2013 – Page 19 – Tech.pinions

Will Gen 3 Chromebooks Finally Hit the Mark?

Now on their third generation, Chromebooks have taken a deserved perceptual and business beating over the last few years. Generation one and two were flawed in many basic ways, with high prices, sluggish performance, and lack of robust off-line capabilities. This makes Lenovo’s and HP’s latest entry into the category all that puzzling. Is their entry into the market an indication that the third generation of Chromebooks will be a success?

When Google introduced the Cr-48 Chromebook prototype in late 2010, hopes were high that the industry would see a viable alternative to the PC notebook. In 2010, most notebooks sold were thick, heavy, with around three hours battery life, and were sold between $499 and 599. The Cr-48 prototype got 9 hours battery life, weighed 3.8 lbs, was less than an inch thick, and came with integrated 3G. Chromebooks promised an inexpensive, enjoyable and simple, connected experience with very fast start times. That’s not exactly what was delivered.

What was delivered was way short of delivering on the value proposition. Prices were as high as a PC at $499, performance was sluggish, had limited storage, limited battery life, and didn’t operate well or at all offline. As expected, the first two generations were only embraced by Samsung and Acer, and only a few consumers actually bought them.

The third generation Chromebook experience is a positive step forward. Compared to the promise, here is how it stacks up.

Instant on: almost immediate
Google offline capabilities: Drive, Mail, Calendar, Docs, and Slides
Prices: between $429 and $199
Battery life: between 4 and 6.5 hours
Storage: 16GB SSD to 320GB HDD
Weight: as low as 2.5 pounds
Thickness: as low as .8 inches high

The “feel” is hard to characterize, but generally, with simple apps like Docs in one windows, the experience felt very snappy. Get on a complex web site with lots of J-script, videos and ads, and the experience starts to get very sluggish. It gets even worse as more tabs are added to the experience. Oddly, SD videos purchased off Google Play were very choppy on the Samsung Series 3 but HD YouTube videos were fine. Keyboards have remained solid and some models have even added the caps lock key. I wish there were a delete key, though. With 95% of the world on Windows PC’s this make a lot of sense.

Will all these improvements turn the tides for the Chromebook? No.

The challenge for Chromebooks as a category is that as they are improving their value prop, so are tablets and PCs and the “feel” is compared to a phone. The biggest of these issues is that PCs are improving.

For nearly the same price, consumers can buy a Windows 8 PC that’s nearly as thin, with mores storage, and similar battery life that can run millions of apps. No, you don’t get the crapware or malware, but consumers don’t think like that. Tablets are an issue, too. If a Chromebook cannot replace the PC then it is an add-on to the experience, which then becomes a question of tablet versus Chromebook. Chromebooks are too much like a PC form factor and consumers will choose the tablet.

Chromebooks have improved their value proposition over the three generations but it won’t be enough to significantly provide the boost that it needs to become a credible category. Chromebooks need to make a much more significant jump in utility or a lower price to do that. By adding better performing processors and graphics combined with more offline capability, it could do that, but that’s for the future.

Should Apple Make A Larger iPhone?

There has been chatter of late around Apple’s plans for the iPhone. Some suggest they need to make a more affordable version of the iPhone. Notice I didn’t say cheap. The logic for a more affordable iPhone is that it will open the door to new customers, especially in emerging markets, who can’t afford the high price of an unsubsidized iPhone. There is a lot of merit to this argument and if done right it can be a healthy addition to the iPhone product line.

The other speculation as of late is that Apple could make an even larger iPhone than the current 4” iPhone 5. This would fall into the larger phone category (some call it Phablets) and would give Apple a competitive iPhone for those who desire larger screens in the 4.7-5.5” range. Apple making a larger iPhone is a newer element to the discussion but one that is worth some thought for those of us who analyze competitive trends.

No matter how you slice it, I believe the time has come for Apple to expand the current iPhone line. This would mean releasing two or three current generation devices in the same year each targeted at different audiences. Apple does this now with the Mac line where they have 11”, 13”, and 15” products in their lineup. Arguably they also do this with the iPad line offering both the 4th generation larger screen iPad and the iPad Mini. I believe it is time this same thinking comes to the iPhone.

Although I think the idea of a more affordable iPhone is compelling, if I had to choose the strategy for either the more affordable iPhone or a larger screen size version for the first product to expand the lineup, I would choose the larger iPhone.

My reason for this logic is the ecosystem. As we have learned from Android phones, focusing on the low-end lowers engagement and ecosystem investment. Those who have cost constraints simply don’t spend as much in an ecosystem. A large question looms as to whether iOS would lead those in the cost conscious category to higher engagement or ecosystem investment. But the evidence we have so far is that the lower end of the market uses these devices very different than the tiers above them. And not in ways that lead to loyalty or deeper ecosystem investment.

Ecosystem investment is important to Apple. Horace Deidu and analyst at Asymco tweeted out the following data yesterday:

Speaking of new legs on the stool, in the last quarter iTunes and Accessories generated as much revenue as the Mac.

— Horace Dediu (@asymco) February 10, 2013

Also in a tweet earlier than that one Horace estimated that gross margin for iTunes is now 15%-17%. This is why for the current growth trend and competitive strategy for Apple, focusing the iPhone lines on segments who can and will invest in the ecosystem is important.

An expanded current generation iPhone line not only gives more customers a path to Apple’s door, it gives more customers an opportunity to invest in Apple’s ecosystem.

Now turning our attention to the topic of Apple making a larger iPhone. I wrote on Friday about my experience thus far with the Galaxy Note II. I made many conclusions in that article and the primary being that larger phones, those above 5” are actually more tablet like than phone like. Yet the value of a pocketable phone/tablet is apparent. The question that needs answering is whether or not the market for larger phones (Phablets) is big enough for a company looking for mass market products—like Apple— to care about. I believe the answer to that question is yes.

Is The Market Large Enough for Large Phones?

The Galaxy Note I sold about 10 million devices world wide in 2012. They will most likely sell at least 20 million this year and most well reasoned analysis I have seen project a steady growth trend for these larger size smart phones. The reasons are simple.

For many markets people can’t afford a smart phone and a tablet. For many markets, especially emerging ones, a product that can merge the benefits of a phone and a tablet is a compelling value proposition. We all know that the phone capabilities of any device is simply just an app, but the portability or pocket-ability is important for a device that is with us 24/7. This is what makes the larger phones a legitimate category. Just how big a percentage of the overall smartphone market large phones are, is a project I am still undergoing. I believe it is larger than 10% but how much larger I am not yet sure. Even if it is only 10% of the overall growing smartphone base of the next few years, it would be in the hundreds of millions.

For more analysis on the value this form factor brings to market read my column on the Galaxy Note II.

Room to Innovate For Larger Devices

Using the Note II, and for that matter the iPad Mini, has led me to think about those form factors as unique sizes to solve challenges for one-handed operation. 5-7” devices, whether phone or tablet, are still manageable to hold and do some operation with one hand. Samsung included some software around the keyboard and keypad to make one-handed operation easy but the device is still to large for full ease of one-handed operation. I genuinely believe this form factor presents some unique opportunities for innovation.

One way could be by using voice, and in Apple’s case Siri. Our research has continually returned many of the primary use cases for Siri not just being search but also automation. Set reminder, add a calendar event, post to Facebook, send a tweet, set an alarm, etc., are all examples of common automation tasks from heavy Siri users. One simple way to address some of the issues with one-handed operation on larger screen devices will be around voice.

Another is sensors. As sensor technology evolves we will be able to embed these sensors into the bezel of the larger devices. The Galaxy Note II was almost impossible for me to reach the back button with just one hand. The back button is a key function of Android and is needed throughout much of its UI. A sensor solution could allow me to have a back button function by simply taping the side of the device. Scrolling was feasible but not ideal on the Note II. This is also a use case I found was capable with the iPad Mini but not as much with the iPad. Sensors could be embed into the sides of the device and allow a slide of the finger down the side to act as the scroll function. There are many more opportunities for sensor control than I can get into here, but I believe this is an area for innovation and improvement. By Apple innovating to solve some one-handed operation problems for a larger iPhone, they can leverage those innovations for iPad as well.

In a market the size of smartphones, staying competitive will mean offering a range of devices. The smartphone market is mature enough that it has begun to segment. An iPhone designed to serve the market that wants a larger screen, which can add to more productive and more media rich experiences in a pocketable form factor, is a good move in my opinion. One that Apple could do right and again put them years ahead of the competition.

Sony’s decline: Have they eaten the poison Apple?

“Those who cannot remember the past are condemned to repeat it.” – George Santayana, 1905

For today’s history lesson, we’re going to look at two of the biggest names in the tech industry that have risen and fallen in complimentary distribution with one another since the 1980’s. As one company climbed to the top, the other plummeted but now the tides have changed.

I’m talking of course about Sony and Apple, two companies with storied histories that bear some key similarities to each other. In the successes and failures of each company, the brilliance and blunders seem to be passed back and forth. In order to move forward towards the future, we must look back at the past; so let’s take it from the top.

The 1980’s were a strange time in America; MTV, big hair, and the Brat Pack are some of the first things that come to mind when I think of that decade. Of course, the 1980’s also ushered in a new era of technology, and Apple and Sony were at the forefront. In the beginning of the 1980’s, Apple came out strong with a record breaking IPO and the Macintosh computer. Things quickly went south for the computer giant, as infighting and a decline in sales ultimately saw Steve Jobs leave the company in 1985; beginning what many would refer to as “the dark years” at Apple. During that same time, Sony had started the 1980’s with dismal profits during a global recession that saw a drop in electronics sales.

One of the things that saved Sony was its creativity and drive to pioneer new technologies. While it lost the “format wars” between VHS and Betamax, it was able to move past and eventually develop technologies such as the Compact Disc and Walkman. Similarly, it branched out beyond consumer electronics and got into the music and movie publishing industries; creating a revenue stream that would allow it to profit several times over from single products. Its latest demise, however, came from the company aggressively expanding into new businesses and technologies with little communication or collaboration between the departments. The question now is “Will they bounce back?”

Apple was able to bounce back from those “dark years” when Steve Jobs came back. Under his leadership, the company was able to re-focus and re-establish its brand. They were able to focus on creating great products from top to bottom, coupled with a user experience that was second to none. If Sony wishes to recover in the same way Apple did, then perhaps they’ll do the same. Sony’s reach is a bit broader than Apple’s so in order to do that, they’ll need to increase the communication and support between departments. They have all the parts they need to return to the top, they just have to deliver what the customers want. Apple delivered things that consumers wanted before they even knew that they wanted them. Sony’s approach as of late has been more stagnant, where they wait for something to come out and find a way to replicate it.

The sting of a few hard blows to a company can send it reeling and certainly bruise some egos. Sony needs to take a whiff of the smelling salts and come out of the corner swinging. Once they return to their roots of innovation, creativity, and quality they’ll be sure to see success once again.

Why I Love My Mac

My aging 27″ iMac, the system I use most for work, had been acting cranky lately but I was busy and ignored the symptoms–until I couldn’t anymore. On Wednesday evening, I tried to reboot it and it just sat there, twiddling endlessly. With enough patience, I finally got it to boot. I ran Disk First Aid verify, and when that failed, repair. Still no happiness. But, as you can guess from the headline, this story has a happy ending.

So first thing yesterday, I decided to make a clean backup before heading off for the Mac emergency room, a/k/a the Bethesda Row Apple Store. I had to postpone my Genius Bar appointment a couple of times because the backup took longer than I expected. When I finally got it in, the young woman at the Genius Bar ran diagnostics and told me that while the drive passed hardware tests and would probably be fixed by reformatting, it was covered by a free replacement policy Apple had put in place for a batch of flaky 1 TB Seagate drives that turned up in iMacs.

The Mac was ready to come home a few hours later, with a new hard drive loaded with OS X Mountain Lion. I went through the preliminary setup, plugged in my Time Machine drive and let the restore run overnight. I had to jump through a few additional hoops, such as reactivating Microsoft Office 2011*, but this morning, it was back to its old happy self.

This experience is the major reason why I continue to use Macs and to recommend them to others. Over the past 20-something years, I have suffered through the failure of many Windows systems and in every case, getting them fixed and rebuilt was a monumental time-suck of a do-it-yourself job. Even if you back up conscientiously, restoring from a Windows backup is a complicated job that requires both time and skill. At best, you might have a fairly recent system image that will allow restoration of the disk with applications and a more recent incremental backup to restore data.

And, of course, there is nothing like the Apple Store for Windows. Even if I had a convenient Microsoft Store–there’s no full-service store in the state of Maryland–they do not offer the range of services that Apple does. I probably would have spent a day and a half fixing the machine myself had it been a Windows box.

The Apple Store is a huge part of the reason that Macs (and iPhones and iPads) provide a vastly superior customer experience. If you doubt that, head for the Samsung Store or the Google Store the next time you have a problem with your Galaxy S or Nexus 7.

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*–Reactivating Office could have been a real pain, because it required a product key, something that is becoming an increasingly serious issue as software is downloaded rather than purchased in a box that makes retaining the key easier. Fortunately (and unlike just about any consumer) I was able to retrieve a key from my Microsoft Technet account. Of course, this problem is caused by Microsoft, not Apple. I was pleasantly surprised to discover that my Adobe Creative Cloud CS 6 applications fired up without licensing glitches.

Opinion Cast: Are Phablet’s For Real? Should Apple Make One?

This week Shawn and Ben discuss Ben’s column about the Galaxy Note 2. Ben goes in to more depth on his thoughts on Phablet’s and what they bring to the table in terms of an experience. We also explore whether or not Apple should get into the large phone market. We tried to stay short and sweet and kept this one to about 15 minutes.

For more context as well read Ben’s article on the Galaxy Note 2.

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

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.

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

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

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

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

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

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

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

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

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

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

Blackberry: The Charge Of The Light Brigade

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

The Personal Computer

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

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

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

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

He was right.

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

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

The MP3

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

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

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

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

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

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

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

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

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

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

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

The Smartphone

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

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

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

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

The Tablet

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

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

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

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

Conclusion

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

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

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

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

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

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

BlackBerry Delivers a Product: Now It Has To Sell It

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

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

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

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

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

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

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

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

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

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

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

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

Business and Social Media: The Good and the Ugly

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

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

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

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

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

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

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

Apple and the Burden of Bigness

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

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

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

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

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

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

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

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

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

Leaving the iPhone- How Windows Phone 8 Stacks Up

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

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

Windows Phone 8 Plusses

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

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

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

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

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

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

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

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

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

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

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

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

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

Windows Phone 8 Neutrals

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

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

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

Windows Phone 8 Minuses

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

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

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

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

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

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

Switching to Windows 8?

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

I’ll Take My Hardware With a Side of Software

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

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

The Internet of Things on Display

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

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

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

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

Hardware with Software Accessories

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

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

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

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

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

Cheering for BlackBerry

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

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

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

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

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

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

What Tech Company is Healthier Than Apple?

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

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

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

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

Others Going Vertical

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

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

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

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

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

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

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

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

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

Apple’s Transparency

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(All quotes are from the Apple earnings call.)

(Chart via Ars Technica)

Mac

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

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

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

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

iPad

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

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

…the iPad mini was very constrained.

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

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

iPhone

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

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

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

iPhone 4 was actually in constraint for the entire quarter…

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

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

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

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

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

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

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

iOS

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

Revenue, Income & Cash

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

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

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

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

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

The Future Of Computing In Two Parts

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

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

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

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

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

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

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

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

Conclusion

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

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

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

Game on!