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Why Nokia is Interesting

What if I was to tell you that the global handset war of the future will be between Apple and Nokia? On a global scale this may very well be the case as I am convinced now that, from a global perspective, Apple and Nokia think very similarly.

This of course does not mean that other handset OEM’s will not be competitive in these areas. However, from a brand and global handset strategy perspective, Apple and Nokia seem poised to compete head to head.

Nokia has never fully exited the realm of relevance. I follow the WW market for phones and am quite interested in what are the big picture global handset consumer trends. Because of that, Nokia and even RIM for that matter, still come up in conversations. However, I believe Nokia has a brighter future than RIM.

Nokia has maintained its relevance both in the terms of product offerings and brand very well on a global scale. Those of us who live, watch, and study the US market primarily, often forget that the world is bigger than the US. Nokia has a weak to non-existent brand in the US so it’s easy to count them out–although we shouldn’t.

There are a few key reasons why I think Nokia is interesting and I will be keeping a watchful eye on them as a global handset competitor. The first is their ability to manufacture handsets in massive quantities.

Nokia currently manufactures 1 million phones every day. Now, those are not all smart phones and mostly feature phones. However, what is key is Nokia’s ability to handle scale. This is one of the key things any global player will need to be able to manage and execute to meet the global handset demands of the future. Nokia can manufacture massive quantities of a single phone design and that is not easy to do.

Nokia has an extremely efficient process for designing and manufacturing handsets and this is one of the key reasons I think they are interesting and, other than Apple, can meet capacity of the future demands.

Again this is not to say other brands like HTC, Samsung, Moto and others will not be successful, only that they will ship more products in lower volume rather than massive volume of only a few designs.

The other element I think Nokia brings to the table is their roots in design innovation. Nokia has certainly had their share of design flops but generally speaking, they are at least creative and out-of-the-box when it comes to design.

The design of hardware is one of the central things factoring into the buying process of consumers. The ability to design an object of desire is very difficult and even companies who do it well don’t necessarily hit home runs each time. Nokia has a history of innovative design and because of that going forward I find them interesting.

On a slightly lesser scale than the last two points, Nokia is also interesting because of their partnership with Microsoft. This, I feel, was a wise choice of an OS partner but it will still bring challenges.

I am very optimistic about Windows Phone and in particular Nokia as a partner in this area for Microsoft. Nokia has a strong brand in many parts of the region and with the release of two Windows phones, the Lumia 800 and the Lumia 710, they have taken their first step to become relevant in the smart phone segment.

Although I am optimistic and will follow Nokia with a keen eye from here on out, there are still many questions that need to be answered.

The first is how they will differentiate,beyond hardware design, on top of the Windows Phone platform. I’ve said this before and I’ll say it again- selling a standard OS only leads to the “sea of sameness” and overcoming that sea of sameness will be key for Nokia. I believe their penchant for design is a good start. They are also bringing core apps with maps, music and sports to Windows Phone and that is a good start.

Second question is how successful will Nokia’s North America brand push be? Although here at Nokia World, Nokia did not release any specific data but they officially stated their commitment to the US market with a portfolio of products in the first half of 2012.

I believe there is still market share to be had with smart phones in the US and I feel RIM in particular is vulnerable there as well. In regard to Nokia in the US, if their efforts are successful,I believe it will affect Android devices more than the iPhone. So although Nokia is late to enter the US market, I hope they enter the US market strategically and relevantly and with a serious marketing budget as well. We will have to wait for further news before analyzing their North America efforts.

Overall, my take away from Nokia world is that Nokia is perhaps still highly relevant. In emerging markets they are designing devices with features consumers want, like dual SIMs, at price points they can afford. Their commitment to Windows Phone gives them a solid first step in smart phones and now executing in these areas above will be key.

What It Will Take for Apple to Crack TV

Steve Jobs posthumously set off a new round of speculation about that perennial object of desire, the Apple television, by telling biographer Walter Isaacson: “I’d like to create an integrated television set that is completely easy to use. It would be seamlessly synced with all of your devices and with iCloud. No longer would users have to fiddle with complex remotes for DVD players and cable channels. It will have the simplest user interface you could imagine. I finally cracked it.”

There’s no question that TVs and their rapidly multiplying set top boxes need a vastly simplified user interface and good reason to believe that Apple might be the company to deliver it. The problem is that if the UI were really the problem, it probably would have been solved by now. The real, and much, much harder problem is cracking the business models that control how TV content is delivered.

The failure, at least so far, of Google TV illustrates the challenge. Google set out to solve the two problems that have plagued efforts to fix television. First, you must find a way to bring together the horribly fragmented offerings of TV and movie content on the web. There’s a lot of content out there, from Hulu to Netflix to Amazon.com to iTunes to networks’ own sites. But no one site or service offers all the content a viewer might want, so a good user experience requires pulling many sources together. Second, live TV is still important for many things, especially sports, and is likely to continue to be so for a long time to come. So you need a way to integrate a live, and for practical purposes, that means a cable, feed.

Google tried to solve the first problem with the best tool it has, using search to discover web video and to try to bring it together into a common interface. Building great UIs isn’t Google’s strength, but its real problem was that content owners sabotaged the effort from the beginning. The content owners, from Hollywood studios to networks to sports leagues, live in an immensely profitable symbiosis with cable distributors. The owners and distributors have become reconciled to the idea of seeing the content on computers, tablets, and handsets, but will do everything in their power to keep it off TVs other than through their own fragmented, paid services, such as Hulu+. So they blocked Google TV’s access to these services.

The problem of integrating a live cable feed is even uglier. Google tried to solve the problem by the ugly kludge of have the Google TV box control the cable set top box, which most of the time has to be done by emulating an infrared remote control. A slightly better, but much more complex and expensive solution is to turn a third-party box into a cable STB by using CableCARDs and Tru2way software. There is every indication that the cable operators will drag their feet on allowing third parties to integrate live feeds for as long as possible.

Jobs’s cryptic remark to Isaacson gives us no clue about whether he solved these problems, but it seems unlikely. No matter how brilliant Apple is, these issues cannot be resolved unilaterally; the content owners have to be aboard. And Hollywood is, if anything, more suspicious and afraid of Apple than it is of Google.

Boosters of the Apple television idea argue that Apple went up against both the music industry and the wireless carriers and revolutionized their businesses. In the case of music, Apple went after an industry whose business model was being destroyed by massive file sharing and which, in the end, had little to lose by trying things Apple’s way.

The iPhone-carrier story is more complex. It is easy to forget that Apple initially tried to revolutionize the business by selling the original iPhone without a carrier subsidy and had to back down in the face of carrier resistance. It’s true that Apple has beaten the carriers on issues such as handset branding, but it has not changed their fundamental business model and no longer seems much interested in trying to.

The studio-sports league-cable complex promises to be a more formidable opponent than either music companies or carriers. For now, at least they have the high cards. Maybe some day Apple (or Microsoft, or Google) will look like a more attractive partner to content owners than the cable companies are. But that day seems several years away at the earliest. And until it does, TV will be a very hard nut for Apple or anyone else to crack.

Why Google and Microsoft Hate Siri

As I watched Andy Rubin’s interview at the WSJ D Asia conference I became highly intrigued by the comments he made about Apple’s Siri. Rubin told Walt Mossberg “ I don’t believe your phone should be an assistant…Your phone is a tool for communicating,” he said, “You shouldn’t be communicating with the phone; you should be communicating with somebody on the other side of the phone.” (

Here is a link to the interview if you haven’t seen it.

And then Microsoft’s Andy Lees, when questioned about Siri said it “isn’t super useful.” At the same time, he noted that Windows Phone 7 has a degree of voice interactivity in the way it connects to Bing, and thus harnesses “the full power of the internet, rather than a certain subset.”

What are these two guys smoking? They both seem to miss the fact that Apple has just introduced voice as a major user interface and that its use of voice coupled with AI on a consumer product like the iPhone is going to change the way consumers think about man-machine interfaces in the future. I wrote about its impact on future UI’s last week and believe that it is just the start of something big.

I have two theories about their response. One is based on jealously and one that is future driven, based on what Siri really will become very soon and its ultimate threat to their businesses. The first has to do with the fact that both companies have had major voice UI technology in the works in their labs for a long time. In the case of Microsoft I was first shown some of their voice research back in 1992. In Google’s case people in the know have told me that they have had a similar project in development for over 7 years. And in both cases they are way–way behind Apple–especially in Siri’s AI capabilities and speech comprehension technology.

Interestingly, for even Apple it has taken a long time to get their voice technology working correctly. In fact, in the early 1990’s, I spent some time with Kaifu Li when he was at Apple working on a speech and voice recognition technology called Plain Talk. At the time, he was considered one of the major minds on this subject and when, after a short stint at Silicon Graphics, he joined Microsoft, one of his key projects was working on speech technology for them. Of course, if you know about Kaifu Li, you know that he left Microsoft to go to Google and was the subject of a major lawsuit between Microsoft and Google because Microsoft thought he would disclose to Google too much of what Microsoft was doing when he joined Google.

Microsoft and Google, especially since they had the mind of Kaifu Li working on various projects while he was at these companies, cannot be too pleased that Apple was the one to actually harness voice and speech comprehension ahead of them since both have been working on similar technologies for quite some time. You can bet that if they were the one’s announcing a breakthrough voice technology they would be touting it as loud as possible. Instead they are downplaying it and to be honest, making real fools of themselves and their companies in the process.

But the real reason these two companies hate Siri is because of what it will become in the very near future. In case you haven’t noticed it yet, Siri’s voice technology is actually a front to some major databases, such as Yelp, Wolfram Alpha and Siri’s own very broad database. But what it is really doing is serving as the entry point for searching these databases. So, I can ask Siri to find me the closest pizza joint and it quickly links me to Yelp, then to Google maps. On the surface this might look good for Google and Yelp since it ties them to these third-party sites that get the advertising revenue from this search. But what if Apple owned their own restaurant recommendation service and mapping system? They could divert all of these ad revenues to themselves. Here is an obvious prediction then if that is the case. How long do you think it is before Apple buys Yelp or Open Table and MapQuest or a similar available mapping service?

How about searching for autos? Ask Siri where the closest BMW dealers are. It comes back and shows you the three or four BMW dealers within a 25 mile radius on a Google Map. But what if it could also tie you to Edmund’s database and instantly give you ratings of their cars, and dealers running specials? Or perhaps you are looking for an apartment in Hoboken? Ask Siri about available apartments in Hoboken and someday it could perhaps link you to Apartment Finder and while they might not need to own this database, Apartment finder would be Siri’s preferred first site to “search” for apartments and Apple would get a share in ad revenue from these searches.

Indeed, it is pretty clear to me that Apple has just scratched the surface of the role Siri will play for them in driving future revenue. At the moment, we are enamored with its ability to enhance the man-machine interface. But that is just the start. Siri is actually on track to become the first point of entrance to “search” engines of all types tied to major databases throughout the world. And it will become the gatekeeper to all types of searches and in the end control what search engine it goes to for its answers.

For this to work for Apple, they need to start acquiring or at least developing tighter revenue related partnerships with existing databases for all types of products and services. And then make Google or Bing the search engine of last resort for Siri to use if can’t find it in its own or its partner’s databases at Apple’s disposal. Oh yeah, and tie all of these searches to their own ad engine and drive as much of Siri’s “search” to one’s they have a revenue share deal with or own.

Yes, Siri is an important product for enhancing our user interface with the iPhone. But Siri is in its infancy. When it grows up, it will be the front end to all types of searches conducted on iPhones, iPads, Mac’s and even Apple TV. And, if I were Google or Microsoft, perhaps I too would be playing down the impact of Siri since they know full well that it is not just a threat to their product platforms, but to their core businesses of search as well. In fact, they should be quaking in their boots since Apple is taking aim at their cash cow search businesses with their technology and could very well impact their fortunes dramatically in the future.

For Apple’s investors, the call for them to start paying dividends on their cash hoard is too short-sighted. Instead, they should be encouraging Apple to start buying up as many databases and services they can and begin the process of entrenching Siri’s role as the first line of offense when searching for a product and service and get the search ad revenue from this for themselves. I believe that if they do this, they could probably add another $3-$5 billion in quarterly revenue to their already healthy business model within three years, as search becomes another profit center for Apple.

So, don’t think of Siri as just a voice UI. Rather, think of it as the gatekeeper to natural language searching of diverse databases and search engines that Apple will link to an ad model that I believe will eventually make Apple the third major search company in the world someday.

Dear Industry: We Owe Steve Jobs a Standing Ovation

Last night we learned of the passing of Steve Jobs, one of the most visionary and innovative leaders this industry has ever and perhaps will ever see. Because of all that Steve Jobs has meant to this industry we thought it appropriate to have our second installment in the Dear Industry series take a quick look at how much this industry owes to this master innovator.

It would be hard to imagine what this industry would have looked like had Steve Jobs and Steve Wozniak never dreamed up their vision for personal computing.

Steve was the only tech executive who had an eye for design and understood technology then married them together to create some of the most iconic products we have today.

Steve Jobs understood that innovation isn’t always about pure invention. Whether or not he invented a particular technology or took what existed and made it better, more useful and more valuable, he was constantly innovating.

He was the ultimate super user or super consumer. He had an un-matched discerning sense of what people wanted with technology before they knew they wanted it. I call this the forward thinking experience and Steve Jobs was an expert at it.

With his vision and leadership Apple never reacted to the trends they always set them.

He was the chief visionary, not just of Apple but of the entire technology industry. His products have challenged and inspired others to be better. He put massive pressure on any and all competitors and challenged them to raise the bar.

He helped create this industry and as a result created value with nearly everything he touched. His innovations made new industries, companies, jobs and more possible.

A great many people employed in the technology industry owe their careers to Steve Jobs.

If we had a technology hall of fame he would be a first ballot inductee and he would of course receive a well deserved standing ovation from the entire technology industry.

jonathanmak — Image Credit: Jonathan Mak

Siri Could Be Reason Enough to Buy the iPhone 4S

Folks who found Apple’s iPhone announcement disappointing, and there were plenty of them, weren’t really paying attention. My colleagues Tim Bajarin and Ben Bajarin have outlined the reasons consumers should be excited about the new phone, despite the fact that it looks identical to its predecessor. I’m going to focus on just one of them, the Siri personal assistant.

It’s a huge mistake to regard Siri as a speech recognition component. Speech recognition has become highly developed, but by itself, it doesn’t do very much. Anyone who has used voice control on an Android phone knows it is very good at letting you dictate messages, but not much else.

Siri cracks a much tougher nut. For it to work, the software, which runs partly on the iPhone 4s and partly on Apple’s servers, must understand not just your words but your meaning. If you ask “should I wear a raincoat today?” and Siri responds with a weather forecast, were are looking at very significant advance in machine intelligence.

At this point, a couple of very important caveats are in order. Siri looked spectacular in Apple marketing chief Phil Schiller’s demo. But it was a demo, and the people who create demos carefully limit their choices to commands and functions that they are confident will work. Apple didn’t give attendees at the announcement any hands-on time with the phone. So until users have a chance to try out Siri in the wild, we’ll have to reserve judgment on how good it really is. In a move that seems more Googley than Apple-like, Siri is being released with the iPhone 4 on Oct. 14, but it is officially designated as a beta product, perhaps in and effort to temper expectations.

A second question is just how good it has to be for people to find it useful. If it doesn’t truly make the iPhone easier to use, people will abandon it quickly. But if it works anywhere near as well as it did in the demo, I suspect it will revolutionized the way we interact with devices.

While science fiction computers has been able to carry on intelligent conversations for decades, it has taken real world computers about that long just to learn to recognize words reliably. Speech recognition, which companies such as IBM and AT&T began working on seriously in the 1960s, was based primarily on signal processing and statistical analysis. Natural language understanding seemed hopelessly beyond reach, whether the input was spoken or typed.

Siri was developed by a company of the same name that was acquired by Apple. The original research was funded by the Defense Advanced Projects Research Agency, but Apple may have thrown more engineering and computer science muscle into the project than even the Pentagon can afford these days. But it also had to wait foir a dramatic increase in the processing power of mobile devices—one reason that Siri will not be available with iOS 5 on older phones–and more seamless communications that allow the work to be split between the phone and the server.

As smart as smartphones have become, simple tasks can require annoyingly many steps. Setting up a meeting requires checking a calendar for the proposed time, finding attendees in a contact list, and sending out invitations. If all that can be replaced by pushing a button and saying, “Set up a meeting with Tim Cook for 10 am on Friday,” ease of use will have taken a great leap forward.

One secret to any successful attempt at natural language understanding is restricting the range of commands, known as the domain, that it must make sense of. If you tell Siri, “Write Mr. Smith a script for simvastatin,” your iPhone will probably stare at you blankly (unless, of course, someone uses the Siri application programming interface to create a prescription-writing program.) The range of things you can reasonably ask a smartphone to do is still pretty limited.

The critical question is how much of that repertoire of requests Siri will handle well. If it is a reasonable fraction, Siri alone will provide ample reason for the iPhone 4’s success.

Five Reasons to Upgrade to the iPhone 4S

While design enthusiasts may have wanted a smaller, lighter and even thinner iPhone, the fact remains that the current iPhone 4 design is about as thin as you can get a smart phone and still pack it with all of the additional new features that will make it the most powerful and best-selling smart phone on the market.

What disappointed people may have in the fact that it is identical in design to the last model, is made up by the high-powered A5 chip that delivers 50% more processing power, and a new dual core graphics chip that is 7X faster than the one in iPhone 4. It has a the new signal processor that makes it possible to deliver Siri’s voice command driven personal assistant, the new 8 megapixel camera with enhanced image sensor, the new video processor that delivers stunning video and the dual antenna system that makes calls and wireless sensitivity better than ever.

From an engineering standpoint, this is the most powerful iPhone Apple has ever made and should help them deliver their first 25-27+ million iPhone quarter this holiday season. With the 3GS being free with contract, this phone could finally attract the laggards who hesitated buying an iPhone because of cost. And the iPhone 4 starting at $99, with its dual cameras and capability to do Facetime, will also be in high demand. However, there are millions of users with 3GS contracts that are out of subscription hell and will gladly make the jump to this new phone in huge numbers. And many iPhone 4 users are close to being out of their contract and many of these folks will also upgrade as soon as they can.

From a consumer standpoint, there are five major reasons why a person should upgrade.

The first is the new 8-megapixel camera sensor at 3264 X 2448 which is 60% more pixels than in iPhone 4 that Apple has in the iPhone 4. This includes a new powerful image sensor and will become the gold standard for digital cameras in smart phones. The images are just stunning. They are 30% sharper.

The second reason is the new video sensor that delivers the best video recording on a smart phone available. The demo they showed of a video taken and actually edited on the iPhone 4 S has to be seen to be believed. It now shoots at 1080P. A user would likely now be more than happy to just use their smart phone to take all of their pictures and videos as the quality of this is beyond what most point and shoot cameras deliver.

The third reason to upgrade is for the SIRI voice assistant. This introduces a whole new way to interact with your iPhone. You can ask it things like, what is today’s weather and get an exact answer instantly via voice. Or you can say, set my alarm for 6:00 AM and it does that automatically for you. Or you can ask, what time is it in Paris, France and it reads out that time to you on demand. It can answer hundreds of questions and enact immediate commands to the phone as part of its design.

What’s more if you are driving and hear a message alert, you can just ask it to read the message to you. Or you can just speak it your message and who to send it to and it does that as well. It can also do dictation in messages, email, and in any app that uses a keyboard. Most importantly SIRI and its voice system only works on an iPhone 4S because of its use of this special signal processor that Apple has on this new iPhone.

And the fourth reason is because of the new antennas. Apple has employed a breakthrough in the way antennas work by making them handle incoming and outgoing calls and data signals differently. This enhances quality of service and it goes a long way to delivering a better voice and data experience. Along with their CPU boost and speed gains from the Antenna that let the iPhone 4S operate at 4G speeds even though it is still a 3G phone, should get it a lot of street cred with users.

And the fifth reason to upgrade is because it is a world phone. That means it can handle CDMA and GSM and can switch between networks when traveling in every country around the world. This is great for anyone that has to travel the world for work or pleasure.

Another hot feature for all IOS users will be the new iMessage system that provides free messaging to any IOS device, which now includes all iPod Touches with the new IOS 5 software.

Of course, iCloud and its amazing synchronization engine will be a godsend to those who want to keep all of their music, video and docs always in sync and up-to-date. In fact, I consider iCloud a most important Apple product and one that will actually help define what the cloud is for consumers and force all competitors to follow suit.

Lastly of course, iOS 5 with 200 new features, will deliver much more power and capabilities to all iPhone and iPod Touch users and make them even more indispensable than before.

iOS 5 and iCloud will both be release on Oct 12th.

The new iPhone 4S will ship on Oct 14th.
The 16 gig is $199. The 32 Gig is $299 and a new 64 Gig is available for $399 with contract.

In the US the iPhone 4S will be available on AT&T, Verizon and Sprint. By the end of the year worldwide it will be available in over 70 countries.

10 Days with Windows 8 Developer Tablet- the “Plusses”

It has been ten days since I attended Microsoft’s BUILD developer forum where I listened to many of the public details on Windows 8. The most valuable time I spent was that with customers, developers, press and analysts to share thoughts about what we all just heard about Window’s future. I also picked up a Samsung tablet with Microsoft Windows 8 Developer Preview on it. I have found that after actually using a product, I can learn 10x more than from any slide deck. I’d like to share my first impressions after using Windows 8 Developer Preview for 10 days, and I will start with the positive aspects. In my next blog, I will discuss the less appealing aspects or areas where it’s just too early to call.

State of Windows 8

Windows 8 is currently in the stage called “developer preview”. How does this relate to alpha or beta stage? Consider it pre-beta, in that it is almost feature-complete. So my thoughts will be in the context that this is a developer preview, not beta, and certainly not a shipping product.

Start Time

Starting the Windows 8 tablet was nothing short of amazing. Press the power button, and in 3-5 seconds you are at the start menu. Nothing short of incredible and I hope this will be consistent between platforms and when lots of software is installed. I remember Windows Vista seeming good at beta stage, but then I started installing programs…

Metro Touch UI for Tablets is “Thumbtastic”

I was stunned at how well Metro works and how good it looks on the developer tablet. It is fast and fluid, minimal, graphical and optimized for a user holding the tablet with two hands in 16×9 landscape orientation.

In fact, most of the important things I wanted to do I could accomplish with my two thumbs.

Multitask by scrolling through open programs
Go “home” or to the Start screen
Initiate a search
Share content to a service or to another device
Change key settings connecting to a network, volume, brightness, notifications, and power

No other tablet I have used comes close to that at 10” and above. Android Honeycomb forces me to reach in to the center to change programs and the thumb action is too far down the tablet in the lower right and left corners. Thumb actions need to be where the thumbs naturally rest.

Live Tiles to Launch Apps and Provide Info

Instead of icons and widgets, Metro uses live tiles. This combines simple navigation with instant access to relevant information. I have always loved Android’s widgets and screens. The issue with Android widgets is complexity and uniformity. Windows 8 goes a step further to provide uniform sizes and a simple update methodology.

Dock as PC

I am an unrepentant fan of “smart” modularity, or making a device serve completely different functions when connected to another device. This must be done intelligently; otherwise users just won’t do it because it’s either not obvious, or too difficult.

I was very impressed with my tablet’s ability to dock with off the shelf peripherals. Samsung’s tablet dock had ports for USB, HDMI, Gigabit Ethernet, and audio. When I returned from meetings, I connected the tablet to a 22” display, a full size keyboard and mouse. In desktop mode, it was like I was at a desktop PC, where I could do heavy-duty work and content creation. When I was done or if I went to meetings or home, I would undock and it was good on the couch.

“Play To” Amped Up

Anyone with a Windows 7 PC can currently play content to another Windows 7 PC. This is via a feature called “Play To”. Also they can play content to a DMA like WD TV Live Hub and even an XBOX 360.

What’s different in Windows 8? First, it’s not buried five layers deep. It’s one thumb swipe away. Secondly, it supports content from the Internet Explorer 10 browser. For instance, even though it’s a preview version, I streamed HTML 5 YouTube videos from my tablet to my HDTV via my WD TV Live Hub.

Finally, at BUILD, Microsoft outlined a new program to certify that the experience would be really good for “certified” Play To devices. For Windows 7, peripherals weren’t certified for experience, but were tested for compatibility. This meant that it would work, but may not work well. With Windows 8, I am hopeful we will see many Play To devices that are certified for compatibility and experience.

Runs Windows 7 Apps

I ran every app I use on my Windows 7 machine in “desktop mode” without any compatibility issues. I used apps like MS Office 2010, Adobe Reader X, Evernote, SugarSync, XMarks for IE, Google Chrome browser, Amazon Kindle for Windows, Hulu Desktop, and Tweetdeck.

Full Screen Internet Explorer 10 Browser

Admittedly, I have been skeptical on full screen browsing. I’ve tried to like it since full screen browsing options started, but it always felt out of place and awkward because no other apps were full screen. Also, without “chrome” or borders, it was difficult to change programs. Windows 8 and Metro changed all of this.

Compatibility was good, too, as long as I didn’t go to sites where plug-ins like Flash or Silverlight were required. I didn’t encounter many compatibility issues at all, surprising given how early this version is. Heck, even LogMeIn worked.

Conclusion

While it’s only been 10 days, it’s easy to get the feel of Microsoft’s Windows 8 Developer Preview operating system. This is particularly true after using so many different tablets over the last few years. There’s a lot to like about Windows 8 so far, particularly the Metro UI on a tablet and its chameleon-like capabilities to transform into a PC. As in life, there are always down sides to decisions or it’s just too early to tell how something will end. That’s the case for Windows 8, and I’ll be exploring this in my next analysis.

See Pat’s bio here or past blogs here.

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Dear Industry: Dare to Differentiate

Why should I (or anyone) buy your product or service over another? This is one of the most important questions any company in business should be asking. Right now it seems in the consumer and personal electronics industry too many executives answer that question with “price”. Their thinking is “My product costs less therefore it is the more desirable option.”

The only problem with that answer is that it is fundamentally flawed, particularly when a product or service competes in a market that is mature or post-mature. In mature product markets there is significantly more happening during the purchasing process.

The reason price is what most companies in the personal technology industry is because price was what drove the explosive growth over the past 10-15 years. However now that the market for PC’s is mature and smart phones and tablets will mature very quickly. Strategically thinking through product differentiation will be central to the innovation and product planning process.

Understanding Mature Markets
In a mature market differentiation is everything. This is true for the simple reason that in a mature market most consumers know what they want in a product and shop accordingly. As a product or category goes through the maturation cycle consumers first purchase helps to familiarize them with the product for the first time. This is happening now with smart phones and tablets.

Consumers are experiencing their first or second smart phone and their first tablet. This will continue to be case for the next few years as these categories mature. After owning one or two product generations consumers begin to become more familiar with their desires for a product.

However the PC market is fundamentally different. Most consumers have owned at least one if not several desktops and or notebooks. Because of this they now know for the most part what they want and what they don’t want with a personal computer and they are shopping accordingly.

It is with this consumer mentality that differentiation is crucial.

This idea first hit me five years ago when I was doing some specific analysis around differentiation. I walked into Best Buy to try to get the consumer experience for shopping for a notebook.

What I saw was a line of notebooks spread across the computer aisle all looking roughly the same. They all ran the same OS with no clear value proposition in favor of one over another except for price.

So as I watched consumers come in and shop for notebooks what was the first thing they went up and looked at? The price tag. Price is important but it should not be the only value proposition of a consumer product.

In a mature product market consumers move to shopping from price to preference.

PC’s Are Now Like Cars
I use this analogy quite a bit but the automotive industry I feel is the best example of a post mature product market to study.

There are more examples of technology and automotive industry similarities than I have time to get into but we can look at a few.

When consumers shop for cars they already know what they want based on their needs or preferences. Do they prefer a truck, do they prefer a minivan, do they prefer an economy car, do they want to save gas, or do they want to drive in luxury. These are all pre-defined buying characteristics that consumers are self-aware of.

The automotive industry has segmented and each segment has its own unique needs, wants and desires.

Similarly with regards to the technology industry consumers are shopping for PCs and other devices based on preference. For some price is their preference, like an economy car, however that is not the only differentiation opportunity.

Hardware Differentiation is Not Enough
All of that context on mature markets and the automotive industry to say that hardware differentiation is simply not enough.

Apple differentiates itself in three vectors all working together. These vectors are hardware, software and services. Apple services differentiate their software which differentiates their hardware. Because Apple is vertically integrated and own’s every level of their differentiation they stand apart from the pack.

It is for this reason that some level of vertical-ization is necessary in order to compete going forward. It is also for this reason enabling technologies or middleware companies need to figure out how to help their hardware partners differentiate their products.

This is never more glaringly true of a problem than with Windows and with Android. Android and Windows are middle ware software providers that solve the software problem for hardware manufactures but add the problem of differentiation.

Devices running the same software can only be different through hardware. This is why in my scenario above when I was looking for notebook differentiation I saw all the notebooks at Best Buy running Windows. None of them were really any different because of it.

Differentiation is no easy task in todays landscape. None the less the answer is innovation. Right now I see companies innovating looking through the rear view mirror rather than innovating with a forward-looking philosophy.

Dare to differentiate, dare to innovate and look to the future not to the past.

Read the First in the Dear Industry Series:
Dear Industry: The Series Introduction

Is there a market for Good Enough “Tablets?”

In April I wrote in my PC Mag column about Amazon Stealing Android from Google and argued in this piece that Amazon was most likely building their own proprietary approach to integrating their overall Android Store and a set of music, video and cloud services and integrate it into their future tablet offering.

Then, in August I wrote how Amazon Could disrupt the tablet market by creating a tablet that could sell for $249 even though it would cost $300 to build, but make it up by amortizing users purchases of books, music and videos over an 18-24 month period.

I suggested that if Amazon did this they could disrupt the entire market for tablets by introducing a new pricing model tied to their services that would make it very difficult for any hardware only tablet vendor to compete in this burgeoning market.

Now, in a most interesting post from MG Seigler at Techcrunch we get an actual hands on description of this tablet and it reinforces the price I suggested Amazon would sell it for. And he goes on to give actual details about it coming out in November including the fact that it has a color 7” screen but no cameras and no i/o ports.

If what Mr. Siegler says is true, then this Amazon tablet is more like a Nook on steroids then a serious competitor to Apple’s iPad. It will have very limited features as a multi-purpose tablet, but will excel in offering Amazon driven music, video and clouds services. And of course, we expect that it will have a browser so it would give people using it broad access to Web based content although apparently it will not support Adobe’s Flash.

But this brings up a very interesting question. Is there room in the market for what we would call a “good enough” tablet? Clearly, Apple’s iPad seems like it will be the Cadillac of tablets and to stay with the GM metaphor, the Amazon tablet is probably more like the Chevy Malibu of tablets. Both are very functional but what is inside and what they can do on the road are very different.

While there is always a market for full-featured products like the iPad, there is also perhaps an even larger market for “good enough” tablets like the first gen Amazon tablet might me. And Amazon, with this limited design and low price point, seems to be aiming at the “Chevy” market for tablets where bells and whistles are less important then price and basic functionality.

This concept of good enough computing has been bandied about in the industry for decades. It started with desktops where high end gaming PC’s ruled the gaming and engineering/graphics market, while lower cost PC’s with less horsepower and functionality took the lions share of the bigger “good enough” PC market. And the same thing happened with laptops. Gaming laptops powered the upper end of the portable market, while thin and lights went after the business crowd and value laptops with less power compared to the other two models took the lions share of the broader portable market. And they were good enough for a very large audience of consumers.

Could this “good enough” approach to the market be repeating itself again with tablets? There is no question that even though Apple’s iPad may be the Cadillac of tablets today, Apple was quite aggressive with their pricing so that it has appealed to much more than a more well-healed audience that normally buys upper end models of everything. On the other hand, there will always be a large audience who either won’t spend much on products or can’t for economic reasons and will opt for something in this value line of products or in this place, a just “good enough” tablet if it is available.

My sense is that as with desktop’s and laptops there is room for both and I suspect we will see tablets at a lot of different price points taking aim at the needs of all level of customers wants and needs. And if history is our guide, the products in the “good enough” category could be very large indeed.

Can Amazon Make a Cheap iPad Challenger?

Developments in the tablet market in the past couple of weeks, especially Hewlett-Packard first killing the TouchPad then successfully disposing of tens of thousands of them in a $99 fire sale, has led to some very strange commentary on how competitors can take on Apple. All they have to do is sell a tablet that’s as good as the iPad–or at least nearly as good–for a lot less.

Kindle icon For example, in a Cnet post, Brooke Crothers quotes analyst Roger Kay as saying the TouchPad “wasn’t really a product failure, it was a pricing failure.” That’s self-evident as far as it goes. The TouchPad at $500 was priced higher than people were willing to pay, and when the price was cut 80%, they flew off the shelves.

The problem is that in the real world of business, pricing has to bear some relationship to cost. No one is going to beat the iPad by building a product of equal performance and quality for less. Apple has mastered the supply chain and, with sales of the iPad in the area of a million units a week, achieves considerable economies of scale. It’s in the rare and wonderful position of offering a premium product while actually enjoying a cost advantage over competitors.

That means that no one can hope to compete with Apple simply by offering a product similar to the iPad for less. If Apple were to perceive it as a threat, they could underprice the interloper while feeling less pain than the competition. It’s a game that only Apple can win.

Another alternative is a subsidy model. Both my colleague Tim Bajarin and Kevin C. Tofel at GigaOm suggest that Amazon could afford to subsidize the hardware and cover the subsidy cost either through advertising on the tablet or through sales.

The one place where the subsidy model has succeed in in mobile phones, including the iPhone. But wireless carriers are in a unique position. Because they sell the phone on a contract, which gives them a revenue stream of known amount and duration, they can be certain of recovering the subsidy and making a profit besides. (Those early termination fees take care of most of the contingencies.) The carriers, however, have shown little interest in extending the subsidy-plus-contract model to tablets.

An Amazon subsidy would be a lot more problematic. Amazon’s operating margin runs less than 4% of sales. On a crude calculation, that means that every $100 in subsidy would require $2,500 in incremental sales just to break even. Maybe tablet customers buy higher margin goods, but the math of the subsidy model seems truly daunting.

All the signs point to Amazon doing a tablet of some sort, though the company itself has remained silent on the subject. But I don’t expect that it will offer an iPad-like product at a substantially lower price. One possibility is a tablet that competes with the iPad not on price but on a distintive feature set. (What might that be? If I knew, I’d design it myself instead of speculating about it.)

The other, which I think is a lot more likely, is a sort of super-Kindle: A 7″ tablet more capable than the Kindle or Barnes & Noble Nook, but simpler and cheaper to make than the iPad. It would primarily be a book reader, casual game console, and media player with, of course, an optimized Amazon shopping experience. A product like that could probably be sold for $300 without much subsidy. (B&N is selling the color Nook for $249, apparently without subsidy.)

Another, bolder approach, would be for Amazon to come up with its own subscription-based revenue model. The company has been steadily diving deeper into online services. It currently sells a somewhat odd bundle of movie streaming and free shipping on Amazon purchases for a $79 annual fee. The trick is finding enough other services to roll in to provide enough revenue–and profit–to pay for substantial subsidies. Book rentals are an intriguing one, but would be a tough sell to publishers. It’s a difficult proposition, but amazon has shown itself to be nearly as creative a company as Apple, and if any one can do it, they have the best chance.

Think Different

My favorite Apple marketing campaign by far was their “think different” campaign. I felt like that campaign profoundly spoke to me and I am a sucker for great marketing.

That slogan, I always believed, summed up Apple eloquently. Apple used the slogan powerfully by simply placing the phrase next to luminaries, visionaries and any other type of person who dared to think different. It was an amazing campaign.

Steve Jobs did not just create a culture of thinking differently; he also surrounded himself with people who also thought different, who saw the world with a different lens. The result is a passionate group of employees who believe they are working on some of the greatest products on the planet; that is why they make some of the greatest products on the planet.

Products created at Apple have the fingerprints of every single person who worked long hours to bring those products into reality. This is why, toward the end of many Steve Jobs speeches, he asked the audience to acknowledge the hard work of everyone who had a hand in Apple’s new creation. And it underscores that Apple is not just Steve Jobs. It is all of them devoted to Jobs’ vision of thinking different and working together to execute on that vision.

From what we have seen Steve Jobs do throughout his career it would be fair to assume that he has been playing on an entirely different level. He is the epitome of thinking different.

Regardless of whether Steve Jobs is at the helm of Apple as CEO or just its Chairman, I am in no way concerned about the future of Apple.

Steve Jobs hasn’t been deeply involved in Pixar for some time now and yet Pixar still is the leader in their feild.

He has done amazing things in and for this industry that employs many of us. I feel honored to have been in the industry, attending industry changing events, and some small part all of it. I look forward to being able to tell future generations that I saw Steve Jobs in action.

The right culture + the right people + the right vision + thinking different = Apple.

Apple After Steve

Everybody has heard the news by now: Steve Jobs resigned because he “could no longer meet my duties and expectations as Apple’s CEO.”

In his letter of resignation to the Apple Board of Directors and the Apple Community, Jobs wrote: “I strongly recommend that we execute our succession plan and name Tim Cook as CEO of Apple.

My first immediate reaction is sorrow that he’s stepping down. I presume that his decision is health related, and wish him and his family well.

My second reaction, to paraphrase Monty Python, is that he ain’t dead yet. His brief and eloquent resignation letter says he plans to hang around a while.

Will Steve Jobs die? Of course. Silly question, as he would be the first to say. (Actually, “stupid f&*$#$g question” is more likely how he’d say it.)

In his graduation speech to Stanford’s Class of 2005, Jobs said: “No one wants to die. Even people who want to go to heaven don’t want to die to get there. And yet death is the destination we all share. No one has ever escaped it. And that is as it should be, because Death is very likely the single best invention of Life. It is Life’s change agent. It clears out the old to make way for the new.”

I suspect he might see stepping down as CEO in the same Schumpeterian way. He and Steve Wozniak started Apple in a garage and it’s now the most valuable company on the whole f&*$#$g planet. Apple sets the agenda for the global technology industry. Jobs himself is by consensus the most important business executive alive today. Earlier this year he effectively decreed that the Personal Computer era was over, and last week the world’s No. 1 PC company, Hewlett-Packard, effectively said, “You’re right again, Steve. We’re toast. You kicked our butt. We give up.”

It would be hard to conceive of a better time to say “Mission Accomplished” and hand the keys to the next generation.

I haven’t checked the after-hours ticker but I assume AAPL is getting cored. That’s silly, too, for anyone with a view that goes beyond a day or two.

There’s always lots of new stuff in the pipeline at Apple, stuff that takes months and years to develop, and Tim Cook already has been running things on a day-to-day basis for some time. Will Cook be as good a CEO as Jobs has been? No one knows. Can he be even better? Again, no one knows.

Could he be worse? Hey, it’s not like Tim Cook is the second coming of Gil Amelio. I remember sitting in the front row at a Macworld conference in the mid-1990s, as a Jobs-less Apple appeared to be in a death spiral, as then-CEO Amelio gave a rambling keynote address while absent-mindedly beginning to undress himself on stage. Apple PR folks were apoplectic. It’s hard to imagine Tim Cook melting down in a similar way.

One thing we do know is that Jobs’s DNA already inculcates the culture at Apple. That may change a few years out, but … that’s a few years out. The fact that Jobs is no longer CEO of Apple is not suddenly going to make HP or Microsoft or Dell any smarter. The fact that Tim Cook is now running things is not suddenly going to invigorate any of Apple’s competitors to execute their strategies any better.

Another thing we know is that Apple is probably going to introduce a fifth-generation iPhone that will run on all carriers, including new carriers in China, the world’s largest untapped market for smartphones. That fact that Steve Jobs is no longer at the helm will not cause millions of Chinese, or Americans for that matter, to slap their foreheads with an epiphany that Android, Windows Mobile, and WebOS are suddenly better choices for mobile platforms.

Notice also the not-so-subtle jab at the media in Jobs’s letter of resignation: “I strongly recommend that we execute our succession plan.” There is in fact a succession plan at Apple and the Board just approved it.

I suspect that Tim Cook didn’t open his first conversation with the Board of Directors by saying, “Okay, boys, now that I’m running the show we’re going to reinvent this company from top to bottom. I’ve been itching to go completely open and dump this whole ‘Apple ecosystem’ strategy.”

At the same time, I can’t think of any company that is as closely identified with its CEO as Apple was under Steve Jobs. Apple without Steve Jobs (or, to be accurate, Apple with Steve Jobs in the Sinatra-esque role of Chairman of the Board) will not be perceived as the same company with Jobs on the sideline. Jobs is a genius. The genius is (sort of) gone. Therefore, some of Apple’s genius is gone, too, until proven otherwise.

In that commencement address at Stanford six years ago, a healthier-looking Jobs gave a speech that was very much like the Apple products for which he is known: Elegantly crafted, attentive to detail, rich in content, but no unnecessary words or buttons. He was talking to a fresh crop of Stanford graduates, but his message almost certainly applies to Tim Cook, Phil Schiller and all the other top Apple executives who are now at the helm.

“Don’t be trapped by dogma,” Jobs said, “which is living with the results of other people’s thinking. Don’t let the noise of others’ opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”

Jobs also said this: “I have looked in the mirror every morning and asked myself: ‘If today were the last day of my life, would I want to do what I am about to do today?’ And whenever the answer has been ‘No’ for too many days in a row, I know I need to change something.”

So, Steve woke up one morning recently and decided he needed to change something besides the world. Namaste, dude.

A version of this post appears in Fiscal Times.

Contemplating the Future of Apple Without Steve Jobs as CEO

Today’s news that Steve Jobs would step down as CEO came as a surprise to many. But I believe Jobs had been preparing for this day for at least 5 years. Apple watchers over that time began to see signs of Job’s putting more and more responsibility into the hands of his executive staff as he often had to step away for health reasons. And during that time Tim Cook, Phil Schiller, Peter Oppenheimer, and the rest of Steve’s executive team understood that they needed to be more in tune with understanding Steve’s vision, directions and ultimate thinking on the long term future of Apple.

While we may tend to be concerned about Steve Jobs the person, I am not concerned about Apple the company. Steve Jobs has in place a very deep bench of executives who really do know Steve’s long-term vision and Jobs’ 10-year roadmap for this very important company. And they are more committed then ever to carry it forward and to extend his legacy well into the future.

What people don’t realize is that Apple does not work like most companies that operate on a quarter-to-quarter basis or planning cycle. Instead, the products they have in the works now are designed through 2013 and the current roadmap extends well through 2015. In this time period, nothing will change for Apple. In fact, I expect Apple to continue to grow even more during this period.

Let’s also remember that while Jobs will not be CEO, he still is Chairman and as long as he can, he will be influencing their current and future product designs and roadmaps. My sources say that while his health wavers at times, he plans to be an active Chairman and to be deeply involved with major decisions and future directions.

But there are two other key reasons that I believe Apple can carry on even with Jobs in a more diminished day-to-day role. It is because Apple is no longer a device company alone. They are now driven by a vision that includes hardware, software and services. And more importantly, the devices they create are just elegant screens that give people access to their software and services. Although their main screens today are the Mac, iPod, iPhone and iPad, they have a lot of room to innovate around the TV, in-car navigation systems and who knows what other screens they may want to design that front ends their software and services. And more importantly, their software, apps and services are a solid foundation that they can continue to build on.

The other thing that makes me certain that Apple will continue to be a force is something Jobs said to me in one our discussions many years ago. I asked him what drove him. He told me that technology could be complicated to use. He felt his mission was to make technology easy to use so that everyone could reap the benefits of technology. He then said that making technology simple to use was hard work, but that this was at the heart of his vision for Apple.

If Apple’s current executive team has caught this vision, especially the one about making technology easy to use so that everyone can benefit from it, then Apple will be just fine. And given their rich integration of hardware, software and services, they still have a lot of room to create great product that people will want to use.

But Job’s Legacy will always be that of a pioneer who sits at the intersection of liberal arts and design and forever changed the way people think about technology. Most executives would be thrilled if they have one hit in their careers. Jobs has had the Apple II, the Mac, the iPod, the iPhone, the iPad, iTunes and Pixar. These technologies and more to come from his vision delivered through his team will keep Apple in the forefront of our connected world and a major player for a long time.

Why the Open OS Model Failed in Smartphones

Fifteen years ago, when Microsoft ruled the world and Apple was near death, the tech world was convinced that the conceptual batter between Windows and Mac–open operating systems available to all comers vs. closed systems–had been decided firmly in favor of open. But what applied to PCs in the 1990s does not appear to work at all for smartphones in the 2010s, as Google’s planned purchase of Motorola Mobility marks the beginning of the end for the open OS approach.

A major reason for this is that phones–and tablets–are very different from PCs even though they perform many of the same functions. A phone is a much more tightly integrated device in which it is very difficult to tell where the hardware ends and the software begins. Getting the user experience just right is both harder and more critical, because quirks that are a minor annoyance on a PC–or which can be remedied through an accessory such as a better mouse or keyboard–become killer flaws.

It’s easy to forget today that the first real winner in the smartphone market was Research In Motion’s BlackBerry, a closed system. RIM’s accomplishment was to provide a tightly controlled, secure mobile email device (the earliest models offered neither voice not internet service) that provided seamless access to corporate mail servers.

RIM could make this work because it controlled the hardware, the software, and the BlackBerry Enterprise Server middleware. Its rivals in those early days were the Palm Treo and Microsoft Windows Mobile. Palm was a bizarre beast that never really worked. Its owner, 3Com, first licensed the Palm OS to other manufacturers, then spun its software unit off into a separate company, PalmSource. The Treo was developed by one of those licensees, Handspring, which had been started by Palm’s founders. Palm eventually bought Handspring and reacquired some rights to the Palm OS, but it never had full control of the software. That’s a major reason why Palm and PalmOS gradually became non-competitive.

Microsoft’s mistakes were different, but illustrative of the traps inherent in an open phone operating system. In the best Windows tradition, Microsoft gave its handset manufacturers a lot of design freedom. It ended up with phones with a variety of screen sizes and configurations, with and without touchscreens, with and without physical keyboards. The hodgepodge of hardware made it impossible for Microsoft to provide a consistent–or particularly good–user experience on all Windows Mobile devices. And third-party software developers had a very hard time writing applctions that worked well, or sometimes at all, on all devices. In a final irony, until almost the very end, BlackBerry did a much better job of providing mobile access to Microsoft Exchange servers than Windows Mobile did.

Apple, of course, changed the game completely with the 2007 introduction of the iPhone, and again in 2010 with the iPad. Apple controls every aspect of the ecosystem, Apple software running on Apple hardware that can load only Apple-approved applications. This has horrified fans of open systems. such a Cory Doctorow and Jonathan Zittrain, but the mass market’s love for these devices has allowed Apple to suck up the lion’s share of profits in the handset industry and to define the tablet market to the point where it has no effective competition.

Except for Android, the open model has now all but collapsed. Nokia never achieved widespread adoption of Symbian by other manufacturers. Linux-based LiMo went nowhere, as did Nokia’s Maemo, Intel’s Moblin, and their love child, MeeMo.

The status of Windows Phone is uncertain. After the Windows Mobile nightmare, Microsoft set very tight design standards for its attempt to rejuvenate the platform. OEMs have a limited choice of display size and a physical keyboard is optional, but other specs must comply with the reference design. And Microsoft’s tight alliance with Nokia could result in, effectively, a line of “official” Nokia-built Windows Phone products. It’s nominally still a market where Microsoft offers its OS to any willing license, buy Redmond really controls the game.

Android’s openness has been a blessing and a curse. The free-to-all-comers OS has allowed the platform to gain a great deal of market share very quickly. It has also proved extremely frustrating to consumers, with a proliferation of designs and software versions all with different capabilities and no consistency in their ability to run third-party apps. With an iPhone, you know you will always be able to run the most recent version of the iOS software and any product in the App Store (with minor exceptions for some older models that lack some hardware features of more recent ones.) With Android, you just never know.

I suspect this will change in significant ways as a result of the Motorola Mobility acquisition. Google is never going to become Apple, but I suspect that the Android market is going to look a lot more like Windows Phone does today, with Motorola playing an even more central role than Nokia will for Microsoft. This sort of hybrid of open software with an official hardware maker is novel and largely untested; Palm and Nokia both nibbled at it, but neither was a fair test.

However it turns out, however, it looks like any attempt to build smartphones on the PC model is over.

Why A Tablet is Key To Amazon’s Business

I was being interviewed by a journalist recently where the discussion was around the impending release of an Amazon Tablet. I enjoy helping journalists out with stories and I gladly accept interview requests because the discussion is always engaging and often helps sharpen my own thoughts on a subject.

This was the case again when I was asked why a tablet is important to Amazon’ business and business strategy. That is the question i’d like to address in this analysis.

A Tablet is Amazon’s Brick and Mortar
Here is an analogy: 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 to create a physical location where you walk in to experience their service. I would argue however that Amazon is very interested in giving you a physical storefront and it started with the Kindle.

The Retail Experience Matters
I wrote an article on Why Apple Retail is Key to Their Competitive Advantage. In that article I highlight some key things about retail.

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 shopping experience.

This is one of the reason’s I believe 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 fees but that Amazon wanted to control the user experience with their storefront instead of Apple. This is why previously with the Kindle app on iOS the Kindle store launched a web browser and took you out of Apple’s ecosystem and into Amazon’s.

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.

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

This is why I believe a tablet is strategic for Amazon. Of course they can and will make sure their services are available on every device imagineable. However if they bring a device to market that is a full blown tablet but 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.

Further Reading on Amazon:
How Amazon Could Own the Android Tablet Market

Android is Finally Ready for the Tablet Market

Over the last few weeks, Android for Tablets (aka Honeycomb) 3.2 started rolling out to tablets like the Asus Transformer and the Motorola Xoom. While the announcement of Android 3.1 was met with great fanfare at Google I/O 2011, Android 3.2 didn’t receive a lot of attention as it started actually rolling out to systems. Ironically, I believe that with the rollout of Android 3.2, the operating system is finally ready for tablet prime-time.

Background

Android 3.X, aka “Honeycomb”, is Google’s operating system for tablets. It was first shown at CES 2011 and the first product it rolled out on was the Motorola Xoom. After its launch, the firestorm ensued and Honeycomb was viewed as having significant issues:

Sluggish performance even while having superior hardware specs.
Lack of stability and reliability as evidenced through repeated application crashes.
Lack of apps. Even as of July 1, 2011, NY Times David Pogue reported that at the most, 232 apps were optimized for Honeycomb. The iPad had 90,000 optimized apps. To make matters worse, Android phone apps ran in a tiny window.
Lack of external SD card support. Just do a few Google searches on “SD card” and “Xoom” and you will know what I am talking about.
Limited USB connectivity. Keyboards, mice, digital cameras, card readers either didn’t work at all or were very inconsistent.

Needless to say, this didn’t exactly equate to a very good experience, as I have personally experienced on three separate 10” Android Honeycomb tablets.

Improved Performance, Stability and Reliability

Between Android 3.0 and 3.2, my Honeycomb experience is like night and day. Single-tasking responsiveness is close to the iPad 2, although the iPad 2 is still faster. Honeycomb does outperform iPad 2 on multitasking though.

When I use a tablet, I use it as a primary device. I load around 20-30 apps, and I do set up the background tasks and widgets as they are differentiated features versus the iPad. Where I previously experienced between 10-20 application crashes a day, with Android 3.2, I may get one a day. This is a huge breakthrough. And yes, I do get application crashes on the iPad 2. iPad 2 crashes are less pronounced and “hidden” as the app just dies and you are taken to the home screen. In Android, a dialogue box pops up on the screen and you are given the choice to wait, kill, or report the crash.

Improved Application Support

Android 3.2 added the capability for users to better tap into the library of approximately 300-400K applications. Applications come in three forms that are somewhat transparent to the user:

Tablet optimized apps: Resolution, layout, fonts, content are optimized for the tablet.
Stretched phone apps: Phone applications are stretched to tablet dimensions keeping phone layout, fonts, and content. In some apps this is automatic; in others it requires the user to toggle a menu icon in the apps bar.
Zoomed phone apps: Fixed-size phone applications are zoomed in like the iPad phone apps. In some apps this is automatic; in others it requires the user to toggle a menu icon in the apps bar.

If a user runs across a a manually scaled-app, they are given the option to stretch or zoom. Many of the apps, though, were automatic and stretched properly into place.

Here is how some of the top Android phone apps look on Android Honeycomb 3.2 tablet.

As you can see, some of the phone apps look really good and others could be improved. The net-net is that Android Honeycomb tablet buyers just got 300K-400K more apps to run on their tablets.

Conclusion

Like the first Android phone OS, the Android tablet OS has quickly undergone a massive overhaul and improvement in a mere 6 months. The most recent improvements in Android Honeycomb 3.2 were virtually unnoticed by many in the press, but ironically, the update improved the experience to the point that Android is finally ready for prime-time.

So does a massively improved experience guarantee success? Of course not. Android still has to deal with its IP challenges, fragmentation, spotty paid video services, and some “me-too” hardware designs, BUT, if you don’t first have a responsive, reliable experience with lots of apps, you have nothing. And Android finally has that for tablets.

Have your say in the comments section below.

The 13″ MacBook Air is the Perfect Notebook

I have used a lot of notebooks in my 11 years as an industry analyst of consumer technology products. In fact I have used nearly every type of design, form factor, performance, and screen size imagenable across notebooks and desktops. Because of that I am convinced that the 13″ MacBook Air is the perfect blend of everything required to be a great computer.

Prior to using the 13″ MacBook Air I used a 15″ MacBook Pro. In conjuction with that Notebook I also used last year’s 11″ MacBook Air. The primary reason for this was I wanted a notebook that was more travel friendly but I also wanted one with enough performance to handle the media processing I do.

After using the latest 13″ Air I have found it to be the perfect blend of portability and performance.

Hardware/Design/Portability/Performance

In my office I have a 27″ monitor that I hook my notebook up to when I am at my desk, making screen size when “docked” somewhat irrelevant. However, I move around a good deal as a part of my job. Whether it’s commuting to clients’ offices all around the Bay Area or traveling the country or the world my notebook is in my bag a lot. Because of that I used to travel with the 11″ Air.

Although extremely portable, arguably the most portable and powerful sub 12″ notebook, I still found the screen size a hinderence to long term use. It certainly sufficed in a lot of ways but I found myself desiring a slightly larger screen often.

The 13″ is the ideal size allowing for a larger screen experience without sacrificing portability.

I also found last years 11″ slightly underpowered when it came to the media processing that I do. I make a lot of HD videos of family and events and such so I need a certain level of performance or I will go insane. Apple says the new models are 2.5 times faster, but the 13″ model is faster still, and surpassed my expectations in handling video and audio processing.

The backlit keyboards are certainly nice but not all that necessary for me. The internal SD card reader is another feature the 13″ has over the 11″ that has been a very nice to have.

At the end of the day, the 11″ is “under-screened” for my needs and the 15″ Pro is just slightly to large for me to travel with comfortably. Fitting right in the middle, the 13″ Air is perfect.

Battery Life
Lastly i’ve been extremely impressed with the battery life of the MacBook Air line. Throughout the last year using the 11″ Air I was constantly shocked how long the battery would go. Especially with what I will consider general use.

It seemed as though I could shut the computer and leave it for a week then pick it up and nearly no battery had drained. I attribute most of this to a true state of “sleep” due to the solid state hard drive. It’s very similar to the iPad experience.

I don’t like to do battery benchmarks because there are so many usage variables. All I can say on the matter is that I can use it for a full day on a single charge. Granted this includes opening and closing my computer as I bounce around for meetings. I’m not sitting stationary working all day on a single charge.

In my opinion all that matters when it comes to battery life is that when you are mobile and not able to plug in you have enough battery to work. In that regard the 13″ Air delivers.

I’ll say it again. The 13″ MacBook Air is the Perfect Notebook.

Time for a Smartphone Patent Pool

Most of the creative energy in the smartphone industry seems to be going into lawsuits, with just about everyone claiming that everyone else is violating their patents. In addition to keeping a lot of lawyers in work, the disputes are having real world consequences, with, for example, Apple blocking the sale of Samsung Galaxy Tab 10.1 in the European Union. It’s time to stop the madness, but any solution is going to have to come from the industry itself, not from Congress or the courts.

If you are seriously interested in the issue, however, stop right now and read “The patent system isn’t broken, we are,” Nilay Patel’s detailed and incisive analysis of the issues surrounding software patents. In addition to analyzing where we are and how we got here, Patel offers some helpful suggestions for reform.

The problem is that serious changes in the patent system require legislation, a tall order from a Congress that would probably have to break a filibuster to pass a Mother’s Day resolution. (a useful but relatively minor reform bill may pass this fall, but it does not address the fundamental issues.) Courts can impose some sanity, but they are slow moving and constrained by existing legislation.

It seems to me that the best way out of the smartphone mess would be for all the the folks now beating each other up in court and before the International Trade Commission to get together and form a patent pool. Everyone owning relevant patents contributes their intellectual property. Members and others wishing to use the patents pay a reasonable fee for a license and the proceeds are divided among the contributors.

This is hardly a novel idea. Philips and Sony, which each owned key technology behind the compact disk, set up a patent pool that helped launch the enormous success of the CD format. Six companies that owned key DVD technology (later joined by three others) created the DVD6C Licensing Group. The numerous patents behind MPEG video compression technology are pooled into MPEG LA, which licenses their use.

A pooling of smartphone patents would make life a lot simpler for everyone in the business. There are so many patents covering so many aspects of the hardware and software that it appears to be all but impossible to build a phone that doesn’t infringe on something. And right now, it looks like the big long-term winners will be the lawyers. In theory, the issues could be resolved by a series of pair-by-pair patent cross-licensing agreements, but a single patent pool seems simpler and more efficient.

Not that creating such a pool is going to be simple. First, any arrangement would probably need the blessing of U.S. and European antitrust regulators, who tend to see such cooperation as potential collusion. The other pools I referred to were easier because they were created at the onset, before an industry existed to be divvied up. A tremendously difficult issue would be determining how to share the license fees among the contributors, a problem that would probably call for a complex arbitration. The position of Google, a major smartphone player with a relatively puny patent portfolio is particularly difficult, although in fairness, Google also stands to be the big loser if the industry proceeds down its present litigious path.

A key step any patent pool would have to take to be successful is to indemnify its licensees against attacks by non-member patent holders. In effect, the pool would have to say: “A license from us gives you access to all the intellectual property needed to build a modern smartphone. If a third party claims otherwise, we will defend you.” This sort of insurance can be expensive, but certainly within the means of a pool that included Apple, Microsoft, HP, Samsung, and other giants.

One serious concern is that the existence of a pool could cripple innovation. If inventors have to share their creations with competitors. will they have any incentive to innovate? One solution would be to limit the pool to current patents–often the most troublesome because their existence and extent is unknown–and leave companies free to claim exclusive rights to future inventions. That might set up more problems for the future, but could still deal with the difficulties of today.

How Important is the Design of the iPhone 5 to its Success?

I continue to watch with amusement the various pictures and speculative drawings for the iPhone 5. And the rumor mills are working over time trying to figure out what the iPhone 5 might look like. In fact, the folks at MacRumors have one of the best mock up drawings I have seen on the rumored iPhone 5 and, at the very least, it is cool to see what an iPhone 5 might possibly look like.

But how important is the new design really to the iPhone 5’s success? Yes, it could have a bigger screen and maybe even be a bit slimmer, but I contend that the iPhone momentum is already so strong that no matter what Apple does with the design of the iPhone 5, it will be a monster hit and could sell as many as 30 million in the holiday quarter. (Apple sold 20 million iPhones in the last quarter.) In fact, our research shows huge pent up demand from both ATT and Verizon customers in the US and very strong demand for this new phone around the world.

I know that the design of the iPhone itself will make the most news when it is launched but there is an even more important technology that needs to be factored into the iPhones future success. To understand this technology, let me relate to you something that happened when the first iPhone came out.

When the iPhone was launched, I had a briefing from the top executives at Apple responsible for the iPhone. After they showed me its design and specs, they did something very pointed and telling. They laid the iPhone on the table and asked me what I saw. I knew this was a trick question and I could have answered it a lot of different ways. But what I said is that I saw a device with a blank screen on it. They affirmed my answer and went on to say that this is what they want people to see. Although they were very proud of the iPhone design, they told me that by itself and when not turned on, it is just a dumb device. However, when you turn it on and the OS and apps get fired up, that is when the iPhone becomes an iPhone.

From the beginning, Apple built into the iPhone’s success equation an ecosystem of hardware, software, applications and services that together make it the iPhone. Yes, the design of the phone is important. But when turned off, it is not very smart. On the other hand, when it is turned on and the screen lights up, that is when the magic takes place. The hardware is only 1/3rd of the iPhones success equation. And while Apple may tweak the design of the iPhone on a yearly basis and add things like more memory, better communications features, better camera, etc, I would argue that what they do with iOS is much more important to the iPhone’s overall success and increased world wide demand. It is what you can do with the iPhone that matters.

So while you might be hyperventilating about the potential features and design of the iPhone 5, keep in mind that the iPhone itself is only part of the iPhone’s success equation. I believe that what Apple does in the next version of IOS and future versions of their mobile OS is actually much more important to the continued growth and success of the iPhone. It is the software that will determine the real future of this important Apple product.

The iPad Does What No Other Tablet Does

There actually may be a number of things that can be pointed out that truly differentiate the iPad. I however would like to focus on just one – battery life.

For the past week I have been camping in Lake Tahoe for vacation. All though i’m on vacation and not “working” I still like to check in from time to time as well as post new things on our site.

I brought a slew of electronics on this trip knowing that I would need multiple ways to get online and have very limited options and time to charge my gear.

So here it is Thursday and the only thing with juice left is my iPad. My Macbook Air, several other Android tablets, my iPhone, and several of the latest Android phones all dead. The only thing left standing is the iPad.

There are many reasons why this is the case but the biggest reason I believe this is possible is because Apple made the hardware (including designing the processor) and the software. When you can “tune” all the elements of your hardware and software together you can accomplish optimal efficiency in the areas you purpose to. One of the many areas Apple had accomplished and continues to strive for in all their products is battery life.

This is not always easy and some devices like phones simply can’t have as large of batteries as others like computers and tablets. But it is still a goal.

It is of course the goal of the industry as well. I don’t believe companies launch products with poor battery life as a goal. Only there are so many factors for other vendors who don’t control the critical parts of the supply chain like software and hardware, so it becomes a greater challenge.

Battery life is still perhaps in my mind one of the biggest things the industry still needs to progress with. Several years ago I would have never thought that I would have a device that I could use to do work and a slew of other tasks with that would last well over a week on single charge. I’m blown away the iPad is still going.

It is Thursday and i’ve been using the iPad normally since Saturday and it sill has 34% battery life left. In fact i’ve been using the iPad more than any other piece of electronics I brought since Saturday and they all still died.

Why Apple Scares the Wintel Vendors

You might think that this is a trick question. On the surface, the answer should be the iPad and its eco system. But the iPad is a new category and while it is true they fear Apple’s potential of owning this market and making it hard to create products that are competitive, this is not the product that they fear the most.

The product they fear the most is Apple’s MacBook Air. When Apple first introduced the MacBook Air, a lot of the PC vendors thought it was a gimmick. While it was very thin and light it was very underpowered. And well over $1000. PC Vendor’s thin and lights (their definition, not mine) had broken $1000 and PC”s under $700 were dominating the overall market for laptops. And this first generation MacBook Air had no impact on their laptop market at all.

The only company to kind of take this Apple move serious was Dell, who created the Adamo XPS, supposedly their version of the MacBook Air. But while it was relatively thin compared to all of the other “thin and light” laptops on the market, it was also so high priced that people stayed away from it in droves. At least for the short term, Apple’s MacBook Air was considered the thinnest and lightest laptop albeit slightly underpowered and with Apple’s upper end pricing scheme behind it.

In the mean time, the demand for cheap PC’s started to take off. In fact, a new category of thin and lights called netbooks was all the rage for about two years. And while Steve Jobs considered netbooks toys, he watched its growth with interest. While he publicly said Apple would never make a netbook, it was pretty clear that Jobs and company had decided to make the next MacBook air lighter and thinner than a netbook yet as powerful as most mid to high end laptops. And, while their starting model is $999, their proprietary unibody casing and integrated graphics chips still make these the most powerful ultralights on the market today.

But when Apple also decided to kill their MacBooks, or their entry level laptops and only bring to market MacBook airs at prices close to their older entry level models, the PC vendors sat up and took note of this quickly. To them it signaled that Apple is getting ready to start a full out assault on what has been sacred territory for them. Sure, they can still create laptops under $500 and sell them all day long. But they also realized that Apple is now setting the bar for laptops at a new level by using the MacBook Air to help define the next generation of laptops and, they know that with Apple’s buying power and International reach Apple could price them even more aggressively in the very near future.

The PC industry itself had somewhat anticipated this and is working on creating what they call Ultrabooks, Windows based systems that are much like the MacBook Air. But the one that is on the market today that is the closest to the MacBook Air is the Samsung 900 3X which is priced about $1600 Euro’s in Europe and well over $1800 in the US. Apple’s comparative model is $1599. Although the Samsung 900 3X is a solid product, Apple’s lead in these types of “ultrabooks” along with their stores will help them sell even more of these in the future. In fact, in the last earnings call, Apple said they sold about 4 million computers in the last quarter and that 73% where laptops. And we believe that 75% of those where MacBook Airs.

Given the MacBook Air’s pricing and Apple’s apparent commitment to be even more competitive with the mainstream PC vendors with this model, signals to me that they really want more of the hallowed ground that traditional PC vendors tread today. And it looks like Apple is about to crank up their laptop supply chain prowess, industrial design skills and marketing and retail emphasis and will go right at the heart of these PC vendors most profitable laptop segment.

Oh yeah, and they will soon have their iCloud offering that will bring their eco-system in sync to their laptops and desktops as well, another value added piece of technology that I am sure will strike a chord with users. And given the possible halo effect of the new iPhone 5 when it comes out as well as the iPad and the iCloud, I am certain that Apple will drive even more people into their stores and will put an even greater effort on selling MacBook Airs and MacBook Pro’s in the future.

Yes, the iPad is a real concern for the PC vendors as Apple has a huge lead in tablets and strong demand. But if Apple starts eating into their laptop market share, this will have the greatest impact on these PC vendors in the future and make it even harder for them to make strong profits on this part of their laptop business.

Mac OS X Lion and the Future of Computing

By now, you’ve probably all heard or read about Apple’s new desktop operating system, Mac OS X 10.7 Lion, or just “Lion” for short. While I believe it is a really good operating system today, what I am most interested in is what it means for tomorrow. I’d like to share with you my thoughts on what I believe OSX Lion tells us about our computing future.

Device Modularity

Device modularity is essentially when one device, when docked or connected to another one, becomes something even better or more functional. It’s a world where a phone becomes a tablet; a tablet becomes a notebook and even a phone or tablet becomes a desktop. I’ve touched upon modularity with a few previous blogs covering the Motorola Atrix Lapdock and Multimedia Dock, the BlackBerry PlayBook and even the Motorola Xoom.

One of the inhibitors to good modularity is modality in UI. Or in other words, the smartphone, tablet, desktop, and laptop act like you would expect in the context you want. When you plug the phone into the dock to make it a laptop, it acts like a laptop, not a phone.

Lion has unified many of the UI elements and HCI (Human Computer Interface) between the iPhone, iPad, MacBook and the iMac:

· Gestures: Lion unifies gestures, or begins to, between the four platforms. Familiar gestures from iOS like pinch to zoom, tap to zoom, and swipe to navigate are just a few of the multi-platform gestures that are shared between phone, tablet, laptop, and desktop.

· Launchpad: Does this look familiar? This isn’t an iPad or iPhone; it’s Launchpad in Lion on a Mac Air laptop. Launchpad is a place for apps and folders of apps just like you see on the iPhone and iPad.

· Full screen apps: This isn’t exactly revolutionary if you’ve used Windows 7, but full screen apps does just that; allows apps to be maximized to the whole screen, just like iOS apps look with no windows. Then, a user can even “three finger swipe” between apps, similar to iOS 5.

So by unifying user interface and basic HCI, Lion has removed a major hurdle for the future, modular designs.

Air Gestures

We’ve all seen Microsoft Kinect in action in the living room and some of us have even seen “home-brew” tests using the Kinect SDK for the PC. Imagine more advanced, future computer “vision” on a much closer scale, or “near-field” basis, removing some of the actual physical peripherals. This could use very common and inexpensive cameras, possibly stereoscopic, with interconnects like CSI-3 and a heavy compute engine building a 3D model of the hand.

· “Magic Hand”: Consider removing the mouse and trackpad and replacing with a camera to use your own hand to do the gestures. Maybe even remove the keyboard and replace it with a projected virtual keyboard. The camera, like Kinect, tracks exactly what your hand is doing.

· Consistent Gestures: As described above, by having consistent gestures between all devices, the computer would be very focused on a specific set of near-field air gestures, not different ones by platform, increasing the chance of success.

With Lion unifying gestures today tied with future improvements with compute power and lower power with architectures like Fusion System Architecture, higher speed camera interconnects like CSI-3, a future without the physical mouse and trackpad becomes a distinct reality. Removing the physical keyboard is more of a stretch, but with pico projection a robust investment area, who knows? Also, with the success of keyboards on iOS and Android tablets, users are becoming conditioned to be satisfied with virtual, non-haptic keyboards.

Peer-to-Peer Communication

Peer-to-peer communications occur when one device directly interacts with another without the need for a LAN or WAN. The trend with services and the internet has led to the belief that peer-to-peer was dead. Not so with Lion, as it actually dialed it up a notch.

· Airdrop: Airdrop enables two Lion-based Macs to safely send files directly between each other without the need for an intermediate LAN or WAN. It automatically creates an ad-hoc WiFi-WiFi connection.

I find this very interesting given Apple’s forecast of a “post-PC” world. With very innovative features like HP’s “touch-to-share” and enabling communications like WiFi Direct and BlueTooth 4/5, peer-to-peer comms could be making a comeback. I’d guess that we will be seeing even more of this in CE devices. Who would have thought in this “everything in the cloud” world? J

Conclusion

OSX Lion is a really good operating system for users today and also gives us some indications of interesting things to come in the computing future. I believe that Lion tells us a lot about the future of device modularity, our ability to ditch the mouse, trackpad, and maybe even the keyboard. Lion also guides to a world that increases the likelihood of even more devices talking directly to each other without the cloud middleman. It’s a future I can get excited about. How about you?

Pat Moorhead is Corporate Vice President and Corporate Marketing Fellow and a Member of the Office of Strategy at AMD. His postings are his own opinions and may not represent AMD’s positions, strategies or opinions. Links to third party sites, and references to third party trademarks, are provided for convenience and illustrative purposes only. Unless explicitly stated, AMD is not responsible for the contents of such links, and no third party endorsement of AMD or any of its products is implied.

See Pat’s bio here or past blogs here.

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