apple and the Android crowd.

Has Apple Peaked?

While Apple continues to deliver record sales and record profits, the financial community seems to think that Apple is done innovating and disrupting markets. Their demands for outlandish quarterly profits have sunk Apple’s stock over the last 7 months and I have heard some even suggest that Apple has peaked and it’s downhill from here on in.

However, if you study Apple’s history, especially since Steve Jobs returned to the company in 1997, Apple’s actual cycle of creating innovative and disruptive products is around three-to-four years on average. In the case of the time span from the iPod to the iPhone, it was actually 7 years. This suggests that Apple is not driven by time clocks or stock price when it comes to innovation. Rather, they take their time and think things through. They focus on the fusion of the hardware, software, and service ecosystem aspect of new and innovative products, before they bring them to market.

There is a key reason for this attention to detail. Apple has an internal mantra that when they introduce a new category of product that has the potential of shaking up or disrupting a market. It must be done so that Apple will have a two year lead at the very least over their competition. If not, they won’t touch it. That is why they did not just deliver a new MP3 Player, but rather an entire hardware, software and solution approach when the iPod was launched in 2000. The same goes for the iPhone and the iPad. In both cases, from time of launch to time competitors come even close to catching up, Apple always has at least a two-year lead.

What’s Left To Disrupt?

So, is Apple done disrupting markets? Don’t bet on it. Most likely the next market they will disrupt will be the TV market and while we don’t know exactly what they are doing, given their track record I am pretty sure that this product will have a dramatic and disruptive nature on the television industry when it does come out. If done in dramatic fashion, competitors may need more then two years to catch up with them this time.

Another industry Apple could disrupt is the auto industry. Although cars are getting smarter, they have a lot of room for innovation around embedded screens that are popping up in cars even in the mid price range. Imagine if Apple and one or two major car-makers get together to write the next chapter of intelligently connected automobiles that marry dedicated applications, an eco system of services and always connected automobiles and what its potential impact could be on the future of road travel.

Another industry Apple could disrupt is the watch industry. Many people are watching closely the Pebble Smart Watch that is just now shipping to see if its connection to iPhones and Android phones takes off. This particular product is an interesting first step in marrying the smartphone with a watch but it mainly brings smart phone alerts and calling info to the watch’s face. While I really like the Pebble smart watch idea, what I really want is Dick Tracy’s watch and I am betting that Apple is the company that will eventually give this to us.

Could our homes get smarter too? Of course they can. It is not a coincidence that former head of hardware at Apple, Tony Fadel, has created the Nest thermostat that is connected to the Internet and is smart enough to watch your heating and air conditioning habits and adjust them automatically. You can control your thermostat over the Internet too. This suggests to me that the concept of the smart home was in the works when Fadel was with Apple and that Apple has been working on this internally for some time. I am convinced that Apple will be the company that eventually disrupts the home automation apple-cart so-to-speak and makes it another prime market to disrupt in the near future.

Controlling the Smart Screen

In each of the examples I state above, you may have noticed that a “screen” is involved. Screens are mostly necessary for managing, viewing and even controlling content. In the case of Apple TV, there is a possibility of Apple actually doing a physical TV, but if so, think of it as mainly a giant iPad in that it could have the same guts and intelligence of that which is in an iPad. However, if I was a betting man, I would bet that the heart of Apple’s true TV product lies in the way the iPhone and iPad interacts with their giant iPad or any other TV via a smart box and that the real disruptive products comes in the way they marry the iPhone and iPad into the next generation TV viewing experience.

All smart cars will have screens in them too. Imagine if a dedicated iPad is embedded in a car that doubles as the cars map as well as the vehicle for a whole host of auto-dedicated apps. As for the smart watch, what if Apple could create an iPhone or iPad that is 2 inches square and could be worn on our wrists. While it may have some touch screen features, the real way you would interact with it is via Siri ala Dick Tracy. As for the smart home, imagine iPads integrated into appliances, the kitchen or even bathroom mirrors that turn them into highly intelligent devices within the home as well as being the center of a whole homes automation system.

If any one thinks Apple has stopped innovating then I have a bridge in NYC that I would like to sell them. Apple is a very smart company run by some very futuristic thinkers that have a toy box of integrated products and services to work with. To think that they will not take this and use it to disrupt other markets is short sighted. It might take time, but Apple is more than capable of continuing to innovate and drive markets in new directions.

Why I Hope Blackberry (a.k.a RIM) is Not Doomed

About 6 months before the original Blackberry email pager was introduced, I got a call from RIM asking if I would be part of their beta testing program before they released it. At the time, which was late 1998, the concept of mobile email was foreign to all. Businesses used email but their primary way of receiving and responding to email was via a PC or laptop. Consumers also were into email thanks to AOL’s and Compuserve’s dial up programs but they too mostly used desktops or laptops to do their email.

We almost forget the role of the pager back then but this was the best we could get in mobile devices, which primarily sent a phone number to the pager to tell the person to call back ASAP. Mostly used in medical, military and emergency services initially, by the mid 1990’s they were cheap enough for most business professionals to use and even some consumers who had need to be available at a moments notice.

By this time I lived and died by email. It became my main link between my clients and myself and was a major vehicle for how I got my work done. No longer a slave to the phone, my early Blackberry pager gave me my email anywhere I happened to be and allowed me to respond in real time. Like many Blackberry users in the late 1990’s, my Blackberry changed my business life and had a real impact on my family life too.

Over the next 10 years RIM created a powerful and secure email platform that was adopted in droves by businesses, government, military etc. Although they evolved the BlackBerry form factor significantly, they paid little attention to enhancing their OS exponentially in order to keep up with the major trend of smartphones and smart operating systems that came on the scene in early 2007. At first, RIM did not feel threatened by Apple’s original iPhone and even when it started getting some minor attention in business, the company was still clinging to its old OS and business model believing that their entrenched position in business, military and government was unshakeable.

But as history records, RIM did misjudge the impact of the iPhone on the entire smartphone market and to their chagrin, began unseating them in hundreds of business, military and government accounts, causing their fortunes to wane considerably. Up until the announcement of the new BB 10 OS last Wed and the new smarpthone designs they introduced in NYC, RIM was perceived by many as too late to now compete with Apple and Google/Android since together they own about 85% of the current smartphone market.

This fact is still true. Apple and Google’s market position in smartphones continues to grow and makes it hard for another smartphone OS to compete even if it is an innovative and solid offering. That said, I do believe that if a third or fourth mobile OS could compete it could be BB 10 and the market needs this extra competition for three reasons.

Competition is Healthy

First, competition is good for consumers since it sits at the heart of innovation. Although RIM will always be playing catch up, the fact that there is another OS that is really solid and competitive will only force Apple and Google to try harder and to innovate faster.

Second, it makes it more difficult for government officials to ever go after Apple or Google for monopolistic practices. While Microsoft and Nokia helped take some of the regulatory pressure off of Apple and Google, RIM only broadens the competitive landscape even if they only get a small share of the market in the future.

The third reason we need RIM is that there is a segment of the market that needs ultra secure devices and specialized email servers that RIM or Blackberry excels in. Apple and Google/Android has shown significant progress in providing secure email and an app environment but in some accounts they are still considered too weak for some with ultra secure email needs.

My Tech.pinions colleague, John Kirk, wrote a brilliant piece Thursday that lays out why Apple has won so much territory in the smart phone wars. He concludes that for Blackberry to be considered even remotely successful it had to be superior to what Apple and Google already has offered the marketplace.

Here lies my real concern for Blackberry and their new OS and phones. For all intent and purposes, it is a me too product that is barely equal to Apple’s iOS and iPhone offerings, and brings nothing new or superior to the smartphone table. When I saw the demos and looked closely at especially the BB Z 10, it looked pretty much like an iPhone 5 or a Samsung Galaxy SIII.

While the new OS is excellent and runs some existing Android apps and will most likely get some support for native BB 10 apps, it brings nothing really significant to the table other than its reputation for providing highly secure email.

I don’t believe BB 10 has any real chance of catching up with either Apple’s iOS or Google’s Android. In fact, I suspect that if they have any success it will be in a niche area where extremely secure email tops the list of things needed in a smartphone platform.

Personally, I hope they do become competitive and over time deliver some innovations that set them apart from the competition. But I am willing to bet that when we look at the charts that layout smartphone market numbers later this year, Apple’s iOS and Google’s Android platforms together maintain at least 75-80% of that market. That leaves Microsoft and Blackberry to duke it out for the other 20% or so and a combined marketing effort from Microsoft and Nokia in 2013 could tip the balance in their favor.

I applaud Blackberry’s commitment to stay in the smartphone game given the beating they have taken over the last five years. However, if anyone thinks that their new OS and their new smartphones will cause Apple or Google any real headaches, they would be mistaken. At best, Blackberry can continue to compete in a market that is dominated by Apple and Google and their partners but I am very doubtful that they will have the kind of success they hope for in light of the momentum their competitors have in today’s smartphone market.