Tag: featured

Why Amazon Will Create Brick and Mortar Retail Stores

Over the years, in my various discussions with Steve Jobs about Apple and their products, there was one theme that always came out when we discussed any of his product designs; they had to be easy to use. In fact, he was the consummate customer of Apple products. If he deemed them not “easy-to-use” then it was back to the drawing boards until they were.

But while this was at the heart of his designs, he also knew that easy to use was actually a relative term and that in the end, there are a lot of variables around the technology people use that determined if they were easy for “them” to use or not. So when Apple was creating the Apple stores, they made sure that they did not just create a place where people can come and buy an Apple product. Indeed, an Apple store, with its extremely knowledgeable sales staff and their genius bars are just as critical to the success of Apple’s stores.

What Jobs and team fundamentally understood is that for those who use technology every day in the office, their ability to use a Mac and Apple’s products are intuitive enough for them to learn and use out of the box. But for the millions of people who do not use technology as part of their work or school, even easy to use products can be intimidating and some will need hand holding from time to time. Apple also understood that as people begin to integrate them into their daily lifestyles and use them as the center of their digital universe, the variables of how to make the technology work for them would only increase. With that in mind, Jobs and team knew that they needed to not only create a product but also had to provide the software and services, in an integrated way, if they were going to grow the company and become extremely profitable.

This formula is not new. In fact, if you look at the history of mainframes, mini-computers and even PCs, they all followed a similar evolutionary path. First comes the hardware, then the industry backs a major OS for these systems, which then makes it possible for the software world to create the programs that make the hardware indispensable. But over time, the profit is taken out of the hardware and the real money shifts to software and services. This is especially being played out now with the PC crowd. The profits are gone in hardware and only the software guys (i.e. Microsoft) are making any money in the PC game. That is why HP has spent billions on EDS and their service business because all of the real profits for the hardware guys have shifted here.

Related Column: Dear Industry Why History Won’t Repeat Itself

Apple is insulated from some of these issues since they control the hardware, software, and services. But while most people think of their services as iTunes and their related apps and cloud services, they miss the fact that their Apple stores are also part of their services offering. A good way to think of this is that the Apple store is their EDS. They are there to interact with the customer, to help them integrate Apple’s various products into their life or work-styles and if there is a problem, solve it for them on the spot. (Sounds a lot like EDS and the big service providers does it not?)

This is why Microsoft has suddenly entered the retail business. While selling their products is part of their retail offering, these stores are their “EDS” that meets the needs of their consumer’s customers. Like Apple, these stores are there to help them “integrate” Microsoft products into digital work and lifestyles and if problems arise in doing this, be the place to come to help them deal with it. While the Microsoft stores need to break even, they are not necessarily profit centers. Instead, think of them as consumer service centers that keep the customers happy and making sure they keep buying products that use Microsoft’s software from all of their partners.

Google opening a store in Ireland is a nod in this same direction. And now we have rumors that Amazon is looking at opening their first store in Seattle. At first, you might think that an Amazon store will be going after a Costco given their breadth of products. But Amazon is smarter than this. They have gone to school on Apple and like Microsoft, understand that a retail storefront is actually a vehicle for servicing their customers who buy their dedicated technology products. At the center will be their Kindle line of course, and the store will be there to answer questions and help people get the most out of their Kindle eBooks and tablets. But it would not surprise me if this signals they might also do an Amazon branded smart phone and over time consider other Amazon branded products that these stores can sell and support.

None of these moves to copy Apple with storefronts should be too surprising given Apple’s success in this area. But while Apple Stores do sell Apple products and are used to drive people into the stores to show off their wares, keep in mind that the role it plays in providing service and support is equally important to its success equation. And for Microsoft, Google and Amazon, and any other vendors who move towards vertically integrated products, if they really want to keep their customers happy and coming back for their branded products, they better be ready to provide the service and support that goes along with helping them integrate these products into their digital lifestyle. If not, that loyalty will shift to Apple, who has defined the consumer version of EDS and is well positioned to continue to take customers away from the competition.

Windows 8 on ARM: The Big Questions

Microsoft released a lengthy blog post yesterday on their website specifically around Windows 8 on ARM. Although the post shed some insight into a number of the looming questions we all have about Windows on ARM, there are still a few things I am concerned about.

Windows 8 on ARM has the potential to be either wildly successful and disruptive but it also has the potential to fail in the short-term.

How Will Microsoft and Retail Position the X86 vs the ARM hardware Versions?
When I put myself in the consumer buying mindset for a new Windows-based PC, I see some potential confusion when it comes to product positioning. Microsoft has a challenge on their hand that I am fascinated to see how they figure it out.

What Microsoft, their hardware partners, and their retail partners can not do is position ARM notebooks or other form factors as limited devices. So they can’t use terms like “full Windows experience” or “the Windows you know and love” types of terminology for non-X86 devices. Taking this direction would cause consumers to ask of their ARM counterparts: “I don’t get the full Windows experience I know and love on these products”? Which would essentially deem Windows on ARM devices to fail because they would be positioned as truncated.

This is actually an area where I am intrigued to see if the Intel inside branding efforts of years past have any relative spill over. It actually could if consumers are on the fence. Consumers may consider going with a product with Intel, or AMD for that matter, the “safe bet” if there is any confusion what-so-ever.

Unfortunately, or fortunately depending on who you are, I don’t think any of the ARM companies benefit by touting their brand name in a Windows 8 on ARM device. For example saying “Runs Nvidia Tegra 3” or “Qualcomm Snapdragon”. In fact that may add to the confusion rather than help clear it up.

It is of course possible that Microsoft and retail partners ignore trying to position Windows on X86 and Windows 8 on ARM differently at all. However, unless the device experiences have no difference at all this would be a mistake.

Will All Drivers Be Supported?
To quote the blog post directly:

“Our device strategy uses standardized protocols and class drivers extensively”

“Of course Windows has many class drivers inside, which you experience when you plug-in a wide variety of USB devices, such as storage, mice, or keyboards.“

“The majority of printers selling today are supported using the class driver, which means you’ll be able to “plug and print” on WOA without additional drivers”

This must be true and must be delivered upon. I want to be optimistic about this and take Microsoft at their word that drivers won’t be an issue, as they appear to insinuate. However, I will feel better once I see Windows 8 on ARM working with a wide variety of peripherals.

Are Consumers Willing to Invest in New Software?
This may be perhaps the biggest point to wrestle with. As I have stated before, I believe Microsoft, with Windows 8 in general, has come as close to fundamentally starting over with Windows as they possibly could without completely starting over. Windows 8 is a step in the right direction to optimize Windows for the future of computing.

Consumers being willing to start fresh with software is the wild card for me. Unfortunately I have no hard data (yet) on this but I will offer some observational logic as to why this may be the case.

Firstly, consumers switching to the Mac platform at incredible rates is an indicator. Apple continually mentions their stats on each quarterly call that 50% of Mac sales are to first time Mac buyers. This would mean that many of those customers have made investments in Windows software and are willing to start over. Perhaps this same buying psychology could translate to Windows 8 on ARM with a reality that legacy Windows software isn’t as important as many would think.

Secondly, reports came out in late December from Flurry that on Christmas day there was a 125% increase in app downloads mostly coming from the 353% increase in device activations on the same day. This leads us to believe that as consumers get a new device they go app shopping.

Lastly, the economics support this trend. The reality is that the new app economy has driven the cost of software down. This is not only true of mobile devices but of desktop / notebook as well. The days of selling software and software bundles in the hundreds of dollars are over. If you look at the top-selling apps in the Mac OSX App store there isn’t a single one over $29.99 and most are well south of that figure. With lower overall app pricing becoming the norm it makes it feasible for consumers to actually start over with software.

Could it be Netbooks all Over Again?
In all of these scenarios I am generally concerned that Windows 8 on ARM devices may be headed down the path of Netbooks in their early days if we are not careful. Netbook return rates were north of 30% in their early years mainly because consumers bought them expecting a “full PC” experience and early Netbooks didn’t deliver. This was primarily because early devices were Linux-based. However, even once the devices ran Windows, they were still positioned as “not full PCs” mainly because they were underpowered. It was a positioning mess in my opinion.

I am not as concerned of these devices being underpowered as much as I am them fully delivering on the full PC experience. This will have to include a robust list of software, which Microsoft and partners are working on. There are a number of form factors outside of the clamshell PC design that I think will be more successful for Windows 8 on ARM vendors and Hybrids being the most interesting potential.

Even with all the questions still looming, ultimately the positioning of these products is what will make or break Windows on ARM devices.

Do Apple Competitors Make Bad Products?

I often engage in discussions with the financial community on matters related to tech for their portfolio management. One of the things I was asked in a recent conversation intrigued me. The question was around why Apple seems to be dominating their competition with such a limited product portfolio mix.

Tim Cook continues to emphasize with each investor, earnings, and public event that Apple’s laser focus is to continue striving to make the best products on the planet. Given that Apple seems nearly unstoppable, it appears their strategy is working. And it does make you wonder what Tim Cook’s statements about Apple continuing to focus on making the best products and Apple’s dominant position (especially with iPhone and iPad) says about other products on the market.

So the question thrown at me was “Do Apple Competitors Make Bad Products?” In light of Apple’s continual progress forward and other companies’ struggle to keep up, this is an interesting question. The answer is simply that many Apple competitors make very good products. I happen to like quite a few of them. The problem—for competitors—is that Apple makes exceptional products and perhaps more importantly, extraordinary experiences with those products.

To dive into this deeper, three fundamental points need to be established…

Apple Has More Competition Than Anyone—Yet No True Competitors

When you think about Apple’s vertically integrated business strategy of having a dedicated hardware business, software business, and services business, you realize that Apple competes toe-to-toe with almost the entire tech industry. Yet no company competes toe-to-toe with Apple.

What I mean by that is Apple competes directly with hardware companies, meaning people who make notebooks, desktops, all-in-ones, smartphones, tablets, and set-top boxes to a degree.

They also compete with those who make software, particularly in operating systems, but also in core apps. They compete with Microsoft at an OS level and at an Office level with Pages, Keynote, Numbers, etc. They compete with companies who make media management and creation software like Adobe, or ArcSoft etc, with iMovie, iPhoto, etc. They compete with Google with Android. The list could go on.

They also compete with services companies. iTunes and iCloud as a service competes with a host of online services providers from email, to calendar, to movies, music, storage and backup etc. Google and Microsoft again are competitors here along with a long list of others.

They compete to a degree with retailers. Apple retail competes with Best Buy, Wal-Mart, Target, Staples, etc. Note that Apple doesn’t compete on all levels with these retailers, but we have to acknowledge there are some crossovers.

When you look at the sum of their businesses, because of their vertically integrated strategy, it is not quite obvious the large list of competitors Apple has all over the industry. Yet the reality is that no other company has such a tightly integrated vertical strategy as Apple. So my first point is that at a fundamental level, Apple doesn’t actually have any true competitors who compete with them on every level they way they do with the rest of the Industry. This, at its core, is what sets them apart.

Granted we could debate that with Google’s acquisition of Motorola, they have all the parts on paper to compete with Apple toe-to-toe, but for the time being I still consider that a stretch.

Apple’s “Works Better Together” Philosophy

What is truly unique about Apple is the relationship that all their products have with each other. It is as if each product was made for the other, yet alone each one is still a solid standalone product. We call this the “Works Better Together” approach. It means that your products or “consumer end-points” can work fine as standalone products, but work even better as a comprehensive whole. In concept this sounds like a no-brainer, but the reality is that Apple’s vertically integrated approach is essential in executing this strategy.

Too many companies who make consumer products organize their business units to compete for PNL. Sometimes even worse than competing for PNL, they work as a silos and never have a clue what the other business groups are working on. This makes it extremely difficult for a company to create a “works better together” portfolio even if they have all the parts to make it work.

By developing this strategy as a part of the “iDevice” ecosystem, Apple benefits by creating a user experience that is not related to simply one device, but to the entire Apple ecosystem. This and more is what we mean when we talk about the Apple ecosystem being sticky and creating consumer loyalty.

Technology as Art

Lastly, Apple has a culture that is completely unique, which is another part of the reason for its success. Steve Jobs in his many keynotes has pointed out that Apple’s approach to products is that they are at the union of liberal arts and technology. And nobody in the industry so far has been able to match Apple’s eye for design.

What this means is that there is an added dimension of design and technology as art that influences the thinking of those who work at Apple. This group is like a passionate team of artists who happen to turn their art into technology.

This is the major reason that Apple emphasizes simplicity. Steve Jobs has in many keynotes and demos said that Apple’s various products “just work.” What we must not forget is that creating technology products that are simple is no trivial task. Simple solutions require sophisticated technologies. Apple knows this better than anyone and it has oriented itself to succeed at just that.

So it is not that Apple competitors make bad products. Their hardware competitors and OS competitors make good products. It is simply because of their vertically integrated model, paired with a works better together product philosophy, coupled with incredible execution, and a hardware as art design strategy, that Apple simply makes exceptional and extraordinary products.

Which is why one can argue that they truly do not have any real competitors.

Wolfram Alpha: Analytics for the Rest of Us

Wolfram Alpha may finally be making the big leap from interesting curiosity to generally useful tool.

For the 2 1/2 years of its existence. Alpha has had something of an identity crisis. It’s sort of a search engine, but instead of crawling the web for results, it relies on a large set of curated databases. At its heart is the computational engine of Mathematica, so it can do some amazing things with that data. When you asked it a question that it knew what to do with, it could produce very interesting, sometimes surprising, analytical results. But it often bombed on simple queries that Google handled with aplomb. It could tell you the distance between San Francisco and Buenos Aires (6,456 miles or 35 light milliseconds) but not where to find a nearby pizza. Alpha got a considerable boost when Apple chose it to handle computation-based queries from Siri–the New York Times reports that Sire generates a quarter of Alpha’s traffic–but it  remained a bit of an oddball service.

With the launch today of Wolfram Alpha Pro ($4.95 per month, $2.95 for students), the service is promising to get a lot more useful. There are loads of new features that make the pro option well worth its modest cost. One big change is that you get a persistent account, in which past analyses are remembered and can be modified. Another the ability to upload your own data for analysis and then to download any of the analytical results, including some very sophisticated graphics.

As a simple test, I uploaded about 65 years worth of government data on U.S. growth of gross domestic product, change in the Consumer Price Index, and the unemployment rate. After an initial glitch, in which Alpha interpreted a column headed “Real GDP” as representing amounts of money in Brazilian reals, it gave me an instant deep analysis of my data. As I would have expected, it should a fairly strong relationship between GDP growth and unemployment,  but no significant correlation between inflation and either growth or unemployment.

bubble chartThe bubble chart on the left is an example of the sort of thing Alpha does automatically. It’s a sort of three-dimensional graphic, in which the y-axis represents GDP growth in a given year,  the x-axis is inflation, and the size of the circle represents the  unemployment rate.  Other data generated include scatter plots, histograms, a regression equation, a covariance matrix, and principal component analysis for analysis of variance.

Using Pro, you can also perform analysis on Alpha’s extensive databases  and  download not only the results but the raw data (there are some restrictions on data exports imposed by Wolfram’s licensing agreements with the data suppliers.) CEO Stephen Wolfram describes the service as “all the tools a data scientist would have combined with knowledge of the world.”

Another feature offered by the Pro service is analysis of images. Upload a photo and alpha will perform a range of  analyses on it, including metadata, color analysis, intensity histograms, edge detection, and even some basic editing tools. Nothing that Photoshop can’t do, but its quick and easy.

The real prize in Alpha Pro, though, is the data analytics. You can learn a lot when you start looking at your data in more depth than yu can get from a spreadsheet. Alpha makes it cheap and easy to get started.

 

 

 

What Intel Must Demonstrate in Smartphones (and soon)

Intel made a big splash at CES 2012 with the announcement that Motorola and Lenovo committed to Intel’s Medfield clip_image002smartphone solution. This came on the heels of a disappointing break-up between Intel and Nokia as well as a lack of previous traction with LG. While Intel has come farther than they have ever come before with one of their X86 SOCs, they still have a long way to go to claim smartphone victory. Of course Intel knows this and is working diligently and sparing no expense. The biggest challenge Intel faces is attacking a market where the incumbent, ARM ecosystem partners Qualcomm, NVIDIA, and Texas Instruments have almost 100% market share. To start gaining share in smartphones, Intel must demonstrate many things in the near future.

More Design Wins with Key Players

The Motorola announcement was impressive in that Moto has a respected name in smartphones, but they won’t carry Intel that far alone. Lenovo is an even smaller player and while very successful in PCs, hasn’t been able to secure a lot of smartphone market share even in their home country, China. Intel knows they need a few more partners to start chipping away at market share and I expect them to announce at least one at this year’s Mobile World Congress.

One of the challenges is that many of the top players are already locked-in in one way or another, Intel has some negative history with, or has rapidly declining share. Apple already has their own A-Series SOC, Samsung has Exynos SOC, and Nokia rebuffed Intel last year and is clearly locked into ARM and Microsoft for the time being. RIM as a partner is a shaky proposition and HTC is an aggressive player but is recently dropping share. That leaves lower smartphone market share holders LG, Sony, Sharp, NEC and ZTE in the short term.

Longer term, I don’t expect Apple or Samsung to get out of the SOC business because they have been successful with their own strategies. I cannot see Nokia or Microsoft motivated to drive a change or provide dual support for X86 until Windows 9. RIM is in a free-fall with no bottom in sight. Intel is forced to take the long-term approach as they are with Lenovo by developing smaller smartphone players to become larger ones. ZTE certainly is a good long term prospect as is Huawei. If Intel can leverage their PC franchise with them I could see them being successful.

Relevant, Differentiated, and Demonstrable Usage Models

In fighting any incumbent, the new entrant must provide something well above and beyond what the incumbent offers to incent a change in behavior. I am assuming that Intel won’t lead in low price or lowest development cost, so they must offer handset makers or the carriers a way to make more money or get consumers to demand an Intel-based smartphone. Regardless of which variable Intel wants to push, they must devise relevant, differentiated and demonstrable usage models that ARM cannot.

By relevant I mean that it must be fixing a known pain point or creating a real “wow” feature consumers never asked for, but is so cool it cannot be passed up. One pain point example is battery life. Battery life is simply not good enough on smartphones when used many times daily. If this weren’t true, car chargers and battery backs wouldn’t be so popular. Wireless display is useful and cool but not differentiated in that Apple can enable this via AirPlay. Demonstrable means that it must be demonstrated at the store, an ad, or on-line on a web site. If something isn’t demonstrable then it may as well not exist.

I would like to see Intel invest heavily in modularity, or the ability to best turn the smartphone into a PC through wireless display and wireless input. Yes, this is dangerous short-term in that if Intel does a great job at it then they could eat into their PC processor franchise. But, this is the innovator’s dilemma, and a leader must sacrifice something today to get something tomorrow. I could envision an Intel-based emerging region smartphone that enables PC functionality. ARM cannot offer this well today but will be able to in the future with their A15 and beyond-based silicon. Intel should jump on the modularity opportunity while it lasts.

One other opportunity here is for Intel to leverage their end-to-end experience from the X86-based Intel smartphone to the X86-based data center. If Intel can demonstrate something incredible in the end-to-end experience with something like security or a super-fast virtualized desktop, this could be incredibly impactful. One thing that will be with us for at least another 5 years is bandwidth limitation.

Carrier Excitement

Outside of Apple, the carriers are the gatekeepers. Consumers must go through them to get the wireless plans, the phones, and most importantly, the wireless subsidy. Apple’s market entry strategy with AT&T on the iPhone was a strategic masterpiece in how to get into a market and change the rules over time. Apple drove so much consumer demand for iPhones that the carriers were begging Apple to carry the iPhone, the exact opposite of the previous decade.

Intel must get carriers excited in the new usage models, bring them a new stream of revenue they feel they are being cut out from, or lower their costs. Intel doesn’t bring them revenue from content side but could I can imagine Intel enabling telcos to get a piece of classic retailer’s PC action once “family plans” become a reality. While telco-distributed PCs weren’t a big success in the past, this was due primarily from the absence of family data plans. I can also imagine Intel helping telcos lower the costs of their massive data centers with Xeon-based servers. Finally, if Intel could shift traffic on the already oversold “wire” by shifting processing done in the cloud and onto their SOCs, this would be very good in a bandwidth-constrained environment.

Competitive Handset Power

At CES, Intel showed some very impressive battery life figures for Medfield handsets:

• 6 hour HD video playback

• 5 hours 3G browsing

• 45 hour audio playback

• 8 hour 3G talk time

• 14 day standby

This was measured on Intel’s own reference platform which is somewhat representative of how OEMs handsets will perform. What will be very telling will be how Medfield performs on a Tier 1 handset maker, Motorola when they launch in Q3 2012. There is no reason to think the Moto handset won’t get as impressive battery life figures, but Intel could gain even more credibility by releasing those figures as available.

When Will We Know When/If Intel’s Smartphone Effort is a Success?

Intel has slowly but surely made inroads into the smartphone market. Medfield is impressive but competing with and taking share from an incumbent with 99%+ market share is a daunting task. The easy answer to measure Intel progress is by market share alone but that’s lazy. I believe that Intel smartphone efforts should first be measured by handset carrier alliances, the number of handset wins, the handset quality and the new end usage models their SOCs and software can enable. As these efforts lead to potential share gain does it make sense to start measuring and scrutinizing share.

Why Tablets are Important to eCommerce

I recently noticed something about my tablet usage that really intrigued me. Since using the iPad, it has become a constant companion to me and along with my iPhone and Droid, I carry it with me all of the time. Although my smartphones are quite important to me, I have always had a bit of a difficult time reading their small screens and as I get older, I have to admit that the size of the screens I use in my life are becoming an important part of my user profile. And while I would often buy apps on the smart phones for use on them, I very seldom used them for any real eCommerce purchases. For that I mostly deferred to my laptop.

But over the last six months, I began noticing that my preferred screen for buying things started shifting over to the iPad. This particular fact came into even sharper focus for me recently when I read a piece in Wired that pointed out that Amazon’s tablet might actually serve as a powerful vehicle for their overall large store.

In this same article, they recounted a Wired interview with Steve Jobs in 1997 where they asked him what opportunities he saw with the Web. Here is what he said:

Wired: What other opportunities are out there?
Steve Jobs: Who do you think will be the main beneficiary of the web? Who wins the most?
Wired: People who have something –
Jobs: To sell!
Wired: To share.
Jobs: To sell!
Wired: You mean publishing?
Jobs: It’s more than publishing. It’s commerce. People are going to stop going to a lot of stores. And they’re going to buy stuff over the Web!

As you can see, even back then, Jobs saw that there would be a major shift in user buying habits and that the Web would become a serious vehicle for eCommerce. And over the last 13 years that has happened in a big way. eBay, Craigslist, Amazon, iTunes, etc have all driven eCommerce into the mainstream and they are now just a normal part of the way most of us buy things, especially things that we cannot find at our local mall. Of course, the irony of this quote from Jobs is that while iTunes has driven his eCommerce vision, he also created stores that have become one of the most successful retail chains in the world.

Now, if you look closely at peoples shopping habits these days, much of how they search for a product through search engines and review sites like PC Mag’s product reviews, and then buy them over the Web, should give you an understand that the Web has literally become the most powerful medium for commerce next to the grocery store. Sure, people will always go to the mall, but the mall and local stores will always have a limited supply of goods. But through the Web, you can buy just about anything. Although people will still use desktops and laptops for eCommerce, if my experience with the iPad is any guide, then the tablet, with its bigger screen then a smart phone and its full access to all Web eCommerce in this highly mobile for factor, could actually drive even more eCommerce purchases in the future. Another way to look at this is that the tablet is Amazon’s Brick and Mortar and a tablet is to Amazon what a physical store is to Wal-Mart.

If you think about Amazon’s business, it started with selling books online and then quickly became a place where consumers can buy just about anything and shop competitively from one single location. It just so happens however that this location is not physical; it resides fully within your browser. Amazon’s location is virtual.

To contrast, a company like Wal-Mart is evolving into the digital age with a strategy that includes their brick and mortar stores. To some degree Barnes and Noble is doing something similar but only in the realm of books. Amazon however has no intentions of creating a physical location where you walk in to experience their service. I believe however that Amazon is very interested in giving you a virtual physical storefront and it started with the Kindle.

Any retailer will tell you how important the overall retail experience is to their success. Some companies do retail poorly and others do retail extremely well. The Kindle for Amazon started completely around discovering, purchasing and reading books. The Kindle is the retail storefront to Amazon’s digital book library.

I believe that the evolution of the Kindle will follow Amazon’s business evolution. It started with books then included everything else. Which is why this next device that will most likely be a fully featured tablet will also come with Amazon’s complete shopping experience built in. This includes not just digital storefronts like books, music and movies but physical items as well. Since Amazon is one of, if not the largest digital storefront, it benefits them to get devices on the market where they control the entire shopping experience.

This is one of the reasons Amazon re-jiggered their iOS app strategy to stay away from Apple’s transaction model and fees. I don’t believe this move was just about avoiding management fees but that Amazon wanted to control the user experience with their storefront instead of Apple.

Reflecting on that point briefly, it becomes clear that Apple’s app store commerce model works for those for whom billing and storefronts are a problem but it does not work for those companies who have spent millions of dollars perfecting their own e-commerce experience. This leads me to believe that if the entire eCommerce experience is baked into the tablet experience then Apple’s new big purchase might be an eCommerce “etailer” that offers a broad range of products that Apple can integrate into the complete user experience of the iPad.

Amazon also has an interesting strategy with their Prime service that could be strategically integrated as well within their tablet offering. Perhaps Amazon gives better deals or promotions to those who own the tablet and are Prime customers thus incentivizing more purchasing from their store directly on the tablet.

This is why I believe a tablet is actually strategic for Amazon. Of course they can and will make sure their services are available on every device imaginable. However if they bring a device to market that is a full blown tablet and also includes the most elegant and seamless experience to research, discover and purchase from, then that device becomes the retail storefront to everything Amazon sells – and more.

The Tablet is the Ultimate Mobile Personal Computer

Our firm has been doing an extensive amount of tablet analysis over the past year. The more I study the role of the tablet in the industry and in the lives of consumers the more fascinated I become with this form factor. To clarify, we believe and classify the tablet as a PC. We simply view it as a form factor within the PC landscape.

One theme of late that has some of my mind share is around tablets going where traditional PCs can not. I am not just speaking of overall market share, although that factors into my thinking, but rather I am thinking about location. Now to be clear, I am not saying PCs (clamshell notebook PCs specifically) literally can not go to the locations I will talk about. Rather, what I want to point out is that the traditional PC/Notebook PC is the wrong form factor for a growing number of use cases and market pain points.

Prior to tablets, I believe the technology industry at large looked at nearly every consumer use case, as well as every vertical market, as an opportunity for the sale of a traditional PC/Notebook PC. What this led to was the adoption of the traditional PC into scenarios, where although sufficient, was the wrong form factor for the job. If you follow much of what I write you will notice that I am fond of Clayton Christensen’s philosophy in The Innovators Dilemma that consumers “hire” products to get jobs done. Prior to tablets the market “hired” the PC to do jobs that we are now finding tablets are better suited to do.

Last week I looked at the adoption of the iPad by a growing number of enterprises for specific mobile workforces like field force and sales force automation. In many business related scenarios we are seeing the iPad step in and take the place of notebook PCs primarily because it is better suited for the specific task at hand. Enterprises are finding that for their most mobile workers the iPad is a better tool for the job than a clamshell notebook.

Late last year I wrote in my TabTimes column about how small businesses are using iPads for things like point of sale retail and even mounting an iPad for interactive product/ media placement. I even talked about some examples where restaurant owners were going digital and integrating iPads for the uses of taking orders, showing pictures of menu items to customers, and adding other relevant information for customers to make dining decisions. In both those later use cases the job could have never been solved by a traditional clamshell PC because who wants to hang that device to the wall at retail or walk around a restaurant holding a clamshell notebook? This is at its core what I mean when I say that tablets will go where PCs can not. This is what I mean when I say that the tablet is the ultimate mobile PC.

Further to this point, I highlighted yesterday in an article how the iPad makes the perfect learning companion. I have been very vocal about how touch computing removes barriers to computing presented by mouse and keyboards and therefore are better tools for learning for all ages but kids specifically. We have been using PCs in the classroom because they were the only tools available. Now there is a better tool, the iPad, and it will find itself fitting into educational environments better than the PC ever could.

The list goes on from legal firms, to financial management firms, to hospitals and doctors, pilots and airlines, public safety, and more, who are all finding that the iPad is better suited than a clamshell PC for their specific computing needs. Consumers are waking up to this reality as well.

Although, the notebook PC is portable you don’t typically see consumers move around, walk around, or stand up and use their notebook. This is because the form factor lends itself to a desk or a lap where the screen sits at arm’s length away. Tablets are very different. Consumers are comfortable using them while standing, walking, sitting on the couch, laying in bed, in the bathroom, by the pool, at the beach, in the kitchen, etc. The tablet is not designed to be viewed at arm’s length and because of that our relationship with this form factor changes. We can use it in different ways and more importantly take it places we would not or could not take our clamshell PCs.

I would argue the tablet form factor lends itself to more mobile computing use cases than a clamshell notebook. Because when consumers use a clamshell notebook they are not truly mobile–they are stationary. Whereas one can actually use a tablet and truly be mobile. I know I am tweaking slightly the classically held definition of mobile computing. However, due to the nature of tablets impact on the market I believe the traditionally held definition of mobile computing needs to be challenged.

The PC, tablet, smart phone, and perhaps something new down the line, are all tools to get jobs done. Each one has its place and each will remain relevant in some way shape or form. However, when it comes to mobility the tablet is mobile computing in its purest form.

Why the PC Industry Cannot Ignore Smartphones

When HP abandoned their smartphone and tablet business and webOS last August, many in the industry were hp-veerdisappointed in the speed of the Palm acquisition and the quick dismantling of it. Some who consider themselves "business-savvy" said it was the wise approach as it wasn’t core to HP’s corporate mission. They said that smartphones were a distraction to competing with IBM and even Dell. We won’t know until 3-5 years from now whether it was a good decision or not.

I believe though, that just as PC companies fought to stay away from the sub-$1,000 PC market in the 90’s, PC makers who don’t embrace smartphones could be out of the client hardware business in 5 years.

Some Context

Over the last 20 years, PC hardware and software have done this little dance where one is ahead of the other. New software came out that required better hardware, then the new hardware outpaced the old software and the cycle continued. With the better hardware and software came new features and usage models like multimedia, desktop publishing, 3D games, DVD video, videoconferencing, digital photography, the visual internet, and video editing. Then Microsoft Vista was launched and it seemed no matter how much hardware users threw at it, issues still existed. Microsoft then spent the next few years fixing Vista and launched Windows 7 instead of developing environments for new rich client usage models. Windows 7 actually took less hardware resources than Vista, the first time a Microsoft OS could say this. Microsoft is even publicly communicating that Windows 8 will take less resources than Windows 7. So what happened? Did the industry run out of usage models to consume rich PC cycles? No, there are many usage models that need to be developed that use rich PC clients.

What happened was netbooks, smartphones and tablets. Netbooks threatened Microsoft and forced them to re-configure Windows XP for the the small, cheap laptops. This was in response to the first netbooks, loaded with Linux, getting shipped into Best Buy and direct on the internet. In retrospect this wasn’t a threat to Microsoft, as those netbooks had a reported 50%+ return rate. After netbooks came MIDs and after MIDs failed came touch smartphones and the iPad. Once the iPhone and iPad showed strong sales it was clear that the center of design was moving to mobility even though needs the rich client PC could solve didn’t just go away.

Windows 8 and Rich PC Clients

Windows 8 was clearly architected to provide a tablet alternative to the iPad and stem the flow from Windows to iOS and Android. Most of the work has been to provide a new user and development environment called Metro, WinRT and to enable ARM SOCs. None of these investments does a single thing to propel the traditional rich PC client forward, maybe with the exception of enabling touch on an all-in-one desktop. Without Microsoft making major investments to propel the rich client forward, it won’t move forward even to the dismay of Intel, AMD and Nvidia. I want to be clear that there are still problems that the rich client PC can solve but the software ecosystem and VC investment is enamored primarily with tablet, smartphones and the cloud. Without Microsoft’s investment in rich PC clients, thinner clients like phones and tablets will evolve at a much faster rate than rich PCs.

The Consequences of Not Investing in the Rich PC Client

With the software ecosystem driving "thin" clients at a much faster rate than "rich" clients, the consequences start to airplaytvemerge. We are seeing them around us every today. Users are spending more time with their tablets and smartphones than they are with their PCs. Savvy users are doing higher-order content creation like photo editing, video editing and even making music with GarageBand. That doesn’t mean that they don’t need their PCs today. They do, because neither smartphones nor tablets can do everything what a PC or Mac can do…. at least today. Display size, input method and lack of software modulraity are the biggest challenges today.

Enter Smartphone Modularity

Today, many users in traditional regions require at least a smartphone and a PC, and a tablet is an adder. Tomorrow, if users can easily attach a keyboard to a tablet via a convertible design, they may not need a PC as we know it today. It’s not a productive discussion if we debate if we call this a PC with a removable display or a tablet with a keyboard. What’s important is that some users won’t need three devices, they’ll just need two.

What about having just one compute device, a smartphone, and the rest of the devices are merely displays or shells? Sounds a bit aggressive but lets peel this back:

  • Apps: If you believe that the smartphone ecosystem and apps moves a lot faster than the rich client ecosystem, then that says that thin clients at some point will be able to run the same rich apps as a PC. Then the question becomes, "when".
  • OS/Dev Environment: iOS, Windows, and Android are all becoming modular, in that their goal is that you write once and deploy everywhere. Specifically, write once for a dev environment and deploy to a watch, phone, tablet, PC and TV or console.
  • Hardware: Fixed function blocks and programmable blocks on tablet and smartphone SOCs are taking over many of the laborious tasks general purpose CPUs once worked on. This is why many smartphones can display a beautiful 1080P video on an HDTV. This is true for video decode, video and photo cleanup, and natural user interfaces too. 3D graphics will continue to be an important subsystem in the SOC block.
  • Display: With WiDi, WiFi Direct, and WiFi AC on the mainstream horizon, there’s no reason to think that a user cannot beautifully display their apps from their 4" smartphone display to a 32" high resolution PC display. Today with my iPhone 4s airplay movieI can display 1024×768 via AirPlay mirroring with a little lag but that’s today via a router and WiFi network. I can connect today via hardwire and it looks really good. In the future, the image and fonts will scale resolutions to the display and the lag will disappear, meaning I won’t even need to physically dock my smartphone. It will all be done wirelessly.
  • Peripherals: Already today, depending on the OS, smartphones can accept keyboard, mouse and joystick via Bluetooth, WiFi or USB. The fact that an iPad cannot use a mouse is about marketing and not capability.

Smartphone Modularity a Sure Bet?

As in life, there are no sure things, but the smartphone and cloud ecosystem will be driving toward smartphone modularity to the point where they want you to forget about PCs. Apple, Microsoft, and Google are building scalable operating systems and development environments to support this. Why Microsoft? I believe they see that the future of the client is the smartphone and if they don’t win in smartphones, they could lose the future client. They can’t just abandon PCs today, so they are inching toward that with a scalable Metro-Desktop interface and dev environment. Metro for Windows 8 means for Metro apps not just for the PC, but for the tablet and the Windows smartphone. The big question is, if Microsoft sees the decline of the PC platform in favor of the smartphone, then why aren’t all the Windows PC OEMs seeing this too? One thing I am certain of- the PC industry cannot ignore the smartphone market or they won’t be in the client computing market in the long-term.

Made in China: Why Boycotting Apple Would be Wrong

If you have been reading the articles from the New York Times about the working conditions at some of the factories that Apple and other big tech companies use to make their products, you can’t help but get upset and concerned when you learn about the abuses mentioned in the report. Apple has publicly shared how they are trying to combat these abuses and has even gone as far as joining a third-party monitoring group to get independent help to deal with these problems. Clearly, Apple has to put even more pressure on all of their suppliers to improve these conditions and rally all of the other tech companies who use these same suppliers to help with this cause.

The New York Times articles pointed out correctly that the human toll due to these abuses is a serious issue. But there is another side to this story that is not getting enough press and it is equally important to this discussion. I have traveled to China for 25 years and worked on many sourcing projects and have had to deal with Asian manufacturing issues for some time. One of the first things I learned about manufacturing in China is that the majority of factory workers come from very poor areas in central or eastern China. They covet these manufacturing jobs to get them out of their abject poverty.

In 1996 I visited an extremely rural area of China and saw first hand how they lived and the poverty they faced. I was shown a cement home that could not have been more than 10’ X 12’ and was told that two families as well as an aging grandmother lived in this place. And that their only earnings came from their field work if they could get it. I was also told that the parents in these areas pushed their teenage children to try to get the new manufacturing jobs that were just starting to emerge back then. Millions of families in China still live in this type of poverty and these manufacturing jobs are actually a life saver for them as these kids send some of the money they earn back home to help support the family.

There is an even darker side to this. The parents in these regions don’t have a lot of options and in some cases they actually sell their kids into prostitution as ways to support the family. So they see these manufacturing jobs as a better way for their kids to better themselves and still help the family. Although they only make $17.00 per day, this is at least 10 times what they could make a day in the fields if the work is even available.

And there have been reports of underage kids in these factories. But I know for a fact that the poverty is so bad in some areas that it is the parents who push these kids to lie about their age to get them into these jobs. A very sad fact is that the age of the kids sold into prostitution average 13-15. While hiring kids at this age for factory work is still wrong, you can see how when parents get desperate they could push their underage kids to the factories instead of some of the seedy alternatives available to them.

With this in mind, the call for boycotting Apple products would be just plain wrong. Apple selling less products would translate into the loss of jobs for these workers and force them back into levels of poverty and working conditions that would be even more difficult than the one’s they have in the factories.

“This American Life” quoted New York Times columnist Nicholas Kristof, a noted human rights crusader, as defending the Chinese labor system as a positive step in the evolution of the country’s economy. “I think it’s useful to be reminded about how grim the conditions are,” Kristof says in the show. “But again, I just think that if you try to think how you can fight poverty most effectively, and what has fought it within China, then I think sweatshops are a key part of that answer.”

I have actually visited some of the high-tech manufacturing factories in three regions of China and the term “sweatshop” actually does not apply to them. Because of the precision work and need to keep things very clean when making these products, these places are well-lit, air-conditioned and efficiently designed. That said, the work is tedious, and the long shifts can become exhausting. And any reported abuses must be dealt with aggressively.

But the call to boycott Apple would be irresponsible on our part. Apple’s success has created ten’s of thousands of jobs for these workers and these factory jobs are a lifeline to them and their families. Yes, these types of manufacturing jobs have gone offshore and as Steve Jobs told President Obama last year, they are not coming back.

In fact, Thomas Friedman wrote a great piece on the fact that for most American companies their customers have become world customers now and the need to manufacture and sell to them has become a global business issue.

While we might not like that Apple has created so many jobs in China, the reality is that, as the NYT’s articles pointed out, the type of manufacturing needed to make things like the iPhone and the iPad are not available in the US anymore.

The answer to dealing with these abuses is not to boycott Apple products. That would directly impact the lives of thousands of workers in a very negative way. Rather, it will be for Apple to step up their efforts and get as much help as possible from the Chinese government and other tech companies to put pressure on all of their suppliers to deal with these abuses and adhere to the rules demanded by their customers for good wages and good working conditions. They also need to find other creative ways to make the working conditions better for those who work in these factories. Let’s hope that Apple and others can make this happen soon. But boycotting Apple would be the wrong way to solve this problem.

Apple’s Enterprise Invasion: Why Winning in Consumer Means Winning in Enterprise

There used to be a time when I would go to tech industry events, trade shows, internal company meetings, etc. and I was one of the few in the room with a Mac. I took great pride in that fact, but now the Mac is gaining everywhere. It’s in schools, hospitals, labs, construction sites, restaurants, consumers’ homes, coffee shops, and now increasingly in the enterprise.

With this observation in mind it should come as no shock that Apple blew the doors off their latest earnings and recorded all time sales of Macs. My analyst colleague, Frank Gillet at Forester, shared his research which showed that 1 in 5 Global workers now use an Apple product for work.

So what is fueling this trend?

Apple Products Cost Less to Support

When I worked at Cypress Semiconductor, I moon-lighted from time to time and helped our IT department by solving Windows problems. I prided myself on the fact that I could troubleshoot Windows with the best of them. I could navigate my way in and out of all of the different and common Windows conflicts. Then a funny thing happened. I switched to the Mac and all of a sudden troubleshooting became a thing of the past. That reality is now hitting the enterprise IT departments.

A recent survey by the Enterprise Device Alliance which surveyed IT professionals in large enterprise environments that have a mix of Macs and PCs overwhelmingly found agreement with IT managers that Macs cost less than PCs to support. IT managers noted that Macs presented higher up front acquisition costs, but also noted that the long-term benefits were worth the tradeoff.

When it came to Mac adoption in the enterprise, ease of technical support and lower total cost of ownership were among the top reasons for the switch. Number one on their list–employee preference.

Bring Your Own Device To Work

If you follow this industry even a little bit you keep hearing about the “consumer-ization of IT” or the “Bring Your Own Device” trend. Yes, both trends are real and IT managers are diligently working to allow employees to use whatever devices they want at work.

We recently interviewed SAP’s CIO Oliver Bussman. He shared with us that inside SAP they have 14,000 iPads and 8,000 iPhones deployed. That is a total of 22,000 iOS devices compared to the 20,000 Blackberries deployed to his workers. SAP, like many other companies is working to cater to their employees’ device preference. And Mr Bussman shared an interesting perspective with us. He said that he now has to pay closer attention to what is going on in the consumer market because if he doesn’t, he would not be able to stay ahead of the game. His workers use and learn how to make things like the iPad work for them at home. Then they come to him and say they want to use it in the office as well. After his visit to CES, Mr. Bussman recorded a video of his thoughts on the consumer-ization of IT and it is worth watching as he has a very important perspective on the subject.

The Right Product for the Right Job

In the construction industry they say that “every job is easier with the right tools.” Perhaps for too long, due to the Windows monopoly on most businesses, IT managers have been forced to have workers use the same tool to get a multitude of jobs done. But now devices like the iPhone and iPad in particular are proving more effective in many situations like field force and sales force automation.

During our interview Oliver Bussman also shared with us that he was able to deploy 300 iPads to his global sales team in just 4 weeks. In many enterprise solutions, the iPad, and touch computing in general, is just a better tool for the job.

IT managers need to effectively empower their workforce to be productive and equipped with the tools they need to be successful. Apple products are now becoming a critical part of the enterprise tool set.

Apple’s focus has not been the corporate IT accounts. Apple has always been a consumer product company waiting for a pure consumer market to mature. Now that the consumer market for personal electronics has matured, it appears to also be an enterprise strategy. Demand for Apple products is at an all-time high with consumers and their latest earnings prove this. What no one really could have predicted was that to win in enterprise you had to also win in consumer. It seems logical, but hindsight is 20/20. That reality is now fueling growth in Apple’s favor from every corner of the technology sector. The scary thing for Apple competitors is that they are just getting started.

Where Have All The Profits Gone? Gone to Apple, Every One

A few years ago, folks in tech used to worry that all the profits in the PC industry were being scarfed up by Microsoft and Intel and that the crumbs left to PC makers would be insufficient to fund any innovation. For companies not named Apple, those were the good old days.

Chart: Apple per share earningsApple’s  blowout December quarter was stunning enough viewed in isolation. But it is even more striking in comparison to the rest of the industry. Apple’s revenues of $46.2 billion blew past Hewlett-Packard’s $32.3 billion to make it the industry leader by sales. But the real story is profits. Apple’s net of $13.1 billion was just a hair less than the earnings of Microsoft, Intel, HP, and Dell combined.

For a little historical perspective, in 2006, Apple earned just under $2 billion on sales of $19 billion for the entire year. Microsoft and Intel combines for sales of $80 billion and profits of $18 billion.  (M.G. Siegler at TechCrunch has a host of other Apple-industry comparisons.)

Apple’s growth and stunning profitability is obviously wonderful news for the company and its shareholders. And there are no signs that its remarkable run is over. The growth rate of the December quarter is unsustainable, but that is a reflection of the strength of one three-month period, not an indication of any weakness.

But the concentration of the tech industry’s profitability in one company is a potential problem for the industry as a whole. Apple is a wonderfully innovative company that has, year after year, come out with the most interesting products in tech. And the iPhone and iPad have spawned a whole ecosystem of successful third-party products.

Innovation, especially in hardware, requires talent, imagination–and money. Apple’s cash hoard–by now over $100 billion–allows it to do things that competitors cannot even think about.

It’s not a healthy situation to have all the innovation coming from one company, no matter how brilliant. But the razor-thin margins of Apple’s competitors make risk taking difficult. Consider the sad case of HP and the TouchPad. Executives of HP’s Personal Systems Group saw webOS and the TouchPad as a way to both challenge Apple and to free the company from the domination of Microsoft.  PSG chief Todd Bradley saw this as a fight of  “years, not months.” But looking at startup costs in the billions and a lack of instant success, HP’s top management got cold feet and killed the project before it had a chance. A lot of this had to do with HP’s tumultuous internal politics,  but the fact that the company earns eight cents on every dollar of revenue  while Apple nets 29 cents  has to have been an important factor in its skittishness. The problem is the vicious cycle, in which a financial squeeze cripples innovation which damages the prospects for growth.

It’s hard to see how this situation changes anytime soon. Perhaps Google, which has margins even better than Apple’s though it is a much smaller company, can use some of its profits to turn stodgy Motorola Mobility into an innovation engine, assuming that it completes its planned purchase. Maybe the partnership of Nokia and Microsoft will produce something wonderful. But for the foreseeable future, expect Apple to expand its dominance.

The Dell XPS 13: An Ultrabook that Could Steal Customers From Apple

If you are in the high-tech industry and haven’t heard of the term “Ultrabook”, you’ve probably been on sabbatical or have been living under a rock. Intel introduced an industry-wide initiative to re-think the Windows notebook PC, which they have dubbed and trademarked the “Ultrabook”. Launched at Computex 2011, Ultrabooks are designed to be very thin and light, have good battery life, have instant-on from sleep, be more secure and have good performance. If you want to see the details on what constitutes an Ultrabook, let me direct you to an article I wrote in Forbes yesterday. Does this sound a bit like a MacBook Air? This is what I thought about the entire category until Dell lent me their Ultrabook, the Dell XPS 13, for a few days. I have to say, I am very impressed and believe they have a winner here that could take some business from Apple. I don’t make that statement lightly as my family is the owner of three MacBooks and I do like them a lot.

Dell plays hard to get
When Ultrabooks were first introduced in July, Dell was somewhat silent on their intentions. Typically Dell is locked arm in arm with Intel many steps of the way. When they didn’t introduce an Ultrabook by the back to school selling season, “industry people” started to ask questions. When Dell didn’t release one by the holiday selling season, people were asking, “what’s wrong with the Ultrabook category”, or “what is Dell cooking up”?

I thought they were waiting for Intel’s Ivy Bridge solution that was scheduled for earlier in the year. Whatever Dell was waiting for doesn’t matter, because they did nothing but impress at CES. During the Intel keynote with Intel’s Paul Otellini, Dell’s vice chairman Jeff Clarke, stormed on-stage with some serious Texas swagger. The video cameras at the CES event didn’t do the Dell XPS 13 justice as it’s hard to “get” the ethos of any device on camera, but with Jeff Clarke and Paul Otellii on stage, you knew it was important to both companies. In my 20+ years as PC OEM and technology provider to OEMs, I believe the only way to really “get” a product is to live with it as your primary device for a few days. And that’s just what I did.

Industrial Design
It’s apparent to me that Dell took their combined commercial and consumer experience and put it to good use. Rather than just follow Apple, HP or Lenovo, they put together what I would call the best of both worlds. The machined aluminum frame adds the brawn and high-brow feel, while the rubberized carbon-fiber composite base serves to keep the user’s lap cool and reduce weight. The rubberized palm rest provides a slip-proof environment that adds serious precision to keystrokes and trackpad gestures. It also provides a slip-proof mechanism for carrying the unit across the house, the office, or into a coffee shop. In a nutshell, Dell solved my complaints about my MacBook Air and made it look, feel and operate premium.

Instant-On
I give Dell and Intel credit for working together to make Windows 7 PCs almost “instant on”. The XPS 13 turned on and off very quickly thanks to Intel Rapid Start and Dell’s integration. I wasn’t able to use Smart Connect, but when I can use the XPS 13 for a few weeks I want to try this out. This is essentially a feature that intermittently pulls the XPS out of sleep state and pulls in emails and calendar updates. While this is as close a PC will get to “always on, always connected”, it is a decent proxy.

Ingredient Branding and Certifications
Historically, the typical Windows-based PC with all its stickers looks like a cross between a Nascar racing car and the back of a microwave oven. That doesn’t exactly motivate anyone to shell out more than $599 for a Windows notebook. There are no visible stickers on the XPS 13 and the only external proof of Intel and Microsoft is on a laser-etched silver plate on the bottom of the unit. Underneath the plate are all the things users usually ignore like certifications.

Keyboard and Trackpad
I never quite understood how little evaluation time users spend on what ends up being one of the most important aspects of a notebook; the keyboard and trackpad. I already talked about the rubberized palm rest that gives the XPS 13 a stable palm base for the keyboard and trackpad. My palms slip all over the place with my MacBook Air. The XPS 13’s keyboard is auto backlit and the keys have good travel and a firm touch. The trackpad feels like coated glass and supports all of the Windows 7 gestures. Clicking works by either physically clicking the trackpad down or gently tapping it. It’s the user’s choice.

Display
The display is 13.3″ at a very bright 300 nits at 1,366×768 resolution. It’s an edge to edge display (or nearly), which allowed Dell to design a 13.3″ display into around a 12″ chassis. I compared it to a MacBook Air and it is in fact narrower with the same dimension display. That is very impressive. I would have preferred a higher-resolution display but I don’t know if many users will make a huge deal out of this. The display is coated with Gorilla Glass which gives some extra added comfort knowing it will be up to the task of my kids accidentally scratching it up.

Ports
Compared to some of the other Ultrabooks, I applaud Dell for removing some of the ports that I am certain primary research said were “must-haves.” Must haves like a VGA port, 5 USB ports, and an ethernet port. (yawn) Users get a Displayport, one USB-3, one powered USB-2, and a headphone jack. The only port I would have preferred was a mini or micro HDMI port. Displayport guarantees that I will need to buy a cable or an adapter I don’t have. I can live without the SD card reader but it sure would have been nice if they could have fit it inside.

Battery Life
I am still very skeptical on most battery life figures of any battery-powered product. One exception is the Apple iPhone and iPad, where Apple goes out of their way to provide as much detail as possible for different use cases. With that caveat, I do believe the Dell XPS 13 will have very respectable battery life figures versus other Ultrabooks and the Apple MacBook Air. Dell says the XPS 13 will achieve nearly 9 hours of battery life, well above Intel’s target of between 5 and 8 hours.

One of the sexier features harkens back to the days of Dell batteries, which had buttons to gauge how much was power was left. Like the Dell batteries of yesteryear, press a small button on the side (not back) of the XPS 13 and it will light up circles to show how much battery you have left. That shows a dedication to useful innovation, not penny pinching bad decisions made in dark meeting rooms. This is the kind of small thing that demonstrates attention to detail that Apple quite frankly has dominated so far.

Consumer and Commercial Applicability
Whenever I hear that one product serves two different markets I usually cringe and jump to the conclusion that it will be mediocre at both. I also take a very realistic approach on the “consumerization of IT”, in that I believe we are a long way off until 50% of the world’s enterprises give their employees money to choose their own laptop. In the case of the Dell XPS 13, I believe that it will provide a good value proposition to both target sets. Consumers are driven by style, price, aesthetics and perceived performance at an certain price point while businesses are more interested in TCO, services, security, and custom configurability. The Dell XPS 13 provides all that. They may run into challenges with IT department and sealed batteries, lack of VGA and Ethernet ports, but then again a few IT departments would require serial ports if you let them spec out the machine completely.

Pricing and Specs
The Dell XPS 13 starts at $999 and includes an Intel Core i5 processor, Intel HD 3000 graphics, 128GB SSD hard drive, 4GB memory, USB 3.0, and Windows Home Premium. For a similarly configured Apple MacBook Air, buyers would pay $1,299. With the Mac, you get OS X Lion, a bit higher resolution display, Thunderbolt I/O, and an SD card slot. And yes, for the record, I know PCs don’t primarily sell on specs but they are still a factor in the decision. If it weren’t, Apple wouldn’t provide any specs anywhere, right?

Possibly Taking Bites from the Apple
From everything I experienced with the Dell XPS 13 evaluation unit, I can safely say that they have a potential winner. Why do I say “potential”? First, I’m using an evaluation unit, not a factory unit with a factory image. As a user or sales associate, if I start Windows and I start getting warning messages for virus protection, firewall and 3rd party software, the coolness factor will be for naught. The first consumer impression will be bad. I hope this doesn’t happen with the factory software load.

Many success factors go into successfully selling a system and creating a lasting consumer bond. Great products must align with great marketing, distribution and support. Controlling the message is key at retail. If, and I mean “if” Dell can effectively pull their messages through retail and somewhat control merchandising at retail, this will be a solid step in connecting the value prop with the consumer. This is very hard, especially in the U.S., where Best Buy rules brick and mortar. What will the Best Buy yellow shirt say when someone asks, “whats the difference between the MacBook Air and the Dell XPS?” If they say “$300” that is a fail. Retail will be important, more important than direct for Dell, because industrial design doesn’t translate well to the web. Seeing the XPS 13 image doesn’t impress as much as holding it does, so retail cannot be minimized.

I see the XPS 13 doing well in business and enterprise, again, given aligned messaging, channel, sales training and support. IT departments now have a design that is every bit as cool as the MacBook Air and arguably more productive plus the added benefits of TPM and Dell’s customization and support.

Net-net I see potential consumer and business buyers of thin and very light notebooks looking at Apple’s MacBook Air and many choosing the Dell XPS 13 Ultrabook instead. This won’t just be based on price, but all other benefits I’ve outlined above. I also believe Apple’s MacBook Air sales will increase during 2012 but they would have sold more had it not been for Ultrabooks, especially the Dell XPS 13, the best Ultrabook I’ve used so far.

You can get more information on the Dell XPS 13 Ultrabook here on Dell’s website.

Are Netbooks Poised for a Comeback?

The answer to this is no, and yes. Let me explain.

In 2007, Netbooks took the market by storm. These small low-cost laptops hit the market at the beginning of the recession and were instant hits. Although first versions with Linux were panned once a low-end of Windows was made available they really took off. By 2010, we were selling about 30 million a year.

But in 2011, demand for Netbooks took a major hit. Many attributed this to the intro of Apple’s iPad and other tablets but in truth, the real reason for the decline is that once the vendors realized there was serious demand for low powered, low-cost laptops, they went full-bore in creating full-sized laptops in this price range. Last I checked you could get a 15.6 inch AMD Dual Core E-300 accelerated processor based laptop for around $329. Although Netbook customers liked their small sizes and low weight, they valued even more laptops that had extra power and full keyboards.

But if you try hard, you can actually trace Ultrabooks back to Netbooks. Indeed, at the WSJ D conference a few years back, when Netbooks were all the rage, the late Steve Jobs told Walt Mossberg that nobody really wants a Netbook. While he did not downplay demand for a smallish type laptop, he felt that people wanted a small laptop with a full keyboard and the same power as their mainstream laptops. Three months later, he and Apple introduced their first MacBook Air and of course, this successful product is the reason all the vendors are creating Ultrabooks now.

But Ultrabooks have one big problem. On average, they will be mostly in the $699-$999 price range and well outside of the realm of what we call value PC pricing. That range is from $299-$599. But to say there is still demand for an ultra-thin and low-cost laptop in this value price range would be an understatement.

What you can expect to happen is, in a way, the rebirth of the Netbook in the form of value priced ultra-thin PCs. These will not meet any of Intel’s Ultrabooks specs, but instead, will have low-end mobile processors, perhaps the home version of Windows 7 and a low-density hard drive. But they could be relatively thin and really cool, just with lower end chips and low-cost screens. In many ways, these will speak to the same audience who wanted a Netbook, namely those who desired a really low-cost laptop for basic computer usage.

This low-end category could get an interesting boost later in the year in the way of Windows on ARM. Arm chips are already low-cost, but with long battery life and some pretty good processing power. You can believe they will shoot for use in ultras-lims as well.

So while Netbooks as we know them are mostly dead, expect to see them return in the form of ultra-slims, ultra-thins, or some type of name the vendors will give them that targets this low-end value segment of the market. While I don’t believe it will have a heavy impact on the more full featured laptops in the value end today since these will sport much better processors, higher quality screens, etc. these low end thin laptops will hit the nerve of a part of this value market and could actually become big hits on their own.

Looking Forward to the Next Round of Innovation

I was surprised by a number of conversations I had while at this years CES. More than once the conversation turned to the staleness of innovation shown at the show. It is true there wasn’t too much to get excited about this year, but the remarks I heard seemed to indicate that there is a belief that we may be headed for a period where innovation is stagnant. I have to say that I disagree.

On Monday I wrote in my column about why I believe the PC landscape is about to change. I pointed out that the barrier to entry to create consumer electronics has dropped to an all time low. Making it feasible for any company with enough cash and a market strategy to start creating electronics of all shapes and sizes. My overall point was that consumer electronics is ripe for new entrants. More specifically new entrants with fresh ideas.

That being said we have to look at innovation as pillars. There is hardware innovation, software innovation, and services innovation. One could also throw in experience innovation as a pillar as well but it is intertwined with hardware, software, and services. Each of these pillars feed off each other and spur parallel innovations.

There are countless examples of how this chain of events works. We could look at examples from the first land line phones, to the PC, to the smart phone and more. However I am going to use the iPad as an example.

The iPad was a hardware innovation (not a conceptual innovation) that integrated all the right pieces of hardware into a touch computing package. The iPad then set in motion the opportunity for software innovation and eventually we will see more innovation in services as well. This leads us to what we can expect in this next round of innovation. Namely that it will come more from the software and services pillars.

This is not to say there will be zero hardware innovation. I simply believe we will see more innovation come from software and services which will take advantage of the hardware platforms that gain mass market attraction. Namely around devices like the PC, tablet, smart phone, and TV. All of those devices represent the platforms of the future. So although we will see some hardware advancements in those devices I don’t believe they will be monumental but more incremental. Screens will get better, semiconductors will get faster, devices will be go through design evolution, etc.

All those hardware platform innovations will continue to lead to new software, services, and experience innovation. Take yesterday’s news from Apple about iBooks 2.0 and the new interactive e-book experience. Tim stated that Apple just re-invented the book and he is right. The point that needs to be made, however, is that without the iPad and the platform innovation of tablets, it would never have been possible to even think about re-inventing the book. The hardware innovation created this possibility. Tim also rightly pointed out that if publishers are not careful they could be disrupted quite easily. The hardware platform innovation leads to not just the re-birth of something like a book but the re-birth of the publishing industry. This can also be said of the music industry, motion pictures, network TV, magazine, and perhaps even government or politics? All of these industries have the opportunity to re-invent themselves in light of new and innovative hardware.

The opportunities will be endless, and again, I am not saying that hardware innovation is dead, perhaps only that it is cyclical. The next cycle of innovation will be more focused on software and services rather than ground breaking new hardware. We could discuss new computing hardware like the smart watch, automobile and more, but perhaps those are more extensions of existing platforms rather than platforms themselves. I will leave that topic for another column.

Maybe Apple Can Fix Television; Someone Has To

Not long before his death Steve Job famously told biographer Walter Isaacson that he had “finally cracked” the problem of television. No one knows quite what he meant, and Apple has shed no light on the subject, but for the sake of the future of TV, let’s hope Steve left something important behind.

Photo of LG booth
The LG booth at CES 2012

At the International Consumer Electronics Show, the overwhelming feeling I got about television is stasis. My colleague Patrick Moorhead has a solid piece on TV makers’ experiments with new user interfaces. But those remain experiments, with no commitment to when, or if, we will see them on TVs you can actually buy. And the user interface, while desperately in need of improvement, is only one piece of a much bigger puzzle.

 
Related Column: How Sony can beat Samsung and LG on Smart TV Interfaces
 
The sad truth if you had told me that the TV displays in the Panasonic, Samsung, and Sony booths were actually left over the the 2011 show, I wouldn’t have argued with you. The main difference was much less emphasis on 3D, which the makers now realize is just a feature, not a revolutionary product. Only LG’s booth showed real commitment to 3D, and not necessarily in a good way. Its booth was a jarring riot of gimmicky 3D images coming at you from all sides, an effect allowed by LG’s move to passive, battery-free glasses that don’t need to sync to a particular set. Both LG and Samsung showed 55″ OLED displays, each claiming the world’s largest,  but to my eyes OLED remains oversaturated, garish, and a dubious improvement on LED-backlit LCD or plasma.

Even the internet connected TVs, which the makers promoted as this year’s big thing, seemed tired. Basically, they build the capability of a Roku box or other internet-connected device directly into the set. It’s an improvement in convenience, mainly though getting rid of one remote, but hardly enough to send anyone out to buy a new TV.

The fix TV desperately needs is an integrated solution. I want to get all of my TV–the stuff I get over cable as well as the content streamed over the internet in a single box that seamlessly combines all the sources. I don’t much care whether this is built into the set or done in a separate box–the box would have the advantage of allowing ample local storage, while a TV solution would probably have to rely on the cloud to save recorded programs. The difference in convenience is not very significant.

Such a solution would require a new user interface, something much better than Google managed for Google TV. But much more important, and much harder, it requires an entire new business model for content distribution. As I have written many times, the biggest impediment to a this breakthrough is not technology, since the technology needed to make it happen is available today, but breaking the iron triangle of content owners, networks, and cable and satellite  distributors who are prospering under the status quo. Can Apple succeed where everyone else has failed? I rather doubt it. But I’m cheering for them anyway.

 

 

 

How Sony can beat Samsung and LG on Smart TV Interfaces

As I wrote last week, Samsung and LG are following Microsoft’s lead in future interfaces for the living room. Both Samsung and LG showed off future voice control and in Samsung’s case, far-field air gestures. Given what Samsung and LG showed at CES, I believe that Sony could actually beat both of them for ease of interaction and satisfaction.

HCI Matters
I have been researching in one way or another, HCI for over 20 years as an OEM, technologist, and now analyst. I’ve conducted in context, in home testing and have sat behind the glass watching consumers struggle, and in many cases breeze though intuitive tasks. Human Computer Interface (HCI) is just the fancy trade name for how humans interact with other electronic devices. Don’t be confused by the word “computer” as it also used for TVs, set top boxes and even remote controls.

Microsoft recently started using the term “natural user interface” and many in the industry have been using this term a lot lately. Whether it’s HCI or NUI doesn’t matter. What does matter is its fundamental game-changing impact on markets, brands and products. Look no farther than the iPhone with direct touch model and Microsoft Kinect with far-field air gestures and voice control. I have been very critical of Siri’s quality but am confident Apple will wring out those issues over time.

At CES 2012 last week, Samsung, Sony, and LG showed three different approaches to advanced TV user interfaces, or HCI.

Samsung20120117-133700.jpg
Samsung took the riskiest approach, integrating a camera and microphone array into each Smart TV. Samsung Smart Interaction can do far field air gestures and voice control. The CES demo I saw did not go well at all; speech had to be repeated multiple times and it performed incorrect functions. The air gestures performed even more poorly in that it was slow and misfired often. The demoer keep repeating that this feature was optional and consumers could fall back to a standard remote. While I expect Smart Interaction to improve before shipment, there’s only so much that can be done.

LG
LG used their Magic Motion Remote to use voice commands and search and to be a virtual mouse pointer. The mouse

20120117-133949.jpg

pointer for icons went well, but the mouse for keyboard functions didn’t do well at all. Imaging clicking, button by button, “r-e-v-e-n-g-e”. Yes, that hard. Voice command search worked better than Samsung, but not as good as Siri, which has issues. It was smart to place the mic on the remote now as it is closer to the user and the the system knows who to listen to.

Sony
Sony, ironically, took the safe route, pairing smart TVs with a remote that reminded me of the Boxee Box remote which has a full keypad one side. Sony implemented a QWERTY keyboard on one side and trackpad on the other side which could be used with a thumb, similar to a smartphone. This approach was reliable in a demo and consumers will use this well after they stop using the Samsung and LG approaches. The Sony remote has microphone, too which I believe will be enabled for smart TV once it improves in reliability. Today the microphone works with a Blu-ray player with a limited command dictionary, a positive for speech control. This is similar to Microsoft Kinect where you “say what you see”.

       

I believe that Sony will win the 2012 smart TV interface battle due to simplicity. Consumers will be much happier with this more straight forward and reliable approach. I expect Sony to add voice control and far field gestures once the technology works the way it would. Sony hopes that consumers will thank them too as they have thanked Apple for shipping fully completed products. Samsung and LG’s latest interaction models as demonstrated at CES are not ready to be unleashed to the consumers as they are clearly alpha or beta stage. I want to stress that winning the interface battle doesn’t mean winning the war. Apple, your move.

The Simple Reason for Apple’s Success

Back in 1984, one of the major PC companies, who was spectacularly successful with their business PCs, decided that they could be just as successful if they created PCs for consumers. But they wanted them to be different from their business PCs since they knew a consumer model would have to be priced much less than their business models.

So they created a consumer PC that, for all intent and purposes was a “wounded” version of their business models, with a lousy keyboard, very weak processor and the cheapest monitor they could dig up. To say that it was a failure would be an understatement. To make things worse, the only OS they had at the time was MS/DOS so that meant they were giving consumers an OS that was hard to use and difficult to learn from scratch. But they reasoned that since so many business users had their PC with DOS at work, they would gladly buy a similar model for their home and since they knew DOS from the office, it only made sense that they could use it on their home PC.

Interestingly, when it failed, they were dumbfounded. They were certain that they had a winner on their hands and some of the top management kept pushing to re-design it and take a new model back to the consumers the following year. But to their credit, some of the people in the group questioned its potential and turned to outside experts to give a 3rd party opinion on the potential of a PC for consumers at that time.

I was lucky to be one of the few outside persons asked to weigh in on this subject so I went back to their HQ on the east coast two times to give my thoughts on the subject. In my presentation and documentation I gave them, I pointed out the major difference between business and consumer users were that business users had serious motivation to go through the hassle of learning a text-based OS, while the mainstream consumer did not. At the time, PCs pretty much only had software for business use. I argued that for PCs to take off, there would have to be a major reason for consumers to buy them, and emphasized areas like using PCs for educational purposes as well as possibly entertainment as well. I also told them they needed to be cheap.

I drew them a picture of the traditional marketing pyramid and showed that at the top we would find the truly early adopters, which at this time were quite IT driven. I then told them the second layer would possibly come from the worker bees whose IT leaders would push them to learn DOS and harness the PC to make their work more productive. But I told them the third layer would come from what today we call prosumers and, even at that time, I felt it would take at least 3-5 years to get these folks excited about PCs and get the PCs to a price point that they could afford.

And at the bottom layer of the pyramid, which is always the largest audience, I said they would find the mainstream consumer, but pointed out that I felt it would take at least 10 years before this crowd would finally buy into the PC vision.

I never found out how much my outside work on this project impacted their decisions but I do know that a week after I made this presentation, their consumer PC was killed off for good.

But there was another key point that I emphasized in this document. I said that the OS had to be easy to use and the PCs had to be simple enough so that consumers did not need a degree in engineering to run them. And if you know the history of the PC business, you know that consumer interest in PCs for the home did not kick in until Windows 95 hit the market, exactly 10 years after this company killed their consumer PC.

Ironically, even though our PCs have gotten spiffy new user interfaces and are clearly easier to use, to the point that PCs have penetrated pretty much every home in the US in some way or another, the fact remains that they are actually more complicated to use. Consumers not only have to deal with the plethora of desktops and laptops to choose from, they now also have to deal with Internet connections to the home, wireless connectivity, security, identity theft, multiple passwords, personal data in numerous non-connected files, and most recently, this new thing called the cloud.

But in the end, consumers want things simple and some handholding when things go awry. I am convinced that this is really at the heart of Apple’s success. They have one phone–the iPhone. They have one tablet–the iPad. They have two laptops but except for sizes and optical drives in the Pro models, they are actually all the same. And they have one major desktop–the iMac. Even in the iPod line, they have streamlined it to the iPod Touch and the Nano. If a person needs help, they have their Genius Bars and 24-hour hotlines in which the people on the other end actually now how fix your problem.

By comparison, there are now over 80 Android phones to choose from as well as at least 5 versions of an Android OS to deal with. And in the PC space, if something goes wrong, people don’t know who to go to for help. While some of the mainstream PC vendors do have 24 hour hotlines, my experience with them has been only marginally successful. And I have even stumped Best Buys geek squad a few times over the last year with problems with Windows laptops.

While we can point to Apple’s powerful OS, industrial designs and ecosystems of products and services as key to their success, I actually think, that at its heart, the real reason for their amazing success is Jobs’ own mantra to his team, which is to keep things as simple and intuitive as possible. And he was smart enough to know that even with that, given the nature of technology and the fact that things get more powerful and complex over time, provide a place for people to get help that is easy to access and stock it with people who can help when a problem arises.

As I walked the floor of CES recently, I saw over a dozen phones at one vendor, nine new PCs from another vendor and five tablets from another vendor, all with different versions of Android on them. While choice is great, I really think that keeping things simple and easy to understand–and buy–is even more important than choice. While Apple has powerful products in many categories, the real reason for Apple’s success that they just keep things simple.

The Most Interesting Things I Saw at CES 2012

CES is certainly the technology lovers candy store. It is nearly impossible for any one person to see everything of interest at CES. So my approach is to look for the hidden gems or something that exposes me to a concept or an idea that could have lasting industry impact.

So in this, my Friday column, I figured I would highlight a few of the most interesting things I saw at this years CES.

Recon Instruments GPS Goggles
The first was a fascinating product made by a company called Recon Instruments and in partnership with a number of Ski/Snowboard goggle companies. What makes this unique and interesting is that the pair of goggles has Recon Instruments modular technology that feature a built-in LCD screen into goggles.

The Recon Instruments module is packed with features useful while on the slopes. Things like speed, location of friends, temperature, altitude, current GPS location, vertical stats on jumps and much more.

Think of this as your heads up display while skiing or snowboarding. The module can also connect wirelessly to your Android phone allowing you to see caller ID and audio / music controls.

Go Pro Hero 2 + WiFi Backpack
In the same sort of extreme sports technology category, I was interested in the newest Go Pro the Hero2 and Wi-fi backpack accessory. I wrote about the Go Pro HD back in December and mentioned it as one of my favorite pieces of technology at the moment. The Hero2 and wi-fi backpack makes it possible to use the Go Pro in conduction with a smart phone and companion app to see what you are recording or have recorded using your smart phone display. This is useful in so many ways but what makes it interesting is I believe it represents a trend where hardware companies develop companion software or apps that create a compelling extension of the hardware experience. I am excited to see more companies take this approach and use software and apps to extend the hardware they create.

In this case the companion app acts as an accessory to the Go Pro Hero2 hardware and provides a useful and compelling experience. Another compelling feature is that you can use your smart phone and the live link to the Go Pro Hero2 to stream live video of what you are recording to the web in real-time. This would make it possible for friends, family, and loved ones to see memories being created in real-time.

Dell XPS 13 UltraBook
Dell came out strong in the UltraBook category and created possibly the best notebook they have created in some time. The XPS 13 UltraBook’s coolest features are the near edge to edge Gorilla Glass display, which needs to be seen to be appreciated, and the unique carbon fiber bottom which keeps the underside cool.

The 13.3 inch display looks amazing with the Gorilla Glass and packed into an ultra slim bezel like that of an 11-inch display. It surprises me to say that if I was to use a notebook other than my Air, this would be the one.

Samsung 55-inch OLED TV
A sight to behold was the Samsung 55-inch OLED TV. I had a similar experience when I saw this TV as I did when I first saw a HDTV running HD content. The vivid picture quality and rich deep color are hard to put into words. Samsung is leading the charge in developing as near to edge-to-edge glass on TVs and this one is even closer. The bezel and edge virtually disappear into the background leaving just the amazing picture to enjoy.

We have been waiting for OLED displays to make it to market, for the sheer reality that in five years they may be affordable. OLED represents one of the most exciting display technologies in a while and it is important the industry embrace this technology so we can get OLED on all devices with a display as fast as possible.

Samsung didn’t mention any pricing yet but said it would be available toward the end of the year. It will most likely cost an arm and a leg.

Intel’s X86 Smart Phone Reference Design
Intel made a huge leap forward this CES by finally showing the world their latest 32nm “Medfield” SOC running on a smart phone reference design. I spent a few minutes with the design, which was running Android version 2.3, and I was impressed with how snappy it was including web page pinch and view, as well as graphics capabilities.

Battery life is still a concern of mine but Intel’s expertise in hyper-threading and core management could help this. The most amazing thing about the smart phone reference design is that it didn’t’ need a fan.

Motorola announced that they would bring Intel based smart phones to market in 2012. This is one of the things I am very excited about as It could mark a new era for Intel and the level of competition we will see in the upcoming ARM vx X86 is going to fun to watch and great for the industry and consumers.

Motorola Droid Razr Maxx
Last but not least the Motorola Razr Maxx has my vote for most interesting smart phone. It was a toss-up between the Razr Maxx and the Nokia Lumia 900. I simply choose the Razr Maxx due to the feature that I think made it most interesting. Which was the 3300 mAh (12.54 Whr) battery that Moto packed into the form factor of the Razr – it’s just slightly thicker than the Droid Razr. Motorola is claiming that the Razr Maxx can get up to 21 hours of talk time. I talked to several Motorola executives who had been using the phone while at the show and they remarked how with normal usage during the show they were able to go several days without charging. To contrast, every day while at CES my iPhone was dead by 3pm.

Image Credit - AnandTech

Making our mobile batteries last is of the utmost importance going forward. I applaud Motorola for their engineering work and creating a product that is sleek, powerful, and has superior battery life.

Going Nuclear to stop SOPA

I'm sure this violates someone's copyright

The online news site reddit said it will invoke the “nuclear option” on Jan. 18 – next Wednesday — against two pieces of federal legislation, the House’s Stop Online Piracy Act (SOPA) and its Senate cousin, the Protect Intellectual Property Act (PIPA).

For 12 hours on Wednesday, reddit’s normally busy “front page of the Internet” will blacked out and replaced by a live video feed of hearings by the House Committee on Oversight and Government Reform, which is debating proposed legislation to give the government the ability to shut down foreign websites that infringe copyrighted material, and to penalize domestic companies  that “facilitate” alleged infringement.

It remains unclear if Google, Amazon, Facebook, Twitter, Wikipedia, Craigslist, eBay, PayPal, Yahoo and other Internet titans will join in a simultaneous blackout to protest the legislation, although the trade association that represents them all says it is a possibility. “There have been some serious discussions about that,” Markham C. Erickson, Executive Director and General Counsel of The NetCoalition, told CNET’s Declan McCullagh. The Net Coalition is not involved with reddit’s action next week, a spokeswoman said.

A coordinated systemwide blackout, proponents say, would demonstrate to millions of Americans what could happen to any website that carries user-generated content, if SOPA or PIPA were enacted.

In current forms, the bills would require online service providers, Internet search engines, payment providers and Internet advertising services to police their customers and banish offenders. Companies that did not comply with the government’s order to prevent their customers from connecting with foreign rogue sites would be punished.

Let’s say a company like YouTube, which publishes an average of 48 hours of video every minute, fails to stop one of its 490 million monthly users from uploading a chunk of video that is copyrighted by a Hollywood studio. Let’s say further that one of Twitter’s 400 tweets per minute that link to YouTube videos contains a link to that copyrighted material. And maybe one of Facebook’s 800 million users reposts the link. YouTube says Facebook users watch 150 years worth of YouTube videos every day. And let’s say you hear about the video and enter a search for it on Google.

Under the proposed legislation, YouTube, Twitter, Facebook and Google are responsible for keeping their users within the law. SOPA grants those companies immunity from punishment if they shut down or block suspected wrongdoers. But if they don’t shut down or block the miscreants, they could be punished themselves.

Both the House and Senate bills are strongly backed by Old Media companies, and equally opposed by New Media companies, along with an astonishing confederation of civil libertarians, venture capitalists, entrepreneurs, journalists and academics.

Both sides cast the legislation as a battle of life and death for the future of the Internet.

Opponents contend that SOPA would shut down the free flow of information and prevent Americans from fully exercising their First Amendment rights. Venture capitalists say it will kill innovation in Silicon Valley by setting up impossible burdens for the social media companies that now drive the area’s economic engine. Some critics say SOPA will hand Big Business a “kill switch” on the Internet similar to the shutoff valves used by China, Egypt and other repressive countries to stifle dissent.

Supporters of the legislation, meanwhile, say new laws are needed to fight online trafficking on copyrighted materials and counterfeit goods. No one can deny that the Internet is awash in fake Viagra and bootlegged MP3 files. Lamar Smith, the Texas Republican who sponsored SOPA, says it will stop foreign online criminals from stealing and selling America’s intellectual property and keeping the profits for themselves. Unless copyright holders are given the new protections under SOPA, Mr. Smith argues, American innovation will stop, American jobs will be lost, and the American economy will continue to lose $100 billion a year to online pirates. And people will die, Mr. Smith says, if we fail to stop foreign villains from selling dangerous counterfeit drugs, fake automobile parts and tainted baby food.

“The criticism of this bill is completely hypothetical; none of it is based in reality,” Mr. Smith told Roll Call recently. “Not one of the critics was able to point to any language in the bill that would in any way harm the Internet. Their accusations are simply not supported by any facts.”

“It’s a vocal minority, Mr. Smith told Roll Call. “Because they’re strident doesn’t mean they’re either legitimate or large in number. One, they need to read the language. Show me the language. There’s nothing they can point to that does what they say it does do.”

Who are these clueless critics who don’t know anything about the Internet?

Vint Cerf, Steven Bellovin, Esther Dyson, Dan Kaminsky and dozens of other Internet innovators and engineers wrote an open letter that said: “If enacted, either of these bills will create an environment of tremendous fear and uncertainty for technological innovation, and seriously harm the credibility of the United States in its role as a steward of key Internet infrastructure.”

AOL, LinkedIn, Mozilla, Zynga and other Internet companies joined in an open letter to write, “We are very concerned that the bills as written would seriously undermine the effective mechanism Congress enacted in the Digital Millenium Copyright Act (DMCA) to provide a safe harbor for Internet companies that act in good faith to remove infringing content from their sites.”

Marc Andreessen, Craig Newmark, Jerry Yang, Reid Hoffman, Caterina Fake, Pierre Omidyar, Biz Stone, Jack Dorsey, Jimmy Wales and other Internet entrepreneurs contend that the bills would:

  •             “Require web services to monitor what users link to, or upload. This would have a chilling effect on innovation.
  •             “Deny website owners the right to due process or law.
  •             “Give the U.S. government the power to censor the web using techniques similar to those used by China, Malaysia and Iran; and
  •             “Undermine security online by changing the basic structure of the Internet.”

A couple of guys named Sergey Brin and Larry Page have been particularly vocal in opposing the legislation.

Well of course, Mr. Smith argues. “Companies like Google have made billions by working with and promoting foreign rogue websites, so they have a vested interest in preventing Congress from stopping rogue sites,” he said at a news conference last month. “Their opposition to this legislation is self-serving since they profit from doing business with rogue sites that steal and sell America’s intellectual property.”

I think everyone agrees that something must be done to combat rampant online piracy and the sale of bogus goods and services by foreign rogue websites. But Old Media is once asking for heavy-handed remedies that resist rather than adapt to technological change. It tried to outlaw videocassette recorders, and it tried to throw students and grandmothers into prison for downloading MP3 files, and now it wants kill-switches on the Internet. Perhaps reddit’s nuclear option will be the kind of heavy-handed rebuttal we need to prompt discussions about a smarter, mutually agreeable solution.

 

 

OnLive Brings Superfast Windows to the iPad

I just lost my last excuse for traveling with a laptop.

I usually find myself traveling with my MacBook Air because some tasks, such as writing this post at the Consumer Electronics Show, is just a bit more than I can manage on the iPad. But OnLive Desktop is about to change that–and could bring big changes to mobile computing for business.

OnLive Desktop screenshotOnLive is the company that did the seemingly impossible by creating a platform where high-performance games are run on its servers with just screen images transmitted to networked clients including computers, tablets, phones, and connected TVs. By running instances of Windows on a server instead of a game, OnLive has duplicated the trick for productivity software. It works a bit like Citrix’s server-based Windows, but with performance so good you think the software is running locally, and on a really fast machine at that. The key to the performance, says OnLive CEO Steve Perlman, is that it was “built against the discipline of instant-action gaming.”

The OnLive Desktop app will be available from the iTunes Store later today. A basic version, which includes Microsoft Word, PowerPoint, and Excel and 2 gigabytes of online storage, is free.

A $10 a month premium version, which will be of more interest to serious users when it becomes available, includes the full Office suite and 50 GB of storage. It also provides for persistent user preferences in Office, superfast server-based web browsing, and the ability of users to upload applications.

Adding your own applications would add dramatically to the usefulness of the services. However, Perlman was a bit vague on exactly how it would work, especially with applications such as Adobe Creative Suite, which have complicated licensing arrangements. Autodesk applications are likely to be available pre-installed on OnLive’s servers, since Autodesk is an investor in the company.

OnLive also plans to offer an enterprise version. This would allow companies to set up virtual Windows machines on OnLive servers using their own custom images, a service aimed at the heart of Citrix’s business.

When I first saw a demo of OnLive’s gaming service, I was deeply skeptical that it could work. Trying it when it first became available quickly made me a believer, and even though I have only seen the Desktop service in a demo, I have every reason to believe it will work as promised over any decent internet connection.

Actually using Office on an iPad is a bit clumsy for reasons that have more to do with Office than with either OnLine or the iPad. Office is notoriously unfriendly to touch, even when installed on a touchscreen PC or Windows slate.  When a keyboard is needed, the user has a choice between the Microsoft on-screen keyboard (the iPad keyboards lack keys that Windows needs for full functionality) or the standard office Text Input Panel, which can be used with any iPad-compatible pen. I think most users will be much happier with an external physical keyboard.

On the other hand, OnLive Desktop will let you display even the most complex PowerPoint slide show, including Flash video, without a hitch. (This works because the Flash is being executed on the server, with only the frames sent down to the notoriously Flash-less iPad.)

OnLive Desktop could really come into its own with Windows 8 and the expected, though as yet unannounced, touch friendly version of Office.

 

 

Samsung & LG Validate Microsoft’s Living Room Interaction Model

Microsoft launched Kinect back in November 2010 in a  move to change the man-to-machine interface between the consumer to their living room content.  While incredibly risky, the gamble paid off in the fastest selling consumer device, ever.  I saw the potential after analyzing the usage models and technology for a few months after Kinect launch and predicted that at least all DMA’s would have the capability.

The Kinect launch sent shock waves into the industry because the titans of the living room like Sony, Samsung, and Toshiba hadn’t even gotten close to duplicating or leading with voice and air-gesture techniques.  With Samsung and LG announcing future TVs with this capability at CES, Microsoft’s living room interaction strategy has officially been affirmed at CES and most importantly, the CE industry.

Samsung “Smart Interaction”sammy

Samsung launched what it called “Smart Interaction”, which  allows users to control and interact with their HDTVs.  Smart Interaction allows the user to control the TV with their voice, air-gestures, and passively with their face.  The voice and air gestures operate in a manner similar to Microsoft in that pre-defined gestures exist for different interactions. For instance, users can select an item by grabbing it, which signifies clicking an icon on a remote.  Facial recognition essentially “logs you in” to your profile like a PC would giving you your personal settings for TV and also gives you the virtual remote.

A Step Further Than Microsoft ?

Samsung has one-upped Microsoft on one indicator, at least publicly, with their application development model.  Samsung has broadly opened their APIs via an SDK which could pull in tens of thousands of developers.  If this gains traction, we could see a future challenge arise where platforms are fighting for the number of apps in the same way Apple initially trumped everyone in smartphones.  The initial iPhone lure was its design but also  the apps, the hundreds of thousands of apps that were developed.  It made Google Android look very weak initially until it caught up, still makes Blackberry and Windows Phone appear weaker, and can be argued it was the death blow to HP’s webOS. I believe that Microsoft is gearing up for a major “opening” of the Kinect ecosystem in the Windows 8 timeframe where Windows 8 Metro apps can be run inside the Kinect environment.

Challenges for Samsung and LG

Advanced HCI like voice and air-gesture control is a monumental undertaking and risk.  Changing anything that stands between a CE user and the content is risky in that if it’s not perfect, and I mean perfect, users will stop using it.  Look at version 1 of Apple’s Siri.  Everyone who bought the phone tried it and most stopped using it because it wasn’t reliable or consistent.  Microsoft Kinect has many, many contingencies to work well including standing in a specific “zone” to get the best air gestures to work correctly.  Voice control only works in certain modes, not all interactions.

The fallback Apple has is that users don’t have to use Siri, it’s an option and it can be very personal in that most use Siri when others aren’t looking or listening.  The Kinect fallback is a painful one, in that you wasted that cool looking $149 peripheral.  Similarly, Samsung  “Smart Interaction” users can fallback to the remote, and most will initially, until it’s perfected.

There are meaningful differences in consumer audiences of Siri, Kinect, and Samsung “Smart Interaction”.  I argue that Siri and Kinect users are “pathfinders” and “explorers” in that they enjoy the challenge of trying new things.  The traditional HDTV buyer doesn’t want any pathfinding or exploring; they want to watch content and if they’re feeling adventurous, they’ll go out on a limb and check sports scores.   This means that Samsung’s customers won’t appreciate anything that just doesn’t work and don’t admire the “good try” or a Siri beta product.

One often-overlooked challenge in this space is content, or the amount of content you can actually control with voice and air gestures.  Over the top services like Netflix and Hulu are fine if the app is resident in the TV, but what if you have a cable or satellite box which most of the living population have? What if you want to PVR something or want to play specific content that was saved on it?  This is solvable if the TV has a perfect channel guide for the STB and service provider with IR-blasting capabilities to talk to it.  That didn’t work out too well for Google TV V1, its end users or its partners.

This is the Future, Embrace It

The CE industry won’t get this right initially with a broad base of consumers but that won’t kill the interaction model. Hardware and software developers will keep improving until it finally does, and it truly becomes natural, consistent, and reliable. At some point in the very near future, most consumers will be able to control their HDTVs with their voice and air gestures.  Many won’t want to do this, particularly those who are tech-phobic or late adopters.

In terms of industry investment, the positive part is that other devices like phones, tablets, PCs and even washing machines leverage the same interactions and technologies so there is a lot of investment and shared risk.  The biggest question is, will one company other than Microsoft lead the future of living room?  Your move, Apple.

Catching up with Apple – This Years CES Theme

CES hasn’t even started, but after sitting through various pre-show press conferences and meetings, one thing is clear: Apple is casting a very long shadow on this show. And many of the products I have seen have been various implementations of something Apple has already brought to market.

This is especially true in two categories.

First is the iPad. Pretty much every tablet vendor here hopes they can develop a tablet that is at least competitive with Apple. Some are going for cheap and basic as differentiators, while others are trying to bring out models with a unique design, tied to Android, and still be cheaper than Apple.

The recent success of Amazon’s Kindle Fire has given them another target to go after, but even this is colored by Apple’s iPad and its strong success in the market. And when talking to all of these “clone” vendors, they don’t even pretend they are doing something new or unique. Rather, many point out that they hope to tag along on Apple’s success and tap into new users Apple may not get because of their higher prices. But make no mistake; all of these are iPad wannabees.

The second product they are all chasing is Apple’s MacBook Air. If you look at Intel’s Ultrabook program, you can see that this is a blatant attempt by the Windows crowd to ride Apple’s successful coattails in design and give their audience something that Apple has had on the market for their customers for five years. Now that is not necessarily a bad thing…it just amazes me that it has taken the WinTel world that long to even catch up with Apple.

But when talking to these vendors who are hopefully bullish about any of their offerings in either of these categories, I sense something else. While they know what Apple already has, the fact that they don’t know what Apple will have in the future really weighs heavily on them. Or in other words, they keep waiting for another shoe to drop.

While they rush to market versions 1 or 2 of their tablets, they know that Apple has the iPad 3 and iPad 4 just around the corner. And while they feel Apple’s prices for the iPads are too costly for most people today, they all fear that Apple could drop prices and seriously impact their chances for success. In fact, to many it is a foregone conclusion that Apple could drop as much as $100 out of their base entry model as soon as this year. And given Apple’s history of maximizing their supply chain as well as pre-purchasing components in huge quantities so as to get the best prices on parts, that is a real possibility.

The other thing I picked up is that many of the Ultrabook vendors are working on what are called hybrids. These are laptops where the screen pops off and turns into a tablet. The first generation of these “hybrids” sported Windows on the laptop and Android on the tablet and the two did not mix well. But the Windows world is counting on Microsoft’s Windows 8 to be the magic bullet that lets Windows 8 with its Metro UI work on the laptop and the tablet and provide a unified experience. And some of the models I have seen are quite innovative.

But, this depends on Windows 8, which means that none of these can get to market until at least mid Oct. And some of the vendors have a sinking feeling that Apple is working on a hybrid as well and that they could beat them to market. And what’s worse for them is that if Apple does theirs as elegant and innovatively as they normally do, some vendors I spoke with feel that they would be immediately behind even though on paper they seem to be way ahead of Apple with their hybrids.

You can even see copied elements of Apple TV in the new Google TV being shown. In fact, all of the smart TV vendors know full well that Jobs told his biographer that he “nailed” smart TV, so these vendors also know that no matter what they offer now, once Apple finally releases a TV solution, they will have to go back to their labs and make big changes just to stay competitive.

One of Apple’s core strategies is to keep ahead of the competition by at least two years. And their competitors have finally realized this truth.

That is why no matter how happy they are about their new offerings at CES this year, they are looking over their shoulders because they know with 100% certainty that Apple could do something significant at any time and send them all back to the drawing board to play catch up.

The ARM Wrestle Match

I have an un-healthy fascination with semiconductors. I am not an engineer nor I do know much about quantum physics but I still love semiconductors. Perhaps because I started my career drawing chip diagrams at Cypress Semiconductor.

I genuinely enjoy digging into architecture differences and exploring how different semiconductor companies look to innovate and tackle our computing problems of the future.

This is probably why I am so deeply interested in the coming processor architecture war between X86 and ARM. For the time being, however, there is a current battle within several ARM vendors that I find interesting.

Qualcomm and Nvidia, at this point in time, have two of the leading solutions for most of the cutting edge smart phones and tablets inside non-Apple products.

Both companies are keeping a healthy pace of innovation looking to bring next generation computing processors to the mass market.

What is interesting to me is how both these companies are looking to bring maximum performance to their designs without sacrificing low-power efficiency with two completely different approaches.

One problem in particular I want to explore is how each chipset tackles tasks that require both computationally complex functions (like playing a game or transcoding a video) and ones that require less complex functions (like using Twitter or Facebook). Performing computationally complex functions generally require a great deal of processing power and result in draining battery life quickly.

Not all computing tasks are computationally complex however. Therefore the chipset that will win is one that has a great deal of performance but also can utilize that performance with very low power draw. Both Nvidia and Qualcomm license the ARM architecture which for the time being is the high performance-low power leader.

Nvidia’s Tegra 3
With their next chipset, Tegra 3, Nvidia is going to be the first to market with a quad-core chipset. Tegra 3 actually has five cores but the primary four cores will be used for computationally complex functions while the fifth core will be used to handle tasks that do not require a tremendous amount of processing power.

The terminology for this solution is called Variable SMP (symmetric multiprocessing). What makes this solution interesting is that it provides a strategic and task based approach to utilizing all four cores. For example when playing a multi-media rich game or other multi-media apps all four cores can be utilized as needed. Yet when doing a task like loading a media rich web page two cores may be sufficient rather than all four. Tegra 3 can manage the cores usage, based on the task and amount of computer power needed, to deliver the appropriate amount of performance for the task at hand.

Tegra 3’s four cores are throttled at 1.4Ghz in “single core mode” and 1.3Ghz when more than one core is active. The fifth core’s frequency is .5Ghz and is used for things like background tasks , active standby, and playing video or music, all things that do not require much performance. This fifth core because it is only running at .5Ghz requires very little power to function and will cover many of the “normal” usage tasks of many consumers.

The strategic managing of cores is what makes Tegra 3 interesting. This is important because the cores that run at 1.4 Ghz can all turn off completely when not needed. Therefore Tegra 3 will deliver performance when you need it but save the four cores only for computationally complex tasks which will in essence save battery life. Nvidia’s approach is clever and basically gives you both a low power single-core, and quad-core performance computer at the same time.

Qualcomm’s S40 Chipset
Qualcomm, with their SnapDragon chipset, takes a different approach with how they tackle the high performance yet low power goal. There are two parts of Qualcomm’s S40 Snapdragon chipsets that interest me.

The first is that the S40 chipset from Qualcomm will be the first out the door on the latest ARM process the Cortex A15. There are many advantages to this new architecture, namely that it takes place on the new 28nm process technology that provides inherent advantages in frequency scaling, power consumption and chipset size reduction.

The second is that Qualcomm uses a proprietary process in their chipsets called asynchronous symmetric multiprocessing or aSMP. The advantage to aSMP is that the frequency of the core can support a range of performance rather than be static at just one frequency. In the case of the S40 each core has a range of 1.5Ghz to 2.5Ghz and can scale up and down the frequency latter based on the task at hand.

Qualcomm’s intelligent approach to frequency scaling that is built into each core allows the core to operate at different frequencies giving a wide range of performance and power efficiency. For tasks that do not require much performance like opening a document or playing a simple video, the core will run at the minimum performance level thus being power efficient. While when running a task like playing a game, the core can run at a higher frequency delivering maximum performance.

This approach of intelligently managing each core and scaling core frequency depending on tasks and independent of other processes is an innovative approach to simultaneously delivering performance while consuming less power.

I choose to highlight Nvidia and Qualcomm in this analysis not to suggest that other silicon vendors are not doing interesting things as well. Quite the contrary actually as TI, Apple, Marvel, Broadcom, Samsung and others certainly are innovating as well. I choose Qualcomm and Nvidia simply because I am hearing that they are getting the majority of vendor design wins.

The Role of Software in Battery Management
Although the processor play’s a key role in managing overall power and performance of a piece of hardware, the software also plays a critical role.

Software, like the processor, needs to be tuned and optimized for maximum efficiency. If software is not optimized as well it can lead to significant power drains and result in less than stellar battery life.

This is the opportunity and the challenge staring everyone who makes mobile devices in the face. Making key decisions on using the right silicon along with effectively optimizing the software both in terms of the OS and the apps is central going forward.

I am hoping that when it comes to software both Google and Microsoft are diligently working on making their next generation operating systems intelligent enough to take advantage of the ARM multi-core innovations from companies like Qualcomm and Nvidia.

These new ARM chipset designs combined with software that can intelligently take advantage of them is a key element to solving our problem with battery life. For too long we consumers have had an un-healthy addiction to power chords. I hope this changes in the years to come.

Why PayPal Is a Bigger Challenge Than Yahoo

 

A month ago The Wall Street Journal had a big story headlined “War Over the Digital Wallet.” “The subhead: “Google, Verizon Wireless Spar in Race to Build Mobile Payment Services.”

Article mentioned AT&T, T-Mobile, MasterCard, Visa, Citigroup, Sprint, and Apple, among others. The word “PayPal” was never mentioned, which is curious because eBay’s PayPal division is by far the global leader in electronic payments.

But not all of the media were ignoring PayPal. TechCrunch the next day carried a story that began, “Hey PayPal, do you realize people no longer trust you?” It continued: “The public’s perception is that there’s a risk in keeping money with PayPal. If something doesn’t change, startups, causes, and merchants will start processing donations and payments elsewhere.”

Something changed. PayPal’s president, Scott Thompson, quit to take over the CEO job at Yahoo!, a media company. When top executives quit, it’s usually because they want a shot at running a bigger or more interesting company. Yahoo is interesting, in the same way that train wrecks are interesting. He will be the fourth CEO of Yahoo in the past five years, not counting those who held the job on an interim basis. None of the previous CEOs, including Carol Bartz, who was fired unceremoniously in September, were able to reverse Yahoo’s seemingly inexorable slide into oblivion.

It’s hard not to chuckle at the highly respected Thompson’s statement that he was leaving PayPal to seek new challenges. “I like doing complicated, very difficult, very challenging things,” he told Reuters. There are challenges galore right under his nose at PayPal’s headquarters in San Jose.

Being ignored completely by the nation’s leading business newspaper in a major story about digital payments, when you are by far the market leader, suggests a nontrivial problem of public perception.

When a major tech blog (itself criticized recently for potential conflicts on interests) scolds that “people no longer trust you,” that stings. Do people really think that AT&T and Google are more trustworthy than PayPal to handle their electronic banking? When I look at my monthly AT&T wireless statement and ponder AT&T’s craven and almost enthusiastic cooperation with the government’s warrantless eavesdropping on American citizens, I can’t imagine ever trusting my digital wallet to a phone company.

PayPal grew impressively under Thompson’s watch at PayPal, doubling its user base to more than 100 million. PayPal in the third quarter of 2011 processed $29 billion in payments. It operates in 190 countries and 24 currencies and has 15,000 bank partners. Revenue was expected to top $4 billion in 2011, and margins were solid at close to 20 percent. PayPal has grown to the point that it now accounts for more than a third of eBay’s operating profits; I would not be surprised to see the tail wagging the dog before too long. John Donahoe, eBay’s CEO, said last year that he expected PayPal to be bigger than eBay two years from now.

Thompson, who is quite savvy about technology and commerce (“e” and otherwise), is credited with the idea to push PayPal out of the cloud and into retail stores. But Google beat him to it, in part by poaching a couple of Thompson’s top lieutenants. (PayPal’s parent, eBay, is suing Google, alleging that PayPal and Google spent two years developing a partnership, then hired PayPal’s point man, who departed with a laptop full of trade secrets; Google denies the charges.) Google then launched its own “Google Wallet” application, beating PayPal to the punch. PayPal still hasn’t articulated its “wallet” strategy.

PayPal’s push into brick-and-mortar retail stores does not appear to be going well. On a visit to PayPal headquarters a few months ago I tried to buy a cup of coffee from the café that operates in its lobby. Sorry, cash or credit cards only. PayPal was not accepted in PayPal’s own headquarters.

Ouch.

Naturally, everyone wonders what Thompson will be able to do in the Augean stables of Yahoo. It is astonishingly hard to revive a declining Internet company, and the task is made more challenging because Yahoo is a media and advertising company very different from PayPal. Both companies recognize, however, that the future belongs to the company that can harvest and sift and parse data, and that’s an area where Thompson has strong chops.

PayPal’s Donohoe said he was shocked by Thompson’s sudden departure; Thomson resigned Tuesday and starts his new job at Yahoo on Monday. Donohoe himself will act as PayPal’s interim president, and promised a “seamless transition.” The person who eventually takes the big chair at PayPal has huge challenges ahead, starting with getting PayPal accepted in its own building.

Mamas (and Dads), Help Your Babies Grow Up To Be Coders

My kids were lucky. They were born at about the same time as the Apple ][ and they grew up during the all-too-brief period when learning to program a computer was considered part of a normal elementary school education. That window only lasted from around 1980 to the early 90s, when the complexities of graphical user interfaces began to kill amateur programming.

It’s time to bring back coding as part of kids’ education. Not because it is important to know how to program a computer to use one anymore than understanding of how engines work is important to driving a car. The virtue of learning programming is that it develops some very useful good habits, especially clear, precise, and careful thinking.

Unlike so much else in life and education, there’s no such thing as a good-enough piece of code. It either runs or it doesn’t and it either produces a correct result or not. But coding does provide instant gratification for doing the job right. Coding problems are inherently fair and objective, giving them all the characteristics of great pedagogical tools.

I don’t have any illusions about programming returning to elementary school curricula any time soon. There’s too much competition for classroom time, and way too few qualified teachers. There’s no one lobbying for it, and no studies showing that learning programming improves scores on standardized tests (though I wouldn’t be surprised if it did.)

Fortunately, excellent free tools exist that will let kids learn programming at home. For younger children, Kodu, a project of Microsoft Research, offers a graphical, drag-and-drop approach.  Kids can use it to design simples games while learning priciples of programming.

Kodu screen shot
A Kodu programming screen
Codeacademy screenshot
Interactive instruction at Codeacademy

Lots of folks in the tech world (venture capitalist Fred Wilson, for example) responded to a campaign by Codeacademy.com by offering new year’s resolutions to revive or improve their coding skills. But I think it is even more important for kids. Codeacademy offers interactive lessons in convenient small bytes designed to teach the basics of programming JavaScript.

(One note of learning programming: The choice of a language is largely irrelevant. The principles of programming are the same regardless of language, and the mainstream languages used today all derive their syntax from C++ and in most ways are more alike than different.)

For a deeper dive into coding, the estimable Khan Academy’s computer science section  provides more formal training in coding techniques. There’s more of a do-it-yourself element to the Khan approach: To actually work the examples and do problem sets, you’ll have to set up a Python development on your computer. Fortunately, that’s about a five-minute job.

I learned coding in completely haphazard fashion back in the mainframe era. In those days, the only way to do anything with a computer was to program it yourself and the data processing I needed to do for an undergraduate research project forced me to learn Fortran—and debug code by reading a printout of a core dump. In truth, I never became more than a marginally adequate programmer, but I believe the experience made me a better, more analytical thinker.

My kids made better use of their opportunities. One is now a mathematician working at the boundary of math, computer science, and operations research. The other is a down-to-the-silicon operating system developer for IBM Research. The might have gotten their without their expeience as young boys banging away at an Apple ][ (and later, in high school, a MicroVAX), but I think those formative experiences were critical.

So take the resolution yourself and make this the years your kids (and please, don’t forget the girls) learn to code. Some day, they’ll thank you.