What Bill Gates’ Mea Culpa Says About Microsoft

This week, in an interview at venture firm Village Global, Bill Gates admitted that his biggest mistake was not to empower Windows to become what Android is today. More specifically, he said:

“In the software world, particularly for platforms, these are winner-take-all markets. So, the greatest mistake ever is whatever mismanagement I engaged in that caused Microsoft not to be what Android is. That is, Android is the standard non-Apple phone platform. That was a natural thing for Microsoft to win. It really is winner take all. If you’re there with half as many apps or 90 percent as many apps, you’re on your way to complete doom. There’s room for exactly one non-Apple operating system, and what’s that worth? $400 billion that would be transferred from company G to company M.”

This is the first time Gates takes responsibility for not doing what was needed to be where Android is today. Over the years, the misstep was always associated with CEO Steve Ballmer and his dismissal of the impact that Apple’s iPhone will have on mobile computing. Hence why the most common commentary on this topic has always been that Microsoft missed mobile. They misjudged the importance that mobile phones will have in taking time away from PCs.

What transpires from this week’s comments is both a sharing of responsibility by Bill Gates, but most importantly, in my view, an admission to missing the opportunity to monetize from consumers not missing mobile.

Missing the Forest for the Trees

Back in 2008, Microsoft’s revenue was still highly dependent on software license sales, as a letter to shareholders clearly outlines.

“Fiscal 2008 was a successful year for Microsoft that saw the company deliver outstanding financial results, introduce significant innovations across the breadth of our product portfolio, and make key investments that position the company for strong future growth.
Thanks to the continued success of our core Windows and Office businesses, and double-digit growth in all of our business groups, revenue jumped to $60.4 billion in fiscal 2008, an increase of 18 percent compared with the previous fiscal year.
Throughout fiscal 2008 we saw strong adoption of Windows Vista, which has sold more than 180 million licenses, and the 2007 Microsoft Office system, which has sold more than 120 million licenses. Microsoft Office SharePoint Server 2007 passed the 100 million mark for licenses sold and recorded more than $1 billion in revenue.”

Microsoft’s performance was linked primarily to the enterprise market and only indirectly to the consumer market. What I mean by this is that PC buyers were buying hardware that was running Windows they were not buying Windows. As a result, Microsoft saw consumers only as a dotted line to a license fee rather than a clear target audience.

It wasn’t Natural

With the rise of the iPhone and Android, Microsoft did not look at mobile in a conceptually different way from PCs. Mobile was just another “channel” for its license and software business. It certainly did not represent a new opportunity to rethink engagement with consumers so that “Windows was not just something they used, but something they loved” as Nadella said many years later. So, being where Android is today was not as natural as Bill Gates makes it sound because the battle strategy was fundamentally flawed.

Google had the foresight to appreciate the real impact that mobile will have on its core business and had the advantage of having a core business that was already centered on consumers. Going from Android as a vehicle for search and advertising to Android as a platform for all services was a natural progression for Google. If you look back at the initial priorities Google had with Android, it was clear that the goal was different than what Apple was doing with Apps. An app store was needed to compete with iOS, but it was not seen as a serious source of future revenue. Google services on phones provided that source through the engagement they drove. Engagement that in turn, benefitted the core business of search and advertising.

Restarting the Race

These reflections on past pivotal moments are very timely. In Cloud and AI, Google and Microsoft were let loose again after the safety car moved out of the way in the race. Both companies are addressing the enterprise with Cloud and AI, and Google is clearly keeping its investment in the consumer market albeit trying to distance the two so that it is clear the business models in these two areas are different.

What we have not seen with enough clarity is how Microsoft will use Cloud and AI to focus on consumers. Of course, there is Office 365, Surface and Xbox that are all relevant to consumers as well as enterprise. But I believe there is a much broader role Microsoft could play as the boundaries between work and home become more blurred. For more and more users, the devices, software, and services they use at work are also those they turn to in their private life. This means that there is a significant opportunity to use cloud and AI to make my overall experience better, use my data across the board to drive more value to me without indirectly monetizing from me. I would actually argue that done right, this value of added intelligence and data protection and privacy could provide a source of direct revenue in itself. Apple certainly believes that and as their core business is hardware and services that is where they aim to monetize.

Pondering on the whats and ifs of winning mobile seem somewhat irrelevant at a time when there are so many more technology touchpoints in our life. It also misses the point that the real target was winning consumers. Leveraging existing mobile platforms today to create synergies with the parts of the ecosystem, Microsoft controls could be beneficial enough to the business in itself. But to harvest such an opportunity, Microsoft must do something that seems to be more natural to them now than it ever was in the past: taking a human-centric approach whether that human is at the office or home.

A Deeper Dive on Android and iPhone in China

I’ve received a number of questions from readers about why I don’t talk as much about the US market for smartphones. It’s primarily because the US doesn’t offer any new interesting questions or problems. It’s about a 50/50 split between Android and iOS and Apple controls over 60% (and growing) of the premium smartphone space. iOS is on track to gain share into Android’s each quarter of 2014 and it will likely be more of the same in the US in 2015. However, other markets like India and China pose much more interesting questions and problems to be solved. I’ll do a few deep dives on the US market with some of our updated data sets, but what we find will likely not contain major surprises. Now, onto the iPhone and China.

First, Android Context

A fascinating data point came from Baidu yesterday. Baidu, the largest browser in use with an over 80% share in China, reported to Tech In Asia that they count 386 million active, individual Android customers. This is Android AOSP, not Google-approved Android, and a few things are unclear about the numbers. First, it is uncertain if these are smartphone-only owners. The report simply states active Android devices. Given China runs both AOSP on smartphones and tablets sold there, either device connecting to the Internet and accessing Baidu’s search engine would be counted. Through my supply chain checks, I learned that, on average, about 20m low cost Android tablets are sold in China each year. As I have discussed before, most of those are used simply as portable media players and large percentages likely do not connect to the internet. Which means, while some of the 386m active Android devices are tablets, the majority are smartphones. ((Even if the report said they were all smartphones, I would still believe a small percentage were tablets since my research there found that even 7-inch tablets in China use smartphone components; therefore they show up in analytics as smartphones.))

Baidu similarly reported last year a total of 270m active Android users. So there is impressive growth for AOSP. For some time now, I have been building a model of AOSP’s growth in China and was pleased to see Baidu’s data for Q3 2014 matched very closely to my own model.

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You’ll note growth is slowing, as is the China smartphone market in general. There is certainly more growth to be had as more of rural China gets online, but these will mostly be with very low cost smartphones. Where things start to get interesting is when we look at the nearly 400m Android AOSP customers in light of the total smartphone user base. A number of Chinese research firms like iResearch China and analytics engines like Baidu/Umeng came out and said over 550m smartphones were in use in China by the end of June of 2014. My model would estimate that number to be around 575m as of today. Now we turn to the iPhone.

All local app analytics sources I have access to in China, and major network statistics I see, show Android and iOS as the two dominant smartphone platforms. So, if ~386m of them are on Android, then the iPhone fills most of the gap between 386m and ~575m. Based on my model, I had estimated iPhones were likely in the 130-150m range and I have believed for some time there were more iPhones in use in China than the US. It seems Baidu’s data is confirming much of what I thought my model was suggesting was true.

However, the bulk of that iPhone active installed base is on much later generation hardware sold through the grey market. This chart is the most updated data — now containing a a month and a half of iPhone 6/6 Plus availability. Keep in mind iPhone 6s starting showing up in September in this data because of grey market imports.

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As Apple offers more models for sale in China, we are seeing the continued rise of primary market sales of iPhones. There remains a large installed base of later generation phones but, as you can see, it is actually more of a mix than domination by a few models. This data comes from Baidu’s app distribution network so it does not cover the entire market but it does cover over 100m devices. I can’t imagine the picture is much different on other app distribution platforms.

What I’m left thinking about is what will happen with the large percentage of current iPhone owners who are using later generation iPhones they bought from the secondary market for prices around $300-$400. It is hard to believe every one of those owners can afford a $700 phone but will they stay in the Apple camp and get another later generation phone like the 5s? Or will they stay in their price range and go with Xiaomi? These will be interesting questions for most of 2015. However, once the current iPhone 6/6 Plus gets discounted in China when the iPhone 7 comes out, I think Apple’s offering in China will be very competitive.

Lastly, it is worth pointing out the China smartphone market is unlike anything out there at the moment. Much of it has to do with WeChat. WeChat is undeniably functioning as an alternate or “para” operating system that runs on iOS and Android. As I look at what lock-in Android AOSP, or Xiaomi’s Android skin, or Apple’s ecosystem has, I observe the true lock-in in China is WeChat. Apple has the benefit of playing as a luxury brand; status is a huge part of their lock-in in China. But as this financial analyst correctly points out, we are hoping to see Apple continue to create more services/cloud lock-in rather than just status. Services like UnionPay integration will help with this but Apple’s services stickiness in China is a story to watch.

With Chinese consumers’ loyalty to WeChat, it means Android vendors could come and go. Xiaomi is doing a decent job building some loyalty and all on-the-ground research I get from China indicates a growing pride of Chinese consumers for local Chinese tech brands. This will continue to pose challenges to Samsung. We are watching a number of Chinese brands closely, but Vivo (charted below) is one to keep an eye on as they are positioning a number of their products to the high end.

There are many story lines to watch and analyze throughout 2015 with regard to China and I’ll keep updating my narratives on all of them.

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Mobile Is Eating The Car

I attended last week’s Los Angeles Auto Show, as I do every year. While the norm among native Californians seems to be to fly from San Francisco to Los Angeles, I always drive. I make my way over to I-5, confirm there are no patrol cars nearby, then torch the accelerator. Soon I’m in LA, checking out all the new models and the many concept cars.

This year was different.

This year it was incontrovertibly clear just how much mobile is eating the car. We still need cars, of course. Some of us still desire cars. But their value is being eaten away by our smartphones.

While it may not seem the tiny smartphone would impact the car industry, car design, or our massive, decades-long commitment to car infrastructure, the fact is smartphones are disrupting this giant 20th century ecosystem just as they are so many others.

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1. Jobs To Be Done

A primary reason for the car’s existence is to get us to work. In the mobile age, work is everywhere we are.

Mobile devices enable us to work anytime, from anywhere. They are even changing the meaning of work, its urgency, how we collaborate, how we respond, and what data is available.

Plug in from the coffee shop. Have a video conference while walking the dog. Check sales reports, site data and support emails from the couch. In this new world, cars are less important, less valuable.

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2. Location Location Location

We need to know where we’re going and want to know the best route. Smartphones are already better at this than cars:

  • We are more familiar with smartphone mapping tools.
  • They offer real time traffic data, including data from the crowd.
  • They know our history, previous locations and preferences better than our (dumb) cars.
  • They know our schedule and contacts better than our cars.

All of this means smartphones, not cars, can better predict where we need to be, where we should be, which path is best, and which mode is superior — car, public transit, ride service, walk or staying put. Yes, we still need the car to physically get us from Point A to Point B, but the value of the location data — more prevalent in our smartphones — is ascending.

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3. Entertainment

We are human. We need to be entertained. The more (and better) our smartphones entertain us — while we are in a car — the less important the car itself. The car’s value is diminished. Don’t believe me? Try this: commute in a $20,000 Honda Civic for one month, with your smartphone. Next, commute in a $90,000 Cadillac Escalade, fully tricked out, also for a month — but without connectivity. No streaming, no Siri, little to keep your and your passengers entertained.

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4. Interface

We deserve simple, instant access to our music, our contacts, our friends, our status updates. I have examined multiple cars at multiple price points and every smartphone I’ve ever used offers a superior interface to mapping, entertainment and other data — despite a 120 year head start for the car industry.

Apple’s CarPlay and Google’s AndroidAuto will deliver simpler, more responsive interfaces, better data, richer options. Expect these to become the norm, not the car maker’s lesser, more confusing dashboard configurations.

As the more personal, interactive interface of the smartphone evolves — from inside the car — the more the car itself becomes merely a vehicle for transportation. Again, this will diminish the car’s value.

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5. Ownership

Uber and similar services, all thriving due to the smartphone, are further undermining the value of a car. Consider that if you live in an “exurb” and commute to the big city for work every day, and your commute totals a whopping 20 hours per week, you are still only using your expensive car for no more than 20% of the day.

That’s a wasted asset. Why pay tens of thousands for a car that will rarely be used when someone else can take you to wherever you need to be?

Yes, the convenience of owning still trumps “ride sharing.” Owning a car means it’s always right outside your door, available at a moment’s notice.

This will change. Smartphones will soon enough be able to proactively tell any available car to be waiting and ready for us, wherever we are. Knowing our calendar, preferences, history and habits, our present location, our to do list, and knowing who we are with — and who we may need to impress — will become more valuable than having the same owned, under-used car always nearby, eating up our limited wealth.

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6. Freedom

Cars are freedom. Every teenager knows this.

Or, once did.

The open road may beckon some but with constant connectivity to friends and family, with our favorite musical groups via social media, with our favorite TV stars via Twitter, with our favorite books on Kindle, it’s time to accept a new truth: we now have more freedom inside our smartphone than is available anywhere our car may take us. No wonder fewer teens are interested in getting a driver’s license.

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7. Under The Hood

For decades, car owners loved to get under the hood, tinker with the engine, make modifications and personalize their cars. Look at today’s engines, especially those that are hybrid or electric, and know that one of the glories of car ownership is rapidly being stripped away. Only trained experts using the right tools can safely modify your purchased vehicle.

Mostly, it’s the same with smartphones. Still, after-market accessories and efforts such as Google’s “Project Ara,” which lets users customize their own mobile device, may foster a generation of smartphone tinkerers who previously might have liberated their mechanical creativity on the internal combustion engine.

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We are rapidly approaching a world where a $250 smartphone is more important than a $25,000 car. The world will never be the same.

Understanding the Global Mobile Web

In the latest mobile focused podcast with Benedict Evans and myself, we touched on a theme that needs more fleshing out. That of a future only possible because of mobile computers/smartphones. When I detail the mobile first world in articles, presentations, and reports, what I highlight is not only the impact but the necessity of mobile to move computing forward. The PC in the shape of a notebook or desktop took computers as far as those shapes would allow. There are very few new users for PCs of that design. The PC in the shape of a tablet can take computing even farther, particularly in business environments, and that form factor gets a PC into the hands of more people. The PC in the shape of the smartphone, however, brings computing to everyone. Perhaps more importantly, the smartphone can bring the internet to everyone. More revolution will come from the PC in the shape of a smartphone than from any previous computing product in history. It is because of this, we will see countless opportunities emerge and it is a future only possible because of mobile.

The smartphone opens the door to new possibilities because it is the first time the technology industry is accessible to everyone. In fact, over the next decade or so, we will watch smartphones become a commodity. Estimates are, by 2020, quality, powerful smartphones could cost $10. The mobile web is already bigger than the desktop web and, in a few years, the mobile web will dwarf the desktop web. It is a cold hard fact, the future of the Internet is mobile. This reality brings out some interesting implications.

Global Mobile Web Browsing

There was a debate last year around the disparity between iOS web browsing and Android web browsing. It seemed a conundrum — Android had 2x the user base but much less of the global browsing share. As you see from this chart from NetMarketShare, only recently has Android overtaken iOS in global web browsing share, and it is still very close.

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When we include Android AOSP and Google’s Android, there are well more than double the active devices compared to iOS. But why did it take so long? There are many theories but there is one in particular I find insightful and adds a bit of needed clarity to the global mobile web discussion.

The bulk of Android’s growth and market share is in the lower tiers of smartphone price bands. My estimates put premium Android price tiers at roughly 15% of the global Android installed base. Meaning much of Android’s installed base globally consists of non-premium/lower price tier smartphone users. This explained quite a bit of the global web browsing paradox. Apple has a significant installed base of premium users, larger than Google’s premium users, and those customers spend more time browsing the web and consuming internet data. As I started researching the mobile web in emerging markets, it became clear one of the factors for this disparity was, because of Apple’s premium customer base, this audience could afford to liberally browse the web. Where much of Android’s installed base, having to deal with pricey and slow internet connection times, and no wi-fi at home, could not.

This insight becomes even more clear when we look at this chart from Jana.com showing the number of hours of minimum wage work required to pay for the average data plan.

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Due to the infrastructure challenges in many of these markets, consumers are very aware of not only how much data they are using, but also the size of the application they are downloading. This is a fascinating quote from a post from LightSpeed Venture Partners, an investment firm focused on India.

So, what is an ideal app size, especially in markets like India with challenged infrastructure?

The ideal size is 10-15MB globally. Idea size for an app for tier 2/3 countries (like India) is below 5MB. 500MB+ is a non-starter. At 50MB+ the conversion rates fall off dramatically. On Android and iOS, conversion rates dip by 50% in tier 1 nations for non-game apps above 50MB. In tier 2 and tier 3 nations, conversion rates dip by 50% for games above 15MB.

It is becoming clear the high cost of data plans in many emerging markets are influencing how they use the mobile web and the apps they use and download.

The Light Web

Understanding this leads me to consider the role web apps may play in these markets. There is a web app called Zomato, which is sort of like Yelp for India. Zomato is a great example of a light application that is useful via a web app in those regions where light applications are necessary. It is true native apps are still dominant in these markets, however, we are still dealing with only the top 30-40% of the global mobile audience that has a smartphone and a data plan. As we extend that reach into the broader 60-70%, a healthy portion of those customers will be even more sensitive to the costs of data and size of applications they consume.

This is why the “light web” is a reality for the next billion users. Whether by lighter/more efficient native apps or, as I believe, web apps, the light web is better positioned for the next billion. Interestingly, even Uber has a robust web app. It is possible the powerful cloud and light, thin client computing paradigm is destined for emerging markets.

It is clear, thanks to PCs in the shape of a smartphone and the inevitable inclusion of robust sensors in these devices even at low prices, that we are heading to a fascinating future not only made possible because of mobile devices but empowered by them. This future will pose great challenges to many incumbents but even greater opportunities for the innovators.

The Consumer Tablet Growth Opportunity

A great deal of my tablet market analysis has been spent exploring opportunities for a PC in the form of a tablet. Opportunities not fulfilled by a PC in the form of a desktop or laptop. As I explained here, the enterprise or commercial tablet market’s upside is still quite large. But the question about the tablet opportunity for the consumer market looms.

Tablets grew faster and were more widely adopted than any previous electronics device in history. Continued triple digit growth was simply not sustainable. The tablet market slowdown was never a question of if but always of when. As you can see by the following chart, that time is now. ((I’m keeping iPads and the overall tablet market separate due to the extremely high sales of white box, low cost Android tablets sold that are used for nothing more than portable TVs and game players.))

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The tablet market, like all markets before it, is normalizing. Growth rates have slowed and now we can wrestle with the question of how much more growth is to be had.

Replacement Market vs. First Time Buyers

I find it helpful to focus on the question of whether the tablet market for consumers is a replacement market or if there is still a market for first time buyers. If the tablet is only a replacement, then it has peaked. However, I don’t believe that has happened. Apple keeps informing us 50% of iPad sales are to first time buyers. Which gives us an indication there are still new owners to be had. So how may that growth in first time buyers be had? I see two possibilities.

The first could be price. My friend Stephen Baker at NPD gave us some insights and holiday outlook for the tablet market. As Stephen points out for the US market, price could be a driver. I think it should be safe to assume that price war offerings for iPads and other tablets will be fierce in Western markets this holiday. Retailers use this pricing to get customers in stores where they hope they buy a plethora of other items. I’m guessing retailers will hope to leverage Apple’s new lineup with this strategy in mind. I believe Apple has a strong lineup from the original iPad mini to the newest iPad Air 2 covering many price points and giving retailers pricing flexibility with their offerings. In general, other branded tablet vendors have been seeing decreasing sales and Samsung in particular. It’s reasonable to assume Samsung tablets will see steep discounts this holiday at retail.

The second growth area is replacements and additions. It is very hard to predict when consumers will replace their tablets and more specifically their iPads. ((I point out the iPad specifically because it is the tablet brand that has the largest installed base by a healthy margin.)) As often is the case with Apple products, iPads are often handed down to other members of the family or to friends. In this scenario, the new iPad replaces the current owner’s device but another person gets their first iPad. Ultimately this is good because it builds the iPad owner base, who we would assume will be added to the future replacement opportunity. Continuing to build a large installed base will yield rewards. Whether the new lineup drives this upgrade and hand-me-down cycle we literally have no idea. But should it hit this quarter, it could be huge. While the iPad 2 is still a perfectly fine device, it has the highest installed base of all iPads. My firm’s estimates for active iPad 2s in use is over 60 million. We believe this base will upgrade at some point in time — we just don’t know when. It could be this quarter or it may not. But, given the price aggressiveness we assume we will see this holiday season, I’m guessing many iPad 2 owners may be enticed. Realistically, there is no better quarter to find deals than a holiday quarter. So this large installed base of iPad 2 owners would be smart to upgrade this quarter or risk waiting another full year. Given the channels I track, I should have a decent sense of what is happening before the quarter ends.

Stealing PC Owners: I still believe the traditional notebook and desktop form factor is overkill for most mainstream consumers. The decent sales numbers of PCs we are seeing are largely coming from enterprise and commercial markets such as education/students. The consumer market has yet to move in mass to upgrade their PCs. We believe at some point in time those consumers will make the move. And the wonderful unpredictability of many consumers leaves us guessing at what they will buy and when. Will they buy another PC? Or will they move to a tablet? This is the tension we will have to live with until we see a market indication of what is happening. The tablet will still have the price advantage this quarter and I suspect Windows 8 is still a hinderance. I do expect Macs to have a very strong holiday as well and, with the new iPhones in the mix, there is a lot competing for consumers’ wallets this holiday.

These are a few of the scenarios I think about when I look at the upside for consumer tablets. This quarter seems very hard to predict right now for nearly everything but for the  smartphone market. For the first time in a long time it’s hard to say with any accuracy how the consumer market for PCs and tablets is going to play out.

The 5.5 Inch iRemote For The Apple Home

You want to talk about Apple. I understand. They are the biggest tech company in the world. Their products are used by hundreds of millions. Oh, and next week there’s — OMG! — a major Apple event, not at Moscone Center in San Francisco but at Flint Center in Cupertino, the very same location where the original Mac was introduced and where the phoenix-like (i)Mac was introduced, and this can only mean…

A new Mac?

How can that be?

We are all expecting an iWatch.

And a large, new iPhone.

Two!

Some of us are even expecting an iPad XL, complete with badly needed split-screen, multitasking function. Tim Cook has repeatedly promised us new products, after all. We are 14 years beyond Y2K. Macs are borderline inconsequential in our glorious new world. Apple can’t possibly be putting the Mac at center stage, can they?

Unlikely, but kudos for cleverly diverting our attention.

Oh, glorious Apple. Stoking the rumors, week after week. Divvying out the “leaks” bit by bit. Building our excitement. Inciting our lust until…shazam!

Something totally unexpected.

Fine. Two can play at that. Here’s my totally unexpected prediction: a 5.5-inch iRemote for the home.

Price? $299, including an Apple TV.

The $299 iRemote

Ben Bajarin says there will be no 5.5-inch iPhone “phablet.” I agree. Jony Ive resisted increasing the size of the original iPhone for years. Market demand forced his hand. The market now wants an even larger iPhone. Ive will once again be forced to capitulate.

A 4.7-inch iPhone should suffice.

An iPhone that size can retain most of Ive’s iconic design, support one handed use, at least for some, and have the additional benefit of offering a larger, longer lasting battery, which is sorely needed.

A 5.5-inch iPhone is nothing more than a twisted abomination of Ive’s design. I can’t believe this will happen. Unless the rumors of a 5.5-inch iPhone point instead to an entirely new device.

The Future Of The iPod

A remote control for the Apple-optimized home does not require one handed use. It needs only be light, mobile, affordable, possibly even unapologetically plastic.

Such a device can control your HomeKit-enabled appliances. 

It replaces that wretched plastic Apple TV remote which has grown so useless even as Apple TV offers up so many more new content possibilities.

It’s the perfect size for tweeting while watching television. It encourages FaceTime calls.

Possibly, this device even supports multiple user accounts. 

That Apple will finally offer “widgets,” which are optimized for both the small iWatch screen and glanceable CarPlay screens, may possibly work better on this new device as well.

The device also does not diminish iPhone sales, where Apple gets the bulk of its money from. Think of this as the future of the iPod, if that helps. Not quite an iPad, which is more personal, this new “iPod” belongs not to a person but to a home. It collects data, controls applications and commands other devices. Yes, even an Apple Television in time.

Instead of storing and presenting your music collection, this new iPod stores, presents and manipulates the collection of data from the family’s wearables, appliances, the Internet-connected thermostats, door cams, and lights. The iPod becomes the universal remote for the Apple optimized household.

Siri will be front-and center with this new iPod, encouraging you to tell her when to turn off the air conditioner, or for how long the oven temperature should be set. Plus, with iCloud, Apple suddenly becomes a leader not just in “machine learning” but more importantly, possesses a knowledge of people inside their homes that is truly unique.

Everywhere A Screen

I accept I may be completely wrong. Where a large iPhone ends, a small iPad begins, or how iPod evolves in a world with all of these is not as clear-cut as even Apple marketing would have us believe. My strength lies not in predicting new technologies but in understanding how existing technologies will re-make the world, the economy, learning, work, power, joy. 

Yet, as computing spreads into all areas of our lives, and burrows its way into all of our things, we need new and better devices to help take full advantage of their combined potential.  

This is a unique Apple strength.

Time and again, Apple shows us how all our many technologies are supposed to work — for people, not for corporations or things or business models or the established order.

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This is why I am reasonably confident that, whether Apple reveals an entirely new device, a deconstruction of an old one, or something in between or far beyond, it will matter. If not right away, soon.  

Next week, the very moment Apple releases a larger iPhone of any size, tech bloggers will giddily point their finger and exclaim: “J’accuse! Apple copied! The iPhone phablet is copying the Samsung Note!”

This is willfully missing the point. 

Lousy artists copy. Tech bloggers squeal. Sound and fury signifying nothing.

Mobile computing is barely into the Model T phase. Apple is helping to push us forward, mostly in positive ways — even when we think their latest product is just one more device in an already crowded market. We can’t know what we need till we have it, be it an iWatch, a phablet, an all new Mac, or, yes, a universal home remote. 

We live in interesting times. They are about to get even more interesting.

Deeper Dive on Android vs iOS Web Usage

I gave a brief overview of my thoughts on global web usage in the Tech.pinions Insider weekly newsletter that goes out each weekend. But I wanted to dive into a few more points I think are interesting.

When it comes to the business model of so many companies in the smartphone, tablet, and PC market, usage is an essential metric. For online companies like Google, Facebook, Amazon, app vendors, and more, web usage or the extent to which one gets on and uses the Internet is even more essential. What we are seeing is the early signs of the problems connecting the next billion customers for many companies. For a long time, iOS dominated Android as a whole in terms of web usage. Interestingly, an online metrics service I track points out this specifically in their FAQ on their site.

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Android ships in larger quantities, but iOS dominates usage. Point number two is perhaps the most insightful. Not only are iPhones typically supplied with generous data plans but they are purchased by people who can afford to liberally use the web. Someone who can afford a $500 or higher phone in non-subsidesd markets can also afford a premium tier data plan. I’ve started using the term “data budget” to describe this. iPhone users have a higher data budget than the average Android user. Another point is broadband is not equal in many parts of the world. Many emerging markets have spotty and slow broadband. It makes the web challenging at times due to the lack of speed. These are part of the complexities I feel led to Android taking so long to pass iOS in terms of web usage, despite having more than double the usage base for quite a while.

While I recognize the disparity in methodologies of StatCounter and NetMarket Share,  I still find them both useful. StatCounter, measures total usage of a user and will count the same user as a page view every time that person views a website they track. That is why StatCounter has Android ahead of iOS in web usage and says it has been for some time.

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StatCounter’s data will favor the heavier of web users, thus their data will give us a broader picture of how active on the web each platform may be. But it is also skewed toward the top percentage of users who more liberally use the web. It leads us to the conclusion that the Android data collected by StatCounter is likely heavily influenced by those Android users who are more like iPhone users in terms of disposable income, data budget, quality of connectivity, etc. That point is well understood when we look at the device vendor breakdown of StatCounters data. We see Samsung users have been driving the bulk of Android’s global web browsing in their network of sites. Samsung’s premium and mid-tier devices would have similar users where usage would be impacted.

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NetMarketShare presents a different picture and for different reasons. NetMarketShare only counts each user once per day on their network of sites, so we get a bit more holistic view of platform usage which is not skewed by the power users of either platform.

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One thing to point out on this chart is it is measuring absolute share. iOS’ line is not going down because iOS is being used less, only because Android is growing as a percentage of overall web traffic on their network.

It was inevitable Android would pass iOS in terms of overall usage. What this brings up though is the striking point that usage is not equal between the two platforms per users. Meaning the average iOS consumer will still use dramatically more Internet services than your average Android user. Given the many points I’ve made before that Google’s Android already has the heaviest web users and the most profitable customers to their ecosystem as they are ever going to get, the longer term trend is problematic to their growth if it remains solely tied to usage of Internet services. The same is true of Facebook. In both cases the next billion will have a lower data budget, less reliable and likely slower connectivity and will have to prioritize that data budget accordingly. In short, this next billion will prioritize survival over entertainment. They will likely use a messaging service like WhatsApp because that is how their commerce or trade gets done. That is a worthwhile spend of data budget. Those needs will trump entertainment for the foreseeable future.

While looking at iOS vs Android web usage is helpful, it is really still only part of the story. I track a range of developer toolsets that show web usage by particular devices as well. Often many of these include app usage as well since most of these analytics services are for app developers. Here are a few select countries of interest because they are big but also because they qualify as those I consider with a stringent data budget.

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All this does is emphasize in countries where the iPhone has a presence, even if only small, those users dominate the usage the landscape and often by a healthy margin.

Take Aways

What is becoming increasingly clear to me is at a platform level, the opportunity within iOS and Android for app developers, providers of web services or services in general, are simply different on each platform. You could make the argument the opportunity within iOS is very different than the opportunity within the Android ecosystem. Thus, each ecosystem may have an entirely different set of developers, services providers, and more.

For a more detailed view of this angle, listen to the latest podcast with myself and Andreessen Horowitz partner and analyst Benedict Evans on our latest mobile focused Tech.pinions Podcast.

Mobile Focused Podcast: Less Expensive iPhones, and the Globalization of Tech

I’m happy to announce that I am rolling up my podcast with Andreessen Horowitz partner Benedict Evans into the Tech.pinions podcast as well. We will shoot to release these discussions between us every few weeks, midweek.

Ben Bajarin and Benedict Evans discuss what a low-cost iPhone could mean for Apple and explore the global and regional differences of iOS an Android.

Click here to subscribe in iTunes.

If you happen to use a podcast aggregator or want to add it to iTunes manually the feed to our podcast is: techpinions.com/feed/podcast

Posts Mentioned:

Benedict Evans – Note on Cheap iPhones

Ben Bajarin – The Regionalization of the Smartphone Market

Jan Chipchase – Connectivity is not binary, the network is never neutral

The Major Industry Battle Brewing Between Samsung vs Google

Over the last five years, Samsung has become a behemoth in the tech marketplace. Their smartphones dominate the tech landscape and their profits have been relatively good until recently, considering the fact they still make most of their money on hardware. However, as we have seen in the PC market, a hardware only business model is not sustainable. Indeed, as smartphones become more and more commoditized, Samsung’s profits margins will soon be squeezed — especially by competitors like Xaomi who is eating their lunch in China.

While they are one of the most vertically integrated companies in the tech arena and can leverage this to help margins to some degree, I am convinced that, unless they take control of their entire destiny, they are just going to become like any of the PC companies who have been beholden to Microsoft and Windows and have seen their margins shrink consistently as PCs became commoditized. “Google and Android” replace “Microsoft and Windows” in this scenario and at the moment, Samsung is just a front end to deliver more and more customers to Google to get their ads, services and products via Samsung devices. Given the fact 50% of Android devices are Samsung branded, and Samsung’s cut of any related profits is the same as even tiny companies who also back Android, if I were Samsung I would be really pissed I’m making Google richer while at the same time, jeopardizing my future earnings potential if I continue to back Android.

To Android or Not to Android?

It is clear to me Samsung sees this and is rethinking their relationship with Google and their support for Android. At their recent developers conference, they showed off their own mobile OS that uses Tizen at its core and have even started paying developers to write apps for Tizen. At first glance it seems the focus on Tizen seems to be for the Asian market but don’t let that deceive you. I think there is something bigger in the works with Tizen.

Here is what Samsung is up against if they continue down an Android path as is.

First, they just make Google wealthier and continue to deliver customers to Google instead of to themselves. Yes, Android has served them well so far, but as long as Google owns the OS, Samsung is beholden to Google and is just a slave to them. Second, they drive revenue to Google, revenue that could be all theirs if they owned the customers. Third, they will continue to face margin pressure as hardware based profits shrink. As I mentioned above, our analysis suggests Samsung’s margins, even on their upper end products, could be reduced to around 10%-15% as even high end smartphones become more commoditized.

There is a reason Samsung copies and steals from Apple as the court in San Jose has already proven during the recent trials in California. They look at Apple’s ownership of their ecosystem and lust after it in a big way. Apple is mostly insulated from very low margin pressure since they not only make money from hardware but also from apps, products and services. They can do so since they own their OS and ecosystem and control their destiny across the board. Put more directly, Apple gets all of the profits from hardware, software, ads and services while, in Samsung’s case, Google gets most of the ad revenue, app sales profits and services sales.

The irony to all of this is Samsung is the one who has made Android successful — yet Google will not share the wealth with Samsung any more than they do with other Android licensees.  Samsung has to be steaming at this predicament and looking for a way out. However, they have a dilemma and are boxed into a corner in the short term. While they can and will modify Android as far as they can without losing the store certification, the apps on Android that are both legitimate and illegitimate (the later being important in China) is too vast for them to abandon. Not being able to run android.apk apps would be suicide for anyone in the short term. Their developer environment is still based on Android so it seems they are trying to create a para-platform on top of Android that still uses the store but gets custom apps created for them in their ecosystem.

However, even in this scenario, where they can add some customization, they are still pouring money into Google’s coffers, leading them down a path where a hardware only play could hurt them big time in the future. Keep in mind, all OEMs backing Android are getting the same OS and, while hardware may differ, the OS is identical. It becomes harder and harder to differentiate with Google in control of the OS and related products and services. And Google’s new Android One program basically takes the cost out of the hardware and makes it possible for small companies to enter the market and go right after Samsung’s low end business in emerging markets.

So what could Samsung do to extricate themselves from the powerful hold Google has over them? Some industry folks I talk to think that Samsung could just fork Android the same way Amazon has done with their Fire OS. But even with Amazon’s clout, there are still not as many apps available on the Fire OS as there are in the Google Play Store and staying with Android even in a forked mode could be confusing for Samsung’s customers in the long run.

I think the real thing Samsung is working towards is to get away from Android completely sometime over the next three to five years and take complete control over their future. This is where I think their backing of Tizen becomes interesting and potentially important. Although Tizen has not attracted a lot of app support to date, if Samsung got behind it and was able to prove to the market they will continue to innovate around Tizen and keep delivering hundreds of millions of smartphones and tablets annually under their brand, they could attract serious software developers to the Tizen platform. Remember, they have 50% of the Android market today. If Samsung could show they would continue to be the #1 leader in smartphones even with Tizen, software developers would be crazy not to back Samsung’s Tizen strategy.

I don’t believe Google will let Samsung dump them without a battle. In fact, the recent fights between the two are becoming more public as it is becoming clear Samsung is no longer in love with Google.

I don’t think Google will adjust the revenue share for Samsung since, in doing, so they would probably have to have similar terms for other big Android vendors and that would really impact Google’s earning abilities. But they could be creative in trying to keep Samsung in the Android fold as well as putting a lot of pressure on them in ways we can’t even imagine at the moment. What Google wants, Google mostly gets.

In the long run, Android is a dead end for Samsung. As stated above, their relationship with Google is not that much different than what other PC OEMs have with Microsoft today and look what that has done to them in the commoditized age of PCs. I have no doubt even high end smartphones will become commoditized in a similar manner. If Samsung does not find ways to gain more control and deliver their own apps and services to enhance their overall profitability, they will, excuse the pun, become marginalized.

Decoding Page And Brin

I have noticed successful CEOs share an uncanny ability to lay bare a company’s strategy while simultaneously leading you down a false path. Steve Jobs was a master at this. I learned from watching Jobs it was always best to remove my expectations, toss aside my biases, and focus strictly on what he was saying and what he was showing. Only then was it possible to divine his intentions.

The same skills are required to decode the words of Google co-founders Larry Page and Sergey Brin. This recent joint interview tells us a great deal about each man and the direction of Google.

Expect still more big, bold bets, more run-ins with the law, more jarringly bad incursions upon our privacy, more encroachments upon everything tech, possibly upon everything man made. That’s how audacious Page and Brin are. Indeed, it’s audacity mixed with a belief in fate, I suspect. Page and Brin appear to embrace the notion it is right and just and good they have so many billions, so many smart employees and a company of such immense, transformative power — only they can rightly and profoundly change our world.

Of course it’s hubris. They are billionaire techies, after all, highly successful since at least their dorm room days, and worth more money than they could spend in multiple lifetimes. But it’s also daring, inspiring, the kind of stuff that enables Silicon Valley to lead America and which enables America to lead the world.

Page And Brin On Record

Google founders Larry Page and Sergey Brin were interviewed recently by venture capitalist Vinod Khosla. The interview is relaxed, even clubby, but quickly becomes revelatory. We learn, for example, Excite nearly purchased the Google tech back in 1999. For $350,000.

We learn Page, who sounds awful, is clearly interested in healthcare as well as healthcare regulations. I would not be surprised if Page secretly believes his billions and Google’s work on life extension, artificial intelligence and computer-enabled consciousness will enable him to achieve near-immortality.

This will fail, of course, though many will likely benefit from Google’s work. Which is a theme in this interview, from Page, especially. He is committed to using Google’s money, brainpower and computing brute force to make a better world.

Some insights based on my analysis of the interview [direct video link]:

  • Page does not seem to particularly care what Brin has to say.
  • Page is obviously committed to Google — the corporation — but also to Googlers, the employees.
  • Google is undefinable, even for Page, the CEO. Google is search, obviously, and those elements clearly linked to search, such as location. But Google is much more than that, even if Page fails to fully distill this into words. Google is artificial intelligence, machine learning, a gift to the world, a transformative engine of innovation.
  • Page intends to remain at Google indefinitely.
  • Brin may not be at Google quite as long. It’s clear Page is in charge of Google Inc. and equally clear the Google X skunkworks efforts captivate Brin. It may be best for everyone if he takes his work outside Google.

Google Now

Did you watch? It’s quite useful if you are interested in Google. Here is my take on the important bits:

0:50 Forget the laughter, Brin is still peeved that “PageRank” was not called “BrinRank.” I am not sure hyper-competitive people have any idea how hyper-competitive they are — about everything.

1:48 I realize Sergey Brin is not wearing a wedding ring.

2:20 Brin re-tells the origin story of Google and how it was nearly sold to Excite. This is thoroughly discussed, I suspect, because Google believes it is destined to do great — insanely great — and tales of how it nearly died merely reaffirm their manifest destiny. (At 4:15, Page joins in this discussion)

5:00 Page’s throat muscles appear stressed, damaged. I cannot stop myself from speculating on his health.

6:05 Page states most companies are “short term focused” and clearly is pleased that Google thinks bigger, longer. At 6:50, Page notes most companies are measured quarterly and most CEOs have no better than a four year tenure. He states solving “big problems” are easy when the leader has a 20 year horizon. Bottom line: Expect Page to helm Google well into the next decade at least.

8:00 Brin states Google has no “critical” opportunities to focus on as a “critical” opportunity would suggest an inherent vulnerability. The implication, of course, is Google can only be un-done by the future, but that won’t happen as Google intends to build the future. This sentiment is especially telling because Google has repeatedly missed opportunities, including social, text messaging, apps, streaming and more. It would be interesting to peer inside their minds to understand how they reconcile their manifest destiny visions with the incessant disruptions percolating from 7 billion humans.

8:50 Brin is clearly excited about the potential for the autonomous cars — a “big bet.”

9:40 Page finally and briefly mentions Android, which he believes is important to Google over the next few years. This is the sole statement regarding Android. Indeed, the interview is surprising for how little the two mention any actual Google products.

10:05 Page offers important insight about search, access to content, navigation, and the expanding notion of what “search” means, which includes knowing the question before the user asks it.

11:05 Page decries the current “bad” state of today’s computers — desktops and smartphones — which require far too much effort and deliver far too little benefit. I start to wonder what amazing gadgetry he has inside his home.

12:20 Brin leads several minutes of animated discussion on Google’s current and long range “machine learning” efforts. He believes Google, unlike all those in the past, can make artificial intelligence — thinking machines — a reality.

14:20 It requires a question from Khosla to force the two to consider how these machine learning efforts will impact jobs, labor, equality, economy and people. Sadly, this mostly leads to joking and a discussion on America’s agricultural past. It’s never been more clear than now just how removed Page and Brin are from the daily realities of nearly the entire world.

16:10 Page states the basic needs of the world can and should be easily provided. Ours is a world of abundance, he tells us. We should focus not on jobs per se, but on abundance and leisure time. Again, Page seems wildly out of touch here, despite any positive intentions. At 18:25, Brin interrupts Page, who then quickly interrupts Brin and it’s now crystal clear the two men have different views on the near term economic and social harm of technology. This is the first clear break between the two. Regrettably, neither possesses the answers to solve these problems.

21:20 Khosla appears to realize Page and Brin have no real answers for current issues re: work, employment and inequality. He leaps to a speculative question “forty years” into the future.

24:15 Brin speculates on who will make the company’s self-driving cars, Google or “partners.” The only thing we learn is the implication the self-driving car market is many, many years off.

25:25 “My view about this has changed quite a bit over the years.” That’s what Page states about Google being involved in too many projects. Page says he used to discuss this idea with Steve Jobs, who insisted Google did too much. Page, however, says much of what Google does is interrelated. He also notes the various projects give employees an opportunity to grow and be creative.

26:45 “Sergey can do that and I don’t have to talk to him.” “That has almost nothing to do with our current business.” This is what Page says about Google’s driverless car efforts — which Brin is responsible for.

27:40 Brin discusses Google X. He reveals X is focused on “atoms, not bits,” an insight I had not previously considered. Cars, internet balloons, Glass, etc. are all hardware first, software second (at best). Unfortunately, Brin does not state exactly why he chose to focus on atoms, not bits. I suspect it is because then Page would keep his distance.

29:00 A discussion on Google’s interests in health services begins. At 29:50, however, Brin states healthcare is so “heavily regulated” that such efforts, at least for now, are not a priority. Page agrees with Brin’s assessment.

30:45 Page, again revealing his tone-deafnesses over current social norms, discusses the potential of using data to improve health. He notes allowing “medical researchers” to search your medical data is a big win for society and likely the individual. Except, Page remarks “maybe” your name is removed from the research. This is shocking. Page seems genuinely focused on leveraging Google’s capabilities to make the world a better place. That said, time and again he seems literally unaware — or simply uncaring — of how actual human users may be harmed or frightened.

34:20 The co-founders dodge the question of whether or not they have ever “fundamentally disagreed” on an issue.

37:15 Page is displeased with how government is “illogical” and how its complexity increases over time.

38:30 Page says he was talking recently with the president of South Korea. Might there be more expansive tie-ins with Samsung?

40:00 Page provides sage advice to entrepreneurs regarding who to hire.

The Smartphone Is The Computer

I have spent the past three weeks in Detroit, a city possessing a rich history and an unremitting present. The vagaries of Silicon Valley count for little here. When I heard a young man ask — for real — if the Samsung Galaxy S5 was an iPhone or an Android, I knew there was much to glean if I simply put my smartphone down and listened.

Here then are my thoughts, insights and observations from the past one score and one day…

There are no smartphone wars. Rather, just amazing, affordable and truly expansive opportunity. Android versus iPhone means nothing to nearly everyone I speak with.

It is hard to overstate just how much television will be disrupted by the combination of children, tablets and YouTube. Free, always accessible content uniquely tailored to their own self-driven interests, available from any location is now possible — and the young will accept nothing less.

Facebook, not smartphones, not telcos, not automobiles, not Disney or ESPN, is connecting the world. Facebook is the new oil. If there is any ‘next Steve Jobs,’ it is Mark Zuckerberg. For whatever confluence of reasons, Zuckerberg divined the power of social media from the start, just as Jobs did with computing. No matter how rich, no matter how many struggles, I expect Zuckerberg to devote the remainder of his life to Facebook and all it represents.

There is middling outrage over the Facebook ‘user emotion’ study. As for me, this represents little more than A/B testing. In fact, I’m more angry over the iPhone keyboard. It’s so terrible. Is this some sort of secret Apple study? I mean, what other possible reason could there be?

Sheryl Sandberg

I am in the place where cars and mass production altered the course of humanity. Now, it is smartphones, social media, mapping, and code; these are re-making the planet as much as the automobile did in the 20th century. We are at the start of a new future. That’s just awesome.

I was often asked the best way to become a professional writer. It’s such an easy question to answer.

Marry well.

Oh, and should you be so fortunate to have an opportunity to write about what you love, for an organization with no concern for page views and provocation, as I am at Tech.pinions, then do not fritter away such a blessing.

I first learned about the SCiO from Techpinions. Point this device at a piece of fruit for example, and it will tell you what it is and even provide data on its composition, such as how much fat and carbs the item contains. Every single time I read more about this device, I think it is absolute magic. I told so many people about it that I now desperately hope it works as advertised.

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I have nothing but good things to say about the Amazon Fire Phone. Yet, I can’t possibly recommend it to anyone. Why would I? In the US, at least, there is almost no reason to recommend any smartphone other than the iPhone or the Samsung Galaxy.

Microsoft’s Windows Phone faces a similar fate as Amazon’s Fire. Fair or not, can you imagine any outcome for Windows Phone other than failure? How does Microsoft start over? What amazing technologies, hardware and combination of services can they possibly deliver to make the world care about a device that is not iPhone or Android? I do not have the answers.

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If I were in charge of Microsoft I would simply continue to make quality devices, offering great Nokia design, great Nokia imaging, incorporating Skype, OneDrive, HERE, Office and other Microsoft-owned products and services. Plodding along, hoping more and more Android vendors exit the business, picking up the scraps, all while leveraging my enterprise install base and security, identity and productivity tools, hoping users discover my superior value.

It won’t help. The smartphone market is lost to Microsoft.

The screen market, however, is barely in its infancy. Microsoft should forget smartphones and focus instead on screens. Screens will become like power outlets, we only notice them when they cannot be found.

Perhaps no company — not Apple, not even Google — possesses the breadth of services Microsoft offers. The problem, of course, is these services are not exposed for all the world to use. They are locked inside unwanted PCs, shoved inside tablet abominations, buried beneath the content we actually seek from our Xbox systems, sold mostly to IT directors, attached to products and platforms we do not need, and hidden behind an incomprehensible UI. Microsoft has built an anti-moat around its services, not locking us in but keeping everyone out.

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The World Cup has introduced to millions the joys of live sports streamed to our smartphones and tablets. This is so in Detroit and around the country. It has never been more clear we all want to watch what we want to watch when we want to watch it where we want to watch it and on the device we want to watch it on. This is simple, obvious and unstoppable. It’s only a matter of time before we have a difficult time explaining to our progeny how it ever could have been anything else.

tim-cook-attends-pride-event

Last week, Apple CEO Tim Cook very happily took part in the San Francisco Pride Parade. Also, Hobby Lobby successfully won the right to provide only certain forms of contraception for its employees. What do these have in common?

Values equal profits.

Companies are publicly declaring their values, even going to court to defend and promote their values. This is only start. The technologies of Silicon Valley are breaking down barriers, bringing corporations to their knees and empowering individuals and groups around the world. With smartphones in hand, with continuous, real time, location-aware connectivity always available, we become our own corporations — with Uber, AirBnB and others merely pointing the way. We will work for ourselves and we will live by our values.

This is good. But it will be messy. Very messy.

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Hype aside, can you envision a situation where you use Bitcoin over, say, your iPhone ‘wallet’ linked to your secure iTunes payment data? iPhone offers ease of use and peace of mind. That’s a powerful combination. Still worse for Bitcoin, is that it is essentially digital cash in a world addicted to easy credit. Learn about the blockchain. Bitcoin itself is merely a bystander.

Given Android’s headstart in wearables, it’s hard to see Apple winning any wearable app wars. Given the limitations of its market reach, it’s similarly difficult to see Apple winning the “smart home” market without buying its way in. Sonos would be a good start.

Smartphones are borderline magical. That said, the iPhone 5s battery and the HTC One (M8) camera are embarrassingly bad.

In the past week, I’ve rented two movies from iTunes. I failed to finish both in the first sitting and was not able to watch either until after 24 hours later. iTunes refused, insisting the rental period had expired. This was true, though did not mitigate my anger. I may abandon iTunes rentals altogether. The lure of non-legal downloading is strong.

marissam

How much of Yahoo’s Alibaba riches is Marissa Mayer prepared to spend to get us to visit Yahoo? I suspect all of it. Nowhere I go does Yahoo seem to matter.

Idle prediction: Apple will not kill off the iPhone 5/c/s form factor this year, nor will Apple offer three simultaneous iPhone form factors. Yes, that means I am predicting only one large-display iPhone.

Not a prediction, just a thought experiment: In 2024, when a chid is born, they will be assigned either an Android or an iPhone. This will control everything.

There will be over 1 billion (American) Android activations this year, and several hundred million (Chinese) Android (AOSP) activations. Android is a stunning success story. All those involved in Android have long since earned our respect. That said, some analysts, bloggers and even industry insiders still have not grasped the obvious: Smartphones are the first screen. Smartphones are the primary computer.

Meg-Whitman-CEO-at-HP

The CEO of Yahoo is female. The CEO of HP is female. The #2 at Facebook is female. A man runs Android, the world’s most popular OS. He is from India. The CEO of Microsoft is from India. The tech sector points the way forward not only with its products.

Be smart. Work hard. That’s true everywhere.

Apple’s New Strategy Is Their Old Strategy, Only More So

An Apple Strategy Failure

Let’s start with a little history. In the 1980’s…

Apple had agreed to license certain parts of its GUI to Microsoft for use in Windows 1.0, but when Microsoft made changes in Windows 2.0 adding overlapping windows and other features found in the Macintosh GUI, Apple filed suit. (The courts decided against Apple.)

Much of the court’s ruling was based on the original licensing agreement between Apple and Microsoft for Windows 1.0, and this fact made the case more of a contractual matter than of copyright law, to the chagrin of Apple. ~ Wikipedia, Apple Computer, Inc. v. Microsoft Corp.

I believe the lesson Steve Jobs learned from the above was all new Apple technology had to be patented to the max. Here is Jobs famously saying, “and boy have we patented it” at the 2007 introduction of the iPhone:

Unfortunately for Apple, Jobs got it wrong. What Apple has learned in the seven years since the introduction of the iPhone is that patent enforcement is entrusted to a worldwide court systems that is expensive, maddeningly slow and wildly inconsistent. Further, courts are justifibly reluctant to issue injunctions in patent disputes and it is injunctions — not money damages — that best serve Apple’s strategic purposes. In other words, Apple — an organization fanatical about owning its key technology — delegated the enforcement of its key technology to a court system totally out of their control.

I believe Tim Cook is now employing a very different grand strategy.

Out With The Old, In With The New

I think it’s clear Tim Cook long ago abandoned Apple’s failed patent strategy and replaced it with a strategy fully within Apple’s control. In essence, Apple decided to do what only Apple could, and only Apple would want to, do: out-integrate their competitiors.

Let’s recap. In only a few short years, Google was able to pivot and turn Android into an operating system that rivaled, and many would contend surpassed, the iPhone’s operating system. In only a few short years, Samsung was able to take the hardware they were making with Apple and use it to compete against Apple and surpass Apple in hardware sales. Apple’s “boy-did-we-patent-it” strategy failed and failed miserably to deter either Google or Samsung from competing with Apple.

Now look at the integrated services introduced by Apple at WWDC 2014. Services like continuity, Apple Family Accounts, Healthkit and Homekit make it clear that where Apple is going, no one can follow.

It’s not because Apple’s rivals aren’t world class. They are. It’s because Apple’s rivals don’t make both the hardware and the software. They literally can’t create a closely integrated product because they don’t make one.

Now you could argue Microsoft makes both the hardware and the software, but Microsoft is very late to the hardware/software game and when it comes to hardware like the A7 (soon to be A8), 64-bit processing and Touch ID, Microsoft is not on the same playing field as Apple.

Further, even if Microsft COULD follow Apple’s strategy, they wouldn’t have the economic incentives to want to do so. Apple is devoting endless amounts of time, energy and effort into integrating their hardware with their software becasue they want you to live exclusively within Apple’s ecosystem. Microsoft wants its cloud services to run on all devices. Microsoft wants its operating software to run on all devices. Microsoft wants its hardware…uh…frankly, I have no idea what Microsoft is trying to do with their hardware. And I don’t think they do either.

Apple’s strategy involves ever tighter hardware, software and services integration on such a scale no other company could do it (because it requires the simultaneous creation of both the hardware and software). Apple’s strategy is tied to a business model so unique that no one else would be incentivized to do it.

Conclusion

Does all of this mean Apple is going to dominate the iPhone and the tablet markets? Just the opposite. All of this integration comes at a cost. This is premium, a vertical, a walled garden strategy. Apple wants you to want to own at least two and perhaps all three of their devices (iPhone, iPad and Mac). Many will gladly do so. Most will glady do with out. And others will will sadly do with out. Apple will dominate only the premium market. That will be more than enough.

Is this a growth strategy for Apple? Maybe no and maybe yes. Premium is premium and there’s only so many people who want and can afford a premium product. This is true of all markets. But those who can afford an iPhone or an iPad or a Mac will also be those who can afford to buy all three. Apple is providing them with stronger and stronger incentives to do just that.

Why Do All Of You Hate Windows Phone So Much?

I have used mobile phones for two decades. I have tried nearly every single platform. I consider myself a good judge of functionality, durability, usability and value. I have spent the past six months using a Windows Phone — a Lumia 1520 — as my primary device. It is big, beautiful, intuitive, powerful. The battery, more than double the iPhone’s, actually lasts me all day long. Cortana knows my voice better than Siri. Live Tiles provide information at a glance better than any iPhone app and all my iPhone notifications. Nokia’s HERE Maps are more responsive than Google’s. The display is magic.

People stop me in public and ask me if they should buy one.

I always say yes.

A few, however, ask if I can recommend it over their iPhone or Android phone.

For this, I have no answer.

For better or worse, iPhone and Android are good enough for, well, nearly every single smartphone user on the planet. I have no reason to believe this will change soon.

Why?

Sales data, mostly. Management shifts inside Microsoft, partly. Plus, I ask people. I ask actual human beings both online and in physical space. I ask why they chose the iPhone or an Android phone. I also ask, and this is always more insightful, why they did not choose a Windows Phone.

But before that, let’s take a look at the numbers. They are unforgiving.

No One Is Using Windows Phone

The smartphone wars are far from over. The near term addressable market for smartphones is in the billions of units.

Global smartphone growth
Global smartphone growth

And yet…

As smartphones become more vital to our lives, as prices drop, as the technology spreads, as smartphones link to more devices, wearables and services, Windows Phone remains barely a blip. Tech.pinions estimates the Windows Phone install base at a mere 2%.

Smartphone install base
Smartphone install base

Love your Windows Phone? Love Nokia design, imaging, sound quality, build quality? Happy with how Windows Phone offers a clear UI alternative, a uniquely innovative means to group contacts, superior music streaming versus Beats?

It does not matter, apparently.

The market has spoken — a billion times over. It can find no valid set of reasons to choose the Lumia Icon or Lumia 920, 1020 or 1520, or any other Windows Phone instead of an iPhone 5c or every model of Android.

It gets worse.

As the Tech.pinions analysis reveals, smartphone sales are dominated by the usual suspects — Apple and Samsung, plus numerous Chinese-based vendors. Nearly all of these are exclusively focused on Android.

Screen-Shot-2014-06-08-at-8.46.07-PM

Lest you think Tech.pinions numbers are an outlier, Tomi Ahonen aggregates data from several manufacturers and industry groups. His smartphone market share numbers align closely with Tech.pinions.

Spoiler alert: Almost nobody wants Windows Phone.

Smartphone share
Smartphone share

Bad, yes. Worse — the most recent quarter offered little hope, with market share for Windows Phone actually dropping:

Smartphone share

By next quarter, Microsoft’s newly acquired Nokia division, which is responsible for the vast majority of Windows Phone sales, may not even crack the top 10:

Smartphone share

Coolpad/Yulong? Ever heard of them? They sold millions more smartphones last quarter than did Nokia. To be fair, their Samsung Galaxy Note flattery is quite nice. 

coolpad_s6

How can this be?

Why Is No One Using Windows Phone?

I want Windows Phone to succeed. I want yet another great American company to be a central part of our global, mobile, highly technological future. Plus, Microsoft can offer users a rather stunning array of uniquely valuable services and platforms. Skype, identity, Xbox, Office, OneDrive, Yammer — an unmatched range of corporate, productivity and connectivity tools that may be peerless in the computing world.

Why, then, are their phones so thoroughly rejected?

I said above I asked people why they did not choose a Windows Phone. That is a somewhat misleading statement. Because as it turns out, almost everyone I asked had not even considered a Windows Phone. They could give me no answers.

A few, however, had considered a Windows Phone. Or at least revealed awareness of its existence. Their responses to my informal survey are telling.

1. Microsoft Derangement Syndrome

If I were to state here Microsoft saved Apple from bankruptcy, the vitriolic comments would never end. Should I remark Apple is a great artist — “and great artists steal” — it would generate far more heated, angry response than could ever be justified.

And yet people have no qualms about openly hating Microsoft. The ancient slights, real and perceived, have not healed. I confess I was surprised by how many people made it clear to me they would have nothing to do with Microsoft. Ever. Whenever they have a choice.

I find this Microsoft hate odd and unproductive. I presume a change in perception will occur now Steve Ballmer, the physical manifestation of all that rage, no longer has a lead role at Microsoft.  

2. Live Tiles

In theory, live tiles should flourish on our mobile devices. They deliver timely, desired information direct to the user’s screen, available at a glance.

In reality, the static app won.

Users I spoke with prefer the pull of static apps to the push of live tiles, even if they could not fully explain why. They also did not care for the look (design) of live tiles, how they twinkle and spin, nor did they express any desire to pin an app, a site, or other information to their home screen. 

When it comes to smartphones, the look and feel of Apple’s iOS is what people expect, no matter who provides it.

3. No There There

Whether out of vision or necessity — or more likely both — Apple made the iPhone the center of our computing world. Microsoft continues to place the Windows PC at the center of our computing world.

This is not the future.

This snapshot of the US browser market is telling. On mobile, Microsoft is nearly non-existent.

mobile browser share

Should anyone still think PCs will ever again be the center of our world, take note of this Mary Meeker graphic which reveals time spent in front of our various screens.

screen time

Those I spoke with viewed Microsoft as a PC company, not a mobile one (or a cloud one, even). Satya Nadella’s “mobile first, cloud first” strategy sounds exactly right, but his words have not resonated with end users.

4. iTunes

Of course, iTunes. Children use iTunes. Grandparents use iTunes. We all use iTunes. Over and over again, people tell me — and this includes Android users — that without iTunes, or seamless access to their iTunes content, they won’t even consider the alternative device.

nokia-lumia-900

5. There’s An App For That (But Not Really)

It’s been stated a million times and it cannot be overstated. The Windows platform desperately desperately desperately needs more and better apps.

There are far fewer apps for Windows Phone, and most of those do not offer the robust experience found on the iPhone.

It is now far easier to buy far more software and content for Apple devices than for Windows devices. This is a stunning reversal. Every person I asked brought up the ‘app gap’.

6. By Any Other Name

Do customers want a Nokia? Do customers want a Lumia? Is Windows Phone high-end, low-end? Is it a premium, integrated device or an OS licensed by unknown entities such as BLU Products, Yezz, BYD, Wistron and Prestigo?

The Nokia XL, which I consider to be an amazing device for the price, runs atop Android. But it looks like a Windows Phone.

What is it?

In my regular discussions with non-technical people, primarily in the US, a smartphone is:

  • iPhone first,
  • Samsung second,
  • Android third

in that order.

Microsoft’s marketing team must gain significant traction within our already crowded heads if it hopes to ever sell Windows Phone.

And We Continue…

Now, my personal experience.

7. Separate But Unequal

I have walked into dozens of carrier retail stores in the United States. Until recently, it was difficult even to locate a Windows Phone.

It gets worse.

At multiple retail stores, as I am examining a Windows Phone, a helpful salesperson has steered me toward Android. Microsoft needs to fix this problem stat.

8. No Self Control

What can I control with my Windows Phone?

My smartwatch? My thermostat? My television? My PC? My Xbox?

The smartphone is the center of our computing world. To succeed, Windows Phone must become this. While no one brought this up, I think the lack of an obvious, flourishing ecosystem centered around Windows Phone continues to limit adoption.

9. The iPhone Box

As much as I love the beautiful, colorful, brilliantly designed polycarbonite Lumia 1520 for example, perhaps Microsoft should focus on making devices that much more closely resemble the squared, austere iPhone. This seems to be what the market wants.

Nokia-Lumia-1520

Ditch the colors, the curves and the unapologetically plastic design. The Lumia Icon mimics the boxy, metallic design of the iPhone. Perhaps that is how all Windows Phones should look. I hope I am wrong, but the world says otherwise.

10. Continuity

Apple made a splash at WWDC by promising “continuity.” That is, creating a seamless experience across devices — iPhone, iPad, Mac. Microsoft needs to show me and all its customers how Windows Phone can or will offer a seamless, integrated, multi-device experience. 

Nowhere To Go But Up

It no longer matters whether Windows Phone is better, just as good, different, or some combination of these. The iPhone and Android are everything users need, which leaves Microsoft on the outside. 

What happens next is up to Microsoft, not the public.

Apple once faced this exact same situation. They were forced to become something other than what they were, despite their abiding belief they offered a superior, or certainly equivalent, product. After a long, difficult slog, it worked out rather well for them. I hope the same for you, Microsoft. I know it will not be easy.

Has iPhone Lost The Best Value Crown?

Smartphones have gotten so good, so fast, and become so vital and accessible in such a short time, it’s difficult to accurately predict the direction of this market over just the next year, and nearly impossible over say, the next five years.

One aspect of the smartphone market that has remained steady throughout, however, is the iPhone always offered the best value.

No more.

A new crop of Android devices and remarkably low priced Windows Phones appear to have usurped iPhone along the value vector. This should put Apple on notice — and will almost certainly impact their branding, possibly even their pricing going forward.

No one ever got fired for buying the iPhone

The iPhone began as a revolution, turning the industry upside down. Since launch, Apple has worked diligently to improve the iPhone, expand its capabilities, and integrate it with other Apple devices and services. iPhone quickly became not just the best smartphone but the best smartphone for the buck.

There have always been solid reasons for not choosing iPhone, obviously, but value was not one of them.

Perhaps you couldn’t afford iPhone. You did not want a device with a locked-down ecosystem. The iPhone form factor(s) was not to your liking. All valid reasons for choosing ‘Other’. Now however, there may be another reason to consider a non-iPhone device: value. If so, this is a remarkable shift in the market and a new inflection point in the battle for market share and lock-in.

It’s hard to put a specific number on ‘value,’ especially as it can vary so greatly from person to person. It’s not just about design or usability. For example, iPhone’s value includes, at minimum:

  • device quality
  • integration with iPad and Mac
  • AirPlay
  • iCloud synch
  • free iWork
  • the most available apps
  • regular, free OTA updates
  • the most available digital content
  • minimal crapware
  • easy returns and superior support (for those near an Apple Store)
  • the largest range of accessories

The list is long.

Add to this list, the iPhone’s disproportionately high resale value. Dollar-for-dollar it’s hard to beat the iPhone — regardless of any personal preference for iOS.

Nonetheless, it appears new devices may now trump the iPhone, dollar-for-dollar.

For the Price of one iPhone 5s, you get 4 Moto E phones

It will cost you $650 for a 16gb iPhone 5s. For the same price, you can…

…Buy 4 Moto E smartphones.

No, the Moto E is not as good as iPhone 5s, not even close. It works only on 3G (not 4G). The screen is not nearly as nice. The camera is only 5MP — and there is no front facing camera. It also has only 4GB of memory, although this is easily expandable.

But, Moto E runs on Android KitKat, a very solid OS. It runs nearly every app, plays nearly every game you can have on your iPhone. Calls and messaging, social media and search, mapping and web browsing are all there.

On a per-dollar basis, it’s hard to think any smartphone offers a better value than Moto E.

Except, the Lumia 630, a mere $159 in the US, may offer a better value still.

Nokia-Lumia-630-hero-jpg

Lika all Nokia devices, the Lumia 630 is beautiful, colorful and built to last. It runs on Windows Phone, which I prefer to Android although admittedly the platform continues to suffer from a lack of quality apps. It includes Cortana, Microsoft’s Siri competitor.

In my experience, Cortana offers fewer functions but has superior voice recognition.

The 630 has a 4.5 inch display, a remarkable 1.2GHz Snapdragon processor and 8GB of storage. I have not tested this, but reviews suggest the battery bests the iPhone’s. There is a 5MP camera but no front facing camera. In my experience, the embedded HERE Maps and turn-by-turn navigation Nokia offers is superior to Apple Maps. The 630 also has a swipe keyboard, which many users prefer.

Ready to buy? Ready to get one for you, your spouse and your two children — all for the price of a single iPhone 5s?

No? I completely understand. Apple has long made the very best, most desired smartphone. That’s the device most of us covet. If you can afford it, there’s little reason to not choose the iPhone. Nonetheless, the price, quality and functionality of the Lumia 630 and similar devices has to put Apple on notice.

Apple’s Loss is Our Gain

Apple devices, be they smartphones, tablets or laptops, have long been among the most expensive on the market. But, they have also consistently offered the best value, year after year after year.

Can we say that in a world where the new OnePlus One phablet is available for $350? This Android smartphone comes with 64GB of memory and has received gushing reviews. It is also obviously beautiful.

oneplusone

If the iPhone no longer offers the best smartphone value, dollar-for-dollar, then Apple will need to re-tool its marketing strategy as well as its product plans.

Tough for Apple, but a win for the rest of us.

The One Where Brian Is Wrong About Everything

Please allow me to introduce myself…

You likely don’t care and would not believe the volume of blog posts, research reports, technical writings and analyst studies I sift through on a daily basis.

This is necessary both to stay informed and to re-evaluate my opinions as new facts emerge. I refuse to let my initial reactions to the latest rumors cement my long term perspective. Though I consider my views well-informed, reasoned and likely to be proven true in the due course of time, my peers disagree.

For your reading pleasure, below are opinions I hold that currently run counter to conventional wisdom.

Who’s side are you on?

Sympathy For The Devil

Unlike all of Silicon Valley, it seems, I applaud the EU’s ruling that affirms an individual’s “right to be forgotten.” I expect this ruling to become the global norm by the end of the decade. Technology should be empowering and liberating. Of course, I should be able to require Google, Facebook et al to obliterate any digital data on me they possess. Everyone should.

I consider Apple’s iMessage – SMS “bug” to be a sure sign of corporate hubris. The absolute worst trait any large company can have is hubris.

I love that Microsoft is sticking to its vision despite the doomsayers. Surface Pro 3 is meant to be both iPad and MacBook. Comparing it to just one device is skating to where the puck never was.

Yet, industry analysts seem universally opposed to the very idea of the Surface. They are wrong. The market for paid software licenses is, to quote Bob Dylan, rapidly fading. Microsoft should not even consider reigniting the licensing ecosystem of its glory days. Such a strategy will fail, miserably. iOS, OS X, Android, Chrome and Linux are now good enough and are cheaper and readily available. Microsoft must create its own devices for a bold new world even as its OEMs fall to pieces. The Surface Pro 3 has the potential to become the device we all really crave: both a tablet and a laptop.

Someone — anyone — says the word ‘grok’ and my brain instantly screams: poseur! I cannot turn this off. I refuse to believe this is wrong.

This recent New York Times piece that glowingly praises a smartphone app, backed by VCs, that sends under-employed Americans on a mad scurry to fetch groceries for harried tech warriors is, I suspect, that singular article we will all point to ten years from now as the glaring, obvious symbol of the last bubble.

Think about an iPhone 6. Go on. If it’s not a larger form factor, why do you even care? Odds are very high you don’t. I have to assume Apple knows this. No iPhone phablet this year and iPhone’s market share will plummet.

I can’t fault a Samsung lawyer for calling Apple “jihadists” considering the Steve Jobs “holy war” email.

But Then My Homework Was Never Quite Like This

Your assignment, dear reader, is to map the decision-making tree that led the Microsoft Corporation to offer the Surface keyboard as a separate item. I bet you fail. It is inexplicable.

Fitbit hires design icon Tory Burch. Intel partners with Barneys. Apple hires Burberry’s Angela Ahrendts. Rumors say Apple is dangling billions in front of cultural trendsetters Jimmy Iovine and Dr Dre. I think this is wise. Fashion boasts, fashion beguiles, fashion demands. Value and quality speak softly. It’s a big, noisy world out there.

Get a drone with a camera. Link it to your Oculus Rift glasses. Experience the world about you in profoundly new and different ways. Now, stream and share all you see and hear — on Facebook, of course. That’s Zuckerberg’s strategy.

One app, one task, one screen is a core value of iOS. If the new iPad allows two apps running on a screen, as rumors suggest, then we immediately know two things: 1) Apple is legitimately nervous about both Samsung and Surface, and 2) Apple intends to launch an assault on the enterprise. Smart and smarter. 

I have serious doubts Tesla can ever build a car the 95% can afford.

We are all rock stars with our cool mobile phones.

kurt

Still Crazy After All These Years

The Samsung Galaxy Gear 2 is pretty. It’s also quite functional — provided you own a Samsung Galaxy. I think the bad reviews are all wrong.

I think a co-branded Mickey Mouse “iWatch” would be awesome.

Within ten years, schools and HR departments will have us wear Oculus Rift or a similar device to experience how others feel, think, and react differently to the very same people, words and actions.

The GoPro IPO, the rise of wearables, the Internet of Things, the budding Maker ecosystem. Hardware is eating the world, not software. 

The best part of an iPhone phablet is it will create radically new experiences and app types. This Opera graphic reveals that phablet use is starkly different from smartphone and tablet use. No, I do not believe this is primarily driven by current phablet demographics. Rather, form factor.

phablet usage

I predict by 2017, apps will be made first for China for iPhone. Then for iPhone for America. Then Android. Then iPad. Then AOSP. Then Windows Phone. Then X or other.

Rhymin and Stealin

Dollar for dollar, there may be no better value in smartphones than the Lumia 630. And if I’m wrong, it’s because the Lumia 520, available for about $70, may be an even better value still. The Moto X and Moto E may prove me wrong yet again. Amazing, amazing technological evolution.

In 1997, Microsoft loaned Apple $150 million. Apple now has 1000X that just in cash. Also, one of these men is on the cusp of being a billionaire. No one saw either of those coming. We were all wrong.

dre

Apple hardware is beautiful, understated, austere. Beats hardware is big, bold, gaudy. I have to believe an Apple – Beats acquisition horrifies Jony Ive.

It’s hard to overstate how much Google must fear Facebook. Facebook has over 1 billion users, mostly on mobile. Hundreds of millions voluntarily give Facebook highly personal information about themselves every single day, sometimes multiple times per day. This is not the same as unknowingly handing over select personal information to Google bots. By the decade’s end, search will be nothing more than a ‘signal’ for Facebook’s massive knowledge engine.

The other day, Yahoo flashed a pop-up on my screen asking me if I wanted to make Yahoo my default search engine. This made me laugh.

I believe Yahoo is on the cusp of what could be its worst-run, costliest period ever — and that, dear reader, is saying something. In her tenure as Yahoo CEO, Marissa Mayer has proven without a doubt her greatest strength is spending money. Sadly, her signal weakness is getting a return on said spending. If you are an investor, it’s time to storm the gates, else those Alibaba lotto winnings will be gone — fast.  

Am I wrong? Share your thoughts.

Nokia Has Fallen. America Wins The Smartphone Wars.

Nokia has fallen. Not even the name will remain. America’s victory in the smartphone wars is complete — for now.

Last week’s news from the front lines of the smartphone wars illuminates the scope of America’s rapid mobile ascendency.

From Microsoft:

“Microsoft acquires Nokia’s smartphone and mobile phone businesses, its design team, most of its manufacturing and assembly facilities and operations, and sales and marketing support.”

From Facebook:

Mobile active users are 1.01 billion as of March 31, 2014, an increase of 34% year-over-year.

From Apple:

“We sold almost 44 million iPhones, setting a new March-quarter record.”  

And the week before, from Google:

Q1 2014 earnings totaled $15.4 billion in revenue, a 19% increase over the previous year’s $12.95 billion. Oh, and their Android platform is on nearly 80% of every smartphone in the world.

Designed By Apple And Google And Microsoft In America

iOS, Android and Windows Phone – American designed, American-led operating platforms all – account for nearly 98% of the global smartphone market, a truly stunning statistic. There appears no line on the horizon.

smartphone market share

As the world rushes to replace their mobile phones with smartphones, even Microsoft, now a distant third, is well positioned to fully capitalize on mobile. Their takeover of Nokia includes the company’s very popular Asha brand of hybrid smartphones/featurephones, as well as Nokia’s traditional handset business, which still ships more than 200 million devices a year. (Second only to Samsung)

Should America celebrate these results?

Yes.

Should the rest of the world take bold, perhaps costly action to limit the continued rise of America’s mobile dominance?

Probably they should try.

The Pivot To Mobile

How did America so convincingly win the smartphone wars? First and foremost by attracting, developing, retaining, and fully incentivizing the best and brightest.

Vision and execution are also paramount. Consider:

  • Apple’s relentless pursuit of optimizing hardware while simultaneously improving upon and expanding the modes of interaction with that hardware.
  • Google encourages, captures and then attempts to make sense of (and profit from) the multiple data streams we generate.
  • Facebook seeks to connect the world on a fully human level.
  • Microsoft has spent the past four decades making computer applications more empowering and productive.

Also, and despite their vast size, these companies move with speed. Witness Facebook’s head-turning pivot to mobile. I think Mark Zuckerberg should be hailed for this accomplishment.

facebook pivots to mobile

Weaknesses Along The Front Lines

Are there weaknesses in America’s smartphone leadership? Several, in fact.

Apple

iTunes is the center of Apple. It’s what locks us in, it’s what helps lure new customers. iTunes revenues are falling on a per-user basis. If iTunes spending falls on a per-user basis, I believe hardware margins will follow suit. Apple is optimized for hardware margins. The iTunes trend line thus appears ominous.

Revenue-per-iTunes-account

Google

Google still does not have an effective messaging strategy. This is confounding. There may be no more important mini-platform in the near term than messaging. Facebook, of course, battered its way into this critical market, dropping $20 billion on Instagram and WhatsApp in a single year. Google will almost certainly need to do the same. Larry Page has the wherewithal to follow suit — does he have the necessary humility? I am not convinced.

Google’s primary response to date, requiring SMS and messaging to default to Google’s Hangouts service, seems a rather anemic response.

Facebook

Though it claims over a billion mobile users, Facebook has no smartphone platform. This perpetually locks them out from critical user, usage and location data. That Facebook is now looking to buy its way into the wearables market, which potentially delivers incredible amounts of user data, should be no surprise.

That said, what will Mark Zuckerberg do when the ‘monopoly’ money runs out? Successful businesses aren’t sustained on buying up others’ creations.

Microsoft

Despite the well reviewed Windows Phone 8.1 OS, Microsoft has yet to reveal it can create a thriving mobile-first business.

Manufacturing

Microsoft’s purchase of Nokia notwithstanding, the vast majority of manufacturing of every piece of smartphone hardware is outsourced. The case has been made that regular interaction with new materials and new manufacturing processes will lead to those companies (and nations) becoming the primary source of innovation, thus trumping Apple, Google et al. This idea has not been borne out and I suspect it never will. Shedding our manufacturing abilities has no doubt damaged America’s middle class, but not its technology leadership.

Money and the Snowden factor

Smartphone platforms almost certainly contribute to a nation’s economic well-being and security. Smartphones link people, telecommunications and banking, holds our most personal information, tracks our movements, manages our identity, logs our purchases, connects us to first responders, and provides vital access to news, cultural and learning resources. We have to assume larger nations in particular are keenly incentivized to repel America’s technological reach. This is especially true in a post-Edward Snowden environment.

It’s not simply a matter of geopolitics, of course. Real money is at stake. Google and Facebook are effectively banned in China — and the in-country alternatives are now worth billions.

Over 90 million smartphones sell in China every quarter. China may decide to lock out Apple and Microsoft — or demand unreasonable ‘rents’. If China creates barriers to Apple, for example, or perhaps does all it can to promote or subsidize homegrown companies such as Xiaomi, then certainly Apple’s growth potential will be diminished.

I would also not be surprised if government sponsored firms in India or Indonesia, for example, purchase BlackBerry or commit significant resources to improving the open source version of Android (AOSP), which is free of all Google services. Success by any means necessary.

smartphone sales by country

Why This Matters

Smartphones are the next great phase in computing’s decades long remaking of work, play, learning, commerce, creativity and connectivity around the planet. They connect us with nearly everything. America is in the lead now. Americans may wish to celebrate this. To remain at the top, however, will demand vigilance, daring and vision.

Each phase of the computing revolution appears to come faster than the one before. The smartphone wars will soon be the technology revolution of the past.

Shazam! Why iPhone Integration With Shazam Really Is A Big Deal.

I believe most analysts, including those that monitor Apple’s every move, are seriously underestimating the ramifications of Apple baking Shazam’s music identification service into iOS 8.  This is not merely about increasing song downloads. Rather, this move marks Apple’s determined leap to re-position the iPhone in our lives. The digital hub metaphor is now much too limiting. As the physical and digital worlds mix, merge and mash together to create entirely new forms of interaction and new modes of awareness, the iPhone will become our nerve center. It will guide us, direct us, watch, listen and even feel on our behalf. 

A bold statement, I know, especially given the prosaic nature of the rumor. Let’s start then with the original Bloomberg report:

(Apple) is planning to unveil a song discovery feature in an update of its iOS mobile software that will let users identify a song and its artist using an iPhone or iPad.

Apple is working with Shazam Entertainment Ltd., whose technology can quickly spot what’s playing by collecting sound from a phone’s microphone and matching it against a song database.

Song discovery? Ho hum. Only, look beyond the immediate and there’s potential for so much more. That late last year, Shazam updated its iPhone app to support an always-on, always-listening ‘Auto Shazam’ feature is no coincidence. Our phones are becoming increasingly aware of their surroundings. I expect Apple to leverage this technological confluence for our mutual benefit.

Today, Song Discovery.

Apple’s move no doubt satisfies a near term need. While Shazam has been around since 2008, and the company claims 90 million monthly users across all platforms, having their service baked into the iPhone will almost certainly spur increased sales. Song downloads have slowed — not just with iTunes, the world’s largest seller of music — but across the industry. 

shazam-iphone-android-app1

Instead of having to download the Shazam app, iPhone users will now simply point their device near a sound source and summon Siri: “what song is playing?” So notified, they can then buy it instantly from iTunes. 

Little surprise music industry site MusicWeek was generally positive about the news. Little surprise, also, the tech industry could not muster much excitement. Thus…the Verge essentially summarized Bloomberg’s report.

Daring Fireball’s John Gruber offered little more than “sounds like a great feature.”

Windows Phone Central readers offered only gentle mocking, reminding all who would listen this feature is already embedded in Windows Phone.

That’s about it. Scarcely even a mention Shazam has a similar, if less developed TV show identification feature which could also prove a boon for iTunes video sales.

Place me at the other end of the spectrum. I think the rumored Shazam integration is a big deal and not because I care about the vagaries of the music business. This is not about yet another mental task the iPhone makes easier. Rather, this move reveals Apple’s intent to enable our iPhones to sense — to hear, see and inform, even as our eyes, ears and awareness are overwhelmed or focused elsewhere.

Tomorrow, Super Awareness.

Our smartphones are always on, always connected to the web, always connected to a specific location (via GPS) and, with minimal hardware tweaks, can always be listening, via the mic, and even always be watching, via the cameras.

What sights, sounds, people, toxins, movements, advertisements, songs, strange or helpful faces, and countless other opportunities and interactions, some heretofore impossible to assess or even act upon, are we exposed to every moment of every day? We cannot possibly know this, but our smartphones can, or soon will. I believe this Shazam integration points the way.

It’s not just about hearing a song and wanting to know the artist. It’s about picking up every sound, including those beyond human earshot, and informing us if any of them matter. Now apply this same principle to every image and face we see though do not consciously process.

Our smartphone’s mic, cameras, GPS and various sensors can record the near-infinite amount of real and virtual data we receive every moment of every day. Next, couple that with the fact our smartphone’s ‘desktop-class’ processing will be able to toss out the overwhelming amounts of cruft we are exposed to, determine what’s actually important, and notify us in real-time of that which should demand our attention. That is huge. 

Going forward, the iPhone becomes not simply more important than our PC, for example, but vital for the successful optimization of our daily life. This is not evolution, but revolution.

The Age Of iPhone Awareness

Yes, it’s fun to have Siri magically tell us the name of a song. Only, this singular action portends so much more. At the risk of annoying Android and Windows Phone users, Apple’s move sanctions and accelerates the birth of an entirely new class of services and applications which I call ambient apps.

Ambient apps hear, see and record all the ‘noise’ surrounding us, instantly combine this with our location, time, history, preferences — then run this data against global data stores — to inform us of what is relevant. What is that bird flying overhead? Where is that bus headed? What is making that noise? Who is the person approaching me from behind? Is there anything here I might like?

auto shazam

Your smartphone’s mic, GPS, camera, sensors and connectivity to the web need never sleep. Set them to pick up, record, analyze, isolate and act upon every sound you hear, every sight you see.

This has long been the dream of some, though till now was impossible due to limited battery life, limited connectivity, meager on-board processing and data access. No longer.

Let’s start with a simple example.

Why ask Siri “what song is this”? Why not simply say, for example, “Siri, listen for every song I hear (whether at the grocery store, in the car, at Starbucks, etc.). At the end of the day, provide an iTunes link to every song. I’ll decide which ones I want to purchase. Thank you, Siri.”

Utterly doable right now. Except, why limit this service to music?

For example, perhaps our smartphone can detect and take action based upon the fact that, unbeknownst to you, the sound of steps behind you are getting closer. It can sense, record and act upon the fact you walk faster each time you hear this particular song. Or you slowed down when passing a particular restaurant. What do you want it to do based upon its “awareness” of your own actions — actions which you were not consciously aware of?

Our smartphone can hear and see. It is always with us. It makes sense then to allow it to optimize and prioritize our responses to the real and virtual people and things we interact with every day, even those outside our conscious involvement.

Ambient Apps Are The New Magic

The utility of our smartphone’s responses will only get better. Smartphones sense by having ears (mic), eyes (cameras), by knowing our exact location (GPS) and by being connected to the internet. These continue to improve. It is smartphone sensors, however, that parallel our many nerve endings, feeling and collecting all manner of data and notifying us when an appropriate action should be taken.

Though still a relatively young technology, smartphones have added a wealth of new sensors with each iteration. The inclusion of these sensors should radically supplement the recording, tracking and ambient ‘awareness’ of our smartphones, and thus further optimize our interactions, both online and offline.

Jan Dawson posted this Qualcomm chart which illustrates the amazing breadth of sensors added to the Samsung Galaxy line over just the past five years. What becomes standard five years from now?

smartphone sensors

Hear, see, sense. The smartphone’s combination of hardware, sensors, cloud connectivity, location awareness and Shazam-like algorithms will increasingly be used to uncover the most meaningful bits of our lives then help us act upon them, as needed. This is not serendipity, this is design. I think Apple is pointing the way. 

Peering Inside The Apple Rumors Prism

Steve Jobs fully understood the value in surprise, the wonder of magic, and the awe a beautiful, functional, highly personal computing device can evoke when unwrapped for the very first time. Rumors, particularly a stream of unceasing rumors of all kinds, tend to sully this ideal.

Not much can be done about it, unfortunately. Not only because Jobs is now gone but because Apple is far, far bigger than it has ever been. The company now comprises ten of thousands of employees, a massive retail chain, strategic partnerships with nearly every big name in media, relationships with automakers and contractors by the score. The Apple ecosystems spans nearly half a billion active users, a global supply chain that touches 4 million workers, hundreds of suppliers, and 18 worldwide final assembly plants. Leaks and rumors are inevitable.

Apple suppliers

In addition to leaks, there may be story plants, trial balloons, media spin, hurt feelings from those let go, false leads from those gunning for a promotion, snapshots from an anonymous line worker in China, misdirections from a savvy executive and slip ups by trusted employees. Given the scope of today’s Apple, shutting down the rumor-media industrial complex is simply not possible.

The end result of all of this?

We don’t know what we don’t know and we aren’t always sure what we do know. To be sure, all the rumors and all the talk may help whet our appetite for the next great Apple product. It can also lead to far too many brain cells preoccupied with even the most ridiculous Apple tales.

For example…iRing. Yes, leading Apple sites have written about and thoroughly dissected the very real possibility of a computerized ring, forged by Apple, which could be, it is presumed, a means to support digital payments, possibly serve as a remote control for the wearer’s music collection, and all manner of other nonsensical functions.

This will not happen. There will be no iRing. None. If for no other reason than should Apple even dare release such a product, every sneer, every cutting remark made by any and every Apple hater everywhere since the beginning of time would instantly be made whole. I can barely write the word ‘iRing’ without laughing.

I am certain, however, that talk of an iRing will persist.

The Apple Rumor Prism

Like it or not, expect no end to the Apple rumors and tall tales that emerge from the amorphous flotsam the media periodically feasts upon. This is all exacerbated by the fact Apple PR, whom I have been in contact with on many occasions, nearly always refuses to comment on any rumor. Realistically, they have little other choice.

Which begs the question: Is there a way to pre-determine the veracity of a Apple rumor?

(Wait for it…)

No.

The best we have so far are a few very well connected Apple writers, such as Jim Dalrymple, who can deliver a yay or nay but only at certain times and only for certain rumors. With Apple, rumors are like weeds, and no one person can stomp down all of them.

For example, thanks to the ongoing court battles with Samsung, we recently learned Apple has been rather concerned over the sales growth of large display smartphones, which it does not yet offer.

iphone-4-5-inch-displays-1

Surprise! Days later, we are treated to pictures of new iPhone molds suggesting a larger iPhone! Is this a plant from Apple? A false lead? Or some kid in Taiwan not very good with Photoshop? We don’t know. Worse, we tend to latch onto any data point, such as it is, that confirms our biases or affirms our hopes.

What then, is the best means of determining if a rumor is even merely likely when Apple refuses to say and the best Apple sources can’t (yet) verify? I focus on what I do know with a high degree of certainty and run the latest rumor through that prism. This may lead to some dead ends or errors, but it typically keeps me on the right trail.

I know with a high degree of certainty that…

  • Tim Cook is firmly in charge of Apple
  • Jony Ive is firmly in charge of the look and feel of Apple products — all of it, inside and out
  • Tim Cook has essentially removed Jony Ive from the bowels of the Apple design labs and made him a quite respectable SVP, which almost certainly means Ive won’t be as intimately involved with each and every product, manufacturing process and innovative material going forward
  • Cook’s big name hires have been in retail and branding, though he’s also hired veterans from the fitness and medical devices industry
  • Apple works on products and prototypes for years before it believes everything is just right for launch
  • iPhone margins are massive and counter to the direction of the marketplace
  • Apple cannot go down market 1
  • Apple is comfortable with offering seemingly confusing choices for consumers (e.g. iPad Mini RD vs iPad 2 vs iPad 3, I think)
  • Core Apple products such as the iPhone, iPad and the Mac are typically replaced by users every 1-5 years, and many of these are not junked but rather re-sold by the original customer or a third party
  • Apple possesses a near religious fealty to the notion of continuous product improvement
  • Optimizing and innovating all hardware in pursuit of product improvement — and product margins — is hardwired into the company’s DNA
  • Apple’s relationships with IT decision makers and procurement personnel in government, the enterprise and businesses with more than 20 employees is woefully lacking
  • Apple is worth more than $450 billion and is sitting on approximately $160 billion in cash and equivalents

These guide me whenever I dare pick apart an Apple rumor or chase down the latest crazy Apple tale.

Caution: these ‘knowns’ are not equal!

The majority of Apple’s revenues come from the iPhone. The addressable market for the iPhone is radically larger than the market for any other extant Apple product. Each fact from above, even if entirely true in isolation, is not inviolable should it ever even potentially bring harm to iPhone sales and iPhone margins.

iphone revenues

The Apple Rumor Mill

Running rumors though this iPhone prism serves as my handy guide in understanding if a rumor has legitimacy or not.

For example:

An iWatch should almost certainly integrate with (and be made most useful by) the iPhone. An iWatch will likely demand a keen sense of style, luxury branding and retail sales savvy. Given what I know, iWatch rumors are absolutely within the bounds of certainty.

An Apple television would not be appreciably enhanced by the iPhone. Televisions are kept in use far longer than five years. There’s little to justify this rumor, no matter its persistence.

A line of wearables or ‘smart’ accessories that all tie back to the iPhone? Absolutely. These enhance the iPhone’s value and should extend iPhone sales.

That Apple has to do anything this month, this quarter, this fiscal year to ensure its success? Complete nonsense.

A revolutionary new product that just might “disrupt” the iPhone? No. Repeat after me: No. For Apple to even consider disrupting its golden iPhone goose would not only be foolish but darn close to a dereliction of duty. Buttressing this is another fact: there is nothing on the horizon, nothing at all, even remotely ready to replace the iPhone (or any high end smartphone). Nothing. Not Google Glass. Not Oculus Rift. Nothing. We are in the early days of the smartphone market. Do not make me repeat myself. 

Within a week of reading this, probably sooner, you will hear yet another rumor about Apple. Before considering it, pro or con, first make sure you run it through your list of knowns. Most of the time, you will immediately recognize the rumor as utter nonsense. On rare occasions however and no matter the source, you will stumble upon a rumor more true than not.

Such is life for those that follow Apple Inc and the hundreds of millions who love its products. The true story of Apple does not begin or end at product launch. Those are merely two data points in an ongoing and very rewarding chase.

1. [Feel free to counter my claim Apple cannot go down market. Remember, however, even the ‘cheap’ iPhone, the iPhone 5c, is one of the most expensive on the market, and note also the major Apple retail hires come from luxury brand companies.]

Market Share Metaphysics

Twice before I have used Aristotle’s concept of “Essentialism” to explain why tablets are “real” computers and why OS X will not be merging with iOS. Today, I go to the well one last time ((…unless I need to go there again in my desire to quench my thirst for knowledge (or drown my stubborn opponents therein).)) in an attempt to definitively and finally put an end to the messianic myth that market share equals platform. Hopefully, we shall never speak of this again. ((Fat chance.))

Essentialism

What attributes make things what they are? Or, what attributes make things not what they aren’t? (Confused yet?)

Aristotle drew a distinction between “essential” and “nonessential” properties. ((Actually, Aristotle called “nonessential” properties “accidental” properties. That’s totally confusing so I “accidentally” changed Aristotle’s wording from “accidental” to “nonessential”. It’s my article, I can do what I want.))

Essential properties are those without which a thing wouldn’t be what it is. Nonessential properties are those that determine how a thing is, but not what it is. For example, Aristotle thought rationality was essential to being a human being and, since Socrates was a human being, Socrates’s rationality was essential to his being Socrates. Without the property of rationality, Socrates simply wouldn’t be Socrates. He wouldn’t even be a human being, so how could he be Socrates?

On the other hand, Aristotle thought Socrates’s property of being snubnosed was merely nonessential; snub-nosed was part of how Socrates was, but it wasn’t essential to what or who he was. To put it another way, take away Socrates’s rationality, and he’s no longer Socrates, but give him plastic surgery, and he’s Socrates with a nose job.

The Elephant In The Room

Baby elephantOne could describe an elephant as being big, gray and wrinkled. But are those essential or nonessential attributes?

  1. Are there elephants who aren’t big? Sure. Baby elephants are small. So were prehistoric dwarf elephants.
  2. Are there elephants who aren’t gray? Sure. There are brownish elephants. There may even be albino elephants.
  3. Are there elephants who aren’t wrinkled? Sure. Maybe. Or maybe not. Who knows.

In other words, bigness, grayness, and wrinkledness all fail Aristotle’s test of defining what an elephant essentially is. Instead, they describe how elephants are, generally and nonessentially.

The Church of Market Share

The Church of Market Share says majority market share is essential for a computing platform to thrive. But is this even close to being true?

  1. Are there successful platforms that aren’t big? Sure.
  2. Are there successful platforms that don’t have majority market share? Sure.
  3. Are there successful platforms that aren’t wrinkled? Uh, maybe. Or maybe not.

In other words, massive market share fails Aristotle’s test of defining what a successful platform is. Arguing market share size makes a platform successful is like arguing being “big” makes an animal an elephant. That’s simply a “whale” of a lie.

What Is Essential

Greek astronomerWhat is “essential” to a computing platform is an operating system which forms the foundation upon which third party developers can develop; developers who create desirable products; and consumers who desire and acquire those products. Bigness may be nice, but it ain’t “essential.”

In other words, bigness, grayness, and wrinkledness all fail Aristotle’s test of defining what an elephant essentially is. Instead they describe how elephants are, generally and non-essentially.

Likewise, bigness, majority market share and wrinkledness all fail Aristotle’s test of defining what a successful platform is. Instead, they describe how platforms are, generally and non-essentially.

This is true only up to a point. Something as small, white, and round as an aspirin cannot be an elephant, and confronted with such an object, we would not be tempted to ask, “Is that an aspirin you’re taking or an atypical elephant?”

Market share as small as Microsoft’s Windows 8 and Blackberry’s cannot be dominant platforms. Confronted with such a platform, we would not be tempted to ask, “Is that an insubstantial, unfounded stereotype you’re swallowing whole and without critical analysis…or an atypical platform?”

The point is that bigness, grayness, and wrinkledness are not precise enough terms to be the essential qualities of an elephant. Likewise, bigness, majority market share and wrinkledness are not precise enough terms to be the essential qualities of a platform.

It’s a certain size range and a certain color range that, among other qualities, determine whether or not something is an elephant. It’s a certain size range and a certain market share that, among other qualities, determine whether or not something is a successful computing platform.

Wrinkledness, on the other hand, may be a red herring, or perhaps a “whistling herring”.

The Wrong Question Will Get You The Wrong Answer

    Abe: I got a riddle for you, Sol. What’s green, hangs on the wall, and whistles?
    Sol: I give up.
    Abe: A herring.
    Sol: But a herring isn’t green.
    Abe: So you can paint it green.
    Sol: But a herring doesn’t hang on the wall.
    Abe: Put a nail through it, it hangs on the wall.
    Sol: But a herring doesn’t whistle!
    Abe: So? It doesn’t whistle.

Microsoft’s Windows platform was big, a monopoly and it whistled (or it didn’t whistle). But that doesn’t mean that it was or is the one and only way to create a successful platform. And anyone who says it is, is telling you a fish story.

Post-Moretm

Feel free to steal this argument and use it since I essentially (not accidentally) stole it, er, borrowed it from Thomas Cathcart: “Plato and a Platypus Walk Into a Bar.”

Of course, a link to this article would be nice…

…just not “essential”.

Rebuttal: 10 Reasons To Not Buy A Windows Tablet

ZDNet posted an article entitled: 10 Reasons To Buy A Windows Tablet Instead Of The iPad Or Android.

[pullquote]If you haven’t got anything good to say about anyone, come sit by me. ~ Alice Roosevelt Longworth[/pullquote]

The ZDNet article proves to me you’re never too old to learn something stupid. The justifications used to support the proposition one should buy a Microsoft tablet are as stupid as they get.

Let’s review, shall we?

1) It’s all about choice

    “Having options available is always a good thing…”

That just ain’t so. Options don’t matter unless they’re GOOD options or, more specifically, unless they’re better than the options already available. Benedict Evans is fond of saying that some people suffer from “Technology Tourette’s” — a baffling disease that causes some technology enthusiasts to grow neck beards and shout out random tech memes like “Open!” and “Choice!” at inappropriate times. That seems to be what’s occurring here.

Choice is not an end, it’s a means and it’s the quality of one’s choices — not just the availability of choice — that matters. If you demonstrate Windows tablets are better, fine. But just claiming they’re different from what’s already available doesn’t cut it as an argument.

2) Plug it in

    “Windows tablets are full PCs. Most can do anything that their bigger siblings can do, and that includes letting owners plug peripherals in to do stuff.”

[pullquote]When it’s three o’clock in Cupertino, it’s still 1995 in Redmond.[/pullquote]

That argument is like a marshmallow — easy to chew, but hard to swallow. ((Inspired by Alberto Nikas))

First, most everything listed in the article can now be done wirelessly — no cables required.

Second, didn’t Microsoft just spend the last decade stirring up apathy about the wonders of having a full PC on a tablet? How’d that work out for them?

Third, didn’t the iPad become a computing phenomenon without all those cables?

160_F_31117682_7sZOFRNgAwbAjqfA4bMyMcFR9KPkmkekMicrosoft claiming their tablets are equipped with the full PC experience is like a hooker claiming she is equipped with a chastity belt. It’s neither a feature nor a benefit.

3) Keeps getting better

    “Windows 8 wasn’t that great on tablets when first introduced, but that’s a thing of the past.”

I think we can agree. The past is over. ~ George W. Bush

That reminds me of a joke:

Morty comes home to find his wife and his best friend, Lou, naked together in bed. Just as Morty is about to open his mouth, Lou jumps out of the bed and says, “Before you say anything, old pal, what are you going to believe, me or your lying eyes?” ((Plato and a Platypus Walk Into a Bar, Thomas Cathcart & Daniel Klein ))

So who are you going to believe, ZDNet or your lying eyes?

Apparently the Windows 8 design team believe if two wrongs don’t make a right, try three…or four…or five…

  1. Saying Windows 8 is getting better on tablets is like saying one’s rash isn’t as noticeable anymore (although it still itches like crazy).
  2. Windows 8 is so bad that if it had been introduced 2,000 years ago, it would have been stoned.
  3. Windows 8 is so bad that if it were your lover it would give you an anticlimax. ((Inspired by Scott Roeben))

And Windows RT (also known as “I-have-no-idea-what-they’re-calling-it-now?”)? Well, that reminds me of another joke.

Q: What do you call a dog with no legs?
A: It doesn’t matter because it’s not going to come anyway.

It doesn’t matter what you call Windows RT because it’s a dog and its got no legs.

4) Double duty

    “Many tablets are available in hybrid form, a slate (screen) that plugs into a dock that turns it into a laptop. These are tablets when you want one and laptops when you need one, as Microsoft is fond of telling us.”

Double “doody” devices are a great problem, masquerading as a great good.

If you’re on a camping trip, you might want to use a Swiss Army knife. But if you’re at home, you won’t ever use it to carve the turkey, open a can or a bottle of wine. You’ll have better tools available.

Similarly, if you’re a road warrior, you may want a two-in-one. Like the Swiss Army knife, it’s a convenient, but compromised, tool. If sales totals mean anything to you — and they certainly mean something to the rest of the world — it appears that even most road warriors would prefer to carry both a tablet and a notebook rather than endure the compromises inherent in a hybrid computing device.

I think well-known-tech-reviewer, Abraham Lincoln, may have best summed up the problem with hybrids:

If this is coffee, please bring me some tea; but if this is tea, please bring me some coffee. ~ Abraham Lincoln

5) Then there’s Office…

    “A lot has been said about the need for Microsoft Office on tablets, and while there are decent alternatives to Office on the other tablet platforms, there’s no solution as complete as the genuine article.”

First, many — nay most — do not need to use Office.

Second, there are numerous Office alternatives available.

Third, if you need to use Office, you’ll be much happier using a notebook than a tablet. Office is not optimized for touch.

Fourth, Microsoft is soon going to bring Office to the iPad.

So what was the point ZDNet was trying to make?

6) Do some real work

    “You hear a lot of discussion about what constitutes real work, and while I can do my work on any tablet, some need Windows.”

ZDNet conflates two arguments here. If you need to use Windows, then by all means, buy a Windows machine. (Although some contend “The Best Windows PC Is An Apple Mac.”) However, Windows desktop programs aren’t optimized for touch, so a notebook would probably be more appropriate than a tablet.

If you really need to know if your computer is doing “real work,” then first you have to know what the definition of “work” is and even before that, you need to know what the definition of “definition” is.

“Definition” is “an exact statement or description of the nature, scope, or meaning of something.”

You use a definition to define an object. You do not use an object to define a definition.

Defining “real work” by comparing it to what one can do on a PC or Windows tablet is the same argument — and the same erroneous argument — PC aficionado’s used to make when they contended tablets weren’t “real” computers. They looked at their PCs, listed all of its attributes and then excluded from the definition of computing anything that didn’t have all of those attributes. This is akin to looking at a cow and claiming anything that doesn’t have all of the characteristics of a cow isn’t a mammal.

“Work” is an “activity involving mental or physical effort done in order to achieve a purpose or result.”

The “purpose or result” is defined by the user, not by the tool. It’s the user, not Microsoft, who gets to define whether the tool does the “real work” or not and the fact 95% of all Enterprise software on tablets runs on iOS should put to rest Microsoft’s pompous contention that non-Window’s tablets don’t do “real work.”

Unbelievably, here’s the screenshot that ZDNet used as support for their claim one can do “real work” on a Windows tablet.

06-real-work

Yikes! If that’s what ZDNet means by “real work”, you can keep it. ZDNet couldn’t have parodied their argument better if they’d tried.

PedalSkatesI suspect if Microsoft had been in the bicycle business at the turn of the last century, they would have offered “pedal skates” as their alternative to Apple’s roller skates, all the while claiming their pedal skates were “real” bicycles because they had “real” tires.

Sigh. It’s a “tired” argument that falls flat. ((There’s probably a RIM joke in there somewhere too.))

7) Lots of apps

Well, that’s just a damn lie. App support for Windows 8 is third of three, so it’s a reason NOT to buy a Windows tablet, not a reason TO buy a Windows Tablet.

One could contend Windows apps are “good enough.” One could contend it, but it still wouldn’t make it so. There are not only huge holes in the Windows lineup, but the apps that are available are often mere shadows of the originals – unoptimized for touch or poorly implemented copycats.

Windows 8 has less apps, the apps it has are less useful and Microsoft is porting its own apps to Apple devices. So how exactly are “apps” a reason to buy Windows tablets?

Microsoft app not only in the Mac App Store, but featured as Editor’s Choice. Different era, I know. Still weird. ~ MG Siegler (@parislemon)

BjB-ZruIEAE-DCu

The above ad came out yesterday. Notice anything missing? (Hint: It’s Windows 8.)

8) Run any browser you want

Geez, that’s some awfully weak sauce. Let’s tease out the reality.

First, most users don’t care about multiple browsers on their mobile devices.

Second, most browsers are optimized for their mobile devices. (Tip o’ the hat to @jseths)

Third, the browsers available on Window 8 are not touch enabled. Which kind of puts a serious crimp in the entire contention Windows 8 tablets come with multiple browsers.

Fourth, even the browser users are pulling out of Windows 8.

Fifth, if multiple non-touch optimized browsers are what you really want on your tablet then by all means the two of you should go out and buy a Windows tablet.

Regarding Firefox Metro, you can complain when devs don’t support Metro, but when they do and see no usage, hard to complain if they kill it. ~ Paul Thurrott (@thurrott)

9) Multi-tasking on the screen

    “Those who do two things at once on an iPad or most Android tablets are all too familiar with having to swap between the two app screens. Bouncing back and forth is OK, but it would be much better to have the two apps displayed side-by-side on the tablet screen. Windows tablets have you covered in this regard, as snap view lets you put two apps up at once.”

Well, on the one hand, many apps do not work with snap view. On the other hand, I really like snap view and if it’s a big plus for you, have at it on your Windows tablet. However, I strongly suspect that design-wise, mobile is made for full screen use. As the world-famous designer, Dieter Rams put it: “Less, but better.”

I’m comfortable letting the market act as the judge and jury on this one.

10) Long-term viability

    “Companies come, and companies go, and that’s especially true in the mobile space. Buying into a mobile platform with any device is making a leap of faith that the platform and the company behind it will be around for the long haul.That’s not a concern with a Windows tablet, as Microsoft is certain to be around for a long time.”

[pullquote]He’s a very competitive competitor, that’s the sort of competitor he is. ~ Dorian Williams, horse show commentator[/pullquote]

Whoa, whoa and whoa!

What a bizarre argument. First, saying Microsoft will be around in the long run is not the same thing as saying Windows 8 will be around in the long run.

Innovation is a process. Innovativeness as an attribute of a company is a measure of its processes not its assets. ~ Horace Dediu (@asymco)

Second, saying Microsoft is committed to Windows 8 tablets is not the same as saying Windows 8 tablets will be around in the long run. I’m pretty sure IBM was committed to OS/2, Palm was committed to WebOS, and RIM was committed to Blackberry. The crucial question is not whether Microsoft is committed to Windows 8 but whether the developers are committed and the answer to that question is a resounding “no.”

Guardian: Firefox on Windows 8 Metro only had 1,000 daily users. ~ Charles Arthur (@charlesarthur)

(Perhaps it’s not so much developers are rats deserting a sinking ship as they are ships deserting a sinking rat.)

[pullquote]Microsoft is like the guy at the party who gives everybody cocaine and still nobody likes him. ((Inspired by Jim Samuels))[/pullquote]

Firefox says Windows 8 is a black hole, kills its Metro app ~ Sameer Singh (@sameer_singh17)

Mozilla pulls the plug on ‘Metro’ mode Firefox browser for Windows 8. Windows 8 isn’t a failure? You’re kidding right? ~ Bhaskar Bhat (@bhaskarsb)

Windows Tablets have long-term viability? Au contraire. Windows 8 has the life expectancy of a small boy about to look into a gas tank with a lighted match. ((Inspired by Fred Allen))

Conclusion

There are two kinds of writer: those that make you think, and those that make you wonder. ~ Brian Aldiss

This article makes me wonder what the writer was thinking. Let me put it this way. If this author had been the Captain of the Titanic, he’d deny the ship had hit an iceberg and say they were only stopping to pick up some ice.

[pullquote]Everything happens for a reason. Sometimes the reason is that you’re stupid and make bad decisions. ~ Parody Bill Murray (@BiIIMurray)[/pullquote]

The fundamental problem with Windows 8 hasn’t changed: you’re still working in two operating systems at once. And it can’t be “fixed,” it can only be undone.

If you board the wrong train, it is no use running along the corridor in the other direction. ~ Dietrich Bonhoeffer

This is the ultimate strategy tax. The visionary starts with a clean sheet of paper, and re-imagines the world. ((Malcolm Gladwell)). The last thing Microsoft wanted to do was to start anew. They wanted to leverage their existing desktop Windows monopoly. Instead, Windows 8 is an anchor so big it’s sinking not only Microsoft’s mobile hopes but their desktop franchise as well.

Which reminds me of one last joke:

      A magician is working on a cruise ship, but there is one problem. The captain’s parrot watches every show he does, and after figuring out the tricks, the parrot has started yelling out the secrets of how the tricks are done.
The bird says, “Look, it’s not the same hat!” or “Hey! He’s hiding the flowers under the table!”
The magician is enraged. But it’s the captain’s parrot, so he can’t do anything about it.

One day on a long cruise, there is an accident. The boat crashes and sinks. The magician and the parrot find them themselves clinging to the same plank of wood in the middle of the ocean. For days neither says anything. Finally, after a week, with no hope in sight, the parrot says, “Okay, I give up. Where’s the boat?”

[pullquote]Anyone can win, unless there happens to be a second entry. ~ George Ade[/pullquote]

There is no boat. And there is no salvaging of Windows 8 either. You can “parrot” Microsoft’s PR all you want, but it’s like they say:

Those who get too big for their britches will be exposed in the end.

Better For The World? Apple Or Google?

Arguably, Apple and Google are the largest, richest, most powerful, most influential technology companies on the planet. Across many markets their products, services and technologies directly compete with one another. Yet, in countless endeavors, each benefits the other, enabling both to earn more, reach more, do more, grow ever larger, their creations touching nearly all of us.

Which begs the question: which company creates more good in this world? Apple or Google?

Unknowable?

I think the question a valid one. Despite their many similarities, the companies have profoundly divergent strategies when it comes to the development, release and spread of technology. Seeking the answer to this question might help us better understand how we should construct future tech companies, offer insights into what we should value most and whose methods we should help foster.

Pay To Play

As both Apple and Google continue to extend their reach deeper into our lives, the more obvious differences between the two begin to peel away. Once, Apple was hardware and Google was software. Now, both are mobile devices, cloud computing, entertainment, maps, apps, payments, productivity, music, messaging and — even if poorly — social media. We have to look deeper.

Start with pricing. Apple, whose products no one is required to purchase, is regularly blasted for ‘premium’ pricing. Google, whose products are mostly free, generates no such acrimony.

Is it better to demand customers pay for a product, to enter into a covenant where value is promised at a specific price, as Apple requires? Or is offering services for free the superior model? Certainly free seems better, but the price of free in today’s world is constant advertising, payment of which is continuous mining of our personal data. Does the Google way — pulling off tiny pieces of ourselves, bit by bit, moment by moment, and then selling these off to an unknowable coterie of people and businesses — better serve humanity?

I want to be in favor of free, but in its current form, the price of free seems too steep for me. For the rest of the world, I think in pricing Google trumps Apple, whether I wish it so or not.

No Product Before Its Time

Another core difference: product development and release.

Is it better to release products only when they are ready, as Apple does, or as soon as they reach sanctioned beta stage, as Google does, allowing anyone to experiment with their creation, make it better, expand its reach? Again, this seems to favor Google.

While we wait for the next insanely great product from Apple, a hyperfast-moving Google is — right now — helping us understand the pitfalls and benefits of driverless cars. Google Glass is forcing us to consider our views on personal privacy in public spaces and it must be acknowledged, pushing the technical boundaries and design limits of wearable technologies.

Google is meeting with city leaders, exploring methods to offer cheaper, radically faster broadband. They are unleashing ‘balloons‘ to bring the Internet to all points of the world. Push, push, push, now, now, now. The Google Way seems more right for our world.

Meanwhile, Apple…what, exactly? An iWatch likely few can afford once its finally released?

Tim Cook recently tweeted:

“Remembering Steve on his birthday: ‘Details matter, it’s worth waiting to get it right.'”

Is this true? Is this best for the 7+ billion of us on the planet? To wait?

Consider Android. Android is now the most widely used operating system in the world in part because Google unleashed it, for free, even while its business model remained in flux, and without waiting for agreement from potential stakeholders like Java’s Oracle. Nor was it perfect, by any stretch. Our gain.

We are rapidly connecting with one another, linking to astoundingly low-cost information resources whose total value is nearly incalculable, thanks in large part to this essentially free, freely available and extraordinarily robust mobile operating system. Humanity has been aided by Android, clearly.

Step back. Did Apple’s deliberate plodding make all this possible?

Look at an Android device pre-iPhone: it is an evolutionary dead-end. Think of all the apps, services, knowledge, entertainment and productivity we garner from all the phones that came only after Apple and the iPhone cleared the way. Consider the rather glaring limitations of Android, pre-iPhone. Had Apple launched iPhone before it was ready, before all the “details” were just right, the entire smartphone industry, now over a billion users strong, may have taken a completely different path – and died on the vine.

Might the same thing happen in wearables — likely the next iteration of the ongoing personal computing revolution? As wearable technologies abound in type and quantity, we await Apple’s entry.

Yet it may be wearables can only achieve their fullest potential for improving our health, our fitness, our connectedness to our minds and bodies only after the details are exactly right. That is, only after Apple clears a broad, lasting path just as they did with Mac (PCs), iPhone (smartphones), and iPad (tablets).

We have significant evidence Apple’s entry into a category has disproportionately, even radically re-shaped all that came before and all that follows. Perhaps we are better served in our analysis if instead of viewing Apple as sitting atop the ‘high end’ or ‘premium’ segment of a market, we acknowledge their products as a sort of official start, or a big bang of a new product category, unleashing and enabling the full potential of such technologies.

Apple and the big bang

Thus, it may be that Apple better serves humanity even as their products are viewed by many as the tools of the wealthy. Apple made possible the very revolutions Google has seized upon. I think when it comes to the development, creation and release of products, Apple does humanity better.

Origin Myths

While I harbor suspicions regarding some of Google’s actions, I deeply admire their speed and scale, along with their willingness to try, to fail, to push. Google’s fast, expansive focus seems much more aligned with our nature and certainly more aligned with our times. Google’s beliefs include:

  • fast is better than slow
  • democracy on the web works, and
  • great just isn’t good enough

Thanks in part to such beliefs we most likely will have faster broadband, more bandwidth, radically cheaper smartphones connecting the world, tablets everywhere, a nearly infinitely scalable and mobile-optimized real-time web, all manner of affordable information and content, search, driverless cars, and whatever else Google is cooking up in its labs or scouting for acquisition.

That’s a substantial list.

It took Google for us to have YouTube, free maps, real-time-anywhere search, and the ability to live our lives within a fully digital realm. Yes, this comes at the creeping and rising cost of advertising everywhere and aggressively lobbied laws that do not necessarily favor our privacy interests. Almost seems fair.

Apple’s mission, by contrast, is shockingly prosaic:

Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and is defining the future of mobile media and computing devices with iPad.

That’s it? No move fast and break things? No do no evil? Not even a computer in every purse?

In vision and purpose, I say Google bests Apple.

I suspect that despite their overlapping business interests, core differences between the companies are inextricably linked back to their founding — the mad, beautiful and deceptively detailed vision of computing borne inside the mind of Steve Jobs, versus the youthful, audacious and limitless grandiosity of Page and Brin. 

Apple and Google are a mere five miles from one another, yet the difference in their work and world views appears an impassable chasm. I do not know who does more for humanity. I am greatly proud, nonetheless, that these two giants of innovation are American-born, American-led, and are both, separately and together, creating a better world.

India And The Future Of The Smartphone Wars

Perhaps I should have titled this “India Is The Future Of The Smartphone Wars”?

The appointment of the highly capable Satya Nadella to lead Microsoft only partly explains why I am thinking more about India and technology. The other reason is that it increasingly appears that the future of smartphones, and the winners and losers of the global smartphone wars, will be determined in large part by what happens in India. Great news for Google, possibly even for Microsoft and Nokia. Less good for Apple.

Despite the rather remarkable success of Indians in Silicon Valley, many of whom, like Nadella, are now leading tech companies, I still meet far too many analysts who remain disproportionately focused on what’s happening in China, or in Europe, while steadfastly ignoring the speedy, highly iterative tech landscape in the world’s second-largest nation.

Consider the following about India:

  • There are over 1.2 billion people — that’s about 4 USA’s
  • The median age is 25 (China’s median age is 36 and the US is 37)
  • India is the world’s 11th largest economy — and still one of the world’s fastest-growing
  • Annual per capita income is a dismaying $4,000 (by comparison, China’s is $10,000 and in the US it is $53,000)

Populous, young, growing, eager for technology, eager for connectivity, albeit with relatively meager resources to spend. It seems to me that is the perfect mix for disruption. Likely, this disruption centers around what is now our most important tool, the smartphone.

There are already about 150 million total smartphone users in India. Despite that number, and despite the nation’s large population, India is the world’s fastest-growing smartphone market. The giant feature phone market is collapsing.

feature phones to smartphones

According to IDC, 44 million smartphones were sold in India in 2013. Phablets (smartphones between 5-6.99 inches) garnered at least 20% of the Indian smartphone market, though other sources place this number much higher.

Using IDC’s latest data, Samsung is the leading smartphone company in India, with India-based Micromax and Karbonn trailing. (Nokia, a leader in feature phones in India lags, though sales of its Lumia devices have steadily increased and the company now may have a 5% share of the market there.)

India smartphone market

Given the size of the market, and its rapid growth, and the number of new users, current sales rankings may not matter much. As DNA India notes:

Tier one smartphone brands are ignoring the writing on the wall in the world’s fastest growing smartphone market in order to cater to a global market. This could be a dangerous thing to do especially at a time when the market is growing at a rate of over 150 percent and with 85 percent users still using feature phones. (emphasis added)

2014 could prove a watershed year, considering that:

  • 225 million smartphones will be sold in India just in 2014 — compared to 89 million in the US
  • Of these 225 million devices, an amazing 207  million will be to first-time smartphone buyers — the largest proportion of new users to existing users anywhere in the world

More so than the spread of 3G/4G, and the rapid improvements in mobile-optimized services, it is the almost unbelievable low prices of new smartphones that are enabling the rapid jump to smartphones in India:

“The median price of a handset has fallen from 8,250 rupees (Dh490) in 2012 to 7,000 in 2013.”

That’s $115.

In fact, about 2/3 of all smartphones sold in India are priced under $200.

The derisively labelled “race to the bottom” is in truth, connecting India, and the world, and gifting us with unbelievably accessible technology. 

Mozilla is seeking to create a $25 smartphone. Nokia’s X devices are all priced under $150. The new BlackBerry Z3 costs less than $200. This is amazing and laudable. Indeed, marketing firm Jana, has cleverly predicted that 2014 may be the year when a smartphone costs less than a carton of cigarettes. 

The world will never be the same, and what’s happening in India offers us clues to our future.

As the Guardian notes, 2014 is when “the number of mobile internet users in the developing world will overtake those in the developed world.”

new smartphone users

Connectivity is flowering in abundance. Equivalent access to everyone and to nearly every data resource will very soon be in the hands of the old and very young, male and female, rich and poor. This may be a first in human history.

We can’t know how this will change us, or change the world. But I suspect that watching what happens in India, and it’s happening so very fast, will provide us with many clues.

Predictions

Sorry. This market is too big, and moving much too fast for me to offer any reliable predictions. That doesn’t prevent me from sharing my thoughts, of course.

Apple

Meh.

Right now, Apple simply has nothing much to offer India. Offering the iPhone 4 for over $200 as they are again, when there are so many other amazing, new smartphones available for far less seems to me almost certain to fail. In fact, I think marketing very old devices against clearly superior ones, at the same price, only harms Apple’s brand. They shouldn’t even bother.

For example, India’s own Lava offers the following Android device for around the same price as the iPhone 4, but here’s what you get:

A sleek, sexy product running on stock Jelly Bean 4.2.1 with a magnesium alloy body, a 4.7-inch HD display, a MediaTek MT6589 chipset, 1GB of RAM, an 8MP camera in the back, a 3MP camera in the front, a panel that includes Sharp’s OGS solution, and Gorilla Glass from Corning.

Or, you can get a Moto G. Even the new Nokia X devices are all available for much less — and they carry the beloved Nokia brand name, look great, and include multiple popular Microsoft services.

In addition, India loves phablets — which pose a direct threat to iPads. Thus, even sales of iPad are hemmed in. Apple probably won’t have anything to offer India for years, in fact.

Will this harm the bottom line of the world’s largest tech giant?

Not so much, and certainly not in the near term. As long as Apple can peel off the world’s top 10% of buyers, they’ll be fine. It is a shame, however, that Apple and the world’s biggest democracy have so little a connection.

That said, Apple can certainly learn from the India market. For example, Indian handset makers are known for their ability to rapidly iterate, offer a host of new products, new models, all with the latest, most affordable hardware, and all at breakneck speed. Apple offers a minor iPhone upgrade about once a year, and a major upgrade about every 2 years. This has to change for success in the developing world — and it may already be underway. As the Wall Street Journal recently discovered, Apple is “hiring hundreds of new engineers and supply-chain managers in China and Taiwan as it attempts to speed up product development and launch a wider range of devices.”

Google

Android is the most popular (smartphone) OS in the world. This is especially true for India, where Google Android may make up 90% of the market. Google should do all it can to continue India’s love of Google Android.

Consider that nearly a third of “Android” smartphones shipped worldwide — that’s now over 70 million devices per quarter — come without Google apps and services installed. Blame, or thank, China, and don’t expect this to change soon. Chinese handset makers, Chinese app stores, Chinese web companies, and the Chinese government itself have little reason to embrace Google or to embed the company’s apps and services into their finished product. If Apple should ignore India for now, as I suggest, Google should similarly ignore China, which will continue to be unfriendly to the company, and instead embrace India.

Google should ensure that its very best tech, its latest services, its most amazingly affordable visions for computing devices all flourish in India, where value and accessibility are paramount. Efforts such as Project Ara, where Google hopes to offer a DIY smartphone for $50, should be heavily promoted and tended to in India, China’s manufacturing prowess notwithstanding.

Nokia

The widely mocked Nokia move to incorporate Android in its new Nokia X line could prove a rather bold, canny move. A feature phone stalwart in India, Nokia has to make an aggressive move to retain relevance in the country’s rapidly shifting phone market. Given the country’s speedy, almost wholesale adoption of Android, this may simply not be possible if Nokia remains fully wedded to Windows Phone.

Nokia’s new X phones will operate on Android, which is everywhere in India. However, they will carry the Nokia brand, retain the familiar Nokia design, keep the look and feel of Windows Phone Metro — and just might renew the company’s smartphone fortunes, all while potentially bringing millions more into the world of Microsoft services.

As Ben Bajarin states:

[Nokia X] is going to help Microsoft acquire customers at the low-end where all the growth is going to come from for the next few years. Every ecosystem needs entry points. Microsoft has a chance to acquire new customers getting their first smartphone and bringing them into the Microsoft ecosystem with a Microsoft ID.

Should the Nokia strategy fail, it’s hard to envision any other OS that is not Android finding any appreciable success in India, no matter the cost.

Where this might be wrong, although I think it unlikely, is if Chinese manufacturers such as the aggressively capable Xiaomi, successfully push out the top Indian mobile phone vendors (e.g. Lava, Karbonn), and thus effectively force them to offer something unique — Windows Phone, even Firefox OS, for example.

Understand, however, that India’s homegrown phone makers are formidable. I do not expect China’s own manufacturers, even such capable ones, to crush India’s leading vendors.

Not all aspects of India’s smartphone market will have a direct parallel elsewhere. The popularity of phablets may never be matched in the US and Europe. Features such as dual SIM are irrelevant in many parts of the world. Nonetheless, the smartphone skirmishes that take place in India will reverberate far beyond its borders. Analysts should pay more attention to this market and its users.

How Is It Possible That Google Is So Bad At What It Should Be Great At?

Mark Zuckerberg cooly plunked down $19 large last week for a SMS-like app that most Americans had never used, probably never will. The move was labelled bold, brilliant, strategic. Zuckerberg branded a badass, a visionary, the next Steve Jobs. I suspect had Zuckerberg offered, say, a mere $5 billion, the echo chamber would have suggested he foolishly overpaid.

One particularly interesting aspect about Facebook’s WhatsApp acquisition, beyond the fact that it generates roughly 0.001 the revenues of Apple’s iTunes group, is that it’s ad-free, unlike seemingly everything else in our expansive digital world. Which begs the question: how will Facebook ever make back that $19 billion?

A better question: how has Google already made so many billions from advertising? Or, better still: who are all these people making Google so much money by clicking on Google ads?

Maybe WhatsApp and Zuckerberg are ahead of the curve. After all, do you ever click on an ad? Ever? Do you know anyone who does? Haven’t you long since trained your mind, your eyes, to not even see the ads? Don’t you count down the seconds until you can SKIP AD on YouTube?

An interstitial takes control of your screen and you immediately click it shut. For those ads that make you watch before you can access your desired content, you sheepishly, guiltily, countdown a second or two, hoping the site owner can make a penny, then click again to get to the actual site. It’s only after shutting down your computer do you realize there were pop-under ads, which you hastily close. You open several tabs in your browser, then frantically search for the one tab where some automatic ad is playing, annoying you to no end.

It’s worse than spam.

This is how we fund the Internet? Still? Perhaps WhatsApp, should it ever come close to returning its investment, will lead us toward some grand new method of funding our digital lives.

Even if Google ads are better than every other ad network — a debatable position — the fact is that almost every single Google-based ad is of zero relevance to my life, an assault on my eyes and ears, a clear barrier to what I actually want. Yet the company continues to generate billions in profits off this digital flotsam.

How?

Is it you? Who are the people still viewing these ads? Who are clicking on these ads? And how is it even remotely possible that after 15 years of gathering every scrap of information about everything I do online, plus many of my activities off-line, that Google ads are still so wildly untargeted to every single thing about me?

I buy a plane ticket to Atlanta, say, and for the following week after that I’m shown offers for plane tickets to Atlanta. They’re worse than the colleague who discovers you just bought a car and tells you he could have got you a deal.

I fly to Atlanta, dine out, meet colleagues, conduct business, take in a few sights, return home. Go online. Where I’m then inundated with display ads, served by Google, for things to do in Atlanta. This lasts for days, at least.

While writing this article — fact — I was blasted with Google ads advertising Google ads.

What more of ourselves — our personal information, our likes, our shares, our time, our attention, our eyes, our ears — can we give so that Google et al finally get digital advertising to be merely remotely useful to us? Google knows us, our location, our friendships, our searches. They know our intent, allegedly, yet ad after ad after interminable ad is rarely anything more than digital trash.

Last week — true story — I searched for an app that might help me find and pay for parking in San Francisco, for that day only. Gmail now insists on showing me ads for “parking deals.” This all seems rather inexcusable. All that money, all those brains, all those machines, a billion smartphones, a billion plus web users, and nearing the mid-point of the second decade of the 21st century and Google advertising doesn’t understand that I needed that parking spot last week despite my explicit intent.

How can a company worth over $400 billion, that inspires so much awe and fear not only in Silicon Valley but in China, Europe and beyond, be so bad at what it should be great at?

To be fair, when I go to Google.com to search for a very specific item, the topper most ad and the first five or so non-ad results are usually, though not always, sufficient for my needs. As for Gmail and YouTube, ads there are so consistently irrelevant as to be comical — some sort of meta-joke the Google singularity squad are playing at our expense, I imagine.

Maybe getting advertising right is like finding the cure for cancer. The more money we spend, the more time and resources we devote, the more we realize just how far away we are from the end goal.

I haven’t seen much of an improvement in ads now that most of America and a good portion of the world has migrated to smartphones. These devices know where we are. They know what we are doing, what we are searching for, what we are seeking on a map, what we are texting our friends, where we are checking in to — yet I am at a loss to recall even a single instance when a tiny Google-served ad at the bottom of my smartphone screen was even remotely worthy of clicking on.

What is Google doing with all our information?

Forget for just this moment any privacy implications surrounding what Google does and instead think of this: someone else, a complete stranger, has full access to your photo library, your entire search history, your movements and locations throughout the day, everyday, a record of all your app purchases, book downloads, pirated television programs. Don’t you think they would have a near-100% better idea of what you’re interested in than Google does?

Almost never right but at scale has magically made Google king of the Internet.

When I search on Google Maps on my desktop — the smartphone screen is too small for this — and when using a generic term, such as pizza, that ad, to be fair, is typically semi-relevant, though has yet to ever be my first choice. That’s the very best I can say about Google’s ads.

Nonetheless, in 2013, Google had an astounding $60 billion in revenues and a profit of just under $13 billion. They had a per-employee profit of $270,000.

I have no answers for this.

I do my best to stay abreast of high-tech, including, grudgingly so, ad tech. Not just pop-ups, pop-unders, banner ads, etc., but the actual technologies and platforms powering these. There is contextual advertising, native advertising, search ads, mobile search advertising, platforms that enable spot-buys in near real-time, technologies that seek to integrate our interests, our location, our friendships across all our screens, all in the hopes of offering better, higher-margin ads. I follow how Google is aggressively pushing Google+ to ensure that all the various services of theirs we use, Gmail and search, maps and more, can all be linked back to us, individually. That Google is making less per ad on mobile than on desktop is a topic I’ve become quite familiar with. I read that Yahoo is trying desperately to re-take control over its search and advertising functions.

But the big question remains: how is it these all work so very badly?

Somebody, anybody, please disrupt this industry.

Is this why Larry Page is spending so much money on Nest, on robots, driverless cars, Internet balloons, fiber and so much more — he knows the whole web advertising ecosphere is ultimately doomed? It can never be right enough, timely enough, personal enough to make any appreciable difference in our lives? Unfair? Ask yourself: Did anyone really believe even for a moment that digital advertising would be so bad come 2014?

Despite my keen awareness of the breadth and scale of the global Internet I am simply amazed each and every quarter to re-discover that so many people around the world are clicking on ads. Yet Google’s earning statement confirm just this. Google even continues to lead the industry in limiting ad fraud. The company recently purchased Spider.io, a start-up that seeks to limit fraudulent clicks. Per Google:

Advertising helps fund the digital world we love today — inspiring videos, informative websites, entertaining apps and services that connect us with friends around the world. But this vibrant ecosystem only flourishes if marketers can buy media online with the confidence that their ads are reaching real people.

Sounds well and good, but such acquisitions mostly only fuel my suspicions that digital advertising is a convoluted, confusing and inexplicable mess, the web equivalent of America’s healthcare system. Probably why at times, and despite how super-rich Google has become, I confess I think of digital ads as a con, a grift pulled not just on content creators, but on us users as well. We are bombarded with ads, companies base their business plan upon ad revenue dreams, ads litter nearly every public website on the planet, and yet in almost every single case and for nearly everyone I know they are a nuisance, an eyesore, almost always irrelevant, rarely of value, and quite possibly a calculated means of ensuring no other business models can thrive on the web.

Information wants to be monetized. Ads are middling succor. Funding the Internet went down the wrong path many years ago and we attempt to right it now simply by throwing in still more ads. Our shared loss.

Perhaps I should say nothing. Fact is, thanks to those billions of clicks and the billions of ad dollars they generate, we now have YouTube, the best search ever, free and accessible maps, a mobile operating system ready to power the world, even Gmail is probably still the best email service for most people. Nonetheless, I can’t help but take note that this is the year 2014 and we are still buried in meaningless, useless, annoying advertising and it doesn’t seem like it’s getting better, despite everything Google, Yahoo, Facebook and others have tried.  Perhaps our best minds, our brightest engineers, should focus their talents elsewhere. 

The Death Of iPhone. The Death Of Android. The Rebirth Of Facebook.

Well, that was a heckuva week.

Google sells Motorola for billions less than they paid for it. Apple sells millions fewer iPhones than nearly everyone expected, then directs guidance lower. Facebook becomes a mobile first company, for real this time. Amazon investors prove they don’t quite have unlimited patience. Yahoo remains last decade’s news. Microsoft probably has a new CEO, one with zero connection to Nokia. Oh, and they now make better commercials than Apple.

Anything else?

What we learned from last week’s machinations is that everything we think we know about the smartphone wars is completely, utterly false — or  worse, meaningless. Barely a fortnight ago, on this very site, I told you: “The smartphone wars are not over.” Nothing has been settled, least not the future. After last week’s fun-bumpy-tweet-filled ride, does anyone still dispute this?

Know this: The current market for smartphones, and all they are subsuming, transforming, re-making, inspiring — which is in fact all of the things — is itself under threat, betrayed by its own relentless innovation and rapid success. Yet, far too many analysts and bloggers stubbornly cling to the fiction that somehow, smartphones can alter every market they touch while continuing on a merry upward slope unscathed by their own destructive deeds.

The most basic assumptions about this market are nothing more than faith-based analyst alchemy.

Time now to kill the dominant fictions in the smartphone wars.

The Death of iPhone

Fiction: Apple owns the high-end of the smartphone market.   

If you are making assumptions re iPhone (or Android) sales growth based on an imaginary perceived share of a market that is already on the cusp of disrupting itself, then you are making faith-based decisions. It’s that simple.

As I wrote months before last week’s earnings announcement, if Steve Jobs was alive he would never approve the iPhone 5c. The 5c is a rare self-inflicted wound, the elevation of profits over values. Only, that is not the cause of Apple’s weakness in their iPhone business. The trouble is the smartphone market itself, which I am beginning to suspect does not actually exist. Bear with me.

The persistent belief among analysts that  as much as 90% of the current mobile phone market (nearly 5 billion users) will transition to smartphones is a religious ideal, nothing more. Repeat after me: There is no total addressable market (TAM) for smartphones. The very concept is a fiction. Indeed, we may already be within months of Peak iPhone, a year or two from Peak Smartphone. For billions of people, voice, robust SMS/MMS services, and perhaps some form of digital identity is more than they will ever need. What can Apple provide them? Even at, say, $300, nearly everyone on this planet cannot afford and will never need an iPhone.

It gets worse.

I carry my smartphone with me all the time and use it for far more than I can list here. For the majority of that time, however, I don’t actually need a “smartphone”. What I really need is something like a credit card-sized piece of glass that supports rare but necessary voice calling, possibly video calling, can display a virtual keyboard for texting, and includes a mag-stripe (and/or chip) for payments. Create this and the smartphone market is gone, reduced to the equivalent of the dusty home desktop PC. Given the rapidity of innovation in this market, I should reasonably expect to have my (truly) smart card by no later than mid 2016. No iPhone necessary — in barely two years.

Tim Cook must know this. This is likely one reason why Apple stockpiles so much cash. When you’re dependent upon a single product line, iPhone, for about 60% of your revenue, and that market may vanish in a few years, then your focus necessarily shifts to maximizing profits of that product line and funneling those profits into entirely new offerings.

Apple doesn’t release many new products. I suspect that is about to change in a very big way. Expect to see several new products and product lines from the company over the next year alone. Some designed for nothing more than padding iPhone margins. Others, desperately in search of that next big thing.

The Death of Android

Fiction: Android is unassailable

Google cut itself free from the anchor that was Motorola. They strong-armed Samsung into more closely following the sanctioned Google Android playbook. Wise moves.

I sense fear.

Yes, Android dominates smartphone market share. Look closer. What many call ‘Google-free’ Android, AOSP, now garners a solid second place — and is growing at a rate much faster than ‘real’ Android.

smartphone OS

AOSP is the “open-source software stack for a wide array of mobile devices with different form factors.” It can power Amazon’s Kindle line, or smartphones made for use in China, for example, where Google search, map, Play and other services are not terribly popular and not welcome by the government.

Does this matter?

Absolutely. Google no doubt believes that AOSP is a necessary sacrifice. It’s availability ensures the rapid spread of the  “Android” template and prevents iPhone or Windows Phone, for example, from garnering another new user. It seeds the future for ‘real’ Android — and it is hoped, heavy usage of those most profitable Google services. Except, this is false.

The fact is, the rapid, global embrace of smartphones has altered the entire value proposition of web search and web services — Google’s bread and butter. AOSP may presently be little more than Android without the Google, but it could ultimately become a fully-fledged ecosystem alternative in its own right, one that directly competes against Google on everything that matters to them, and not just in China, but in Japan, South Korea, Brazil, USA, everywhere.

Thus, while I suspect last week’s moves by Google signal the company’s preparations to launch an assault on the Chinese market, it may already be too late. The world’s biggest market for data and smartphones can do just fine without Google. Which means: everyone can.

It gets worse.

Extremely popular mobile services may now have a vested interest in supporting AOSP’s growth. Popular social messaging apps such as Line, WeChat or WhatsApp no doubt noticed that Google made its Hangouts service the default messaging app for Android Kitkat. They won’t sit still for such bullying. What’s to stop them from integrating their service and AOSP and offering a low-end smartphone in the developing world?

In the short-term, perhaps none of this happens. In fact, I expect Google to best Apple as the world’s most valuable tech company, possibly within a few weeks. Save the celebrations. Google’s value arises strictly from it’s ability to capture more of our habits, more of our actions, and monetize them across a near-endless supply of strangers and brands. What we are learning, however, is that despite the rapid spread of Android in all its forms, there are effective alternatives to Google services across every smartphone platform — even its own. Little wonder, then, that Google is moving quickly into moonshots, driverless cars, the connected home, consumer hardware, health and more. Such moves are driven by fear, even if they are shrouded in boilerplate Silicon Valley boasting.

The Rebirth of Facebook

Fiction: Unbundling Will Kill Facebook

Like that persistent meme that teens are abandoning Facebook, the idea that Facebook is being unbundled to death — via messaging apps, social picture apps, Christian dating sites and the like — is simply false. Facebook is benefitting from the unbundling trend.

In fact, after badly stumbling on mobile, after the laughable dung heap that was Facebook Home, the brief marriage to HTML5, and the spats with Apple and Google, Facebook is doing better than ever. More than half its revenues now comes via mobile — no smartphone OS necessary.

This is in large part because the company is embracing the unbundling strategy, shrewdly leveraging its billion users and their extant Facebook identity and eagerness to share everything. That some people want to share only some aspects of their lives with only some others at some times and places, via text or image or video, is fine — every 1 and every 0 feeds the growing Facebook engine.

Let a thousand apps bloom. Facebook will be there.

Barely a year ago, analysts were convinced Facebook was doomed given its utter dependence upon iOS and Android. Now, a case can be made that smartphones, once thought as the device to bring the developing world into the global sphere of the Internet, is already on the cusp of being disrupted. In this new world, it is Facebook (and our Facebook ID) that will connect us all to one another.

The Dogs of War

What I think last week’s official numbers and clever machinations reveal is that the “smartphone” market, which most still believe is a pitched battle between iOS profit share and Android market share, is, in fact, merely the initial wave in a coming tsunami, one that will deliver highly personal, nearly ubiquitous and ever-engaging computing and connectivity to all who want it and nearly all who do not, and in forms we have yet to imagine. Hardware profits and OS marketshare, be damned.

The smartphone itself may be no more than a fleeting, ten-year-blip in computing history. There will be no 30th anniversary for the iPhone. Android will betray its maker. Owning your own smartphone ecosystem does not matter. Everything is in flux. My verse is the destruction of everything — and the great tech companies of our day happily, foolishly oblige.

As Jim Morrison said, “no one here gets out alive.”

The Smartphone Wars Pivot And I Jump To Windows Phone

The smartphone wars are over. Apple won.

They are not the only winner, of course, just the biggest. I confess I do not fully appreciate the many moving parts of a Korean chaebol, nor understand Korean accounting practices. Such caveats notwithstanding, Samsung also emerged victorious.

Given that there now exists about a billion persons who use Google services everyday, several times a day, their most personal information monetized by the company’s anonymous servers in steady bursts, clearly Google also won, even if it has yet to show up in their earnings reports.

The losers include Sony, Panasonic, Sharp, BlackBerry, Palm, Dell, and far too many others to list here.

Except, our story doesn’t end there. The world keeps spinning. The market keeps growing, smartphones continue to invade new industries, apps are becoming more robust, software ever smaller, the power and scale of the cloud keeps expanding — and competition never stops.

One Shot One Opportunity Is False

HP — remember them — is set to release a low-end smartphone for emerging markets. Don’t scoff. The vast majority of the world still does not own the equivalent of the very device you refuse to give up for even a day. While Samsung continues to lead all smartphone makers, the company’s operating profit fell notably in the fourth quarter, likely due to reduced margins on its high-end smartphones. Apple, meanwhile, saw its global smartphone share drop to a shockingly low 12.1%. That’s not 12.1% of global mobile phone sales but of “smartphone” sales. I never expected it to be so meager.

Yet, new opportunities abound.

Apple’s iPhone is steadily invading corporate IT. With each job and every task smartphones strip away from traditional PCs, their inherent value increases.

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Cars are another new battleground. That constant stream of real-time data, entertainment and connectivity we now demand fill every moment of our lives will not be halted simply because we get inside a car. This is a big deal. Around 80 million new cars and trucks are sold every year.

Last summer, Apple announced iOS in the Car, its effort to integrate iOS  apps and services with newer automobiles. I have exceedingly low expectations. Apple makes its money from hardware sales, iPhone hardware in particular. iOS in the Car still requires users to have an iPhone which they must then plug into the vehicle to gain the full benefits of Siri, Maps, iTunes and other content. This is much too limiting.

Google’s recently announced Open Automotive Alliance — still primarily vapor — has a far greater upside as it is free from such device constraints. The automotive market may force Apple to re-think its hardware-only focus very soon. After all, Apple hardware, at least while we are driving, is effectively irrelevant.

The situation is much different in wearables, where I contend Apple has a decided advantage. If we are ever going to wear computing devices en masse — be they wristbands, eyewear or clothing — they will have to be far more than merely functional. They must look good. They must synch effortlessly with our smartphones and other computers. They must be intuitive to operate. We will want to try them on without sales pressure. Advantage: Apple.

Sports and wellness, the Internet of Things, and the extrication of content from copyright, which will allow us to control, share and interact with content at all times and from any place, will similarly spin the smartphone market into numerous overlapping paths, merging with, tearing down and creating industry after industry.

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Then there are the giant emerging markets. China, of course, but also India, which has long embraced Sony and Samsung. In my admittedly limited experience, Southeast Asia has long revealed a love of physical keyboards and robust messaging services — offering a potential return to life for BlackBerry.

As the many combatants prepare for these coming new wars, let us rejoice in the fact that we can now can go to practically any mall, any carrier’s store, any electronics retailer anywhere in the world, and purchase an extraordinarily powerful, highly functional and reasonably intuitive connected mobile computer for relatively little money. Which is exactly what I did recently. I was quite surprised by what happened.

I chose Windows Phone.

Though I have used smartphones built for nearly every single platform from all around the world, my go-to device for the past 5 years has been iPhone. No longer.

These are my reasons why — and they remind us that even where the smartphone wars are settled, they are never truly settled.

I Like Big Displays And I Cannot Lie

Nokia-Lumia-1520I now primarily use the Nokia Lumia 1520. It’s huge. I love it. Surfing the web, reading a book, racing cars (gaming), watching movies, scanning my photos; all are so much more delightful on the gorgeous and very big Lumia 1520 display than on the iPhone.

I dislike the iPhone 5(c/s) screen dimensions. I find it much too narrow. The dimensions of the iPhone 5 series, in my view, reveal the limits placed upon Apple by its highly successful app ecosystem. Yes, apps should be optimized for specific screen sizes and Apple is the clear leader in apps, both in terms of quantity and quality. Unfortunately, this results in a display with dimensions that I find to be both limiting and, frankly, unattractive.

I have found no device that is as beautiful as the colorful and unapologetically polycarbonite Lumia phones.

Build Quality

The Lumia looks great, yes, but it also feels great. In fact, Nokia devices have long been known for their build quality and durability. This is not to suggest that Apple’s newest iPhone is poorly constructed. Rather, they feel flimsy. iPhone 5s, in particular, feels much too light, like your grandmother’s jewelry.

Navigation

The combination of Nokia Maps (Here Maps), which includes traffic data, search, and downloadable maps, plus Here Transit for public transportation data has proven more helpful to me than Apple’s alternative. Google Maps with Waze, not fully available on Windows Phone, may prove more useful to most. However, I simply don’t want to provide Google with still more of my personal data.

Accessories

Most iPhone accessories are priced well above my pay grade. Not so with Windows Phone. I recently purchased a car charger for my Windows Phone at a gas station — for less than $10. The low price was due, of course, to Windows Phone’s use of the micro USB standard. Similarly, I lost my Jambox charger. Luckily, it also uses micro USB so I simply swap with my phone charger. Standards make life easier.

smart_hero_mba_11_2xiOS 7

I love what I think Apple is trying to do with iOS 7. The problem is, they haven’t done it yet. The emphasis on data presentation, plus improved integration across select apps and functions is a laudable achievement. It’s just that the damn thing freezes and crashes much too frequently.

Live Tiles

Live Tiles are often — but not always — preferable to static app icons. Tiles can display current weather, show me how many calories I have consumed for the day, display my favorite photos. Tiles that merely twinkle and flash and convey no useful information, however, are admittedly a time-sucking distraction.

The Fine Print

I am a Mac user. This means that with Windows Phone I no longer have apps that effortlessly synch across iPhone and Mac. This is just one of the sacrifices I’ve had to accept by choosing Windows Phone.

Because of copyright restrictions, I no longer have full, unfettered access to all the songs and videos I’ve purchased over the years through iTunes.

There are far fewer apps and most apps are of lesser quality on Windows Phone.

Maddeningly, the very latest Windows Phone keyboard remains determinedly stuck in 2011. The keyboard is cumbersome and stupid, rarely correcting my obvious typos.

As much as I dislike the iPhone 5 design, it adheres to what should be a cardinal rule for smartphones, despite everything I have said about big, beautiful displays: for every smartphone, it should be possible for every action to be performed with just one hand.

Games? There are great games on Windows Phone. Microsoft also appears intent on offering a gaming experience that truly integrates phone and Xbox console. Then there’s that bigger display. However, there are far more games for all types of gamers available on iPhone.

Mobile Safari and Mobile Explorer are equivalent. FaceTime and Skype are not, however, with Skype more a global and business telephony service and FaceTime the world’s most accessible video chat service.

Nokia offers highly granular camera controls that are sorely lacking on iPhone. My Lumia takes much better pictures at night. However, iPhone 5(c/s) takes great pictures and is faster to operate.

Email is simpler to use and to set-up on Windows Phone.

The Windows Phone equivalent of Siri is of absolutely no use. As I am at a loss to recall a single instance when I have found Siri useful, this probably doesn’t matter.

Winners & Winners

Clearly, whichever device and whichever platform you choose requires trade-offs. I expect this to become even more pronounced as the smartphone wars morph, move into entirely new arenas, enable new devices, like wearables, reinvigorate old device, like automobiles — and steadily connect more and more billions of people across the world.

For millions of people every month, and for nearly all of us at least once every year or two, an opportunity presents itself to embrace a new or different platform. This is a good thing as it keeps the combatants ever vigilant, always striving to improve.

The smartphone wars are not over. Rather, the first smartphone war has ended.