This week Sonos announced the Sonos One (One) with integrated Alexa. The One does not look different from the Play One but has six far-field microphones to pick up your voice and lights to show when it is listening. Amazon Alexa will work out of the box and you will be able to control with your voice all your Sonos speakers in the home. The speaker will ship on October 24 and will cost $199. Sonos promised that other assistants will come in 2018, including Google Assistant. At launch, the One will support about 80 streaming services, and you can use Alexa voice commands to play tunes from Amazon Music, iHeart Radio, Pandora, and a few other music services right now. Support for Spotify will be added soon, with Apple Music coming at a later date.
likes of Amazon Echo, Google Home, and Apple’s HomePod, as the first main entry points, the real battleground is the platform, and the services, consumers will consume as a result of integrating more technology into their homes.
Google’s announcement of its second generation of first-party hardware made clear something that’s been increasingly apparent over the past year: the company is very serious about this business. However, it also reinforced what continues to be a strange paradox: Google doesn’t actually seem to be very serious about selling at least some of that hardware, namely phones.
Another Solid Set of Hardware
Google’s first set of hardware was announced a year ago this week, and was already an impressive start. The Pixel phones were a decent pair of devices with some clever features, good cameras, and exclusive access – at least temporarily – to the Google Assistant which was then just launching. The Google Home was a prettier and in some ways more powerful answer to the Amazon Echo, at a lower price. Daydream VR was a prettier and more usable answer to the Samsung Gear VR. And Google WiFi leaned on Google’s partnership with a couple of traditional WiFi router vendors to create the first mesh WiFi system from a big brand. All told, the hardware released was solid, attractive, and competitive in its various markets.
This year’s hardware builds nicely on last year’s, with refreshed Pixel phones, two new Google Home devices either side of the first in the lineup, and new entrants in several other categories too. The new Pixel phones look like good upgrades on last year’s, and offer some interesting new features while not embracing some of this year’s big trends either entirely or at all. The new Google Home devices will help Google compete more effectively with the low end of Amazon’s lineup while also targeting a part of the market Apple had looked like having to itself. The Pixelbook laptop is as baffling a product as the first Pixel was – a premium device in a category notable mostly for its low prices. Google’s two new categories are wireless earbuds, where its PixelBuds serve as BeatsX competitors at an AirPods price point with a unique AI-based twist, and Google Clips seeks to create a new category which took a somewhat unwarranted chunk out of GoPro’s share price yesterday.
Again, all told this looks like a solid lineup. Google’s recent HTC deal, the fact that it’s updated and broadened the hardware line, and its ongoing public statements all confirm that it’s really serious about making its own hardware, offering a coherent set of products, and driving the same integration and optimization benefits as other integrated vendors have done before.
A Unique and Somewhat Puzzling Approach to Hardware
Google continues to approach the hardware categories it enters in a unique way, however. It downplays the role of hardware itself while playing up the role of software, clearly playing to its strengths as first and foremost a software company, and one which has had little control until now over the details of its hardware design in phones in particular. It’s the argument we would expect Google to make, and it’s clearly capable of achieving in software what others pursue through hardware, which is impressive.
Some of Google’s offerings also feel experimental, and the AI features in both the PixelBuds and Clips seem like good examples of that. Real-time translation and the idea of a camera that automatically takes the shots you want are both impressive demonstrations of Google’s AI chops, but neither is a product people are clamoring for, nor are the features ones people are actually likely to use regularly. How often do you need real-time language translation? And how likely is it that both you and your conversation partner will have the necessary hardware and software to make it happen? Google is honest about the fact that it doesn’t expect Google Clips to be a big seller, and that’s a good thing – creating new hardware categories is tough for anyone, but especially for companies without a significant presence or history in the space.
Given that ChromeOS has actually done pretty well in the segments where it feels relevant, while Android Wear continues to languish, some of Google’s choices about where to pursue a first party hardware strategy seem a little puzzling. Why not show the Android OEMs how to make a decent smartwatch, rather than ceding much of the market to two platforms – Apple’s and Samsung’s – it doesn’t control? Why pursue premium Chromebooks instead? Showcasing both Android apps and Google Assistant on a Chromebook would be just as possible at $500 as at $1000 if that’s the intention here.
Marketing Continues to be the Biggest Challenge
Above all, though, it feels like marketing continues to be Google’s biggest challenge when it comes to smartphones in particular. The products are there, but Google’s approach to the other 4 P’s of marketing continues to be lacking:
Price – last year Google matched iPhone pricing exactly, but this year it has a $200 price differential between phones which it explicitly said don’t have any feature differences, in a market where $100 size differentials have become the norm. That makes the Pixel 2 XL more expensive than Apple’s base iPhone 8 Plus, which seems an odd decision.
Promotion – as with pricing, much of Google’s marketing last year seemed aimed directly at the iPhone, not surprising from a company which doesn’t want to be seen to undermine its OEM partners. And yet all the evidence suggests that people tend to be fairly loyal to the two big ecosystems, and there’s relatively little switching from iOS to Android. Everyone else knows that Pixels are for Google-centric people, and Google needs to embrace that in its marketing rather than making sarcastic digs at the iPhone. Its advertising should be about what its phones do uniquely well for people who love Google and its services, because that’s the niche it’s really going after.
People and Placement – ever since the launch of the first Android phone, Google has underestimated the role of people in selling and supporting phones, and that still doesn’t seem to have changed. Its own channel is exclusively online, and it really hasn’t invested in the kind of third party retail presence necessary to effectively market a phone. But from a US perspective in particular the biggest stumble Google has made continues to be its exclusive relationship with Verizon on the carrier side. Carriers are by far the biggest channel for smartphone sales in the US, and limiting itself to one carrier – generally not the one seen as the most forward looking either – has been a huge mistake, one Google has repeated this year. (Indeed, I was told today that the Google-Verizon exclusive is a three-year deal, and if that’s true it means Google can’t extricate itself from this mess anytime soon.)
All of this adds up to a bizarre picture of a Google which is enormously serious about building the best possible hardware, but doesn’t seem very serious at all about actually selling it. Given the scale of both its organic investment in the Pixel line and now its billion-dollar-plus HTC deal, Google is pouring massive resources into this project, but it will never see a reasonable return unless these devices sell. It’s unclear to me whether this is a deliberate strategy on Google’s part to limit the negative impact on its hardware partners, or the result of organizational schizophrenia, but it simply doesn’t make sense. Either Google is serious about this market or it isn’t, and if it is it needs to bite the bullet and go ahead and compete with its OEM partners more directly. If that pushes them to do better, that’s good for Google too, and if it doesn’t Google gets a greater share of the premium Android smartphone market and gets to put its own services front and center. At this point, there’s no viable alternative to Android for independent phone makers, so there’s little if any risk to the strategy.
In a recent column, I wrote about how Silicon Valley Is becoming more vilified these days as the technology we create has increasingly been used to deliver both good and bad things to the market and that a pall has been cast on our tech region.
At an event in San Francisco on Tuesday, Kinect and HoloLens creator Alex Kipman shared Microsoft’s vision for Mixed Reality that will be unleashed starting Oct 17 with the Fall Creator Update and a set of Mixed Reality Headsets coming to market in time for the holidays.
Similar to his Ted Talk from 2016, Kipman talked about the power that Mixed Reality offers of expanding our capabilities and transcend time, space, and devices as we move away from a reality where we interact mainly with 2D computing experiences.
Wearing the new Samsung HMD Odyssey, Kipman teleported himself to the Cliff House – Microsoft Mixed Reality Home – to show what is possible today. The result felt a little like our current smart home experience: more a promise of what it will be than what it is today. You certainly need some vision as you think of what Mixed Reality can be for you. After all, balancing that futuristic view with something we can relate to today is the hardest challenge Mixed Reality, as well as Augmented Reality and Virtual Reality, face today. Games and entertainment are easy, but when it comes to convincing people that AR, VR, MR have a role to play in everyday computing it is hard to find what works because we are still working out what is possible. That said, I do not believe that Microsoft will be hindered by the current view of the world. Today’s Microsoft is not the same Microsoft that looked at the iPhone thinking that mobile computing will never be a thing. Maybe driven by self-preservation, the impetus behind Windows 10, 3D and Mixed Reality has been high and possibly since the PC era, the MR implementation in business might be a great advantage for Microsoft against Oculus.
The Modern Workplace
During the event, Kipman announced Microsoft’s acquisition of AltspaceVR. If you are not familiar with AltspaceVR, here is how they describe themselves: “one of the pioneers in immersive communications bringing people together in virtual reality from over 160 countries to attend meetups, comedy shows, yoga classes, dance parties, and large-scale events.” We have seen demos by Boeing and Ford using HoloLens before, but that mixed reality meeting on stage, which, as far as I know, was the first ever acquisition announcement in MR, was for me the best demonstration of the future workplace.
I have talked before about Millennials driving the digitalization of the workplace, but this will be nothing compared to what Gen Z will do to the workplace! While we, Gen X people, might still be complaining about Webex meetings using cameras, VR meetings like the ones AltspaceVR hosts will feel entirely natural for Gen Z.
Interestingly, when Kipman was asked what the killer app for MR is, his answer was somewhat unexpected as he mentioned communication as the killer experience. What is key, in both the commercial and consumer world, is that Mixed Reality allows you to pick the tools you want and, while the level of sophistication of the experience might differ depending on the device you are using, the core experience will not. This means that, depending on the need, businesses will be able to adopt a “mix and match” approach when it comes to devices: your engineers might be given HoleLens while marketing will have a Mixed Reality headset.
Communication not only matters in business. We can rush to judge today’s experience of avatars representing us as a futuristic version of “Who Framed Roger Rabbit” where cartoons and real people come together. Yet, I think that the idea here is not to replace real human interactions with MR but to supplement them when location or time might prevent us from a face to face exchange. The way I think about it is similar to how I think about Facebook. It allows family and friends who live across the pond to somewhat be part of my life. What if that experience could be more than watching a video or seeing a picture? What if we could feel like we are all sitting around the table telling stories or playing a game while talking to each other. I am sure some of you think this is what video calls are for! And to some extent, they are. Yet, you rarely share an experience. Video calls are mostly adding a video to a voice call, they are enhancing your call experience, but they are not recreating it. If you think this is just semantics you never tried to read a bedtime story to your child over FaceTime while on the other side of the world. Now think about doing that while you can teleport yourself in the same room, on the same sofa cuddling with the same teddy bear. Do you still believe it is the same?
The Power of Samsung
The discussion of the role of Mixed Reality and the path that its development will take is fascinating, but devices still matter. So, it is no surprise that a lot of the attention at the event went to the new Samsung Odyssey. Having briefly tried the headset, I have to say that it is the closest thing to Oculus Rift I have tried minus the multiple cables and set up.
The Samsung Odyssey matters for multiple reasons.
It gives Microsoft a brand that consumers trust when it comes to VR. Yes, the Gear VR experience is nowhere near a true VR experience due to the limitations of the computing power of a phone, but consumers trust Samsung to be capable of delivering such an experience.
Samsung’s continued push into the enterprise market could also benefit Microsoft when it comes to Mixed Reality. While enterprises know and trust the PC manufacturers that already have announced Mixed Reality headsets, they also trust Samsung when it comes to mobile, so I am curious to see how the Microsoft Samsung collaboration will develop.
Content remains King
While we wait for the futuristic vision of Mixed Reality to be delivered, we continue to count on content like games and entertainment to attract buyers. It seems to me that Microsoft has learned from mobile and has been focusing on content from the get-go. It has done that through original content like Halo Recruit to opening the Windows Mixed Reality SteamVR preview to developers to help them test their games.
When all is said and done though, Mixed Reality is VR, and if you are unconvinced by VR, you will be unconvinced by Mixed Reality.
I’m a fan of all things sci-fi. Which is why I was excited to hear about the new Star Trek Discovery Series. What was less than exciting was that CBS is using this show to promote their CBS All Access pass and the show is only available, at least right now, to CBS All Access subscribers. There is a one-week trial so I decided to do it so I can watch the first three episodes of Star Trek Discovery and choose the $5.99 a month with limited commercials. There was also a $9.99 a month option. Either one was a little shocking given CBS does not offer enough exclusive shows on its All Access offering to warrant either subscription. Regardless I found CBS’ approach here interesting.
One thing unique to this service over others that I have tried, is it asked me for more personal details than other streaming services. It asked for age, gender, and location. The result of this was actually much more relevant ads than others I’ve seen on streaming services. I saw more ads for tech products, things of interest to men under 50, and a range of other commercials that really weren’t that bad overall. Which got me thinking if the ultimate goal of these type services is to ultimately provide a better ad experience, thus leading to better revenue for the networks.
Nearly every brand and advertising study I’ve seen over the last year confirms that consumers are fed up with the amount and lack of relevancy of ads they see both online and on TV. The same consumers also suggest they are willing to tolerate better and more relevant ads as a trade-off for free or lower priced premium content. While this implementation of CBS All Access is a possible way to bring more relevant ads to consumers, it is also riddled with other challenges.
The primary challenge being how many additional subscriptions consumers will tolerate. Assuming one subscribes to a skinny bundle, or some kind of bundle, other options are Hulu, Netflix, Amazon Prime Video, HBO, now CBS All Access, etc., as places where you have exclusive premium content. Soon Disney will offer a subscription service, and it is likely other networks follow suit after CBS as well. My main issue with so many of these services is by the time you subscribe to all of them you want you are paying about as much as a cable subscription.
Besides the challenge of consumers being strangled by too many subscriptions, marketing and catalog of exclusivity becomes a challenge for the networks also. They will be faced with trying to decide what content to offer to their subscribers only and which to leverage their tried and true business model of mainstream broadcast distribution.
All of this leads me to believe a better way to aggregate this content must be possible. I’ve long said the bundle is not going away, however, who we pay may change. We may not pay a Comcast, DirecTV, Dish, etc, any longer and rather pay Netflix, Amazon, etc., instead. Once a large-scale company like Amazon or Netflix decide to leverage their sizeable user base to start fighting, or paying for premium network content, you can imagine they are in as good of a position as any to become the new aggregators of our premium content.
There is one other company that could be of interest as an aggregator and that is Apple. If you think about Apple’s sizeable customer base of 800-900 million affluent consumers, you can argue that Apple is in as good of a position as any to aggregate content from every source more relevantly for customers. In fact, this is ultimately what Apple TV, and the TV is executing on. While I made the point earlier that people don’t want half a dozen or more subscriptions, the question is if they can all be managed in one place like the iTunes content store, maybe they are more willing to have multiple subscriptions if they can be easily managed in one location. This is where iTunes could come into play.
One thing is certain, we are in the midst of a profound change of how consumers discover, consumer, and pay for premium content. Right now the landscape is a mess, however, as the market figures out what works and doesn’t work, I believe we will be back to a small number of aggregators once the dust settles.
From a pure technology perspective, it’s hard to imagine something much hotter than artificial intelligence, or AI. Everywhere you look, companies of all types and sizes are talking about their AI initiatives and all the amazing things those projects will enable. Similarly, it’s nearly impossible to read recent stories in both the tech and general press that don’t mention AI.
While I have no doubt that, technologically, AI is a fascinating new area of development that’s bound to drive some incredible new innovations, I am starting to have some doubts about the business opportunity for AI.
In many ways, the business challenges for AI are similar to those that arguably still face “big data.” First, it’s hard to do, and the number of people with the skills to really create AI algorithms and other software is very limited, making the cost of creating any products and services with the right people very expensive.
Second, the end results of the effort can be hard to quantify from a return-on-investment (ROI) perspective. In some cases, it’s easy to point to clear monetary savings or revenue increases from the results of either big data analysis or AI-driven outputs, but in a very large percentage of cases, it’s not. Sometimes it’s a process improvement that comes from the work—often a positive development, but not necessarily one that’s easy to associate with a dollar figure.
The third and most fundamental challenge for many AI applications is with the inherent nature of what they’re designed to do. In essence, if an AI project is done properly, it should basically put itself out of a job.
Let me explain. In many instances, AI is applied to a set of data in order to determine hidden patterns, more efficient ways of achieving/doing something, or just making a process easier or more natural. If the technology is applied in an intelligent way, then the results will be an improved process that’s cheaper, faster, easier or generally better than the manner with which it was done previously.
That’s great, but often that discovery process only has to be done once. So, once you’ve figured out a better way to do something, the project is done. It’s essentially a one and done. Yes, there can often be iterative improvements made after the fact, but it’s often a case of diminishing returns. You might make 95% of the possible improvements thanks to that first round of AI-driven analysis, but then only make very minor improvements after that.
From a business perspective, that’s clearly a challenge, because most tech-related business models are built around a continuous, ongoing stream of revenue and not just a one-time sale. You can certainly build successful businesses based on a single sale/project, but it’s definitely more challenging, especially because many of the efforts necessary to build a strong AI algorithm for a particular application are very unique to that project. As a result, it may be difficult to leverage that work across different projects/applications, which would be critical for building an ongoing, viable business.
To be clear, there are certainly applications for which a constant flow of AI-driven analysis is essential—keeping an autonomous car driving for example—and those types of applications won’t necessarily face the business model challenges of other AI approaches. Even in these cases, however, there will likely be challenges in monetizing ongoing services, because the AI-driven features are going to be sold as part of a given device or service.
Process-driven services are likely the best opportunity for AI from a business perspective, but it’s not exactly clear what those will be, how they will work, how they will be marketed, and if people will be able to understand the value in them.
The bottom line is that, while there are clearly great opportunities to build some amazing AI technologies, the manner with which money can be made from those technologies isn’t quite as clear. Providing new levels of capabilities, improving how goods are designed, manufactured, sold and used, and generally increasing the overall “expertise” built into other products is clearly a noble goal, but AI increasingly looks like an “ingredient” technology that could be challenging to monetize on its own.
There is a lot to like about the promise of wireless charging. That said, I’ve used wireless charging solutions from many smartphone manufacturers through the years, and I’ve never had a flawless experience with any of them. Unfortunately, the same is true with Apple’s latest offering with iPhone 8/8 Plus. In the few weeks, I’ve been using an iPhone 8 and the Mophie wireless charging pad I have woken up the next day to an iPhone that did not charge and has less than 10% battery at least several times a week. This last week alone it happened three times. For a myriad of reasons, from charging coils, to pad design, etc., when using this pad the iPhone and Mophie pad have to be aligned just right, or it won’t charge. You can’t just drop it down anywhere on the pad but instead need to align it just right. Where this impacts me, is throughout the night my phone may get a notification buzz and as a result will move off the sweet spot and then stop charging.
While I fully assume Apple will solve these problems with their charging pad, and I acknowledge much of the feedback I got on Twitter after mentioning this, that there are some charging pads that have more coils, and better design and therefore don’t have the same issues I’m describing. However, the larger point remains that this happened in the first place. There exist wireless charging pads consumers will buy (Apple sells this one I’m having issues in their stores) which will lead to unmet expectations with the product. This, in a nutshell, is the problem with standards at large, and open systems in particular.
Open solutions have their benefits. They solve problems for companies who are not capable of solving specific problems themselves and built up ecosystems. But they also regularly lead to inconsistent experiences. Wireless charging is one example of many where there can be exceptional and also really poor implementations of the standard. The result is consumers will end up having an inconsistent experience with the solution, and that can often turn consumers off altogether to a product or feature. This is part of my concern with the wide variety of Qi wireless charging solutions out in the world. We know from our research that wireless charging was a top three feature driving interest to the iPhone 8/8 Plus. There will exist products on the market that lead to experiences like mine and consumers will get frustrated. My fear is they become sour on the idea of wireless charging altogether and thus write it off entirely. With things like this, all it takes is one bad experience for consumers to lose trust in the feature.
While many third parties disliked Apple’s MFI accessory program, the guidelines Apple had in place for third parties to create accessories for their products led to consistent experiences with third-party products and Apple products. At the moment, we don’t have the same situation with Qi Wireless charging. While Apple’s embracing of the Qi standard means they will certainly get involved and help drive the standard and the technology forward, for now, Apple runs the risk of having third-party solutions not meet their standards of an accessory that will work with iPhones.
Further observations on the challenge of open ecosystems lead us to both Microsoft and Google now going full steam ahead with their own hardware roadmap. I do find it interesting that both the largest open software platforms in history have led the companies who created them into the hardware market. Both Android and Windows have such diversity in offerings that you can have a quality experience with the platform and a sub-par one all with the same software platform. Both platforms have a great deal of inconsistency in their user experience. They do try to manage this by defining the hardware and software specs as much as possible but in open systems, you can only define your standard so far and still allow your partners to differentiate. It is a double-edged sword.
I view both Microsoft’s and Google’s efforts in hardware as strong evidence of the challenge open systems create and their attempts to address those challenges and provide a “best of” experience that they hope others aspire to duplicate.
Ultimately, all of this is just a thought exercise to view things from the contrary view to open always wins, or open is the best. Open systems/standards are necessary for many things basic to consumer electronics. Things like ports for example. But I’d argue that wireless charging may not be one of them. In a few years, we may look back and the landscape has changed and the Qi standard has improved. But I, for one, would have been entirely content if Apple would have built a proprietary wireless charging solution, and simply made it the best customer experience by controlling all the variables. Apple has proved with their proprietary connectors that they don’t need to embrace standards to have their own third-party ecosystem grow and support their products.
While not a popular viewpoint, it can be argued that Apple’s products are a standard unto themselves. The sheer size of their customer base and the economics of those customers means whatever Apple does–even if proprietary–the industry will move and follow.
Roku went public this past week, and saw its stock soar in its first couple of days on the NASDAQ. The timing of its IPO is closely tied to a shift in its business model the company implemented a few years ago and which is now beginning to bear fruit. Understanding that shift is critical both to understanding the company at this stage, and understanding whether or not the big bets many investors are making on it are sensible.
This week’s Tech.pinions podcast features Tim Bajarin and Bob O’Donnell discussing Amazon’s new Echo announcements, debating the value of 280-character tweets, analyzing what the impact of potential Russian interference on social media platforms could mean, and describing the announcements from Microsoft’s Ignite and Envision conferences.
I’ve spent the last week using the Apple Watch, Series 3 with cellular and my experience has been quite good. Now running WatchOS 4.0 with a long list of new features, and utilizing faster silicon, it is easily one of my favorite pieces of new technology this year. I’ve used every version of the product and watched as Apple iterated on the hardware and software, and sharpened the device’s very reason for being. Which leads to this question: Was Apple better off shipping an imperfect product back in April 2015, or should it have waited until 2017 to ship this more fully-realized product?
Series 0: Underpowered and Overtaxed The first Apple watch was a marvel of miniaturization, but a bit of a rough ride for early adopters with too-high expectations. The first-generation silicon inside often struggled to run some of Apple’s first-party apps, let alone the third party software that developers rushed to build in anticipation of Apple’s recreating the success of the original App Store. The watch was always going to be an accessory to the iPhone and not a replacement, but that first product was entirely too dependent on that wireless umbilical and watch apps themselves literally had to run on the phone. That said, Apple consistently pointed to strong consumer satisfaction with the product, and in the end, the biggest detractors were likely tech reviewers and disgruntled app developers.
At WWDC in 2015, Apple announced WatchOS 2.0, which gave developers the ability to run native apps on the watch itself and to access more of the hardware (including the Taptic Engine). This would prove to be key to a better experience, but it also meant developers who had built for the first version of the OS had to port over those early apps to run on the new platform. This was easy for some, harder for others depending on the app’s underlying architecture. In September 2016 Apple rolled out the Series 2 and re-released the first watch as the newly-christened Series 1 with upgraded silicon. The performance was demonstrably better, and as the company moved to WatchOS 3.0, the capabilities of the product continued to improve. While the user experience continued to improve, many developers had all but abandoned their existing Apple Watch apps or plans to bring new apps to the platform. But Apple’s first-party apps continued to improve regarding functionality and performance, and my experience with the Series 2 was almost entirely positive. Over time I came to find its fitness tracking capabilities and its messaging features hugely beneficial. So much so, in fact, that I put my favorite mechanical watch in a drawer–likely for good.
Series 3 with Cellular: Indispensable Which brings us to the current version of the watch I’m testing, the Series 3 with cellular. Unlike many early reviews, I had zero issues attaching the watch to my current data plan with Verizon. (And yes, $10 per month for data I’ve already purchased is too much.) I’ve also not encountered the captive WiFi issue, although it’s likely to come up when I travel next week. Overall, I find the new features in WatchOS 4 to be as good or better than advertised, and I’m eagerly consuming the myriad of new data points available through the updated heart-rate tracking features.
The LTE watch has 16GB of storage, which has allowed me to download numerous music albums for listening on the go, and that experience has worked without issue when using the AirPods. Siri on the Series 3 feels like a more fully-formed digital assistant here, both in terms of her upgraded ability to speak, as well as the number of useful capabilities she can now accomplish.
But without a doubt, the most compelling feature on this new watch is the cellular connectivity. Whether it’s leaving the phone locked in the car at the gym, hitting the trail with the dog, or just walking around the neighborhood with my family, the ability to leave it behind while remaining connected results in a feeling of liberation that’s downright addictive. I ran into no technical issues while sending texts and making calls directly on the watch. When Apple’s Jeff Williams introduced the Series 3 with cellular, he said “This has been our vision from the very beginning. We believe built-in cellular makes Series 3 the ultimate expression of Apple Watch.” So if that’s true, should Apple have waited?
I don’t think so. While it was unusual to watch Apple struggle to find its footing with the first product, the company clearly learned a great deal by shipping. The product we have today likely wouldn’t exist if it didn’t ship back in 2015. As the current WiFi issue illustrates, there is only so much you can achieve behind closed doors, and eventually you must put the product into customers’ hands.
IDC estimates that Apple has shipped about 30 million watches to date. Apple itself noted during the keynote that it had moved pass Rolex to become the highest-revenue watch maker in the world. The watch isn’t going to replace the iPhone, in terms of revenues for Apple or in terms of usage for customers. But it clearly represents the next chapter in Apple’s constantly evolving story of bringing together hardware, software, and services. In fact, I’d personally written off the Apple Music service for my own personal use (I’m an audio geek who prefers the higher-bitrate Tidal). But now I plan to re-up with Apple Music when it becomes available for streaming to the watch. And I suspect I won’t be the only one to do so.
The big question now is whether app developers will return to the WatchOS platform. I suspect that many will be skeptical of the opportunity, and rightly so. This is one of the challenges associated with shipping hardware early and asking people and companies to risk their time and money to build for a new platform. Apple’s big challenge going forward will be convincing these developers to give WatchOS another spin. As others have noted, I suspect many of these next-generation WatchOS apps will exist primarily to bring new services to consumers.
Samsung is said to be the latest vendor to release a Mixed Reality headset supporting Windows 10. Earlier in the year, at Microsoft Build, we had seen units from Acer, Asus, HP, Dell and Lenovo all bringing to market headsets between $299 and $450 depending on whether the Windows Controllers are included in the price. Samsung is said to be presenting this new headset at an event in San Francisco on October 3.
Amazon on Wednesday held an event to update and expand its Echo lineup, and in the process demonstrated how the product line is maturing. There are more products, but they’re also more clearly targeted at specific segments of the market, while still undercutting pretty much all major competitors on price. Amazon clearly isn’t ready to cede the market to Google, Apple, or anyone else likely to enter in the near future.
Increasing Segmentation in the Echo Lineup
The first thing to note about the new Echo lineup is the increasing segmentation of the market. Though I’ve seen some reacting to Amazon’s new lineup as if it’s essentially random and experimental, I think there’s a lot more structure to it than it might at first seem. The illustration below lays out Amazon’s Echo product line before and after this week’s announcements:
Before this week’s announcements, the Echo portfolio looked like a bit of a hodgepodge, with two specialty devices, one device with a screen, and one cheap and one relatively expensive straight voice speaker. After this week’s announcements, the picture is a lot clearer, especially in the first two columns in the chart above:
A good, better, best lineup in the core voice speaker space, with list prices at $50 intervals and likely discounts to even more competitive prices. The core Echo is now also $50 cheaper, significantly better looking (and with more design options), and with better audio.
A two-size lineup in the currently much smaller (and pricier) speaker-with-a-screen segment, doing to that segment what the Dot has long done in the core voice speaker space and offering the videoconferencing and other video benefits in a smaller device, likely for secondary rooms in the home
There remain two specialty devices, one for fashionistas and the other for those that want to take Echo-like functionality on the go, which will likely continue to account for a very small proportion of sales
There are now also two accessories, which expand the addressable market and activities associated with the Echo line, into voice calling using a landline and family gaming.
At this point, the vast majority of customers will mix and match products based on how much they care about audio quality and video, in a variety of rooms in the home, using Dots for secondary spaces and Echo or Echo Plus units in primary spaces, with the occasional device with a screen for customers who care about video conferencing or another endpoint for Prime video.
Addressing a Broader Market
The range of activities enabled by the Echo line has been expanded mostly through software since the original launch, but over the last few months Amazon has added considerable specialization through hardware too, from the screens and cameras on the Show/Spot and Look to the smart home hub in the new Echo Plus to the accessories.
By addressing a wider set of use cases, Amazon is clearly looking to expand the market for which Echo devices will be attractive beyond those looking for voice-driven kitchen timers, user-friendly but low-quality and unattractive speakers for music, or an alternative to turning on the radio in the morning. As such, these devices start to compete indirectly with more products which would previously have set in fundamentally different categories, including game-centric TV boxes like the Apple TV, VoIP services and devices, smart home hubs like those from SmartThings and others, and so on.
Amazon’s ambitions with the Echo have always been broad, but they’ve been achieved largely by taking on a new, voice-driven interface with the limited set of tasks that are well suited to voice control through a device with finite capabilities. Its broader ambitions are now more easily realized as it leverages its early dominance in voice speakers into these new market segments, and I would expect it to take a greater share of the segments of the market it addresses in the coming year than in the past year, despite Google’s likely introduction of a Dot competitor next week.
The High End is Still Up for Grabs
That last sentence, though, raises the question of what will happen in the segments of the market Amazon doesn’t address with its first party lineup, especially the high end market. That market doesn’t really exist today for voice speakers specifically, and is mostly limited to standalone speakers from premium audio companies and Sonos, which will hold its own event next week, one that’s widely expected to feature voice as a major new feature.
Apple, of course, will also shortly enter the market at the high end, emphasizing many of the same historical strengths that have driven Sonos’s dominance of the mid-tier whole-home audio market: quality, ease of use, and a focus on music. Amazon still seems relatively uninterested in going after the premium part of the market, in part because that’s a strategy for those who want to drive high margins from their hardware rather than for those who are using voice speakers as a loss leader for building a voice ecosystem. Both Amazon and Google seem likely to try to address that premium end of the market mostly through partners, though Amazon has moved ever so slightly into higher quality audio in recent months. Google is reportedly working on a higher-end Home speaker, but we’ll have to see whether that actually launches and where in the market it’s pitched.
The diagram below indicates how I see this market playing out over the next few months, with Sonos and Apple both entering towards the premium end of the market, but Apple likely pricing above Sonos based on the pricing of Sonos’ current lineup:
Amazon doesn’t have a strong incentive to pursue the premium part of the market for today, while Google’s participation in that part of the market is still theoretical at this point. That means that we may well see the same dynamic playing out in voice speakers which we’ve seen in smartphones, tablets, and even connected TV boxes, with Apple capturing the small but highly profitable premium segment while Google (and in this case Amazon) captures the lower-margin mass market. Given that there’s likely to be close alignment between those who already favor Apple’s devices in those other categories and those who will prefer the premium approach in the voice speaker market, that likely won’t present problems for Apple’s ecosystem. Sonos, meanwhile, may find itself squeezed between increasingly high-quality voice speakers from Amazon and Google (and their partners) and Apple’s HomePod, and will have to ensure that it’s unique value proposition around multi-room audio really stands out in that mid market.
Look around, and you will find no shortage of Apple Watch skeptics. Those who continue to bang the drum that Apple Watch is a flop. Or those who believe the Apple Watch serves no purpose and is a confusing product. Many so-called experts and self-proclaimed pundits fail drastically to understand Apple as a company so it should come as no surprise many of those same people are confused by a product like the Apple Watch.
In late 2014, Ray Kurzweil, one of the most forward-thinking scientists alive today, published some of his predictions for the next 25 years. SingularityHub wrote an excellent piece in January of 2015 outlining past predictions that came true as well as new predictions he sees coming in the near future.
1) With the purchase of HTC, it is clear that Google is serious about becoming a hardware company; 2) And Google is becoming a hardware company because Apple is a threat to Google; 3) Which means Google is going to war with Apple; and 4) In the Author’s opinion, Google is likely to win this war.
GOOGLE IS GOING INTO HARDWARE
“The reason why Google acquired what looks to be the majority of HTC’s phone design and engineering team is simple, and it’s been obvious for over a year: Google is serious about becoming a hardware company.”
THE IPHONE THREATENS GOOGLE
(T)he iPhone is a direct threat and counter to Google’s overarching goal of being ubiquitous on every internet-connected device.
Apple’s not-so-secret advantage is in having tight control over every aspect of the iPhone user experience.
If Google were to leave the battle to forever be between the iPhone and Android, between an integrated piece of modern tech and a mere operating system, Apple’s device would always win.
(Google) can design its own, premium-tier device that can go right up against the iPhone. The HTC deal today makes sure of that.
(Google is) trying to make a better smartphone … (because) either you integrate … or you get left behind by those who do.
Apple and Google are drifting toward a direct confrontation.
To make it perfectly clear, the Author is not alone in his assertion. Others agree:
Google Just Made a Big Move in Its War Against the iPhone. … The (purchase of HTC) is a big play by Google to make its Pixel smartphone a more formidable opponent to Apple’s iPhone. ~ Time
I have (at least) three questions regarding his article.
1) Is Google really surpassing, or about to surpass, Apple in hardware quality? 2) Is it a good strategy to challenge Apple where Apple is strongest? 3) Won’t Google’s new hardware strategy conflict with Google’s existing Business Model?
Let’s take a look at these questions, one-by-one.
PART ONE: HARDWARE
TO THE SWIFT
The striking thing about Google’s transition to being a formidable competitor on the hardware front is how swift it has been and will be.
Excuse me? You say Google’s transition has been swift? Google has put out a Google-branded smartphone every year since 2010. And every year pundits assert that this is the year that Google will finally take back share at the top of the market from Apple. And every year, the sales numbers from Google’s own phone end up being a “rounding error” that is reported as a footnote in Google’s quarterly returns.
Apple’s iPhones account for 12% of global smartphone shipments, while Samsung’s devices comprise 23%, according to International Data Corporation. Google’s own phones account for such a small slice of the market that they’re not even specifically mentioned in the IDC’s survey, and are simply lumped into the “Others” category. ~ Time
Is Google moving swiftly towards hardware? Not hardly. If anything, Google’s “transition” from a software maker to a maker of integrated hardware has been a slow, tortuous and — so far — totally unsuccessful slog.
GOOGLE IS GETTING BETTER AT HARDWARE FASTER THAN APPLE IS
(T)he Pixel turned out to have the best smartphone camera of its time — and it arguably still does. On day one, Google’s Pixel had already won one of the biggest battles against the iPhone: that of having a better camera.
(I)n my estimation Google is closer to catching up to Apple’s hardware design and engineering than Apple is to recreating Google’s online empire.
I still see a more logical and obvious progression for Google than I do for Apple.
The Author rests much of his argument on the premise that the Pixel’s camera is better than the iPhone’s — a clear sign to him that Google has already surpassed Apple in hardware quality. First off, I’m not sure that the camera — while very important — is the be-all and end-all for deciding which company is “ahead” in hardware quality. But setting that aside for the moment, is it even true that the Pixel’s camera is better than the iPhone’s?
Apple iPhone 8 Plus: The best smartphone camera we’ve ever tested. – DxOMark
JEDI MIND TRICKS
Did you notice the Jedi Mind trick that the Author tried to pull here? His contention is that Google is challenging — and may even have surpassed — the iPhone as an integrated hardware/software solution. And he does this by pointing to what? A single feature of the Pixel — its camera. A single feature — no matter how good it may be — can never constitute proof of integration. And it is in integration where Apple easily surpasses its competition.
(Apple) designs both the hardware and software for all of its products, including the iPhone. Because of this, it can create new software that takes advantage of the device’s hardware, such as the iPhone’s Portrait Mode camera feature. This shooting mode takes advantage of the double camera system available on the iPhone 7 Plus and new iPhone 8 Plus, making it possible to capture photos with more depth. It would be difficult for Google to do this today since there are so many types of Android devices different manufacturers that all of them have different specifications. ~ Time
It seems to me that — contrary to the Author’s assertions — there is plenty of evidence to suggest that it is Apple — not Google — that is ahead in smartphone hardware and that their lead is rapidly increasing.
That’s right, your new iPhone is more powerful than a MacBook or a Windows PC. ~ Paul Brody, @pbrody
Even the Author acknowledges that Apple’s biggest advantage over Google may be in their chip designs. But he goes on to dismiss that advantage as mere “potential”.
Maybe Apple’s investment in developing in-house CPUs, GPUs, and the proprietary Face ID system will pay off in granting it a technological edge in the future, but as of right now, those are potential advantages, whereas Google’s online lead is already in evidence.
Apple’s advantage in chip design is merely potential? The new A-11 chip that is contained in both the iPhone 8 and the iPhone X say otherwise.
Apple’s chip strategy has given it a big advantage—and arguably made its mobile chips the best on the planet. ~ WIRED, @WIRED
The ‘Bionic’ part in the name of Apple’s A11 Bionic chip isn’t just marketing speak. It’s the most powerful processor ever put in a mobile phone. We’ve put this chip to the test in both synthetic benchmarks and some real-world speed trials, and it obliterates every Android phone we tested. ~ Mark Spoonauer, Tom’s Guide
The latest Geekbench figures show that Apple’s processor development teams have utterly beaten all comers when it comes to processor performance. And Apple’s SVP of Hardware Technologies Johny Srouji, has confirmed the company began to design it that way way back when the iPhone 6 was the smartphone everybody wanted.
‘This is something we started 10 years ago, designing our own silicon, because that’s the best way to truly customize something that’s uniquely optimized for Apple hardware and software,’” Srouji told Mashable.
Srouji confirmed that when the company begins to design silicon, it starts by looking three years out, which means the A11 Bionic was under development when Apple was shipping the iPhone 6 and its A8 chip.” Back then we weren’t even talking about AI and machine learning at a mobile level” Srouji said, “The neural engine embed, it’s a bet we made three years ahead.” ~ Jonny Evans, Apple Must
As these articles and these charts show, the iPhone does not appear to be in danger of being caught by competing phones. If anything, the evidence suggests the opposite — that Apple’s mobile hardware is starting to distance itself from its competitors. And the best is yet to come.
These charts exist because of decisions Apple made 3 years ago. What’s in the pipe for 2020? ~ Matthew Panzarino, @panzer
PART TWO: STRATEGY
But let’s not nitpick. Let’s say the Author is right and Google IS making significant progress toward catching and even surpassing, Apple in hardware. Does that then necessarily mean that Google is going to start stealing share from Apple’s customer base?
STRATEGY IS ABOUT ATTACKING WEAKNESS, NOT STRENGTH
I don’t know if, as the Author contends, Google is truly serious about wanting to challenge Apple in the integrated hardware space. But if it is true, it’s an abysmal strategy. Whether you are a military entity or a corporate giant, you don’t win by attacking your opponent where they are strongest.
(T)he way is to avoid what is strong is to strike what is weak. ~ Sun Tzu, The Art of War
There is nowhere that Apple is stronger than in integrated hardware and software solutions. Attacking them there is mere folly.
Refrain from intercepting an enemy whose banners are in perfect order, to refrain from attacking an army drawn up in calm and confident array:–this is the art of studying circumstances. ~ Sun Tzu
It is a military axiom not to advance uphill against the enemy, nor to oppose him when he comes downhill. ~ Sun Tzu
In contested ground, do not attack. ~ Sun Tzu
THE ANCIENT ART OF DISRUPTION
If you subscribe to Techpinions, you’re sure to be steeped in Disruption theory. There are some aspects of disruption theory that are new. But there are some aspects that have existed since the dawn of strategic theory. And one of those truths is that you don’t attack a strong opponent where they are strong, you attack them where they are weak or, better yet, where they’re absent.
Strike into vacuities. ~ Sun Tzu
To advance so that one cannot be resisted, charge against the empty. ~ Sun Tzu
To be certain to take what you attack is to attack a place the enemy does not protect. ~ Sun Tzu
Appear at points which the enemy must hasten to defend; march swiftly to places where you are not expected. ~ Sun Tzu
You may advance and be absolutely irresistible if you make for the enemy’s weak points. ~ Sun Tzu
Do you know what it looks like when a tech company — even a giant tech company — violates those strategic principles and goes up against another company’s best?
— It looks like Bing, where Microsoft went head-to-head with Google Search.
— It looks like Zune, where Microsoft went head-to-head with the Apple iPod.
— It looks like Microsoft’s $7.2 billion dollar purchase of Nokia, where Microsoft tried to out-Apple Apple in smartphones.
— It looks like Google’s $12.5 billion dollar purchase of Motorola. (See what I did there?)
Never fight against heavy odds. ~ Thomas J. “Stonewall” Jackson
If you want to take on a tech giant (or any opponent), you don’t hit them where they’re strongest, you hit them where they’re weakest — or better yet, where they have no presence at all.
As water seeks the easiest path to the sea, so armies should avoid obstacles and seek avenues of least resistance. ~ Sun Tzu
In other words, don’t attack the opponent where they are — hit ’em where they ain’t.
— Microsoft didn’t succeed by making hardware that was better than IBM’s.
— Amazon didn’t succeed by making a better brick and mortar bookstore.
— Facebook didn’t succeed in challenging Google’s online advertising empire by making a better search engine.
Apple banged its head against the Microsoft Windows operating system for years, and years, and years and all they had to show for it was 5% market share and near bankruptcy.
— Apple didn’t succeed by making a better desktop operating system than Microsoft. They succeed by making an integrated music solution where Microsoft had none. And they succeeded by making a smartphone operating system, where all Microsoft had was a watered down version of their desktop operating system.
Challengers don’t succeed by doing what the incumbents are doing better. They succeed by doing what the incumbent isn’t doing or cannot do well.
PART THREE: BUSINESS MODELS
If you know the enemy and know yourself, your victory will not stand in doubt. ~ Sun Tzu
The greatest help in meeting any problem is to know where you yourself stand. ~ William Faulkner
Does the Author of this article fully understand the differences between the business models of Google and Apple? I doubt it. For if he did, he would never have written this article.
APPLE’S BUSINESS MODEL
Apple’s Business Model is fairly straightforward. Apple appeals to its target customers by creating an ecosystem of many parts that work seamlessly together. While the ecosystem is the draw, Apple monetizes its products through the sale of its hardware. The purchase of Apple hardware is the “golden ticket” that lets one enter the “Apple World” ecosystem.
GOOGLE’S BUSINESS MODEL
Google’s Business Model is a little more complex than Apple’s. Google appeals to its hardware manufacturing partners by creating an operating system and giving it away for free. This, in turn, allows Google’s manufacturing partners to appeal to their customers by selling their hardware cheaper. Google monetizes by gathering the data of the end user and selling it to advertisers in the form of targeted advertising.
DIFFERENCES BETWEEN THE BUSINESS MODELS
Apple and Google’s Business Models are entirely different and incompatible.
Apple’s Business Model works well at the high end because it targets those who are price insensitive, those who are willing to trade money for convenience and ease of use, those who are willing to pay to avoid advertising, and those who are willing to pay to insure their privacy. In other words, they’re willing to pay to avoid Google.
Google’s Business Model works poorly at the high end because — regardless of how well Google’s hardware works — Google will still sell their customer’s data to advertisers. Google’s end users are usually more than satisfied with trading their privacy and exposure to a bit of advertising for lower cost hardware. However, a high-priced Google phone destroys this value proposition because it eliminates all of the up-side while retaining all of the down-side.
Further, Apple does not have to concern itself with hardware partners because they design both the software and the hardware. Google has a good relationship with their hardware partners because they create a high-quality product (the Android operating system) and give it away for free. The moment Google starts making their own hardware, they create a conflict of interest with their hardware manufacturers.
First, the creation of a Google hardware phone causes Google to directly compete with their hardware manufacturers for sales at the high end of the market, which is also the most lucrative end of the market.
Second, the creation of a Google hardware phone creates an internal conflict of interest within the Google software team. If they want to sell a premium hardware product that competes with Apple, then they want to tailor their software to work with their hardware, just as Apple does. But the more they tailor their software to work with their own hardware the less well it will work with the hardware it is not designed for.
Further, while Google is currently incentivized to provide their hardware manufacturers with their best version of Android, when Google makes their own hardware, they are placed on the horns of a dilemma. They can either retain their best software features for themselves and make them exclusive to their own hardware — at the expense of their partners — or they can share their best with their partners — at the expense of their own hardware.
“Well, so what?” say the pundits. “Google’s hardware partners, like Samsung and others, have nowhere else to go, so they’ll have to simply take what Google gives them and be satisfied with it.”
In fact, that’s almost exactly the argument the Author makes:
If Samsung doesn’t like that, it can try selling Tizen phones instead of Android.
These exact same arguments were made when Microsoft created its own hardware for MP3s. And its own hardware for mobile phones. And for tablets. And what was the result? Microsoft’s hardware manufacturers haven’t entirely disappeared, but they haven’t thrived either. And Microsoft’s increases in hardware sales have been more than offset by the lost sales of their hardware partners.
This is not that hard to understand, yet pundits seem determined not to understand it. Third-party manufacturers are not going to stick around if they don’t make a profit. And the more successful Google is at making their own hardware, the less successful their manufacturing partners will be at competing against Google’s hardware.
CHANGING A BUSINESS MODELS IS HARD
Changing a Business Model may seem all fine and dandy on paper, but in reality, it’s a nightmare. I challenge you to name a company that has both changed its business model and retained its relevance. Historically, there are a few exceptional companies who have accomplished it, but that’s what they are — exceptions. In the vast majority of instances, changing one’s business model is nigh on impossible because the things that make a company great at doing what it does are the very things that make it lousy at doing what it doesn’t do.
ATTACKING THEIR BEST CUSTOMER
Finally, is it really in Google’s interest to compete with Apple? Apple is, after all, their best customer. Even though Apple only has 12-15% of the smartphone market, Google makes more than half of their profits from customers on Apple’s platforms. Google currently pays Apple 3 billion dollars just to be on their platform. If Google attacks Apple, Apple will be incentivized to cut ties with Google. Is it really worth it to Google to sell a few extra Pixel phones if it means endangering the Goose that lays the golden eggs?
One who knows when he can fight, and when he cannot fight, will be victorious. ~ Sun Tzu
Maybe Google feels this is a battle they have to fight. For their sake, I hope not. This is a fight they cannot expect to win.
Wars are not won by fighting battles; wars are won by choosing battles. ~ George S. Patton
Over at Technically Incorrect, Chris Matyszczyk has a different take. He argues that Google will fail in consumer sales because Google is inept at consumer marketing. He makes a pretty convincing case. You can see it for yourself here.
And in case you’re wondering whether HTC has better marketing chops that Google? Yeah, not so much. See video commercial here and associated article here.
Over at MacWorld, the Macalope uses his inimitable style to eviscerate a similar article making a similar argument. You can view the Macalope’s article entitled “Fourth time’s the charm: Google to win again”, here.
Some fascinating news broke yesterday that Apple is returning to Google for certain aspects of search within iOS and other core software. Apple is returning to having Google as the default search within iOS and macOS as well as for web-based search within Siri. When the iPhone first launched, Google was an essential partner for Apple as the Google search and Google Maps were core features touted as capabilities of the original iPhone.
Sometimes, context and comparison can really make a difference. At the company’s combined Envision and Ignite events in Orlando this week for both business and IT professionals, Microsoft showed off its ability to reach the extremes of computing. It talked about both new low-end (sub-$300) Windows 10 S-based notebooks, as well as entirely new types of computing with a circuit board, prototype device, and programming language built for a functioning quantum computer.
On a practical level, the new Windows 10 S devices coming soon from HP, Lenovo, and Acer are probably a much better iteration of what 10 S-based computers should look like. Recall that Windows 10 S is a “simplified” or cleaned-up version of Windows 10 that can only run modern Windows 10 applications available from the Microsoft store, and was (until now) primarily targeted towards the education market. Specifically, the apps must comply with all the “rules” that Microsoft has defined for the most optimized performance and long-term stability on Windows.
In theory, 10 S is a great idea that can rid the world of problematic applications, allow PCs to run faster and more consistently and, best of all, avoid the inevitable Windows “rot” that slows your computer down as you use it over a period of time. In reality, however, there are a lot of applications that don’t conform to all of Microsoft’s rules—especially in business environments, where custom applications are extremely common.
Not surprisingly, as a result, 10 S has seen relatively little adoption in the enterprise, even though Microsoft initially tried to drive a higher-end view of 10 S by installing it on the pricey Surface Laptop. With this week’s announcement, however, Microsoft is targeting Windows 10 S at what it calls firstline workers—everyone from receptionists, to sales clerks, and 2 billion others who are often the people that first interact with a business’ customers on the front lines. The argument is that many of these workers have more simplistic computing needs, so a less expensive, less powerful, and less flexible device will still be more than sufficient.
While it’s easy to pick apart some elements of Microsoft’s position, frankly, this is the same group of workers that companies who build and sell thin clients have successfully focused on for years. At least with these new Windows 10 S notebooks they get a mobile computer and local storage—two key detractors against thin clients. Plus, it comes at a price point that is actually cheaper than some desktop-only thin clients. Finally, and most importantly, one of the real distinguishing parts of this new offering is a low-cost version of Microsoft 365, which combines Microsoft’s Office 365 productivity applications, along with security and manageability services. Taken together, it’s a pretty compelling package that I think will finally bring some life and opportunity to Windows 10 S in business.
At the other extreme, Microsoft’s announcements on quantum computing were absolutely revolutionary. The company has chosen to follow the path of topological quantum computing—apparently, one of several options being researched around the world—and discussed an array of extremely complex math, physics, and computer science challenges coming together via a 12-year effort.
Using a vocabulary that practically sounded like a foreign language—qubits, Majorana fermions, decoherence, etc.—the company described its efforts to turn mathematical theory into practical reality via a chip that can perform quantum calculations, a steampunk-looking computing device that operates at near absolute zero (the extreme cold is currently necessary to manipulate qubits), and even a programming language built into Microsoft’s Visual Basic programming environment that can create algorithms designed for quantum computing applications.
All told, it was an extremely impressive, though still confusing, discussion of where the next several decades of computing will likely be focused. To make it a bit more practical, the company even announced the ability to create quantum computing algorithms that, for now at least, can be simulated on the Azure cloud computing platform.
While Microsoft never made any comparisons between the low-cost Windows 10 S notebooks and quantum computing announcements, as an event attendee, you couldn’t help but notice how stark the difference was between them. Some might argue that the range was a bit too wide, but it reflects the breadth of Satya Nadella’s vision for Microsoft, and how the company has extended its idea of computing across an enormously broad spectrum of possibilities.
This past week, there was lots of coverage of perceived demand for the iPhone 8 models in the media. Shorter lines at retail stores were seen as evidence of poor sales, and there was the usual handwringing about what it might mean for Apple. To put all this in context, it’s helpful to look at Apple’s financial guidance for the September quarter and see what that tells us about what Apple was expecting by way of early iPhone sales, and whether it’s still on track.
Last week, Apple gave me a Space Grey Aluminium Apple Watch Series 3 to test. I have been wearing an Apple Watch since it first came out and it has become an essential part of my device portfolio. I have already admitted to being a skeptic when it comes to wearables with cellular but a skeptic with an open mind willing to be proven wrong about the need to have a connected smartwatch. So I was much more interested in what Watch OS 4 had to offer to be honest and features such as the new heart monitor than cellular.
While I had been running iOS11 Beta since it first came out, I had decided not to run Watch OS 4 Beta so the first time I experienced it was when I turned on the new Apple Watch Series 3. Aside from cosmetic embellishments to the UI and faces, the most noticeable improvements for me have been on activity and fitness. The higher performance heart monitor and the added data on recovery really help you bring your workout to the next level even if, like me, you are just trying to get fitter. It has also been interesting to have Siri answer back to you rather than just displaying the answer to my question. I thought this might be a hook for me and while I need to spend more time with Apple Watch, it certainly has the potential to make me turn to Siri more.
The Role of the Carriers
As I listened to Apple Watch Series 3 being announced at the Steve Jobs’ Theater, I said that it was going to be down to the carriers to mess up this opportunity. I was referring to the pricing they would choose to charge for activating a watch which turned out to be about $10 a month with some limited promotions. A price, that in my view is excessive considering what the device can do, which is much less than what an equally priced phone or a tablet can do.
Little did I know, that the actual experience of setting up the Apple Watch could also be a bit of a hot mess mostly because the store, as well as online staff, was not properly informed. After a few hours and a few self-taught sales assistants, I could activate my Apple Watch, but in the process, I learned a few things.
My carrier still thought I was using an iPhone 5 as, apparently, the data on what phone I am using does not get updated automatically when a new phone with my phone number gets connected to the network. When I asked the salesperson, he said that they do not have that information and I should be calling in my IMEI number every time I update my device – he could not quite understand why I chuckled when he said that! I am sure it will not surprise you to hear that in the UK my mobile operator knew what phone I was using and that data was actively used to pitch upgrades and services.
It also turned out that my SIM was an old one, which did not support WIFI calling, a feature you need to activate to get NumberSynch working. Once again, I was surprised, as in the UK my carrier sent out a free SIM every time they upgraded them.
All these steps were necessary to start the activation, but they are totally unrelated to the Apple Watch and just show very poor customer management on the carrier part.
Others reported glitches in their activation process and I am not sure if it was because carrier underestimated the amount of demand or because carriers were just not ready. Either way, the customers are feeling the pain and Apple will likely be criticized for it. The complexity of being almost first (activations of LTE smartwatches thus far have been quite limited) and doing things slightly differently from others by relying more on the sinergy between Apple Watch and iPhone, however, had left Apple trusting that carriers would be ready. In some ways, this reminds of Apple Pay roll out when banks were heavily advertizing their support but you called to activate your card and they would have no clue. Some suggested that Apple should have waited, that the product was rushed, but I do not think that was the case. No matter when the shipping would have started these issues with setup would have likely occurred. As it was the case with Series 1, I think Apple is still in learning mode with Apple Watch and in this case how consumers will use the cellular connection.
Setting Expectations Right
Once I could set up LTE on my Apple Watch 3, I was very impressed by how smart the LTE connection is. When you look at your control panel, you can see when the Apple Watch is connected to the phone and therefore cellular is off. You can tell because you have a green phone icon and the cellular icon is white. When your phone is off or not connected to your Apple Watch because it is out of range, the cellular icon turns green and rather than the iPhone icon you will have the network bars, well dots in this case. This allows for Apple Watch to optimize battery life.
Apple made it clear that while the Apple Watch can now be a stand-alone device, it is not meant to be that way all day long. I had no problems going for a dog walk or through a workout without my phone and being able to make a couple of test calls and receive messages and notifications. Battery life when I did that ended up being a little shorter than when I did not use cellular, as you would expect, but I still made it through the day.
Apple’s great demo of the employee who was paddle boarding led people to expect miracles. While Apple’s decision to favor Wi-FI made sense, as it would help with battery life but also with data consumption, it is proving difficult in an urban context where you can find many public networks that require a password. Aside from this widely-reported Wi-Fi issue, which I am sure Apple will address shortly with a software update, I think that, because of that demo, people now expect to have reception in locations where not even a phone would get a signal. Let’s be realistic, despite the innovative design Apple used for the antenna, there are going to be limitations on what Apple Watch vs. an iPhone can do.
Should you buy the Apple Watch Series 3 LTE
I won’t tell you, whether you should be buying an Apple Watch Series 3 with LTE. Not because I cannot tell you but because I should not. My experience is mine alone, and more so than any other device you might have with you, Apple Watch is a very personal experience, and you should base your purchase on what you think your key use cases will be and mindful of the limitations the Apple Watch might have as an iPhone replacement simply because that is not what it’s purpose is.
This week’s Tech.pinions podcast features Carolina Milanesi and Bob O’Donnell discussing the reviews of Apple’s newly lauched products, analyzing Google’s announced acquisition of people from HTC, chatting about the Nest security product announcements, and debating the opportunity for Amazon-branded smart glasses.
There are certain apps that we use every day that are just fantastic and that I think we take a bit for granted. Google Maps is one of those. It is amazingly useful, works exceedingly well, and just keeps getting better. And, rather quietly, helpful new features are introduced without a lot of fanfare. For example, I’ve noticed that parking information is now integrated into directions in certain cities.
One of the more interesting meetings I had recently while in San Francisco for Mobile World Congress Americas was at the headquarters of Mapbox, a VC-funded company that crafts beautiful maps and provides a location data platform, APIs, and SDKs for developers to build into applications. For example, they provide the weather layers that we’ve all been seeing too much of on the Weather Channel over the past few hurricane-filled weeks. The market for digital mapping services is active and very competitive (even though Google is the behemoth). And there’s been huge growth of mapping APIs over the past couple of years.
This dip into the digital mapping world got me to thinking about a few new features that would be very useful for mapping apps.
Greater Delineation of Road Surface Type. Especially Dirt Roads. Many people use mapping services to plan out bike routes. I’ve found that in many more rural locations, it is not clear whether a road is paved or dirt. This can spell trouble for bikers, especially if it’s a ‘road bike’ with thinner tires. Plus, it’s hard to determine road surface type using ‘satellite view’. Some of the services do a good job of delineating surface type for trails, such as running or bike paths, but, curiously, not as well for roads.
Offer A ‘Best Route’. For driving directions, there’s usually an option to ‘avoid highways’. And the mapping services have been steadily incorporating more information about roads that are ‘cycle friendly’ (e. have bike lanes). How about a ‘pleasant’ or ‘scenic route’ option, which would guide the user to more interesting, less traffic-y roads? For pedestrians, this might mean using side roads between two spots that are more enjoyable or interesting for walking. In cities, I could see some cool AI applications, for example for those who like art, designing a walking route that goes by galleries.
Incorporate Car Pool/HOV Lane Into Traffic Info. This idea came about as a result of a recent experience. It was a Friday afternoon, and I was on 101 South in the San Jose area. Lucky me. The map said it would take 45 minutes to get to my destination (12 miles away). So happens, there were two of us in the car, so we were able to use the car pool lane and get to our destination in 20 minutes instead. The time did adjust once we were in the lane, whizzing by other cars.Incorporating HOV lane information into mapping apps would be very useful. When requiring directions to a location, there could be a setting where the user is asked if there are two or more passengers. Then the app could also help plan the optimal route using HOV lanes, if applicable, and also adjust the time to destination. Or, in the route option, show ‘use HOV’. Even letting the user know that “you saved 10 minutes by carpooling” would be a helpful incentive.
Greater UI Consistency Between Web and Mobile App. This might be more specific to Google Maps, but I find that there are some major usability differences between Google Maps on the web and on smartphones. For example, it is easier on the Web to obtain directions between two places. And I think the “search nearby” function works more quickly, intuitively, and effectively on the Web. On my PC, if I enter an address, there’s a nearby button with prompts for restaurants, hotels, and so on, or I can enter something in the search box, such as ‘hardware stores’. But the “explore nearby” function, or trying to find out what’s near a particular spot, is much less intuitive or user-friendly on a phone. Funny thing is, it used to be better and easier. There have actually been petitions to bring back “search nearby” function which was on what is now referred to as the “classic’ version of Google Maps.
Better Tutorials & Help Information. There are many very useful features and settings in Google Maps and other digital mapping applications that I don’t think are well known, or are under-utilized by the average consumer. A search for “how to” usually yields helpful results, but many people don’t have a good idea of what to even look for. I think the digital mapping companies, or even third parties — Google, Apple, and third parties — could develop an improved set of visual tutorials on how to maximize the wonderful capabilities available in their services.
Earlier in the week, the FT published a story reporting that Amazon was allegedly working on a set of glasses using bone conducting technology to bring Alexa to your ears. Given Amazon’s hiring back in 2014 of Babak Parviz- founder of Google Glass – the Amazon’s eyewear should not come as a surprise. According to the FT, the glasses will have no screen, will work tethered to a smartphone and will look like a traditional set of glasses.
As iOS 11 rolls out, and a flood of augmented reality apps hit the market, the category faces a risk of a letdown. Apple is already featuring AR apps in a dedicated section of the iOS App Store and in the process hoping to educate consumers of the benefits. As we have observed before when Apple releases a new technology that developers can take advantage of and in return, Apple may feature their app; these developers flood the market with ideas. Some of these ideas are good, and some are not so good. It is this flood of applications that, while necessary, could lead to some technological letdown.
Nest this week make its biggest ever announcements and introduced its first truly new hardware category since it acquired Dropcam in 2014. Its product line is now extensive and with partner devices thrown into the mix covers much of the addressable smart home market, with all of its own products overhauled in some fashion in the past year. But one thing remains stubbornly unchanged at Nest: its business model. And that may now be the biggest thing holding it back.
An Explosion in Activity After Years of Minor Change
The past year has seen an explosion in activity from Nest after years of relatively minor change and incremental updates. The picture below illustrates what’s happened to Nest’s portfolio of products since its inception, and it’s clear how different 2017 has been:
From its inception in 2011 with the original smart thermostat through the acquisition by Google and acquisition of Dropcam shortly thereafter, Nest created or acquired three main product lines, and from 2014 to 2016 that didn’t change. The Dropcam products adopted Nest branding and got some updates and new variants, but there was no dramatic change. Then, in 2017, the cameras got big updates with much smarter technology, Nest introduced its first cheaper (and less obtrusive) thermostat, and this week it announced its first doorbell product and a home security system. All of this came after the ouster of founder Tony Fadell and although that’s likely in part a coincidence, it’s notable how much more quickly the company has appeared to be moving in the past year.
But the Business Model Remains the Same
However, for all the new products announced over the past year, Nest’s business model remains the same: this is fundamentally an off-the-shelf, pay-upfront, do-it-yourself model, the same as it’s been since the beginning. And as I’ve argued before, that model has severe limitations in terms of its addressable market. Just consider the prices of Nest’s top of the line products:
Nest Cam IQ outdoor: $349
Nest Cam IQ indoor: $299
Nest Secure: starts at $499
Nest Smart Thermostat: $249.
Several of these products will need to come in multiples to be useful, so those prices should likely be multiplied to get a real sense of what they’ll cost. That alone will make them cost prohibitive for many customers, but add in the intimidation factor of fiddling with thermostat wiring and the attendant risk of electric shock, drilling through walls to install a security camera, or trying to troubleshoot devices that won’t maintain a reliable connection to WiFi, and you further limit the addressable market.
The (DIY) Smart Home is Stuck
That’s why I’ve been arguing for quite some time now that the biggest thing the smart home market needs to go mainstream is a service model in which professionals install and manage the system and charge a monthly fee which recoups the cost of the hardware rather than charging for it upfront. That lowers the price barrier to entry considerably and means that those not willing or able to install or manage devices themselves can still participate in the smart home.
When new CEO Marwan Fawaz took over from Fadell, I posited that his background at Motorola and other companies which worked through carriers to support a service model might mean that we’d see more of this kind of thing from Nest going forward. But although Nest devices are included in some third party smart home services, Nest still hasn’t created its own, in contrast to players like Comcast, Vivint, AT&T, or the alarm companies. Indeed, at this week’s event it used the self-install model as a major selling point in contrast to having to wait around for a technician to come and spend hours installing a system. That may well be a selling point for the minority who feel comfortable with that model, but I worry that Nest is shutting itself off from a much larger addressable market by restricting itself to it.
A Foundation is in Place for a Managed Service
Nest already has a foundation in place for a services model, as it offers the Nest Aware service for monitoring cameras, and now has a partnership with Moni for 24/7 monitoring around its security system. It’s building a subscription model, but it’s entirely based on either third parties or automated systems today rather than incorporating the human touch in installation and management. Nest even offers to help you find an installer for your new Nest products, but that’s still an arm’s length relationship today and doesn’t offer the brand guarantee that could come from a truly integrated service.
To be sure, there’s still likely quite a bit of growth available for Nest in its current model, by expanding it to new markets and now expanding the line of products it sells. For now, that may be enough to sustain its business for the next couple of years, but there’s a much bigger opportunity out there if it takes many of the components it already has in place and turns them into a managed service.