Apple, iPhone, and the NSA: A Tale of Sorry Journalism

Copy of NSA document from Der Spiegel

Watching CNN on New Year’s Eve, I learned that the National Security Agency was able to snoop on everything I did or said on my iPhone. Actually, I had been reading this for a couple of days on an assortment of web sites, whose idea of reporting seems to consist pretty much entirely of reading and borrowing from other web sites, with, or more likely without, attribution.

If you dig back through the sources here, you find a fascinating dump of documents in Der Spiegel (German original) about the NSA’s Tailored Access Operations including a 50-page catalog of snooping devices worthy of MI-6’s fictional Q. One, called DROPOUTJEEP, claimed the ability to compromise an iPhone by replacing altering its built-in software. “The initial release of DROPOUTJEEP will focus on installing the implant via close access methods,” the 2008 document said. “A remote capability will be pursued in a future release.” In other words, before any snooping took place, the NSA first needed to get its hands on your iPhone and replace its software ((It shouldn’t come as a surprise that a device that falls into the hands of an adversary can be compromised in this way. The ability to jailbreak iPhones is as old as the iPhone itself, and once you can modify the firmware, you can make it do pretty much whatever you want.)) .

This extremely important qualification quickly disappeared from subsequent reports. For example, an Associated Press story (which appeared on the Huffington Post under the headline “The NSA Can Use Your iPhone To Spy On You, Expert Says”) said: “One of the slides described how the NSA can plant malicious software onto Apple Inc.’s iPhone, giving American intelligence agents the ability to turn the popular smartphone into a pocket-sized spy.” Forbes.com reported: “The NSA Reportedly Has Total Access to the Apple iPhone.”

Part of the problem is that Jacob Appelbaum, an independent journalist allied with Wikileaks and a co-author of the Spiegel article, went well beyond the cautious printed piece in a speech to the Chaos Computer Club in Heidelberg, Germany. Unlike more circumspect accounts of NSA disclosures such as those by Bart Gelman in The Washington Post ((Very interestingly, the Spiegel articles made no mention of Edward Snowden, the source of the recent flood of NSA revelations.)) , Appelbaum was quite willing to speculate far beyond what was supported by his texts. As quoted by the Daily Dot, he said in his CCC speech: “Either [the NSA] have a huge collection of exploits that work against Apple products, meaning they are hoarding information about critical systems that American companies produce, and sabotaging them, or Apple sabotaged it themselves.”

Apple was typically slow to respond to the charges. In a statement released Dec. 31, after the story has been percolating for a couple of days, it said:

Apple has never worked with the NSA to create a backdoor in any of our products, including iPhone. Additionally, we have been unaware of this alleged NSA program targeting our products. We care deeply about our customers’ privacy and security. Our team is continuously working to make our products even more secure, and we make it easy for customers to keep their software up to date with the latest advancements. Whenever we hear about attempts to undermine Apple’s industry-leading security, we thoroughly investigate and take appropriate steps to protect our customers. We will continue to use our resources to stay ahead of malicious hackers and defend our customers from security attacks, regardless of who’s behind them.

I’m not sure how upset we should be about NSA’s Tailored Access Operations, of which DROPOUTJEEP was a part. A lot of this is the stuff of spy movies and is the sort of thing intelligence agencies are expected to do. ((One thing not quite clear from the Spiegel story is whether the NSA was designing the exploits and leaving them to others, such as the FBI, to execute,  or whether NSA was running its own “black bag” operations. The latter would be disturbing, as it appears to be outside the NSA’s charter.)) One the whole, I agree with University of Pennsylvania security expert Matt Blaze, who tweeted:  “Given a choice, I’d rather force NSA to do expensive TAO stuff to selected targets than let them weaken the infrastructure for all of us.”

But I have no doubts at all about the quality of much of the journalism. The idea that the government can tap into any iPhone anywhere, anytime, makes great clickbait, but sorry reporting. Too many writers, it seems, couldn’t be bothered to track the story back to the original sources or even read the NSA document that many plastered on their sites. There’s no excuse for this.

 

 

Top 5 2014 Predictions

The next year promises to bring some critical new changes to the world of devices, the software and services that run on those devices, and the usage of those devices in both commercial and consumer environments. In this year-end column, I predict what I believe will be the top 5 changes impacting the tech market for 2014.

PREDICTION 1: WORLDWIDE “PHABLET” SHIPMENTS WILL OUTPACE WORLDWIDE SMALL (8” AND UNDER) TABLET SHIPMENTS

The technology market, the hardware supply chain and most vendors have been almost obsessively focused on the tablet market for the last several years. Of course, they’ve had good reason to do so. Tablet shipments grew from almost nothing in 2010 to a market that in 2014 will be measured in the hundreds of millions of units and tens of billions of dollars. During that time, we also witnessed an important transformation within the tablet business, as the market flip-flopped between demand for larger tablets (such as the original iPad) and smaller tablets (such as the Google Nexus 7). In fact, in 2013, the smaller 8” and under category was expected to account for about 60-65% of all tablets. At the same time, we began to see the growth of the 5” and larger screen size smartphone (commonly called a “phablet”), thanks to the popularity of products like Samsung’s Galaxy Note.

In 2014, I expect these two powerful developments to cross streams, with the phablet category gaining the upper hand. Specifically, I predict that the market for large-size smartphones will surpass that of smaller tablets (in the range of 175 million units versus 165 million units) and that development, in turn, will have a dramatic impact on the hardware and software ecosystems supporting these devices for many years to come. For US-based industry observers, this phenomena may be a bit difficult to see initially, in part because I believe it will occur outside the US first. But this difficulty is also because many in the US have failed to look past the idea of a phablet as anything more than a device that looks ridiculously large when held up to your head to make a phone call. In many Asian countries (notably forward-looking South Korea—where phablets already make up about 2/3 of all mobile phones and where tablets remain a limited market) as well as developing regions, where broadband connectivity and WiFi hotspots are more limited, phablets are seen for what they really are: always on, always connected, always with you mobile computing devices that occasionally make phone calls (and typically with a Bluetooth headset when they are).

I believe many vendors—including Apple—will enter and/or strengthen their phablet offerings in 2014, with a particularly strong push from Chinese vendors such as Huawei, ZTE and Lenovo. In fact, these vendors, amongst others, will help drive down the costs of these devices significantly over the next year—even in markets where there are little or no subsidies from the telco operators. This, in turn, will open up hundreds of millions of new customers to a more complete, more visual experience of the internet and, for many of them, serve as their sole computing device. The impact is bound to be enormous.

PREDICTION 2: THE BUSINESS PC MARKET WILL REBOUND

The PC market has been written off as a lost cause for years by some in the tech press and even within the industry itself. And again, there has been good reason for these concerns: PC shipments peaked in 2011 and have been declining ever since. But, I would argue, even a steep decline, does not a death foretell. In fact, in the business world, there are several signs of hope. The last few quarters in the US commercial PC market, in particular, have returned to positive year-over-year growth and I believe this phenomena will continue in 2014 and even spread to other developed regions.

The reasons for this belief are several. First, the installed base of commercial PCs is aging and a reasonable number—the exact percentage being a hotly debated subject—are in need of replacement. Second, there are a number of business organizations still running Windows XP and with the April 8, 2014 end-of-support (and more importantly, end of security updates) deadline now just a quarter away, there are bound to be a bunch of last minute stragglers who will purchase new PCs to upgrade some of these older machines. The third reason—and the one I believe actually has the biggest potential impact—is the increasing awareness that PCs in business are not going away anytime soon. For all the justified excitement around tablets, smartphones and the aforementioned phablets, people also now recognize that, particularly in business environments, those devices do not replace PCs. They are great supplemental tools—and for some, perhaps even the primary tools—but the likelihood that large numbers of people in a typical business environment would be willing to completely walk away from a PC and still feel confident that they could get their work done is small, particularly in regions outside the US.

Even consumer PCs may get some badly needed reinvigoration late in 2014 thanks to the expected arrival and growth of lower-cost (sub-$500) 3-D printers. Part of the reason consumer PCs have struggled is that many feel they are overkill for the types of applications most people use. Viewing, creating, editing and scanning 3D images before they are printed, however, seems like exactly the kind of activity that could get at least some people to justify a new consumer PC purchase. I expect to see 3D cameras that could function as simple 3D scanners in notebook PCs by the end of the year, so this is an area that bears watching—but it probably won’t have much of a serious impact until 2015.

PREDICTION 3: LOW-END SMARTPHONE BUSINESS WILL DRIVE MAJOR PLATFORM READJUSTMENTS

The majority of the focus on the smartphone market for the last few years has been on the high-end devices geared towards developed (and relatively wealthy) markets, such as the US and Western Europe. In 2014, however, a confluence of factors will start to shift more attention to the lower-end markets in developing regions and the full impact of the widely anticipated but long delayed BRIC (Brazil, Russia, India, China) phenomena—in which developing economies, such as the ones found in these four countries end up having a much greater impact on worldwide trends—will likely hit the smartphone market more than it ever did the PC market. First, the smartphone share of the total mobile phone market in countries like the US and parts of Western Europe is extremely high—nearly 90% in the case of the US. That means the market is nearly saturated in these countries and depends almost completely on replacements—people exchanging one smartphone for another. Of course that’s a popular exercise here in the US—and one that the carriers are trying to encourage as much as possible—but it doesn’t drive nearly as many sales as that of first-time smartphone buyers. Plus, as the pace of smartphone improvements inevitably starts to slow—something that you could easily argue has already started to occur and will increasingly be the case once we see a wider array of phablet-sized phones (iPhone 6, anyone?)—the desire and impetus to upgrade is also likely to decrease as well.

The bottom line? New smartphone purchasers in developing markets will quickly become the most important consumers for smartphone vendors to target. Of course, many of those buyers will be upgrading as well—but it will be from small-screened feature phones, many of which carry the Nokia brand. As a result, I believe that if Microsoft and Nokia focus the proper attention on a solid step-up strategy for these types of customers with smarter versions of the popular Asha line of Nokia phones and embed a Windows Phone 8-like UI, there could be a very real chance for the pair to become a solid number three choice in the mobile phone platform world. In addition, while there has been almost no measurable success to date, I believe it’s too early to completely write off Firefox OS, Tizen and other efforts targeted at creating an alternative mobile OS environment for the low end. While Android clearly has a huge advantage, ongoing concerns about splintering and the uncertainty surrounding how Google intends to merge Android and Chrome (details of which are likely to emerge in 2014) could create opportunities for new, smaller players.

PREDICTION 4: WEARABLE ANNOUNCEMENTS COULD OUTNUMBER SHIPMENTS

The hype around “smart wearable” devices, particularly smart watches and smart glasses has hit the kind of absurd level that one often associates with fads and other “bubble”-type developments. So, while there will certainly be no shortage of announcements coming out of the Consumer Electronics Show (CES) in Las Vegas in January and Mobile World Congress in Barcelona in February, the actual shipments of the devices will almost certainly have less impact than all the stories they will inevitably generate.

Admittedly, the headline to this prediction is more than a bit hyperbolic in the opposite direction, but the truth is that early results from smart wearables have been disappointing and reflect the more “experimental” nature of this category’s first offerings. Smart glasses suffer not only from the basic pricing and “fashion” concerns of such a device, but from a level of privacy and security concerns that could easily lead to restrictive legislative action in countries all over the world. In fact, I would not be shocked if 2014 was the year when devices such as Google Glass were legally banned in some types of establishments and/or some states or countries.

Smart watches should avoid those kinds of hassles, but have unique challenges of their own. Because of basic physics and mechanics, none of these devices are likely to include a wireless broadband (3G/4G) radio—or the battery necessary to support it—anytime soon. As a result, they will be stuck functioning as expensive accessories to mobile phones, with limited differentiation and perceived value by most consumers: not a strong recipe for success. But, if vendors can come up with the right kinds of clever applications that take clear advantage of the new form factor, then there’s always the possibility of a game-changing product. Right now, however, I’m not holding my breath….

PREDICTION 5: MULTI-DEVICE, MULTI-PLATFORM “COMPANION APPS” WILL BECOME AN IMPORTANT NEW CATEGORY

As people continue to add to their collections of smart connected devices, a few important revelations start to become clear. First, though, they’re theoretically designed to make our lives easier, it seems the more devices we own, the harder it is to get everything working together. Part of this may be due to the related axiom that the likelihood of having all your devices on a single platform decreases with every new device you acquire. Second, and somewhat paradoxically to the first point, the more devices you own, the more interest you develop in getting them to work together.

As a result of these observations, I would argue that the market is in desperate need of more applications and services that allow multiple devices running multiple platforms to work together as a coherent whole. I call this category “companion apps” and I believe it is poised to become an important new opportunity in 2014. The concept here is for combinations like a Windows PC and an Android Tablet or a Chromebook and an iPhone, or a smart TV, a Windows Phone and an iPad to all work together in helping to complete a task, provide some information or simply serve as a source of entertainment. This is not simply a case of duplicating functionality across all the devices, but of actually using each device at the elements of a task for which it is best suited. So, for example, to use the last combination, the act of watching TV could be greatly enhanced if the Windows Phone could function as the smart remote control for the TV, while the TV relays supplementary content (e.g., character background, sports statistics, etc.) to the iPad’s screen. To be sure, there are many different ways to achieve the scenario I described (as well as many other potential combinations—see my previous “Multi-Device, Multi-Platform Companion Apps” column here on Techpinions for a few more companion app examples). But the important point is that these kinds of combinations could give end users a great sense of satisfaction, as well as the perspective that each of their devices was now even more powerful and more useful.

Of course, talking about these kinds of ideal device-to-device communications situations and actually achieving them are two very different things. But with developments like Qualcomm’s AllPlay protocol starting to gain traction, I believe 2014 will be year when these types of multi-device applications become important.

Apple To Dominate The Wearable Devices Market

I have written much about “wearables” — wearable computing devices such as the Nike FuelBand, Fitbit Force and Google Glass. Wearables are set to invade consumer markets, healthcare, logistics and other industries, delivering a combination of personalized data, real-time notifications, and analysis of various human outputs, all stylishly wrapped inside the explicit promise of empowerment, enhancement and efficiency.

Whether these devices will actually improve personal fitness, lead to a healthier society, make for better-performing professional athletes, dramatically increase worker productivity, or even systematically violate our privacy are all questions I’ve explored.

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One question not explored: who will dominate the bourgeoning wearables revolution?

The answer seems obvious: Apple.

Apple’s design skills, highly integrated ecosystem, apps market, retail footprint, customer support staff, computing prowess, touch-based OS and global manufacturing scale are peerless — and every one of these are critical for success in the wearables market.

Indeed, I have a hard time conjuring scenarios under which Apple will not crush the competition in wearables. For the moment, I can envision only three, and none I put much faith in:

1. Wearables Are Not Real Computers

Though unlikely, I can at least imagine Apple Inc, with its finite resources and very obvious talents in building high-end personal computing devices, simply abdicating the wearables market.

Tim Cook and company may decide to continue their focus on “real” computers — smartphones and tablets — and cede wearables and sensors to others. Then, as wearables, their apps and services all become so popular and so pervasive in our lives that they eclipse today’s computing market, Apple is relegated to the margins.

Given Cook’s poaching of key people from Nike, Burberry and elsewhere, this scenario seems extremely unlikely. Much more likely is my earlier Techpinions prediction: that Apple rolls out a line of premium-priced computing jewelry.

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In fact, I think most analysts are missing the big story from Apple’s recent signing with China Mobile. It’s less about the number of new iPhones Apple will sell — let’s not play the smartphone market share game now, after all. Rather, it’s that a nation of a billion plus people, hundreds of millions of whom are transitioning into middle class, may ravenously desire beautiful, simple, and highly functional jewelry, watches, sensors and other wearables. Apple can provide all of these.

2. Apple Mistimes The Market

The “Apple copies” meme is partly true, at least on the surface. Apple works on a great many technologies, gadgets, form factors. However, the company typically does not release these until they believe both the product and the market are  ready, oftentimes long after competitors have their product collecting dust on retail shelves.

Apple may have a grand solution ready in, say, Q2 2015, only to lose out if wearables explode in popularity in early 2014.

Or, the market may radically veer onto a path Apple has no response to, and no strength to bear. After all, the accepted trajectory of such devices is that they become nothing more than computerized ‘tattoos’ placed on the skin, or tiny capsules we swallow. Perhaps a biotech company will ultimately prevail in the wearables market, or some uber-geeky Maori entrepreneur revolutionizes our very notion of a computer. As we well know, the best laid plans of giant tech companies are often complete failures.

3. Tim Cook Is Steve Ballmer

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My final scenario, and the one I think most likely — though still unlikely — is that Tim Cook is the Apple incarnation of Microsoft’s Steve Ballmer. Baller delivered massive profits, global scale, and as Microsoft grew to unwieldy heights, Ballmer somehow kept the trains running on time. Innovation, however, was suffocated.

It may be that the path of the wearable computing market usurps the need for high-margin iPhones and iPads. In response, Cook might hamper Apple’s long-term potential by attempting to corral the wearables market inside the high walls of Apple’s highly profitable iOS ecosystem. Just like Ballmer attempted to force everything through Windows and Office, this also will fail.

Similarly, for all the potential of Apple computers in the enterprise, Apple can’t seem to pull away from the high-margin, high-profit, easy-money consumer market. Perhaps wearables revolutionize the enterprise, just as smartphones upended it, and Apple has no adequate response. Cue the return of Microsoft.

Lastly, I suppose Apple could also simply whiff on wearables entirely, the way Microsoft, for example, struck out on touch screens. All possible, all unlikely.

The Next Evolution of Apple

The competition should be wary. When I examine Apple’s talent, skill set, ponder its brand, analyze its active customer base, assess its growing retail operation, test the integration of its many products, proprietary technologies and devices, it is  difficult for me to see how the company fails to win the wearables computing market.

Though Samsung beat them to market, and their Galaxy Gear ad is sublime, long-term I see no company that can bring to the wearables market what Apple already has. Namely, the chips, the design chops, the OS, the integration across devices, the commitment to intuitive function, voice and touch controls, cloud support, media partnerships, carrier relationships, broad appeal across borders and demographics, battery expertise, AirDrop, their own video chat service, the best designed notifications service, the list goes on.

The scale of each new computing revolution is far bigger, far richer, spreads far wider than the one that came before. I expect this with wearables. These will eclipse smartphones and tablets, just as those devices eclipsed “PCs.” Thus, if I am right, Apple is about to get much, much bigger.

The Decentralization of the PC

I’ve been trying to figure out a better way to articulate what is happening in the multi-screen era we have shifted to. I say shifting because there are many markets where one screen still dominates most consumers connected experiences. What is fascinating about those markets is that it is a mobile device which is the primary computing device not a PC with a mouse and keyboard designed to be used in a fixed or stationary setting. But in many western markets growing numbers of consumers are using multiple screens in collaboration with each other.

I’ve never liked the term “post-PC.” Primarily because in many western markets the mouse and keyboard PC is still being used in conduction with other connected devices. The term post-PC gets has carried with it a tone which de-emphasizes the role of the PC more than it should. The other term we have used, which I no longer like, is the PC plus era. This term emphasized that the mouse and keyboard PC was still relevant but also puts too much emphasis back on the mouse and keyboard PC for my liking.

The best way to understand what the computing shift which is happening is that the PC has been decentralized. Prior to our smartphones and tablets, the PC was the center of our computing universe. I vividly remember Macworld in 2001 where Steve Jobs eloquently positioned the Mac as the center of consumers digital lives. For nearly a decade this was true for many computer users. Everything revolved around the PC and was an accessory to the PC.

This is no longer the case. Think about the last time you physically–with a wire–connected your smartphone or tablet to your PC? I honestly think its been at least a year since I plugged in my iPhone, iPad, or even my DSLR with physical wire to my PC.

The decentralization of the PC has become even more evident to me in the past few years. Being that I’m the most technical person in my immediate and extended family I’m generally the person who fixes PCs for family members. For the better part of the past decade I can’t remember a family gathering around the holidays at someone else’s house where I wasn’t asked to take a look at what was wrong with someones Windows PC. Yet over the past few years, I’ve noticed those requests have shifted from fixing Windows notebooks or desktops to showing tips or tricks of things to do with their iOS or Android devices.

What is key to internalize about this shift and the decentralizing of the PC is that it is being led by mobility. We have noticed this shift with every advance in computing. Notebooks overtook desktops as the dominant computing form factor and now smartphones and tablets are overtaking Notebooks as primary compute devices as a percentage of computing time for many (especially if we take a worldwide view of the market). ((In fact, more people are actively online with mobile devices that PCs on a worldwide level.))

The center is now mobile. The mobile market is bigger than the PC market. The mobile Internet is bigger than the desktop Internet. The mobile Internet is the first class citizen and the desktop Internet is secondary to it. ((Yes I include tablets in the mobile Internet discussion.)) The world is already mobile. The PC will still live on and sell hundreds of millions of units annually while mobile devices will grow and sell billions of devices annually. Each plays a role as a part of a computing solution. The cloud will keep all our devices in sync, allowing us to choose any number of screen size and form factor combinations as a part of any individual computing solution.

Mobile computing devices will become more powerful and more capable. This reality will continually challenge legacy devices that require a consumer be stationary to get the full value of the product. The share of compute time is already shifting from fixed to mobile devices and this reality is upon us. The PC has been decentralized and mobile is the new center.

What is interesting to ponder is if there is still a shift to happen that can decentralize the smartphone.

Understanding the Market for Chromebooks

A few days ago NPD released numbers that caused many media outlets to proclaim the amazing success of Chromebooks as a data point in the market. These numbers were bring used in blog posts to suggest that the rise of Chromebooks were impacting PC sales, and in particular Macs and Windows PCs. As so often happens, the media has mis-interpreted the data points released in a vague press release from a device counting and tracking agency. However, this press release is specifically talking about the commercial sales channel (i.e the channel used by organizations for purchasing) not the consumer retail channel like Best Buy, Staples, Fry’s, etc.

NPD is about as reputable of a US retail consumer electronics tracking firm of any I follow. In fact, I generally trust their data more than most. This is because NPD has relationships with all the major US retailers and gets actual channel sell through data. So when they release data we know that we are getting actual numbers of products being sold at US retail. However, we have to keep in mind that while their data is accurate it is also somewhat incomplete in some cases. NPD does not track Amazon sales, or other e-commerce sales, nor do they track Apple store retail sales or other OEM vendor channels. So while NPDs data is important and useful it is also somewhat incomplete. In most cases this doesn’t matter since the bulk of US consumer electronics is sold through retail channels which NPD tracks. While Apple does sell more than average product through their own retail channels they still sell the bulk through retail channels.

Now the story around Chromebooks has been a fascinating one to watch. Earlier in the year, we had picked up on a key data point that Chromebooks were selling almost as many per month as Ultrabooks. Ultrabooks were a specific segmentation of notebooks at retail which had quite a bit of marketing behind it. To learn that Chromebooks were moving in similar volumes to Ultrabooks did take me by surprise. So the question we had to answer was why.

Chromebooks as Textbooks

Earlier in the year I spoke at a conference of educators and IT managers that worked for the state of California and managed the technology purchased and implemented for all California school districts. What we learned was that education markets were buying and deploying Chromebooks in fairly significant numbers. Much of California’s, and many other states, computer programs and curriculum are web based. School districts have a license to education software that is accessed through a browser and teach things like computer literacy, language arts, math, and several other subjects. The bottom line, is that when you dig into many of the ways in which computer based curriculum has been evolving in school districts you learn that much of it is becoming browser based.

There are still many PCs still being used in schools, particular at more advanced grade levels, but many districts are implementing Chromebooks as dedicated web portals to online education software to be used in classroom settings.

This is not surprising given the cost of Chromebooks vs. the cost to replace or add new PCs during these times when many school districts across the US are facing budget restraints.

The key takeaway about Chromebooks in this use case is that they are being used a specific purpose devices. In fact, it is reasonable to think of Chromebooks very much like textbooks in many education environments.

While Chromebooks have a great deal of upside as they evolve, they are being used as specific purpose devices in nearly all markets today. This is both the potential of the upside but also the products challenge in going up against more general purpose computing devices.

Chromebooks has a role, but over the next few years whether its role is as specific purpose devices or general purpose applications will wait to be seen. Stay tuned, however, should Google release a tablet running Chrome OS things could get very interesting.

Most Read Columns of 2013: Learning to Love Chromebooks and Succeeding

I have been a skeptic about Chromebooks since Google announced them. What could you really do on a pseudo-laptop whose only native application was the Chrome browser and which depended on an internet connection for most of its functionality. But I avoided sharing my opinion because I had never used on for more than a few minutes.

Now I have remedied that situation and you can count me as a convert. For the past cuple of weeks I have been spending a lot of time with a Chromebook. Not the drool-worthy $1,299 Google Pixel but a humble $250 Acer c710 with an 11.6” non-touch display, 4 GB of RAM, a 1.1 GHz dual-core Intel Celeron, and an almost pathetically old-fashioned rotating hard drive.

A Chromebook is far more restricted than a regular laptop of even a tablet. Without the ability to load standard applications, you must make do with web apps, which are limited both in scope and in functionality. But it is a good 80% or 90% solution, perfectly acceptable for the great bulk of what most people want to do most of the time. The applications and the operating system are both lightweight, so that performance feels snappy despite the modest specs.

Most important for those of use who live in a world where we are disconnected at least some of the time, the key Google apps, especially Docs, work offline. A Gmail add-on, officially still in beta testing, lets you read, edit, and reply to email messages offline.[pullquote]The Chromebook is very good at what it does well, and for a large number of people, it would be a more than adequate replacement for a conventional PC.[/pullquote]

I wrote this post mostly on the Chromebook, much of the time offline. The WordPress editor is not offline-friendly, so I composed in Google Docs, then copied and pasted into WordPress. The image was downloaded from the Web, saved as a local copy, and uploaded to WordPress. In terms of the apps I used, the experience was much like working on an iPad (or an Android tablet) except for the convenience, for writing, of working on a laptop form factor.

I used the image I found as-is. Chrome features a very limited built-in picture editor. Anything more sophisticated would have required using one of a number of on-line picture editors, such as Pixlr. Though it requires a live internet connection, it’s fine for occasional use and designed to be familiar to a Photoshop user. (Oddly, Google does not offer a Chrome version of its own Picasa photo tool.)

But I would n’t want to use the Chromebook to process a large number of images from my camera. It can’t handle the RAW format I like to use on by DSLR and there is nothing–at least that I know of–like Adobe Lightroom for batch processing of photos. And even with a fast internet connection, moving a large number of multi-megabyte photos to and from web servers will get tired quickly.

Similarly, I really wouldn’t want to do much audio or video editing on the Chromebook. I have too much invested in my familiar tools (Apple FinalCut and Adobe Audition) for these complicated chores, and any complicated video editing would be a tedious chore on the low-powered C710.

But this is all a little like complaining that a good bicycle isn’t a Lexus. A Chromebook cannot do everything that a Windows PC or a Mac (of even a Linux PC) can do. It can’t even do everything that a tablet can do. For one thing, the selection of games is very limited though there is, of course, Angry Birds. But it is very good at it does well, and for a large number of people, it would be a more than adequate replacement for a conventional PC.

 

Hail and Farewell, All Things Digital

so_long_farewellNext Tuesday, New Year’s Eve, will mark the end of one of the most important journalistic tech industry web sites, Dow-Jones’ All Things Digital. Those of you who have been following this drama in recent months know that its disappearance will only be momentary.  Walt Mossberg and Kara Swisher, who have run the site and associated conferences as an independent unit (but with no equity stake) are parting company with News Corp. after failing to reach agreement on a new contract.

The site, with its crack team intact, will re-emerge with a new name and new corporate investors, including NBC Universal, at the start of the new year. But the end of its six-year run is worth a moment of reflection. (Walt and Kara seem to agree; ATD is offering a series of posts (here’s the first) with summaries of and links to some highlights.

Many of the ATD crew has been friends, colleagues, and competitors, some for more years than any of us want to admit. But when ATD started in 2007, it brought to the web  the journalistic standards of The Wall Street Journal with the timeliness, aggressiveness, and attitude that befitted a post-print publication. It quickly became the go-to site for, among many other things, Kara’s exhaustive (and occasionally exhausting) coverage the decline and, maybe, rebirth of Yahoo, Peter Kafka on media, Ina Fried on mobile, and Arik Hesseldahl on the enterprise.

It will be very interesting to watch what changes and what remains the same in the new ATD. Equally interesting will be what Dow-Jones plans to do to fill the giant hole left by the departures. It clearly has major plans, and has been hiring a lot of staff.

(So long and thanks for all the fish. The picture of  the dolphins, originally from icanhascheezburger.com, is from the allthingsd.com home page.)

 

 

Grading My Predictions For 2013

Sigh.

Time to fess up and see how badly I did in last year’s predictions. You can find them all here.

Criticism may not be agreeable, but it is necessary. 
It fulfills the same function as pain in the human body. 
It calls attention to an unhealthy state of things. ~ Winston Churchill

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

This is still in dispute. Many still feel that a hybrid category between the tablet and the notebook will eventually emerge.

Not me. And it surely didn’t happen in 2013, so I’m chalking this one up as “correct”.

Here’s the thing: The touch user input (finger) is wholly incompatible with pixel specific forms of user input (mouse and stylus). And putting both side-by-side on a single device is not the solution, it’s the problem.

Why (my wife) hates Windows 8? In her words, “It doesn’t do what I’m telling it to do!” ~ Brad Reed (@bwreedbgr)

It’s anecdotal, but that’s about as damning a criticism as a product can receive.

In 1995, Cynthia Heimel wrote a book entitled: “If you leave me, can I come too?” I think that’s today’s de facto motto for Microsoft. Microsoft wants to have it both ways – sell you an all-in-one notebook AND tablet — and consumers are having none of it.

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

Worldwide the number of smartphones will surpass the number of PCs in the next 6 months. ~ Benedict Evans

Screen Shot 2013-12-18 at 17.51.51

Nailed it. 2 for 2.

Tablets were the biggest story in 2013. And they may well be the biggest story in 2014, too.

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

Wrong, wrong wrong. I thought that Apple would target the tablet for the education market. But Apple has opted, instead, to move almost ALL product launches — iPod, iPhone, iPad – and maybe even Macs — to the holiday quarter.

2 for 3.

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

Sounds about right to me.

There a persistent misunderstanding of the Apple business model.

…Apple simply doesn’t care about market share. As a properly capitalist company it cares about the profits…

Apple has repeatedly said that it’s not interested in being a top Chinese or anywhere else smartphone player. It’s interested in being a top player at the top end of the smartphone market which is an entirely different thing. ~ Tim Worstall

No one seriously argues that Burberry should be more like Walmart ((Analogy borrowed from Brian S. Hall.)). Why ever does anyone think that Apple should be more like Samsung?

That makes me 3 for 4.

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

Hmm. Lots and lots of talk about such a thing happening but almost zero action. Got that one definitely wrong.

Final score: 3 for 5.

Conclusion

I don’t really have much faith in my predictions anyway. I don’t pretend that I’m a seer who can peek into a future that no one else can see. As I often say, I prefer to predict the past — it’s safer. Easier too.

I more or less see my role as trying show people that the future they’re resisting is already here today — that the things that they are denying have already happened.

To most men, experience is like the stern lights of a ship,
 which illumine only the track it has passed. ~ Samuel Coleridge

Here’s a couple examples for 2014.

A) Microsoft is in more trouble than people seem to realize. Microsoft is making lots of money — which is good — but consumers are about to fire Microsoft from its current job and Microsoft doesn’t have any obvious prospects for obtaining future income — which is bad, bad, bad.

B) Phones and tablets are a thing. Notebooks and Desktops are a niche. Still getting lots of resistance to this fait accompli, and that resistance is warping the analysis of many.

C) Android is not the Windows of the 1990’s. Apple is not the Apple of the 1990’s. If you can’t see that today’s marketplace is entirely different from the computing marketplace of the 1990s, it’s because you refuse to see what is right before your eyes. The evidence is all around you.

There’s more, of course, but this isn’t a prediction article, it’s a mea culpa article. I was extremely conservative in my predictions and I still got 2 of 5 wrong. C’est la vie.

Happy New Year to all…and one last prediction:

I predict it will be an unpredictable year.

Most Read Columns of 2013: The PC is the Titanic and the Tablet is the Iceberg

During this holiday week, we wanted to re-showcase some of the most read columns of 2013. Whether you read them before or are seeing them for the first time, enjoy some of the most read columns of our site from the past year.

Most tech pundits are confused about the Tablet computer. They compare the abilities of the PC (traditional notebook and desktop computers) to those of the Tablet and find the Tablet wanting. They can’t understand how the Tablet can be so dog gone popular when it makes for such a terrible PC.

What they don’t understand is that the tablet isn’t trying to be a PC (unless it’s the Microsoft Surface). Tablet sales are exploding because the Tablet is competing against…nothing. The Tablet is going where the PC is weak and where the PC is absent. There’s virtually nothing standing in the tablet’s way.

Comparing the PC to the tablet is like comparing the Titanic to the iceberg that sank it. It wasn’t the one-ninth of the iceberg protruding above the waterline that sank the Titanic. It was the eight-ninths of the iceberg that lurked beneath the surface of the waters. Similarly, it isn’t the few overlapping tasks that the PC and the Tablet can both do well that matters most. It is the tasks that the Tablet excels at – and which the PC does poorly or not at all – that will ultimately reduce the PC to niche status and turn the Tablet into the preeminent computing device of our time.

ABOVE THE WATERLINE
The PC and the Tablet – like the Titanic and the tip of that fateful iceberg – do compete on rare occasions. Companies like SAP and IBM have ordered tens of thousands of Tablets and some of those Tablets have replaced traditional PCs, especially in those instance where the PC was overkill for the task it was originally assigned to do.

But let’s be real. The PC is a better PC than the tablet is, or ever will be. The number of Tablets that will directly replace PCs will never amount to great numbers. Accordingly, we should no more fear the Tablet replacing the PC than the lookouts on the Titantic should have feared the the damage that could have been caused by protruding tip of the Iceberg. They knew, and we should know, that that’s not where the real danger lies.

AT THE WATERLINE
There are millions upon millions of Tablets that are supplementing, rather than replacing, the PC. These Tablets are being used by Lawyers and Financiers, by CEOs and Presenters, by Presidents and Prime Ministers, by Queens and by Parliaments. The Tablet frees the owner from the constraints of their PCs. They can use the PC when they are at their desks and use the tablet to take their data with them wherever they may go.

These tablets will not sink the PC because they complement the PC. However, they may well extend the life of the PC, thus slowing the PC’s upgrade – and sales – cycles.

BELOW THE WATERLINE
The bulk of the iceberg that destroyed the Titanic lay beneath the surface of the waters, beneath the vision of the lookouts, beneath the ship’s waterline. Similarly, the bulk of the tasks that the Tablet excels at, lies beneath the PC’s level of awareness, beneath the PC’s contemptuous gaze, beneath the PC’s areas of expertise and far, far below it’s area of competence. The PC will not lose in a fair fight, anymore than the Titanic lost in a fair fight. Instead, the Tablet will hit the PC where the PC is weakest – below it’s metaphorical “waterline”.

  • STANDING:

Tablets excel at working while you are standing. Tasks done by matre d’s, inventory takers, tour guides, concierges, face-to-face service providers and order takers of every kind, benefit from the use of the tablet.

Can the PC adequately compete with the tablet as a stand-while-you-work device? No, it cannot.

  • ROOM TO ROOM, DOOR TO DOOR AND REMOTE LOCATIONS:

Tablets excel at working when one has to move and stop and move yet again. Car Dealerships, like Mercedes Benz, are giving tablets to their salespeople. European doctors are rapidly taking to the tablet. Service Technicians at Siemens Energy are using tablets while servicing power installations. Scientists are using tablets during field research. Nurses, Realtors, Journalists, Park Rangers, Medical Technicians…the list of users and uses is nearly endless.

Can the PC adequately compete with the tablet as a work-and-move, and work-and-move-aagin, device? No, it cannot.

  • SALES:

If you’re in Sales, you’re into Tablets. Whether you’re traveling or standing or presenting or taking an order and acquiring a signature – Tablets are a salesperson’s best friend.

Salesforce purchased 1,300 tablets and Boston Scientific purchased 4,500 tablet for their respective sales forces. And just this week, NBA Star, Deron Williams, signed a $98 million dollar contract…on a tablet.

Can the PC adequately compete with the tablet as a sales computing assistant? No, it cannot.

  • KIOSKS:

While the PC makes for a terrible Kiosk, the tablet is almost ideally suited to the task. Tablets as Kiosks are making their presence known in places as diverse as malls, taxi cabs, hospitals, the Louisiana Department of Motor Vehicles, and the FastPass lanes at Disney World.

In the coming years there will be millions of Kiosks converted to Tablets and millions more in new Kiosks created from Tablets.

Can the PC adequately compete with the Tablet as a Kiosk? No, it cannot.

  • POINT OF SALE:

Today there are millions upon millions of antiquated PCs being used as some form of cash register or point of sale device. Let me put this as diplomatically as I can – they suck.

They’re going to be replaced by Tablets, almost overnight. And tens of millions of new Tablets are going to be used as cash registers and point of sale devices in all sorts of new and unexpected places.

Can the PC adequately compete with the tablet as a Cash Register? No it cannot.

  • PAPER REPLACERS:

I’ve been hearing about the “paperless office” since the 1970’s. Yet every year, the PC generates ever more, not less, paper. But that was yesterday. Today the Tablet may finally be able to fulfill the promise that the PC so carelessly made – and broke – those many years ago.

Airlines such as United and Alaska are replacing their in-flight maps with Tablets. The United States Air Force is replacing their manuals with Tablets.

Construction companies are replacing their on-site blueprints with Tablets.

Governmental bodies of every shape and size are reducing paperwork through the use of Tablets. City councils and municipalities have jumped on the bandwagon. The Polish Parliament and the Dutch Senate have substituted Tablets for paper printouts of the documents read by their members. The British Parliament just replaced 650 of their computers with Tablets. And the President of the United States and the Queen and Prime Minister of England have all used Tablets in their briefings.

Twelve NFL teams, including the Denver Broncos, Miami Dolphins and Baltimore Ravens have replaced their paper playbooks with tablets. In Major League Baseball, the Cincinatti Reds have done the same. And at Ohio State, all the athletic programs are replacing their playbooks with tablets. Can there be any doubt that this trend will extend ever outward and ever downward to every professional team, every college team, every high school team and even, eventually, perhaps to amateur sports teams?

Can the PC adequately compete with the tablet as a paper replacement? No it cannot.

  • LOANERS:

Tablets are starting to show up as “loaners” that are lent out as entertainment devices. They’re being purchased by libraries. Airplanes run by Singapore Airlines and Qantas use them as in-flight entertainment devices. Airports like New York’s LaGuardia, Minneapolis-St. Paul International and Toronto Pearson International, lend them out to waiting passengers. The Tablet is ideally suited for the task. It is light, it is portable, it is versatile, it displays content beautifully and it is sublimely easy to use.

Can the PC adequately compete with the tablet as a Loaner? No, it cannot.

  • EDUCATION:

PCs in schools are mostly relegated to teachers and computer labs. Tablets live in the classroom and they reside in the hands of the students. No one wants to learn HOW to use computers anymore. Students simply want to use computers to help them learn.

The Tablet is starting to take educational institutions by storm. It acts as an electronic blackboard, as a digital textbook and as an interactive textbook.

It’s at the K-12 level (the San Diego School district just ordered 26,000) and at the Universities (Adams Center for Teaching and Learning at Abilene Christian University, George Fox University, North Carolina State University in Raleigh). Tablets are even finding their way into the top-tier high schools in China.

Some schools have even reported a 10% improvement in the exam scores of students who use Tablets in lieu or paper books.

Can the PC adequately compete with the tablet in education? No, it cannot.

  • NEW USERS:

The tablet excels at creating new computer users. This might seem a bit controversial, but it shouldn’t be. Just think of anyone who says that they hate computers – they’re a candidate for a Tablet. Just think of anyone who is too young or too old or too infirm or too disabled to use a PC – someone like a 3 year old or a 93 year old or a recovering cancer patient or an autistic child or someone with learning disabilities. They’re all perfect candidates for the Tablet. The tablet will create a whole new class of computer users – people who have never used a computer before.

Can the PC adequately compete with the tablet as no-fuss, no-muss computing device? No it cannot.

  • NEW USES:

What makes the Tablet so very exciting is that we haven’t even begun to touch on it’s full potential yet. With desktops, we were desk bound. With notebooks, we were surface bound. The Tablet allows us to do new tasks in new places and in new ways.

And it’s virtually impossible to say what these tasks will be. We’re limited by our experience and the scope of our imaginations. Tablets are going to be used in ways that we haven’t even begun to think of yet.

SUMMING UP

Can the PC compete with the Tablet while standing, while moving, in sales, as Kiosks, as Point of Sale devices, as paper replacers, as loaners, in education, with wholly new users in wholly new uses? No, it cannot.

It is in these areas – the areas that are below the PC’s level of competence, below the PC’s level of contempt – that the Tablet will establish its empire. And there is simply nothing that the PC can do to stop it.

Like Captain Edward Smith of the Titanic, the Captains of Dell, HP, Google, Microsoft and many other computing companies, have failed to adequately grasp the true significance of the danger they are facing. They looked at the Tablet and thought: “What the hey, I can avoid that dinky little tablet floating there on top of the waters. It’s no bigger than an ice cube! It’s no threat to me and my business at all!” But what they forgot, is that most of the tablet’s strength lies hidden beneath the optimal level of the PC, i.e., beneath the PC’s “water line”. THAT is where the real danger to the PC lies.

LESSONS LEARNED AND LESSONS YET TO BE LEARNED

So, what should all of this be telling us?

Is the PC really the Titanic?

Sure, why not. The PC may sink beneath the waves like the Titanic did…but it will leave hundreds of very large “life boats” in it wake. Anywhere that the PC is weak and the Tablet is strong, the PC will cease to exist. And that’s a LOT of places. But the PC will continue to exist – just in a much diminished state.

It is not so much that the PC market will grow smaller (which it will) that matters. It’s much more a matter of the Tablet market growing larger. Much, much larger. Soon the ships that are the PC will be floating atop a sea of Tablets. And what was once a “Titanic” PC industry, will merely be just one component of a much larger, and much more diversified, personal computing industry.

Is the Tablet Really an Iceberg?

Sure, let’s go with that. The important thing to note is that the portion of the Tablet market that everyone is focused on – the portion directly challenging the PC – that portion is, by far, the smallest and the least dangerous portion of the Tablet market.

Tablets will not so much reduce the number of PCs we use as they will simply outgrow the total number of PCs in use. Tablets are additive. They will replace a few PCs but mostly they will replace millions upon millions of tasks that never before were done with the assistance of computers. While everyone is bemoaning the fact that PC sales are flat or diminishing, the reality is that the actual sales of personal computers are currently exploding. True, the PC market is shrinking. But mostly, the Tablet market is growing, and it is growing so fast that it will soon overtake the PC market.

Like the iceberg, it is the rest of the Tablet market – the part that has not yet been fully discovered – that will overwhelm the PC. There will be far more Tablets than PCs simply because there are far more tasks that the Tablet can do, and do well, than tasks that the PC can do, and do well.

This is a novel concept for most. We tend to think of computing only in terms of the tasks that the PC is capable of doing today. We define those tasks that computers are currently doing as the only tasks that could possibly require a computer.

But the number of tasks being done WITHOUT the assistance of a computer dwarfs those that are currently being done WITH the assistance of a computer. And while the PC has pretty much maxed out the number of tasks that it can do, the limits to the number of tasks that the Tablet can do are undefined – and nearly endless.

A Picture Is Worth A Thousand Words

Sometimes a picture is worth a thousand words. Or more.

Alex Greer posted the following picture on Twitter under the caption:

I turn around and find my parents at the kids’ table at the @apple store. ~ @alexpgreer

BcJWbqDCYAAKsZhNow what can this picture teach us?

1) The learning curve on the tablet is so low that Seniors find it easy to use.

2) The learning curve on the tablet is so low that children find it easy to use.

3) Very important: Both seniors and children (and those in-between) are attracted to the tablet and ENJOY using it.

Extrapolating from there:

4) Whole new classes of people are being drawn to computing. Salesmen on the go, park rangers, kiosk owners, presenters, school children, soccer moms and seniors who never before felt a need (or felt competent enough) to own and operate a computer.

Speculating from there:

5) Our devices are mere windows to our data stored in the cloud. We don’t choose the one tool that does it all or is most powerful, we choose whichever tool works best for the situation at hand.

But I’ll say no more. I’ll let the picture speak for itself.

Most Read Columns of 2013: Apple Turns Technology Into Art

During this holiday week, we wanted to re-showcase some of the most read columns of 2013. Whether you read them before or are seeing them for the first time, enjoy some of the most read columns of our site from the past year.

As I was reflecting on my first experience with the new iPad and its retina display I was intrigued with a thought. There has always been something about the iPhone’s retina display and now with the iPad’s display that has me mesmerized. When I first saw the new iPad and the screen at Apple’s event I couldn’t stop looking at it. Even today I sometimes just turn it on to look at it and shake my head in disbelief.

The thought that I was intrigued by is how the visual appeal of Apple’s devices, and in this case of the screen, causes us to be so emotionally attached to them. Even this NY Times article in September of last year points out that consumers do actually love their iPhones. I believe this affect however as everything to do with the visually appealing experience with Apple products.

In a TIME column I wrote last year, I pointed out that Apple’s desire to create products that are at the intersection of liberal arts and technology drives them to create technology products that are in essence art. Apple turns technology into art we can use. Apple exhibits an unparalleled focus in the technology industry to design some of the most visually appealing hardware in all of computing. This focus of creating objects of desire is one part of many that encompass the Apple experience. That experience, the visual and emotional experience tied to Apple products creates an emotional response in consumers of Apple products that create as much passion around a brand as I have ever seen.

The Most Passionate Community

I would challenge you to find a more passionate community anywhere in computing. I have attended many industry conferences and trade shows and the Macworld’s where Steve Jobs spoke had a level of energy associated with them that I am yet to encounter anywhere else in this industry.

The experience around Apple products is what I think many who compete with Apple take for granted and simply don’t understand. I’ve said often at industry talks I have given that consumers don’t buy products they buy experiences and that is what Apple delivers.

Consumers in droves are discovering what the hard core long time Apple community has known since the beginning and are converting in droves buying iPads, iPhones, and even Macs. It all leads with the visual experience and beautiful and attractive hardware. Believe it or not, however, beautifully designed things are easier to use.

What is Beautiful is Usable

In 2000 a scientist from Israel named Noam Tractinsky, wrote a book called “What is Beautiful is Usable.” He started with a theory and built the scientific evidence to back it up. To quote his report on the subject:

two Japanese researchers, Masaaki Kurosu and Kaori Kashimura1, claimed just that. They developed two forms of automated teller machines, the ATM machines that allow us to get money and do simple banking tasks any time of the day or night. Both forms were identical in function, the number of buttons, and how they worked, but one had the buttons and screens arranged attractively, the other unattractively. Surprise! The Japanese found that the attractive ones were easier to use.

Noam himself then wanting to test this theory with the Israeli culture so he duplicated the experiment. He thought that aesthetic preferences may be culturally dependent. His observation was that the Israeli culture is more action oriented and they care less about beauty and more about function. However when he duplicated the results with an Israeli group of people the conclusion was the same. In fact in his research the sentiment was stronger with the Israeli sample size. So much so that in his research report he remarked in his paper that beauty and function “were not expected to correlate” — He was so surprised that he put that phrase “were not expected” in italics.

It appears that Apple has been on to something from the beginning. Perhaps Steve Jobs absolute resolve to make technology products beautiful carried with it inherent user experience paradigms that simply made products easier to use and that theme is continued today all throughout Apple. This in my opinion is truly what is setting Apple apart in the market place. They create objects of desire and out of that focus comes a visually and easy to use user experience paradigm that drives emotional responses in consumers of their products.

We know humans are visual beings, especially men, and interestingly enough a great deal of science exists today linking beautiful things to ease of use. There are companies who can design objects of desire and easy to use products and there are those who can’t. Apple’s advantage in this area is that they create the hardware and the software with this technology and software as art philosophy. We see this in their hardware and their software and will eventually see it more in their services.

Noam Tractinsky is right and his book title highlights a profound truth. What is beautiful is usable and this philosophical truth carries over into computing and human interaction with computing.

Right now there is only one company who I think truly understands it.

References:
– Don Norman, Why We Love (or Hate) everyday things, Feb 4th 2003
– Tractinsky, N., Adi, S.-K., & Ikar, D. (2000). What is Beautiful is Usable. Interacting with Computers, 13 (2), 127-145.
– Tractinsky, N. (1997). Aesthetics and Apparent Usability: Empirically Assessing Cultural and Methodological Issues. CHI 97 Electronic Publications: Papers

The iPhone and China Mobile. Impact and Expectations

Yesterday Apple announced that the iPhone will finally come to China Mobile on January 17th. Pre-orders will start on December 25th. The timing of the iPhones availability will coincide with the Chinese New Year. This time of year is a popular time for Chinese consumers to give gifts that reflect good fortune and coming prosperity for the new year. Which makes the initial timing of the iPhone release in China Mobile to be significant as a jumping off point.

China Mobile is the largest carrier in terms of subscribers by far in China. China Mobile has over 700m customers and largely due to their expansive converge of the country. Of course, not all of these devices are smartphones and even more relevantly not all of these devices are 3G. In fact most are still 2G. China Mobile over the past year as added between 23-31 million new 3G subscribers per quarter with their base of 3G subscribers at 169.5m at the end of Q3 2013.

This is a significant tracking statistic to have watched the 3G penetration grow over the past 2-3 years. It may shed some insight into the adoption rate of 4G devices, and in this case the iPhone, over the next 3 years. The iPhone will support China Mobile’s 3G/TD-SCDMA and of course their latest 4G/TD-LTE network in which the iPhone will be a flagship device.

The biggest question most are asking is what the impact of the China Mobile deal will do for iPhones in China. Most financial sell side analyst figures I’ve seen speculate that the bear case is an additional 5 million with the most bullish case estimating the deal could amount to an additional 31m units in 2014.

I tend to think estimates in the 20m range are reasonable as an increase to iPhone sales in 2014. That being said, I still believe most are underestimating the demand for the iPhone in China on China Mobile in particular. But even with that in mind a few things need to be pointed out.

Firstly, there are already an estimate 40-45m iPhones already in use on China Mobile’s network which were purchased on the grey market and brought onto the network unofficially. These devices, however, do not support all the bands of China Mobile’s network therefore have spotty coverage. A key question for the iPhone 5s and 5c are how many of these grey market devices have already been purchased and are running unofficially on China Mobile’s network. If this number is large then it potentially impacts the number of new consumers ready to buy officially from the network.

I have a hunch that many of the rumors, leaks, and even promo material being floated around China from China Mobile about the iPhone coming to the their network was designed to help thwart some of these grey market purchases in the hope that those consumers would wait for the device to be officially launched on China Mobile.

The other key question is what the price and or subsidies for the iPhone will be on China Mobile. While the device is still going to be out of the price range of most consumers on both the subsidy and pre-pay markets, if China Mobile gets creative it can potentially increase the market opportunity for the iPhone. Payment plans, on top of subsidies are examples of ways they can be creative.

When networks invest in new infrastructure they need to find ways to recoup those investments. Carriers around the globe have found that the iPhone is the best device in the market to focus on as a premium services promoter. The job the iPhone does for carriers is to help them sell premium services. China Mobile understands this and we believe is willing to push the iPhone hard as the flagship device for 4G on their networks and begin helping them down the road of recouping their investments in LTE.

A paragraph from Apple’s press release on the subject succinctly points out the aggressiveness of China Mobile’s 4G LTE roll out.

China Mobile now has over 1.2 million 2G/GSM, 3G/TD-SCDMA, 4G/TD-LTE base stations and over 4.2 million Wi-Fi access points, providing broad coverage to quality networks for iPhone 5s and iPhone 5c customers. China Mobile is rolling out the world’s largest 4G network. By the end of 2013, China Mobile’s 4G services will be available in 16 cities including Beijing, Shanghai, Guangzhou and Shenzhen. By the end of 2014, China Mobile plans to complete the rollout of more than 500,000 4G base stations, which will cover more than 340 cities with 4G service. The collaboration between Apple and China Mobile will give a big boost to the development of China’s homegrown 4G/TD-LTE technology. iPhone on China Mobile supports major cellular network standards, making a global phone a reality for China Mobile customers.

While there is still some speculation about the impact of the iPhone being on China Mobile, the key take away is that this is a marathon for Apple. China is poised to be Apple’s largest market for mobile. It is a mobile first and mobile primarily market making it the perfect place for iPhones and iPads from the view of the future of mobile computing.

Apple will surely benefit from this deal in 2014 but over the next 5 years, we expect China to be a booming market for the Apple ecosystem.

Happy Holidays From Tech.pinions

We would like to personally thank our readers for helping make 2013 the best year on record for Tech.pinions in every category. We truly have the best readers and the best commenters of any technology publication. We have encouraged our columnists to take this week off to get rejuvenated and get the minds ready for an ambitious and exciting 2014.

Each day this week we will re-feature one of the most read articles of the year. So enjoy re-reading, re-discovering, or even discovering for the first time some of the most popular and most read Tech.pinions columns from 2013.

Happy Holiday from all the columnists.

– The Tech.pinions Team

Most Read Columns of 2013: Android’s Market Share is Literally a Joke

During this holiday week, we wanted to re-showcase some of the most read columns of 2013. Whether you read them before or are seeing them for the first time, enjoy some of the most read columns of our site from the past year.

This is the first of three articles looking at how we measure – and mis-measure – who is “winning” in the mobile sector. Article one focuses on market share and was inspired by an article written by Bill Shamblin, entitled: “Chasing Smartphone Market Share Is A Chump’s Game.” Article two will focus on the proper way to measure or “score” mobile hardware manufacturing, mobile advertising and the “razors-and-blades” content models. Article three will focus on the role that market share plays in the network effect and will examine the proper way to measure or “score” how well a platform is doing.

The Joke

Have you heard this one?

Two farmers bought a truckload of watermelons, paying five dollars apiece for them. Then they drove to the market and sold all their watermelons for four dollars each. After counting their money at the end of the day, they realized that they’d ended up with less money than they’d started with.

“See!” said the one farmer to the other. “I told you we shoulda got a bigger truck.”

Or how about this one?

Android is winning because they got a bigger truck.

The Joke Is On Us

Both “jokes” are based upon the old saw that one can lose money on every sale but make it up in volume. Unfortunately, the joke is on us because this is exactly the kind of nonsensical analysis that is being doled out by tech pundits and lapped up by the press and investors. You think I’m exaggerating? Take a gander at some of these recent tech headlines:

Android is crushing Apple and Microsoft in the mobile device market
Android looks like it’s winning
CHART OF THE DAY: The iPhone’s Market Share Is Dead In The Water
Despite its upmarket history, Apple needs to compete on price
Gartner: Apple falls below 20% in smartphone market share
Harvard Liquidates Apple Stake After IPhone Sales Lose Steam
How Apple Is Losing Mobile
IDC: Apple’s share of worldwide tablet market drops under 40%
iPhone growth stalls as Android continues to nip away at Apple’s market share
iPhone Market Share Stuck At 18%
Nearly 75% Of All Smartphones Sold In Q1 Were Android
Sharp to seek Samsung edge for survival as Apple sales lose steam
Why Android Is Winning The Tablet Wars

I could link to a dozen more headlines just like them. These headlines – or their underlying articles – all have two things in common:

1) They contend that Android is winning and Apple’s iPhone is in deep, deep trouble; and
2) They point to market share as the sole or primary basis for their conclusion.

TechCrunch sums up the thoughts of many this way:

“The latest numbers are in: Android is on top, followed by iOS in a distant second. There is no denying Android’s dominance anymore. There is no way even the most rabid Apple fanboy can deny that iOS is in second place now. Android is winning.”

ReadWrite takes it one, final step further, stating:

“The Mobile Battle Is Over – And Google Won.”

In other words, pundits think that Android has won because they “have a bigger truck” (i.e. more market share) – regardless of how much – or how little – profit Android manufacturers make. Android, the pundits opine without a hint of irony, is not making much, if any, money but that’s okay because they’re making it up in volume.

But is that really how market share works? Can you tell how well a company or an operating system is doing solely by measuring its market share?

No, of course not.

Quiz #1: Market Share Alone

Question: Company A has 25% market share. Company Z has 75% market share. Which company is doing better?

Answer: With market share alone, there’s simply no way to know or tell. Company A might be bringing in all the profits and company Z might be going bankrupt.

The Wrong Way To Calculate Who’s Winning

(T)he primary problem with using market share as a measure of business health is it provides no insight into the profitability of the product being sold. ~ Bill Shamblin

Scoring by market share alone and ignoring profit is like saying that a baseball team won because it had more hits when the other team scored more runs. Scoring by market share alone and ignoring profit is like saying that a football team won because it gained more yards when the other team scored more points. Scoring by market share alone and ignoring profit is like saying that a hockey team won because it had more shots on goal when the other team had more goals.

Market share without context is not only useless, it is worse than useless because it is likely to be misinterpreted.

First, market share without context assumes that each percentage of market share is equal to another – that every Android activation is equal to an iOS sale. Nothing could be further from the truth. You can’t simply total up market share and determine a winner any more than you could count up coins or poker chips without knowing the underlying value of those coins or chips. A penny does not have the same value as a quarter and only a small child would rather have more coins than fewer coins but more money.

Second, market share without context implies that market share is a zero sum game – that market share gains for one always result in a loss to another. But in a rapidly growing market, a company can actually LOSE market share yet have both positive unit sales and profit growth. Not growing as fast as another company is not nearly the same as “losing”, especially if the growth is coming in a more desirable portion of the market.

For example, despite a decline in Q1 market share, iPhone sales actually increased based on year over year comparisons. (iPhone sales were not declining,they were growing slower than the overall market.)

The same was true of tablet sales. Last quarter, Apple LOST tablet market share, but because the entire market was rapidly growing, they GREW unit sales by 65%.

tablets-q1-2013

Source: Apple 2.0, “Pie charts of the day: Tablet sales grew 140% year over year”

The “Fair-Share” Way To Calculate Who’s “Winning”

What matters is not only market share and not only profit share but the ratio between them. This is called Fair share profit analysis. Fair Share Profit Analysis contends that 1 point of market share should deliver 1 or more points of profit share.

Less than a 1-to-1 ratio of profit share to market share demonstrates that a company is buying market share; that the company has not been able to differentiate its product in the market and is likely competing primarily on price.

More than a 1-to-1 ratio of profit share to market share demonstrates a company’s ability to differentiate its products, provide more value than its competitors, command higher prices, charge a premium and enjoy pricing power.

Quiz #2: Market Share or Profit Share

Question: Company A has 25% market share and 75% profit share. Company Z has 75% market share and 25% profit share. Which company is doing better?

Answer: If you said anything other than company A, then you are dumber than a doorknob. Any intelligent person would take company A’s profit share over that of company Z’s market share.

No one would be confused if Apple had 50 percent market share and 50 percent of the profits. But apparently it’s very confusing to some that Apple has only 5 percent of the market share and well over 50 percent of the profits. ~ John Gruber, The church of market share

Imagine, for example, that Apple were a hamburger chain who made more money than McDonalds, Burger King, and Wendys combined, but only sold 5% of the total hamburgers. Would anyone seriously contend that Apple was “losing” the hamburger wars?

Apparently so. For example, take this analysis from Matt Asay of ReadWrite (please!):

For those who say market share doesn’t matter, that Apple still commands most of the industry’s tablet profits, they clearly haven’t been paying attention to the smartphone market.

It turns out it’s a really big deal to maintain market share, and not simply profits. Profit share follows market share.

Profit share follows market share? Are you kidding me? Show me a business sector where profits have a 1-to-1 correlation with market share and I’ll show you the exception that proves the rule. The reason market share doesn’t necessarily correlate to profit share is because profits are made up of both market share and margins. And market share alone tells us nothing about margins, therefore market share and profit share are almost always going to be unbalanced.

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Source: Asymco, Escaping PCs

Take, for example, the Apple Mac. As the pie chart above demonstrates, the Mac has 45% profit share with only 8% of the market share. That means that Apple pulls in an awesome 5.63% of the sector’s profits for each and every 1% of its market share.

Profit share always follows market share? Not hardly.

The truth is, anyone can get market share if they want it badly enough. All they need to do is sell their product at cost, give it away for free or, better yet, subsidize (pay their customers) to take the product off their hands. This is called “buying” market share, but it always comes at the cost of profits.

Pricing to gain market share simply for the sake of market share is a chump’s game. ~ Bill Shamblin

The problem is, you can “cheat” and buy market share, but you can’t do the reverse and “cheat” to buy profits. You have to EARN profits. Buying market share is a downhill race to the bottom but gaining profits is an tortuous uphill climb and it can only be made if the manufacturer is able to produce highly valued and differentiated products. The company that buys market share must inevitably go out of business or reverse its course and fight its way back up to profitability. The company with the value and the profits, on the other hand, has the advantage of holding the high ground and can choose to take market share at will.

Quiz #3: Less Market Share Can Be Better Than More

Question: Company A has 25% market share and 50% profit share. Company Z has 75% market share and 50% profit share. Which company is doing better?

Answer: Anyone with any business sense would say company A.

Company A is commanding 3 times the price of Company Z. The formula is 50% profit share divided by 25% market share (50/25 = 2). This means that for every one percent of market share, company A has two percent of the profit share. Company Z’s position is reversed. For every one percent of market share, they command only 0.5% profit share (50/75 = 0.66). Company Z would have to work three times as hard and sell 3 times as much product just to match the profits of a single sale by company A.

Grading The Contestants

Android accounts for approximately 70% of global smartphone shipments and 29% of global profits. This means that the average Android manufacturer creates just .41% of profit for each point of market share (0.29/0.70 = .414). In other words, the average Android manufacturer needs to capture 2.4 points of market share just to increase their market profit by 1%.

Such a low fair share profit index may indicate that Android manufacturers are:

— Having difficulty differentiating their product;
— Sacrificing profits in order to buy market share (the “race to the bottom”);
— Unable to reach economies of scale in the manufacturing process.

(Profit data, source: Canaccord, Market share, source: IDC)

Samsung is doing far, far better than the average Android manufacturer. Samsung’s 2013 Q1 market share was 33% and its profit share was 43%. This means that Samsung reels in 1.3% of the profits for every 1% of the market share it owns (0.43/0.33 = 1.30). Samsung, unlike all other Android manufacturers, is earning, rather than “buying”, market share.

(Profit data, source: Canaccord, Market share, source: IDC)

Apple’s iPhone 2013 Q1 market share was 18% with 57% profit share. This means that Apple’s iPhone took in a lavish 3.12% ((0.57/0.18) of all profits for each 1% percent of market share it controls.

If Android manufacturers needed to sell 2.4 phones just to gain 1% profit share, they would need to sell a staggering 7.5 units just to match the profits that Apple garnered from the sale of a single iPhone.

As Daniel Eran Dilger puts it:

“… Apple could simply have blown through much of its $13.1 billion quarterly profit to “beat” Samsung in market share, rather than allowing Samsung to do that while earning $4.8 billion less than Apple.”

Further, in 2012 Q1, Apple held 23% market share and 74% profit share. This means that each 1% of market share was equal to 3.22% (0.74/0.23) of the sector’s profit share. Apple’s market share to profit share ratio remains almost identical, which means that Apple has maintained its pricing power. Not only that, by focusing on just a few smartphone models, Apple has become the low-cost manufacturer in smartphones as well.

slide-11-638-1

Source: Ben Evans, Mobile is eating the world

Take a good hard look at the chart, above, then go back and re-read the headlines I listed at the start of this article. What each and every one of those headlines is contending is that Android is winning and Apple is losing because Apple doesn’t control the green portion of the chart, above.

I mean, honest to goodness, take a look at the total units sold compared to the paltry profits obtained from those green sales. Who in their right mind would even WANT that market share?

Price Elasticity

What we’re really talking about here is the economic concept of price elasticity. “Price elasticity” seems to be way beyond the pay grade of most pundits and analysts who follow the mobile sector, but what it essentially means is that when the price of something goes down, sales almost always go up, but the rate of that sales increase depends upon the price elasticity of the product. In other words, dropping prices may increase sales but the increased sales may result in disproportionately larger or smaller profits.

Unless we truly understand the price elasticity of the iPhone, we really shouldn’t be calling for Apple to drop its iPhone prices.

Summation

It isn’t what we don’t know that gives us trouble, it’s what we know that ain’t so. – Will Rogers

Not only do the high priests of market share have it wrong, they have it exactly backwards. The company with the lower market share and the higher profits has all of the leverage. The goal is to INCREASE, not decrease, the ratio of profits to market share. Increasing market share at the cost of profits is a recipe for disaster, not a formula for success.

Apple may or may not do well in the future but right now, and contrary to popular belief, they are winning the smartphone wars and winning them handily.

RATIO OF PROFITS TO MARKET SHARE
3.12% Apple
1.30% Samsung
0.41% All Android

Not only is market share not the best way to evaluate the relative positions of competitors but, without context, it is one of the worst. Assuming that market share will always bring you success is like assuming that a bigger truck will always bring you bigger profits. It’s literally a joke.

Next

Next, I’ll talk about how market share affects hardware manufacturing, advertising and the “razors-and-blades” content models. The series will conclude with a discussion of platforms and the network effect.

Read Part Two of John’s column entitled: 4 Mobile Business Models, 4 Ways to Keep Score.

Read Part Three of John’s column entitled: Google’s Android Activations Are A Lot Less Cash Cow And A Lot More Bull. And That’s OK.

The Top 10 Silicon Valley Business Memes That Must End in 2013

It’s that time of year when everyone likes to compile a “Best Of” list. Having sat through so many meetings here in the center of the universe known as “Silicon Valley”, I’m offering my Top 10 Silicon Valley Business Memes That Must End for 2013. It is my fervent hope we can squash these sometime during 2014.

1. Compute terminology can substitute for normal words…
We do not “reboot” businesses, plans, conversations, or strategies. Difficult fellow human beings are not “no-ops”. Butting in and asking for attention is not a “priority interrupt”. I can keep going and so can you. In the name of decent, normal conversation, I’m asking that we please stop trying to de-humanize human things. Contrary to popular belief, employing this meme does not make us look “technical”. Using the word “meme” however is still cool.

2. Silicon Valley works well because it is a meritocracy…
No it’s not. We all enjoy telling each other this one out here because it makes us feel as if we are making rational business decisions on something other than influence and connection. Silicon Valley depends on networking. It concentrates a lot of skill and talent in a fairly small area and leavens the entire mixture with liberal amounts of cash. We seem to feel that it is a dirty secret that it is not what you know but who you know. That’s not a bad thing or even wrong, it just is.

3. Outrage Expressed on social media is action…
Unbelievably, despite whatever outrage we are feeling about whatever subject expressing it on social media is not going to fix it. Just because it has been expressed in a semi-public forum is not the action-equivalent of doing something. Yes, we linked to an article that proves our point, yes, my hand-picked friends might even be outraged right along with me. That is why they’re my friends after all! No, I didn’t actually “do” anything in this process. In 2014 if we are outraged, let’s actually do something about it in more than 140 characters or “like” buttons.

4. We’re getting a 10x return on our investment!
Come on, we know we’re not! All us bright people out here chasing 10x’s on our initial investment–statistically we know there aren’t that many to be had. In fact the actual number of companies that get this return are vanishingly small. Our limited partners are actually going to be much more impressed with actual returns when an exit occurs rather than excuses about why that hopeful 10x flamed out. If you’re an entrepreneur and you have tried to figure out how to make your pitch look like 10x you know the drill. Please stop. Let’s make 2014 the year we build great businesses with lasting value that further the common good. Let’s have that be enough.

5. Employee Buses
All the haters voting against tax increases to support mass transit, showing up to hate buses for the elite “knowledge worker” to get to work and unclog our highways a little bit, please check your irony meter at the door. Bus drivers parking where you don’t belong: please make those knowledge workers walk a little further. BART administrators and workers: repeated strikes are not only not helping, but there is a real danger of a “pox on both your houses” becoming the way we all feel. Can’t we all just get along? Traffic’s bad enough.

6. SoMoLo
Yes there is some obtuse linkage between Social, Mobile and Local, but not as an investment category. There is no unicorn here. While everyone tries to come up with some kind of grand unification theory around the so-called category, time is wasting for hundreds of little companies with great ideas. Big kudos to the person who dreamed up the name though–it actually makes it look like there’s a grand strategy in there somewhere.

7. We can hide the poor, or at least teach them how to code…
There seems to be a persistent belief that the poor should not be seen or heard and that means they don’t exist. Or that “teaching them to fish” means developing and iPhone app. Please see meme #3 and spare us the Darwinian (Malthusian?) social theories. Why not just do the right thing in 2014 instead? Let’s head over to Glide Memorial and put on an apron; refrain from taking pictures when we’re there, and post absolutely nothing to Twitter about the experience. No one will even know we did it! The poor (whom we will always have with us) will be fed and that’s all that really matters.

8. Food is rational investment thesis…
No it’s not. Call any Bay Area CPA and ask them the silly ways smart people waste good money. Right after they tell you “open a winery” they’ll probably add: “start a restaurant”. Yet we all do after some point and most, if not all of us, lose our shirts in the process. Just because we have come up with some way to tie a smartphone app to our kitchen does not make this venture capital worthy. Let’s make a New Year’s resolution to not make a business plan around food.

9. “Lean” anything must mean it is good for a business…
I love this one for its creativity. It combines humanity’s love of dieting fads with how to run a business. We business people just eat this stuff up (see how easy this is?). Waste looks like fat, and cutting down trims our waste-line (get it?). Lean-ness leaves us with muscle and bone and we are strong and growing. Sure, sure, we get it, but enough already. In 2014 I’m going to start my own meme called “healthy fat”. You see, startups are really like babies and babies actually need a lot of healthy fat to grow quickly… hey wait! If I turn this into a restaurant and add an iPhone app… instant funding!

10. Personal Branding
I don’t know if this started out here in San Francisco or not, but it sure feels like it did. Humans are not brands, nor should they ever be. It’s bad enough that half the clothing I wear has to show some type of logo, but now I have to make myself into a brand too? This is what we’re teaching our next generation of entrepreneurs? Be your own brand? Really? How about we focus on making ourselves into better people and leave the branding to companies and cattle in 2014?

Microsoft Needs Their Hell Froze Over Moment

hellfrozeovercolorIn a simple tweet today from Katie Boehret. As she was cleaning out her desk for her transition from the Wall St. Journal to the new venture with the All Things D team, she found a poster from when Apple released iTunes for Windows. The famous catch phase Steve Jobs used when he announced this was Hell Froze Over. I was at this event and I recall this moment vividly. Tim and I did a number of media interviews after this announcement and we pointed out the importance of this move in driving the growth of the iPod and what in essence has become the foundation for the iTunes ecosystem and Apple’s iPods and now iPhone.

As I reflected on this moment and how Steve Jobs and Apple positioned this moment, it made me think that Microsoft needs its hell froze over moment. What this is exactly for Microsoft I am not sure. The obvious one is simply bringing Office to other platforms in a more rich and meaningful way. However, a more controversial strategy could be for Microsoft to fully embrace Android.

BlueStacks has developed solutions that allow Android apps to run in a Windows environment. Whether Microsoft works closely with BlueStacks on this or does something on their own, this could be an interesting strategy where Microsoft embraces an environment foreign to their own but uses it to strategically advance their larger agenda. Windows Phone needs apps. They must adjust their tablet strategy as Windows 8 is not the answer. Embracing Android could be an ecosystem booster if it is done right and the useful parts of the two solutions are integrated seamlessly.

All of this assumes, of course, that Microsoft does have a larger agenda and strategic plan, although I am somewhat skeptical of this assumption and its validity. Perhaps a new CEO can straighten out their path. But it remains true that Microsoft is reaching a point where they need to be willing to take more risks and be more hungry to not be passed by the mobile phenomenon.

Avi Greengart’s Last Minute Holiday Gift Guide 2013

Every year I try to write my holiday gift guide before the holidays. This year I completely missed Hannukah, but there are still a few days left before Christmas and New Years, so if you’re still looking for a gift or two – or are trying to figure out what to do with cash or gift cards you received – this guide is for you. I have personally tested every product listed here, along with dozens of others that did not make the cut. With the exception of the Chromecast, all products were provided for review at no charge; no consideration was given to Current Analysis clients.

Tablets

apple-ipad-air-1-634x422I don’t usually recommend tablets in my gift guide because I can’t add much value – it’s not like you didn’t know that there’s this thing called an iPad. However, this year I felt compelled to talk about three devices that are worthy of stronger consideration based on their successful completion of radical weight loss programs. Apple’s iPad Air ($499 – $929) is compatible with over 500,000 iPad-specific apps and the full breadth of iTunes media, making it an incredibly powerful tool for content creation and consumption alike. It is thinner and lighter than before. This is not news to anyone. However, if you haven’t held an iPad Air yourself, you really ought to; the thinner profile and significant weight difference make what was the leading tablet so much more enticing to pick up and use.

kindle1_2Amazon’s Kindle Fire HDX 8.9 ($389 – $594) is even lighter than the iPad Air, and while it does not have the breadth of Apple’s apps, its light weight, gorgeous display, and access to Amazon’s store makes it superb for content consumption. Just be warned – Amazon will let you download full HD content to view on that display, and if you choose the highest resolution, file sizes can be so large that you may only be able to fit a single movie on the 16GB model. As Amazon does not offer expandable storage, it pays to spend more on the higher capacity variants.

Screen Shot 2013-12-19 at 9.53.19 AM

Finally, for book readers, Barnes & Noble’s Nook Glowlight ($119) is so light it feels hollow, making it easier than ever to get lost in a book without arm fatigue. The backlight and battery life have been improved over previous models as well, but the real difference – like with the iPad Air and Kindle Fire HDX 8.9 – is the weight loss.

Screen Shot 2013-12-19 at 7.33.39 AM

Accessories

The iPad Air’s shape and size is so different from its predecessors that covers and accessories for the old iPads won’t work. I wish Apple would come out with its own keyboard covers for the Air – or better yet, Microsoft, whose TouchType keyboards for the Surface are fantastic – but until then, you should look to Logitech for iPad keyboard accessories. I was a big fan of Logitech’s Ultrathin Keyboard Cover for iPad, and the new version for the iPad Air ($99) is my recommendation for the new model.

However, for those seeking a cover that protects the front and rear of the iPad, Logitech’s Keyboard Fabricskin Folio ($119) is now a good option. The old version was simply too thick once the iPad was included – it felt like holding a notebook, not a tablet. The iPad Air’s new dimensions make the whole package work.

Screen Shot 2013-12-19 at 7.34.21 AM

Screen Shot 2013-12-19 at 7.38.53 AMA year after Apple upended its accessories ecosystem by abandoning the 30 pin connector for the equally proprietary – but completely different – Lightning connector, there still aren’t enough products with Lightning connectors built in. So I was intrigued when iHome announced the iDL100 ($149), a clock/radio/docking station with two Lightning connectors – one for an iPhone, and one for an iPad. iHome also throws in a USB port to power a different phone or tablet, and a 3.5mm input jack to handle anything else you might want to connect. Sound quality is good – it’s loud and clean, with more bass than I was expecting. (The Sonos Play:1 is better still, but that’s a dedicated speaker and it costs $50 more.) The display can be dimmed or turned off entirely. The iDL100’s neatest trick is that it sets the time automatically from your docked iPhone. It also has battery backup for power outages, and FM radio with 6 presets. You’ll want to download the pair of free companion apps to make settings easier, as the buttons are not as intuitive as they could be. But if you’ve got the manual, you won’t need an iPhone – the clock, both alarms and the FM radio work whether you have an iDevice docked or not. There are some limitations to the free companion app – if you want it to control the alarm, it needs to be in the foreground. My biggest wish is an AM radio; AM isn’t relevant in most global markets, but it’s still the premier urban news/weather/talk source in the U.S., where iHome is located, and it would cost next to nothing to add it. For the Apple fan who has upgraded their phone and tablet but not their alarm clock or docking station, the iDL100 is perfect, and given its capabilities and sound quality, it’s not outrageously priced, either.

Screen Shot 2013-12-19 at 7.41.01 AM
You can never have too many charging solutions. There are a million USB car chargers and third party cables, but the ones that stood out for me this year were from Ventev. The Dashport R1200 ($19.99) is small enough to be left in the cigarette lighter all the time, and powerful enough to charge tablets. Chargesync cables ($24.99) come in both microUSB and Apple Lightning connector versions, and the bright colors are ideal for differentiating between the two. The flat and chunky design of the cable itself ensures that it never gets tangled.

Steve Jobs said, “if you see a stylus, they did it wrong,” but that’s really a matter of opinion. Today’s styli add to a tablet’s capabilities, especially for drafting, illustrating, and painting, without forcing the user to navigate everything with the pen. Samsung’s S-Pen uses extremely precise Wacom technology but only works on Samsung’s Note line of phones and tablets.

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Wacom itself came out with the Intuos Creative Stylus ($99) for iPads; I love the thick barrel, pressure sensitivity, and palm rejection (you can lay your hand on the screen without it registering as a brush stroke), but wished the tip was smaller and less rubbery. Still, it beat using a finger or a cheap capacitive stylus.

For one specialized use case – digital painting – I just loved sensu’s brush stylus ($39.99). It’s a capacitive stylus made of fibers that feels just like a horse hair brush. It doesn’t offer pressure sensitivity, palm rejection, or even that much fine control – but that’s the point. It feels like a brush. For an artist accustomed to real world water colors, guache, or oil paints, this could be the tool that gets them to expand their medium to pixels.

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Gaming

Nobody needs an NVIDIA Shield ($249), a handheld Android game system, which is a lot of fun to play, but is rather bulky and fairly expensive. Likewise, nobody needs a Parrot AR.Drone ($279), which is a quad-rotor helicopter with cameras facing forward and down. However, when you combine the two products, you get something sort of magical. The Shield’s joysticks act as the perfect controller, while its unobstructed display can be switched among either camera live, while it simultaneously records. Sure, you could use this combination for good (checking your gutters), but it is far more fun to dive-bomb your six year old and instantly send the results to YouTube. Is this worth over $500? Only you can decide.

One of the other uses for the Shield by itself is streaming PC games around the house – assuming you have a fairly specific, relatively high end Nvidia graphics card in the PC. I’ve tried this scenario, and it works most of the time, allowing the gamer to sociably ignore everyone while sitting on the couch and playing Borderlands 2 instead of anti-socially retreating to the computer room. Setup can be finicky, however, and you may still need access to the PC at times – so if the PC is in the room with a sleeping baby, this still might not work.

shield

Did someone on your list just buy a PlayStation 4? Sony also has an in-home streaming solution for the PlayStation 4 ($399) using the PlayStation Vita ($199) handheld system. In this case, the Vita essentially becomes the PS4 – the implementation is completely seamless, which makes it perfect for playing endless rounds of Resogun while some else is monopolizing the TV that the PS4 is attached to. There are plenty of good games for the Vita itself, too, so it’s a good time to reconsider portable PlayStation gaming.

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I’ve been using both the Xbox One and PlayStation 4 since before launch and like different aspects of each, but at this point they have tremendous unmet promise than polished perfection. As we get close to Christmas I’ve actually seen it get easier to find these consoles at retail than when they first launched in November, but if you can’t find one easily, don’t despair. Saving money on these now is not a bad strategy; they’ll be much better next year when there is more unique software for them and some of the system limitations have been worked out.

Wireless Bluetooth Speakers

This year was the year of the Bluetooth speaker. I must have had hundreds of public relations people pestering me to test their variant on the theme. Most of them are indistinguishable from each other. Two are worth calling out: if you must buy a cheap Bluetooth speaker, you could do worse – a lot worse – than HDMX Audio’s JAM Classic ($34) speaker. It’s not high fidelity, but it does play louder and cleaner than your smartphone’s puny speakers or anything else in its price range.

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My favorite Bluetooth speaker this year was Logitech’s UE Boom ($179): a waterproof, weatherproof, colorful cylindrical speaker that provides deep, rich audio at the same price point as other good quality options that are not as versatile or nice to look at. The packaging is also a work of art.

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For roughly the same price ($199), if you don’t need portability and weather resistance, Sonos’ Play:1 offers better sound and is still quite compact (it uses its own WiFi-based network, not Bluetooth). However, I must warn you: the Play:1 is a gateway drug to a whole-house Sonos system. Once your giftee has one Sonos speaker, they will feel compelled to add addition speakers in additional rooms, all controlled by iOS or Android devices, with each room coordinated with the others or playing its own tracks.

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Stocking Stuffers

No matter how convenient a tablet or eReader may be, there is still something to be said for printed books, especially when they are filled with photographs and left invitingly for everyone to browse on your coffee table. No Starch Press has a rich line of books chronicling the adult LEGO community, and this year’s Beautiful LEGO ($29.95) has been rightfully highlighted on Wired and other tech and geek culture sites. You can use the book to learn different building techniques or simply marvel at the time, talent, and money that goes into them. This is simply a stunning collection of sculpture built one brick at a time.
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Screen Shot 2013-12-19 at 7.57.07 AMGoogle has made several attempts at taking over your television, and all of them flopped. Rather than try again with another version of Google TV that tries to cram search and apps and overlays and guides and PLAY services, etc. into a $200 box you don’t want to buy and need a PhD to install, Google finally just gave up. Instead, it tried to solve a simple problem: how do you get YouTube or other video from your laptop or Android device onto your TV as simply and inexpensively as possible? The Chromecast ($35) is the answer. While it also streams Netflix and Google PLAY content, if all you ever use it for is the occasional YouTube video, the price and simple setup make it worthwhile.

Neverisms: Holiday Etiquette, New Year’s Resolutions & Well Wishes

This is my last article before the holidays, so I thought I’d use it to regale you with some holiday “Neverisms” — things that you should never ortter do. Here’s hoping they’l help you have a happy, healthy holiday.

Holiday Etiquette

HOLIDAY PREPARATIONS

Never hire a cleaning lady named Dusty. ~ David Corrado

HOLIDAY GIFT BUYING

[pullquote]If thine enemy wrong thee, buy each of his children a drum. ~ Chinese proverb[/pullquote]

Never purchase beauty products in a hardware store. ~ Addison Mizner

Never buy a pit bull from a one-armed man. ~ Dave Barry

Never buy a parachute marked: “For Sale: Only used once, never opened, small stain.”

HOLIDAY ATTIRE

Never wear a hat that has more character than you do. ~ Michael Harris, former owner of Paul’s Hat Works in San Francisco

Never wear anything that panics the cat. ~ P. J. O’Rourke

HOLIDAY DRIVING

Never drive faster than your guardian angel can fly. ~ Bumper sticker

HOLIDAY EATING

Never feel compelled to finish everything on your plate.

Never inhale through your nose when eating a powdered doughnut. ~ Dave Barry

Never (consume) food in excess of your body weight. ~ Erma Bombeck

HOLIDAY DINNER CONVERSATION

The rule in carving holds good as to criticism; never cut with a knife what you can cut with a spoon. ~ Charles Buxton

Never argue at the dinner table, for the one who is not hungry always gets the best of the argument. ~ Richard Whately

Never try to tell everything you know. It may take too short a time. ~ Norman Ford

GRACIOUS GIFT RECEIVING

Technically, this isn’t a “Neverism.” However, it’s likely that some of us may receive a gift (or two) that we really don’t care for. If that should happen to you, try to be as gracious as the bald man who received the the comb as a present, and simply say, as he did:

“Thank you very much. I’ll never part with it.”

THE GOOD HOLIDAY GUEST

Some cause happiness wherever they go; others, whenever they go. ~ Oscar Wilde

Strive always to be the former, never the latter.

For Your Consideration: A Dozen Neverism New Year’s Resolutions

  1. Never let a computer know you’re in a hurry.
  2. Never kick a cow chip on a hot day. ~ Cowboy Proverb
  3. Never let a fool kiss you or a kiss fool you. ~ Joey Adams
  4. Never have children, only grandchildren. ~ Gore Vidal
  5. Never moon a werewolf. ~ Mike Binder
  6. Never say “bite me” to a vampire. ~ Dave Barry
  7. Never play leapfrog with a unicorn. ~ Anonymous
  8. Never raise your hand to your children…it leaves your midsection unprotected. ~ Robert Orben
  9. Never use a big word when a little filthy one will do. ~ Johnny Carson
  10. Never hit a man with glasses; hit him with something bigger and heavier. ~ Dave Barry
  11. Never, under any circumstances, take a sleeping pill and a laxative on the same night. ~ Dave Barry

Two Thoughts For You To Reflect Upon This Upcoming Holiday…

Never too late

It’s never too late to have a happy childhood. ~ Berke Breathed

It’s never too late to be what you might have been. ~ Mary Ann Evans (under the pen name, ‘George Eliot’)

Happy Holidays to you and yours, and a joyous New Year!

Necessary Death and the Strategic Plan

Every strategic plan is an opportunity to kill our company and have it be born anew. This is a necessary thing and a good thing, but of course it does not come without fear. Do not miss the opportunity to kill your company or division or team or idea. I mean it. Look to kill your company as soon as you can. You can thank me later.

When I was younger and fresh out of school working for a big firm, the single task I dreaded the most was the once yearly “five year strategic plan”. Every year we had to review our business and fill out forms and compile data and turn in a plan that looked cautiously, five years into the future. I was never sure exactly what these plans did because I never saw any change that was directly connected to the planning we were doing. After several years of this routine a few friends and I made The Bet. We were older, more jaded and had loftier positions. By that time we were assembling the inputs from our respective teams and placing the plans into special sealed envelopes destined for headquarters. Now, in a bar somewhere in New York, we had convinced ourselves pint by steady pint that, unbelievably, no one was actually reading our opus magnums. Such was the foundation of The Bet.

The Bet

Each of us was to take a $20 bill and staple the greenback to the fifth page of our plan. Our idea was that if someone from headquarters asked about the money stapled to page five, we’d at least have some confirmation that a human being had read that far into our plan. Weeks later when I had not heard anything, curiosity got the better of me and I called my buddies from the night in the bar and checked in with them. True to form, I was the only one who had actually gone through with it. I spent the next several weeks scared to death that our stupid joke had likely torpedoed my bright future, and then promptly forgot about the whole thing. Some three years or so later I remembered and finagled my way into the room where the strategic plans were archived. There was my $20 as crisp as it was the day I sent it.

At many businesses people are engaged in the act of “strategic planning” because that is what it is: an act, a fiction. The strategic plan is the function that gets performed in the third calendar quarter of every year whereby we act like we are strategizing. But we miss the key point and value of the exercise when it is more a plan and less a strategy. The word “strategy” comes from the greek word “strategia” meaning office or command of a General–a leader commanding armies.

Perhaps we forget that death is a necessary part of any strategic planning because it seems to go against the grain of what we think a business should actually be doing. Dying? Businesses should be growing, vibrant, healthy places! Shouldn’t all our curves go up and to the right? Each quarter’s revenues are supposed to be higher than the last! Shouldn’t every powerpoint slide show some kind of slope rising to infinity? There is no room for death when all that gets rewarded is growth. And that is the problem. Intuitively we know that no curve in real life always goes “up and to the right”. Intuitively we know that real death is actually stalking our business every moment of every day either through complacency or a more aggressive competitor. [pullquote]Every great stride made by your fellow humans had death at its heels and this is acknowledged as a good thing[/pullquote]

No great General ever considered a war plan without also considering casualties. Certainly no General who loved and respected an army ever did a strategic plan that did not make the necessary deaths for the outcome actually worth something. Go further for moment though and try to think of any living process on planet earth that does not include death as part of its “strategic plan”. Foundational to Darwin’s theory on evolution is the necessary part death must play. Can you think of any serious, world changing human endeavor that does not include the possibility of death? Every great stride made by your fellow humans had death at its heels and this is acknowledged as a good thing. Why then would we ever consider any strategic plan that did not also include dying?

Death has not been altogether missed by the most successful businesses; they just don’t use the term “death”, instead preferring to use much more acceptable words like “fast failure” or “learn from our mistakes” or “cannibalization” or “planned obsolescence” or “transition plan”, or “succession planning”. The hot word these days is “pivot” meaning “our old plan wasn’t working so we have a new one”. This is all insecure justification for the reality: an old plan was killed and a new one was born. There are hundreds of ways of saying that something must die for success to occur, but perhaps it is our own human innate fear of death that prevents us from embracing “death” and facing it without fear.

Apple has death down to a science and has turned it into the world’s most successful business. Steve Jobs once said, “If you don’t cannibalize yourself, someone else will”. Cannibalization is the essence of death bringing new life in a business context. In Apple’s thinking, it is far better to kill and eat its own products with its own products than to have someone else do the killing to them. Their very survival is based on planned death.

Andy Grove, the former CEO of Intel is famous for making the decision that would kill a very profitable memory business in favor of an unproven semiconductor device called a microprocessor. He oversaw one of the largest increases in share price of a publicly traded company on the “death” of Intel’s cash cow memory products business. Perhaps it is not at all surprising that a Jewish boy growing up in a Nazi occupied Hungary, and surviving to watch dictators and regimes come and go would be so familiar with death that the death of a mere product line would seem a small thing. That experience led him to Intel and he likely saved one of America’s greatest companies as a result. Death is an excellent teacher.

Behind every great company like Intel or Apple there is a death and rebirth story, if not for the whole enterprise then a key division or product. It is a simple fact and it is not talked about enough. We have to wonder why. Why when everyone is looking for an edge, are we not looking at the only edge that matters?

Lessons Learned

Having been a part of so many deaths during my business career, I am sometimes privileged to be present when someone learns the lesson themselves. Which is how I came to share an iced tea in a cafe in Palo Alto with a good man embarking on a new business. Having recently left his job as much by suggestion as by choice, he had decided to strike out and build his own business. So pervasive was his fear regarding this decision, it was hard to think of anything else. In an entrepreneurial sense he was naked in the town square. He was betting his farm. He was pledging his reputation. He was in fact thinking a lot about things that felt like dying one way or another. I knew that no words from me were going to prepare him for the feeling of really owning his payroll, or worrying about growing a business with a wife at home and two kids in college. I could not have been happier for him though, so I asked him the only question that really mattered at the time: “Are you scared to death?”

I saw him rub some of the beads of condensation off his drink as he thought intently. I watched him die a little bit then and thought that dying should always be a difficult thing to share with someone else. I waited.

“I think so,” he said. “It’s hard to tell.”

“It’ll be okay,” I said. “You’ll be terrified and then you’ll get over it, because that’s what we do. You’ll probably be scared to death two or three more times before it works out the way it’s supposed to. You’ll be okay.”

Still staring at his glass, he asked, “You really think so?”

“Cross my heart and hope to die.”

That gave us both a good chuckle.

A Tale of Two Ads: “Misunderstood” vs. “Scroogled”

Screen shot from commercial (Apple via YouTube) If you want to know why Apple keeps winning  in consumer markets and Microsoft keeps losing, you can find much of the answer in the ads the two companies use to present themselves to the world. This week, Apple channeled Frank Capra and Vincente Minelli into an iPhone ad in the form of a perfect 90-second nano-feature film. Microsoft, meanwhile, spends its ad dollars to trash the competition and come across as combining the worst features of Mr. Potter and the Grinch. I have worked with both companies for many years and can assure you that while they are very different from each other, both are fiercely competitive, touchy, and as huggable as  hedgehogs. But there can be big difference between what you are and the persona you choose to present to the world.

The iPhone ad (left), titled “Misunderstood,” blows away the memory of the rather odd ads Apple has run lately. In it, a sullen boy or 13 or so seems totally absorbed by his iPhone during the family Christmas celebration. But the kid has really been making a video documenting the family that, when shown via Apple TV, reduces his mother and grandmother to tears. Yes, it sounds sappy as can be but set against a soulful version of “Have Yourself a Merry Little Christmas ((The only real fault I can find in the ad is a terrible jump cut in mid-song. I have been unable to identify the performer, but she’s wonderful.)) ,” it packs a powerful emotional punch.

Microsoft’s 90-second anti-Chromebook ad (left), part of a recent extended attack on all things Google, is the complete opposite. A young woman walks into a pawn shop hoping to trade her “laptop” for enough money to buy a ticket to Hollywood. The man behind the counter laughs at her and tells her that because it is a Chromebook and not a real laptop, “it’s pretty much a brick.” “See this thingy,” the man says, pointing to the Chrome logo. “That means it’s not a real laptop. It doesn’t have Windows or Office.” After some of Microsoft’s by-now familiar attacks on Google tracking, pawn shop guy says, “I’m not going to buy this one. I don’t want to get Scroogled.” I’m going to leave aside the ad’s numerous misrepresentations and outright falsehoods (apparently news of standalone Chrome apps has not yet made it to Redmond) and focus on its tone. It is, in a word, nasty. Apple’s ad leaves you with the warm fuzzies, Microsoft’s leaves you wanting a shower. I don’t think it  is a coincidence that this bullying tone of advertising and the general attack on Google were born after Microsoft brought Mark Penn aboard as executive vice president for advertising and strategy. Penn, a longtime Democratic operative and a veteran of Hillary Clinton’s 2008 presidential campaign knows negative advertising inside and out. There are two things well known about negative political ads. One is that voters absolutely hate them. The other is that they work. But selling a consumer product is very different from selling a candidate. U.S. elections, even primaries by the time they get serious, are zero-sum, binary affairs. If you can convince voters that the other guy is a bum, your guy will benefit. Microsoft’s problem, though, is that consumers don’t seem to want to buy its products. I cannot see how telling them that Chromebooks are bad and Google is evil makes them want to run out and buy Windows 8 or a Surface 2.  Considering how thuggish that ad makes Microsoft look, they are probably just as likely to head for the nearest Apple Store. (One very odd criticism of the Chromebook in the Microsoft commercial is that it doesn’t run iTunes.) ((You could argue that the Mac vs. PC ads of a few years ago were Apple’s own foray into negative advertising,  but there were two critical differences. One is that the ads were done with a light and humorous touch. The second is that they favorably compared Macs to Windows rather than simply trashing the competition.)) Microsoft desperately needs people to want Microsoft products (other than Xboxes.) This is not a problem that marketing can solve–better products have to come first–but ads that drip aggression and hostility are only going to make things worse.

Over-Serving And Under-Serving The Marketplace

Today, I thought I would explore the concepts of over-serving and under-serving the marketplace. The terms “over-serviing” and “under-serving” are used a lot nowadays, but I can’t believe that they’re well-understood, else many more companies would change their current product improvement processes.

This is how it works. We want to improve our existing product or service. Naturally, we start with where we are. We look for ways to make our product better, easier to manufacture, cheaper and faster to make, etc. Unfortunately — and counter-intuitively — this is exactly the wrong approach. Let me give you an example.

INTEL

Waitor serving telephoneSome six months before the introduction of the iPhone, Intel sold off the division that made their ARM-based chip designs for its mobile chips. In hindsight, this strikes one as bordering on the insane. But viewing things from Intel’s perspective at the time, one can easily explain Intel’s now disastrous decision.

Intel was the undisputed master of the x86 architecture. They had their own mobile chips (Atom) that ran on this architecture. x86 chips typically have some computational speed/power advantages over ARM chip designs, while ARM designs typically deliver better battery life. At the worst possible moment, Intel chose to emphasize speed, over battery life.

Why the worst possible time? First, speed was already over-serving most of Intel’s current and prospective clients. Intel’s customers were glad to have the additional speed but most didn’t need it and they certainly didn’t want to have to pay for it.

Second, with the introduction of mobile devices, battery life was at a premium. Intel’s customers wanted increased battery life, Intel’s customers needed it, Intel’s customers were willing to pay a premium to get it and if Intel wasn’t supplying it, Intel’s customers were willing to go elsewhere.

Device capabilities are immaterial compared to how they are actually used. Basis of over/under serving markets. ~ Sameer Singh (@sameer_singh17)

THE SOLUTION

The solution to this problem has been stated so many times that I suspect that most of us simply dismiss it as a cliche.

We start with the customer and work backwards. ~ Jeff Bezos, founder & CEO, Amazon.com

In other words, instead of looking to see how we can improve our existing product, we need to start, instead, with the customer, see what their needs are, then create a product around those needs.

If Intel had looked at their customer’s or their prospective customer’s needs, instead of looking at their own strengths, they would have noted that their customers were going to want better battery life, not more speed, in their computing devices.

Of course, I am ever-mindful of the fact that advice, like medicine, is easy to prescribe, but hard to take. Creating a product around the customer’s needs, instead of around one’s own needs, is terribly hard work. But that’s what they pay us for.

If it wasn’t hard, everyone would do it. It’s the hard that makes it great. ~ Tom Hanks

So stop looking at where you are and where you can go and start looking, instead, at where your customers want to be.

So very easy to say. So very hard to do.

Author’s Note. This article was inspired by an article entitled: “The Importance of Adopting Meaningful Product Improvements” written by Bill Esbenshade

Holiday Shoppers Gifting Themselves

Now that we’re fully in the throes and craziness of the holiday shopping season—just seven shopping days left until Christmas!—it seems appropriate to further investigate how the process really works, especially when it comes to electronics purchases. In fact, I’ve always been curious to not only know what items are hot sellers each year, but what drove the purchase decisions. The common perception, of course, is that most holiday shopping outings have an intended gift recipient in mind. But recent research just completed—the first report created by my new firm, TECHnalysis Research—reveals that many of the electronics purchases made in the early part of the holiday season are actually for the buyers themselves.

Specifically, in a survey of 401 US consumers aged 18-74, we found that a full 50% of electronics purchases made on Thanksgiving Day, Black Friday and Cyber Monday—either in retail stores or online—were for me. Well, not actually me, really, but the “me” of the shopper who made the purchase. The chart below summarizes the basic results.

HolidayShopperWhomPurchased

Perhaps not surprisingly, women were a bit more generous than us guys, with only 47% of female’s purchases being for themselves vs. 47% being gift purchases and the remaining 6%—like the total numbers—a “non-gift” purchase for others. Men, on the other hand, listed 52% of holiday electronics purchases as being for themselves, 42% as gifts for others and 6% as “non-gift” purchases for others. Clearly, lots of tech shoppers wait for and specifically target these huge shopping days for their purchases—either that, or the spirit of Uncle Scrooge is perhaps a bit more alive today than many of us would like to admit. But I digress…

The top-selling items among survey respondents were large-sized tablets (those with screen sizes greater than 8”), followed by game consoles, small-screen tablets (under 8” screen sizes), PC accessories and smartphone accessories. The chart below lists the top ten of the 19 categories that were covered. The x-axis represents the % of respondents who made a purchase in that category.

HolidayShopperTopCategories

Of those purchases that were made as gifts, the top category was actually small tablets, which makes sense given their lower prices, followed by larger tablets and game consoles. Interestingly, the top category for both personal purchases and as “non-gift” purchases was PC accessories—which covers things like USB drives, speakers, keyboards, mice, cases, printers and more.

In terms of buyer rationale, 57% of the purchases were considered “net new” devices, and 43% were replacements for existing devices, though the numbers ranged fairly significantly based on the category of device. For example, 75% of small tablets were considered new purchases, whereas only 32% of desktop PCs were additions to the household.

An interesting statistic regarding the new category of smart watches and other wearable devices was that only 45% were considered new and 55% were replacements. To be fair, the sample size for that group was only a modest (and not statistically reliable) 11 purchases. Still, it suggests either that early purchasers of those devices were not happy with their first choice, or that it’s the same people who keep buying many of the different options now available. Only time will tell….

Another interesting statistic from the study relates to the manner (and location) in which the purchase occurred. For online shoppers, which were intentionally just over half of the total respondents, 45% of purchases on Thanksgiving or Black Friday were made on mobile devices—either tablets or smartphones—while that number was 39% for Cyber Monday purchases. Additionally, 11% of all online purchases made on either Thanksgiving or Black Friday were done while the individual was mobile—either while shopping, while travelling, or at another public location, such as a café. If there was ever a question about the impact that mobile devices have had on people’s lives—let alone their shopping—these data points clearly show it.

If you’re interested in learning more, you’re welcome to download a free copy of the top-level results from the study at the TECHnalysis Research sample deliverables page.

Glimmers of Hope for the PC Industry

There have been some interesting data points over the past few quarters that I’ve been following. Most of them are related to some specific interplays between the tablet market and the PC market. As many of our readers know, I divide the tablet category into two categories–for now. One is the market for more capable tablets like the iPad, Surface fits into this category now as well, and a slew of other new tablets called 2-in-1s (I dislike the term) coming in 2014 will as well. Then there are tablets which are purely more media consumption products. Now what is interesting from a data point is that the US, who is one of the largest regions for notebooks and desktops, also happens to be one of the largest regions for tablets as well of both categories. But perhaps more importantly, the US is one of the largest markets for iPads. The rest of the worlds big markets are higher consumers of less expensive, commodity tablets, which is actually where much of the tablet growth has come from the past 6 months. So with these observations in mind let’s look at a few charts.

Screen Shot 2013-12-16 at 7.55.57 AM

What this chart is showing is that it appears the PC market is stabilizing in the US. Meaning that quarterly negative growth is lessening. What it also shows is that tablet growth is also slowing in the US. I believe there are several explanations for this.

While I believe a certain class of tablets will suffice for the masses as a PC replacement, the majority of the installed base is still using them in conjunction with their PCs. It is important to remember that over 90% of tablets sold are sold to EXISTING PC owners. Many PC owners find that owning a capable tablet allows them to delay their purchase or need for a new PC. Most are still using their tablet and keeping but using their current PC less. This would explain many data points we see from comScore and others showing PC usage high during the day and tablet usage high during the evening.

The question now becomes: Are many of those tablet (mostly iPad) owners finally ready to start upgrading their PCs? This is the theory the PC industry hopes is true. I do believe there is some merit to this theory. However, it is going to take at least another six month’s for us to have a clearer picture. My hunch is that the tablet slow down picks back up this holiday Q4 and notebook and desktop sales remain negative. In fact the Consumer Electronics Association Black Friday and Cyber Monday survey’s indicated that tablets were the second most frequently purchased product at 36% to the notebook which was 23%.

How negative notebooks and desktops are in Q4 is a key point. If it is around -4 to -5 or better then this is actually good news as it would add to the theory that the market is stabilizing. I fear it may be off more than that, but this scenario may also be interpreted as a good sign for PC refresh in 2014.

The other bit of good news is that the higher-tiered price bands of PCs are doing better than lower tiers.

Screen Shot 2013-12-16 at 8.24.23 AM

As you can see the chart shows the greater than $400 segment as doing better than the less than $400 segment. Even the premium segment of PCs is holding steady mostly thanks to Apple.

Looking forward, if the PC market is stabilizing this is good news. We could very well be looking at a pendulum swing in the industry where PC slowdown and tablet slowdown off-set each other in particular years. PCs may be slow during tablet refresh cycles and tablet refresh cycles may be slow during PC refresh cycles. The key point in this scenario is that tablet refresh cycles will be more frequent that PC refresh cycles.

2014 will be an interesting one to observe these trends and the interplay between tablets and PC. I feel that by the end of 2014 we will have a much clearer picture of this somewhat symbiotic relationship.

Where I Save Windows Phone

My name is Brian and I use Windows Phone.

Confession: I want Windows Phone to succeed. I want it to succeed because I believe users will benefit from Microsoft innovation and renewed market competition. I want Windows Phone to succeed because as Android increasingly takes over the computing world I am increasingly fearful of the success of an OS whose very existence is to track and record user behavior across the world.

I want Windows Phone to succeed because I want great, American companies to continue to dominate the global tech market.

I am not at all sure Windows Phone will succeed.

This has nothing to do with the silly, breathless rumors about a Nokia Android device. Rather, even given Microsoft’s money, brainpower and massive “Windows” install base — and 10+ years of fruitless R&D — the world continues to reveal that it is quite happy choosing between Android and iOS.

My hope, thus, is cruelly crushed by market reality. Must be doubly bad for Microsoft, I suspect. Therefore, I offer the following advice to help save Windows Phone.

1. Fewer Apps

Yes, this is counterintuitive, but absolutely necessary. You lost the app battle, Microsoft. It’s over. Accept defeat. We now live in a world where there are far more software applications for Apple products — and they are much easier to buy.

Stop pumping bad apps through the system in a futile attempt to make the actual numbers look not so awful. Instead, focus on offering the absolute best apps of any platform.

I have spent the past 4 years using iPhones as my go-to device. I have spent the past several weeks using the Lumia 1520 almost exclusively. In nearly every case, I’ve found an app equivalent for Windows Phone to match my iPhone. Unfortunately, nearly everyone is awful. Limited functionality, poor to no integration with web services (or iPhone apps), bad design. Indeed, the vast majority of apps in the Windows Phone store appear to me as little more than high school projects. End this anti-user behavior. Ensure that any app offered from your store is absolutely awesome and in no way a pale, brittle facsimile of what’s long been available for iOS and Android. Reject far more apps than you accept.

Fifty thousand great apps is better than 150,000 awful ones.

I also recommend you pledge every single of the many billions of dollars you receive from Android patent scofflaws to fund app projects with the very best app development houses. Bonus: offer huge cash windfalls for successful tie-ins with your very best mobile offerings (Skydrive, Bing, Office, Skype).

2. Fewer Devices

Windows Phone, the platform, will not be widely embraced by OEMs the way Windows was back in the 20th century. Android has won that war and its presence and pace throughout the world is accelerating. Your best hope is to focus on your own great devices. Luckily, you now own Nokia, which makes the most beautiful, best designed smartphones in the world.

Nokia’s problem is its insistence on offering as many variations of devices across every possible region, industry and demographic. This is no longer a viable strategy in a world where we are all connected. Worse, it increases manufacturing and marketing costs, generates user confusion and capitulates to self-serving carrier demands.

This is what you should offer:

  • Student model — for children, students, grandparents and those of lesser means.  The Lumia 520 is amazing for the price. Does the target market even know this?
  • Business model. Your premium offering. The Lumia 920 (or equivalent) with Office, Outlook, Skydrive and Skype included is a powerful combination.
  • Globetrotter model. The Lumia 1020 with 41mp camera is the baseline device for artists, photographers, creative types.
  • Gamer model. Your “gamer” phone fully leverages Xbox and the beautiful large-display Lumia 1520. Maybe offer Xbox credits with every purchase.

Next, you must give each of these devices comprehensible names. 520, for example, means absolutely nothing to absolutely no one. 920 is (obviously) less than 925, which obviously has lesser hardware than the 1020. Right? Nobody knows. Stop such nonsense.

3. Be Mobile First – Really

From this day forward, the role of Office and Windows is not to maximize shareholder value. Rather, it is to maximize profits to fund the future. The future is mobile.

You’ve bravely taken a few baby steps in this direction, and have now evolved from believing smartphones are mere satellites revolving around the PC sun to your current belief, where you appear to grudgingly accept that smartphones and PCs can be equivalents. Still wrong. The smartphone is the center of the computing world. Until you accept this your giant company will continue to flounder.

I fear this will not be an easy fix. Your Surface ads reveal that you, dear Microsoft, can’t even conceive of a “computing” device that is solely and purely touchscreen and mobile. In the second decade of the 21st century you still promote computers and “slates,” such as your Surface, as devices that work best when there is a physical keyboard attached and the user is seated. This is a profound misunderstanding of the future of everything.

Focusing on non-mobile, non-touchscreen devices is like if Android is the Death Star, iPhone is Ben Kenobi and you are Aunt Beru. Don’t be Aunt Beru, Microsoft.

Change your strategy. Radically improve touchscreen responsiveness. Offer a movie store. Make multitasking really work. Fix the (virtual) keyboard. Mobile first — really.

It’s not all bad, of course. Your instincts are sound. Note that the much-lauded Jony Ive continues to parrot what Windows Phone and Nokia have been doing for years: “Unapologetically” plastic devices. Bright colors. Polycarbonite-like feel. Flat design. Lots of white space. He knows.

Lumia_1520_three

4. Start A War With Apple

Android is good enough for most of the world. For what it offers, for its price, availability and ecosystem, you aren’t going to convince many to choose Windows Phone over Android, particularly at the low-end. You must prove your worthiness by taking on Apple. Fortunately, that’s where most of the money may be found.

Focus your marketing on a Mac vs PC-like campaign.

  • Your live tiles versus their static icons
  • Skype versus FaceTime
  • 20mp and 41mp cameras with Zeiss lenses and Nokia imaging controls versus iPhone’s 8mp camera
  • Office versus iWork
  • Outlook versus Apple Mail
  • Nokia Maps and real-time transit data versus Apple Maps
  • Xbox versus Game Center
  • Mock Siri. Belittle Touch ID.

Pay no attention to the Apple echo chamber. Ignore what people may say on Twitter. “In marketing, what looks new is new.”

A relentless assault against the iPhone earns you respect, customers, and helps focus your company. If possible, hire the “PC” guy to do the ads.

saupload_mac_pc

Reminder: not one moment of these ads, not one image, may include a keyboard or a person seated. Commercials advertising a “real keyboard” to do “real work” is my grandfather insisting that music used to be so much better. Probably, he’s wrong and if he’s right, it’s irrelevant.

Having spent the past month with a Nokia Lumia 1520, and having used every iPhone, several Android devices, BlackBerry, Palm, Symbian, Asha, MeeGo and others, I know that your odds are slight. Your potential remains great, however. Go forth. No excuses — you’re Microsoft. The time to line up your pawns has long since passed. These are the smartphone wars. Ball so hard.

Tech Predictions for 2014

For the last 27 years I have written an annual industry prediction column where I try to forecast what I see happening in the PC and CE markets in the New Year. To be fair, I spend thousands of hours each year researching these industries and their products and get to see inside the labs of many companies as well as peek into start-ups and garage shops all over the world. So what I predict has more to do with taking an intelligent guess about what I see happening in 2014 and less an actual prediction. So as I look into my crystal research ball, here is what I believe will happen in tech’s New Year.

1-Google will spin out Motorola

Google says they bought Motorola for their patents, but patents only go so far in allowing any company to keep the doors open and profitable. I believe that in 2014 Google will spin Motorola out as a dedicated company that creates great products around Google IP and have it be responsible for its own P&L. We have heard rumblings that they have some stunning and innovative products in the works and they could use these to become the branded arm for all of Google’s hardware related products. Having Google and Motorola products that are basically the same is just confusing to customers. Google will see that it makes sense to use them as their hardware arm and make them accountable on their own.

2- Larger tablets for sharing will hit market by mid-year

I recently wrote about how Dell’s 18” all-in-one was now being used as a kind of giant tablet in the home with people putting them on their laps for use in front of the TV or for tablet laptop games. The industry has seen the potential of a larger screen device that can be shared and instead of making them clunky all-in-one’s, we should see some sleek designs optimized as actual large tablets for use by two or more. The industry does not have a name for this but I have heard them called lap tablets or shared tablets for the home. Should be on market by mid-year.

3-Dual OS laptops and tablets

It is clear that Windows 8 is very slow to gain a large volume of software that can compete with IOS or Android’s Apps stores. So expect to see Windows laptops that will also have Android on them that taps into Android apps for use on Windows. The folks from Bluestacks have had a solution for this for years but in 2014 this will be a big issue for the industry and a lot of PC and tablet vendors will have dual OS products on the market starting in Q1.

4–Apple will release a ground breaking productivity device 

The iPad has become a powerful productivity tool in its own right, even without much help directly from Apple. As you know, Apple does not have an enterprise sales group. They don’t even have an enterprise services group. Yet, iPads have become the dominant tablet in IT and enterprises around the world. But there is stiff competition for the hearts and minds of business users coming from Microsoft and Google and some of their partners with tablets of their own aimed at this market. I can’t imagine Apple sitting still and letting these competitors gain ground on them so I believe Apple will create an iPad class product that will be unique and ground breaking focused on business and productivity. I have no clue about its design, although some think it might be what they call an iPad Pro while others think it could be some type of convertible. I am not sure what it will be but I suspect that whatever it is it will be a surprise to all. By the way, I do have one prediction related to this. Whatever Apple releases in this category will have a major negative impact on traditional Windows laptop sales next year and I think total sales of laptops could be off as much as 20-30 million units in 2014 over this year.

5-Smartphones and beacon-based sensors become a big deal

2014 will be the year when Bluetooth Low Energy beacons take off. These beacons can be placed around ballparks to communicate with smartphones and tablets to give users related information about game stats, deals from the concession stands, and coupons for discounts on logo’ed clothing. They can also be used in stores so that as a person goes by an end cap that has a beacon on it, it can send a short burst of information to their smartphone announcing a discount or deal on what is on the end cap if they buy it within 30 minutes. Apple is leading the charge in this space with their iBeacon technology but Microsoft and Google are working on similar programs. The marriage of Bluetooth Low Energy radios integrated into beacons and smart devices will start to take off next year.

6-Smartwatches are dead in 2014

All attempts at creating a smart watch for the masses have failed. The ones on the market today only appeal to male geeks and ultra early adopters  Although we may sell as much as 1.5 million smart watches in 2014, unless someone masters the issue of elegant design and style matched with non geeky technology, they are not going to be a product for the mass market anytime soon. Next year will still be an experimental year for smart watches. 
What will be hot will be wearable health related devices such as the  NikeFuel Bands, Fitbit, Jawbone UP, etc. These types of wearables along with Bluetooth related health devices such as wireless blood pressure kits, wireless blood glucose testing kits, etc. will see serious consumer interest next year. These health devices come under a category called Digital Health and there will be a lot of exciting new products along with health related wearables coming to market in 2014.

7-The PC market could actually grow in 2014

I know that this sounds contradictory given my statement in the Apple prediction that a new product from them could have a 20-30 million negative impact on current laptop demands next year. The discrepancy comes from something that is a bit of a problem for us market researchers at the moment. In the past when we counted computers shipped we had two distinct categories. 

We counted desktops and laptops separately but in final totals combined them. For example, we will sell in total about 300 million PC’s in 2013. However, 67% of these are laptops, the rest is desktops, which include all-in-ones, traditional tower desktops, etc. Enter now the 2 in 1’s and convertibles. Are they tablets with keyboards and should we count them as tablets, or are they tablets/keyboard combo devices and should we count them as laptops? At the moment some researchers are putting these in the laptop category and since they have not been huge sellers yet, they have not had a dramatic impact on our total PC sales in 2013. IDC now says PC sales overall will be negative 10% this year over last year. I believe that we will see a stronger uptick in 2 in 1’s and convertibles and whatever Apple releases in a new design will probably also be counted as a laptop. If this is true, then the overall market for PC’s, especially laptops, should stabilize or possibly even grow in 2014.

8-Internet of Everything goes mainstream

Cisco, Qualcomm, Intel and pretty much every major tech company is now focusing on the Internet of Everything. Basically this means that all tech devices get some form of connectivity, become smart, and can be connected to all types of devices and to the cloud. Although this often now comes off as a buzz word, the idea of IOE is a big deal and represents an important part of all tech companies’ strategies. I believe that in 2014 the industry will come up with a better definition of IOE and how this will practically impact business, consumers and education. 

9-Greater acceptance of Chromebooks

I was in a coffee shop in Santa Barbara recently and an elderly woman was sitting in the booth in front of me searching the Web on her Chromebook. On the way out I asked her why she bought this laptop and she said besides price, it did pretty much what she needed a laptop to do. I hear this story a lot in our research and understand that Google and their partners will become even more aggressive in pricing and marketing this in 2014. I expect this to help Chromebooks gain more ground in the new year. 

10-Digital Health will be a big focus in 2014

In a way this is the health arm of IOE. I have been testing the new iHealth Wireless Smart Gluco-Monitoring system, that allows me as a diabetic to test my blood sugars and transmit the results wirelessly back to my iPhone. Their Wireless Blood Pressure cuff also uses my iPhone to manipulate the cuff itself with all of the reading being done on the iPhone. There are dozens of other medical examples tied to smartphones and represent another key function that uses the smartphone as a personal digital hub. The recent Health Summit in Washington D.C. drew hundreds of people to their largest event ever and friends who attended it were excited about the growth of the products and services in this space. In 2014 Digital Health products will become more available to the masses and be its biggest growth year to date. 

11- 3D cameras and 3D Printers

At CES we will see the first 3D printers under $500. And we will see new desktops and laptops that will employ 3D cameras in them. While 3D never took off in TVs, it’s role in personal computing will be better accepted in the future. Although 3D printers are in the discovery phase with consumers, at prices this low millions could be tempted to buy them and begin experimenting with creating 3D objects. With the help of 3D cameras popping up in new computers, this will help these discoverers to be even more creative. It will still be a small market in 2014 but 3D printers and cameras could start reshaping the way we view our personal computers and what they can do for us. 

12- Jeff Bezos buys the US Post Office 🙂

This is a bonus prediction and I highlight here a tongue-in-cheek article Carl Schlachte wrote for Techpinions recently. It is a futuristic piece that imagines the implications should Jeff Bezos set his eyes on the US Post Office. Very provocative piece and well worth the time to read.