Ultimately, HP, You’ve Got To Do Something

Via All Things D:

“We have to ultimately offer a smartphone…” ~ Hewlett-Packard CEO Meg Whitman

When exactly is this “ultimately” going to be?

“My mantra to the team is: ‘Better right than faster than we should be there.’” ~ Meg Whitman

What? Say what?

(W)e’re working to make sure that when we do this, it will be the right thing for Hewlett-Packard, and we will be successful. ~ Meg Whitman

Are you also planning on jumping in on the hot new “horseless carriage” business? Or investing in the Pony Express? In case you haven’t noticed, the smartphone market isn’t waiting around for you to “ultimately offer a smartphone.”

There’s a time and place for things and this is no time to be telling us that you’re “ultimately” going to be making a phone.

Stop telling us that you’re going to do something. Do something.

Apple is Still the #1 Smartphone Vendor

There has been quite a bit of interesting media and headlines this last week pointing to data related to Samsung’s latest earnings and smartphone shipments. Many are making the claim that Samsung is now the number one smartphone vendor by volume. However, when we dig deeper into the numbers we find a different story.

First (something that shockingly needs to be continually pointed out), the numbers released in Samsung’s earnings of 27.8 million smart phones shipped is product shipped into the channel not sold to consumers. In reality the carriers stores are Samsung’s customers since their goal is to sell phones to carriers who then try to sell them to consumers. This is called having a channel strategy, something Apple does very differently due to their rather large retail presence. Another differentiating point regarding numbers is that Apple actually releases the number of products sold to consumers where many other companies do not.

Second, the statement that Samsung is the largest “shipper” of smartphones can only apply to Samsung’s Q3 for 2011 not per annum. Apple still sells annually more smartphones than any other manufacturer.

It is tough to say exactly how many smartphones Samsung “shipped” into channel in 2011 to-date since they did not disclose smartphone shipment data in their Q2 earnings. That being said I’ve seen credible attempts to break down estimates and the most logical number I have found for “shipments” into channel from Samsung thus far in 2011 is 50.2 million. In that same period (since January of 2011) Apple SOLD 56.09 iPhones. This is why I am confident Apple is still the number one smartphone vendor. One last point here, we believe Apple will SELL north of 25 million iPhone’s (conservatively) in this upcoming holiday quarter.

We need to be much wiser if we are going to make headlines with market share claims. I understand to many market share is a big deal but I don’t believe it is as big a deal as people make it out to be.

Henry Blodget of Business Insider makes a point that I disagree with. In his column on why Apple should be worried about this Samsung data he states:

As the history of the tech industry has demonstrated again and again, technology platform markets tend to standardize around a single dominant platform. Although several different platforms can co-exist while a market is developing, eventually a clear leader emerges. And as it does, the leader’s power and “network effects” grow, while the leverage of the smaller platforms diminishes.

I don’t disagree that Henry’s observation is true, I simply don’t believe it will be true in the future. The flaw in this observation is that it is only true when a new product, technology or market begins and moves to maturity. As a market matures, it is true that a standard emerges. This standard helps drive the market to maturity. Once the market matures however it becomes saturated with many variations and departures from the standard.

For Henry’s statement to have absolute truth we would need to look farther back than just the technology industry to ALL consumer products. If we do that we find that what I pointed out is always true. Once a market matures it fragments and thus there is no longer a dominant market leader. Study consumer packaged goods, automobiles, consumer appliances and more and you will find this to be true.

This is why I am confident that Apple, Android and most likely Windows Phone will all compete for market mobile share but there will be no dominant leader like there was when Microsoft had 98% Windows share. That future will not happen, as all three platforms will co-exist and each have chunks of the market to themselves.

Smartphones are 5% of global handset shipments world-wide. If we think that this game is anywhere close to being over we would be deceiving ourselves. We have a long journey ahead and one hopefully filled with tremendous competition, because when that happens consumers always win.

Give Your Smartphone Room to Stretch

As convenient and versatile as mobile devices have become, there are still times when that little 4-inch, 7-inch, or even 10-inch screen just isn’t enough. Maybe you want to enjoy your mobile apps and content with friends or colleagues – without knocking your heads together. Maybe you read the latest study that found that reading text, watching movies or playing games on small handheld screens could lead to problems with eyesight down the road. Or how about this one: you’re halfway through showing your awesome vacation video, and your phone’s battery suddenly goes dead. Sure, there are ways to output your handheld’s display to an HDTV, but they all seem to fall short in one way or another. Either the video quality is sketchy, the link is unstable, or both. Unless the connection supports HDCP, forget about watching copy-protected content like first-run movies. Wouldn’t it be great if you could just plug the phone into the TV and avoid all these problems? Display photos, watch movies, play games, and enjoy your mobile apps on the big screen, controlling it all with your TV remote and charging your phone’s battery while you’re at it? It’s not a fantasy, it’s MHL technology, and it’s here now.

MHL stands for Mobile High-Definition Link, a new digital interface that was purpose-built to connect smartphones and tablets to DTVs and other HD displays. It’s a high-bandwidth connection, capable of transmitting Blu-ray™ quality video and audiophile-quality 7.1-channel surround sound as a digital stream, with no signal compression.

MHL technology has a number of unique performance features that make it ideally suited for connecting mobile devices to DTVs. First, MHL technology is connector-agnostic, so manufacturers can link MHL-enabled mobile devices through its existing connector to just about any brand of DTV or monitor as long as it’s MHL-enabled or there’s an HDMI port. Rather than try to force mobile manufacturers to add an additional hardware connector, it allows them to repurpose what they already have on the device. Second, its streamlined architecture requires only five wires, allowing for extremely lightweight, flexible cables that make carrying them around simple. Third, it does more than just transmit audio and video. It’s a smart connection that allows the user to interact with a smartphone or tablet using the TV’s remote control, and for the TV to recharge the phone or tablet’s battery while it’s connected. Finally, being able to charge your mobile device while it’s connected to the TV may sound like a small thing, but it’s a huge convenience factor — especially compared to other connectivity options, such as Wi-Fi, that will drain your battery faster than you can say “drain your battery.” Of course Wi-Fi has other performance issues, like the fact that it can be prone to radio interference from other devices on its increasingly congested frequency band.

Signal compression is another shortcoming of many legacy interconnects, both wireless and wired. They just don’t have the bandwidth to handle HD content without running it through compression and decompression algorithms, an inherently “lossy” process. MHL technology, by contrast, provides plenty of uncompressed bandwidth for even the richest content, so what comes out of the TV is exactly what you loaded into the phone, with no loss of clarity or fidelity, even if it’s 1080p video with high-fidelity surround sound. And since MHL technology offers native support for HDCP copy protection, you can watch protected content without running afoul of anti-piracy measures.

MHL technology also offers the unique benefit of being able to control your mobile device with your MHL-enabled TV’s remote. Forget about scrolling through tiny windows and pressing tiny buttons – now you can do it all on the big screen thanks to something called the Remote Control Protocol (RCP), a technology that’s built into MHL-enabled TVs, phones, and other devices. Better still, it’s brand-agnostic, so you can connect any phone with MHL connectivity to any MHL-enabled TV, regardless of manufacturer, and control your mobile apps through the TV.

MHL technology is backed by an industry Consortium co-founded by Nokia, Samsung, Sony, Silicon Image, and Toshiba. As of October 2011, more than sixty additional companies have licensed the technology as Adopters. Adopters agree to submit their products to a compliance testing program, helping to ensure reliable performance and cross-vendor interoperability. Many MHL-enabled products are already on the shelves, including smartphones, tablets, adapter cables, and the first wave of DTVs featuring a new, dual-purpose, MHL/HDMI port. Legacy TVs, projectors, and other display devices can be made MHL-ready with the use of adapters, also available now.

While MHL is hardly a household word at this point, this could change rapidly as the pace of adoption increases, more products hit the stores, and more consumers experience the unique benefits of the technology. What’s not to like about watching a movie, TV show, or YouTube video from your phone on a big-screen DTV with surround audio and walking away with your phone fully charged and ready to go? Or playing your favorite games on a 46-inch screen instead of a 4-inch for that truly immersive experience? Sharing photos and videos likewise gets a lot easier and more convenient with MHL technology. As smartphone cameras offer increasingly higher image quality and video recording capabilities, MHL connectivity provides the reliable, high-bandwidth connection people need to share these images with family and friends, or to pull them down from an online gallery and show them on the living room TV.

Business travelers can also benefit from MHL connectivity. With an MHL-enabled video projector, the savvy road warrior can now carry all her slides and demos on a smartphone, update them on the plane or even in a taxi, and plug in to the projector at her destination for a high-resolution, high-impact presentation. The technology also has potential applications in automotive, aircraft, and hotel environments – wherever people travel with their handheld devices.

As consumers increasingly view a smartphone or tablet as their primary computing device and content repository, the rise of MHL technology marks an important step forward in that trend. By giving users the option of switching over to a big screen at any time, it makes it easier to view the handheld as a legitimate replacement for the PC, or at least to create a more seamless interface between the two devices, by offering greater flexibility in how people interact with their content and apps.

In brief, MHL technology has the potential to revolutionize the way we interact with our smartphones and tablets, delivering a premium big-screen experience when the small screen just isn’t enough. Optimized for mobile platforms, designed for an immersive audiovisual experience, and built with on-the-go consumers in mind, it has established its roots in the industry with products already in retail and a promising future.

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.

A patent shingleIf 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.

Why Apple Can’t Chase the Low End

In a post here earlier today, Ban Bajarin dismissed the frequent criticism of Apple for failing to serve the low end of the computer market. Ben focused on consumers’ willingness to perceive, and pay for, value in Apple’s relatively expensive products.

But in wondering why otherwise knowledgable people keep hammering Apple on this point, it’s worth considering just how the company’s business model is working. Everyone else in the PC business depends on selling enormous volumes of product at razor-thin margins. This has steadily driven the average selling price of PCs downward, though NPD data show that the average retail ASP in the U.S. has stabilized a bit at around $600. Apple has exactly one product close to that price point, the $599 bottom-of-the-line Mac mini. In a world of $500 to $700 notebooks, the entry point for a Mac is $999 and goes up quickly from there.

And what has the refusal to chase the mass market done to Apple? It absolutely owns the market for computers selling for more than $1,000. As a result, with about 10% of the U.S. market and less worldwide, it is grabbing the lion’s share of industry profits. Apple’s operating margin from all products in the most recent quarter was 32.8% compared to 5.7% for Hewlett-Packard’s Personal Systems Group. HP, with total revenues of $127 billion a year, has a market capitalization of $76 billion. Apple, with just over $100 billion in revenue, is valued by the market at $362 billion.

With numbers like that, it’s just silly to argue that Apple should be chasing the profitless low end of the market (or, for that matter, offering low-cost, lower-margin versions of the iPhone and iPad.) The history of the tech business is full of companies that won large market share by cutting margins to the bone, or sometimes further. Apple is in the sweetest of all possible spots, and it would be lunacy to change the business plan.


The Need for Smarter Mobile Notifications

Push notifications on our smart phones and tablets are shaping up to be a central part of our experiences with those devices. The concept itself has many benefits, particularly where it lets us get information quickly and choose how to respond to that information. I have however recently had an experience with a notification that not only frustrated me but in turn forced me to conclude that we need smarter notifications.

The experience was several weeks back and it was with the CNN app. Tennis is among many of the sports I enjoy watching on TV. I especially like the major tournaments where 3 out of 4 are held in other parts of the world. The most recent major tournament was Wimbledon held in England. I watched many of the big match’s leading up to the championship between Rafael Nadal and Novak Jokovic.

Because of the time zone difference between the US and England the time for the championship match was on a Sunday morning. We had family things to do that morning so I set my DVR to record the finale. Perhaps you know where this story is going. Later that morning as we are driving around and I heard my phone alert me of a notification. Responding quickly to nearly every sound my phone makes, I quickly pulled it out to see a message from CNN saying Novak Jokovic had defeated Nadal and won Wimbledon.

Given that I was recording this match I would have loved to watch it without knowing the outcome. However the CNN app gives me no options to tell it not to send me any alerts related to sports or in even more detail which sports. Therefore the outcome was spoiled for me entirely and thus frustrating.

Perhaps deeper personalization of our phones would give apps the information necessary to know more about us and craft notifications that way. Or perhaps some level of context awareness could be used to dictate which notifications I receive and when.

Notifications are needed but they should also be smarter. However we solve this problem there needs to be a way for us to tell our smart devices which bits information we would like to be notified of and which ones we don’t need to be bothered with. This level of app personalization needs to be a key part of how we think about software in the future.

The Asus PadFone is a Glimpse of the Future

As a part of my work as an industry analyst I do a great deal of thinking about the future. Many of the projects we get pulled into and asked to add analysis on are related to the distant not the near future. This happens to be one of the things I love most about my job, thinking about the future and imaging what the world of technology will be like 5 years out.

Pat Moorhead wrote an article yesterday highlighting Why Convertible PC’s Are About To Get Very Popular. I agree these product designs have a place in the market and we will likely see a good deal of hardware experimentation through 2013. I however think another product idea may have much longer staying power.

Without going into too much detail on things I can’t go into much detail on, I want to use the Asus PadFone as an example of a future I think is highly possible. This future is one where the smart phone is the center of our personal connected ecosystem and in essence becomes the brains that power all the other screens in our lives.

We talk a great deal about the “smart screens” which will invade consumers lives and homes. Although it certainly looks like we are heading in this direction, I sometimes ask: “if the smartest screen is in our pocket why couldn’t that device power the others.” Thus eliminating the need to have a high performance CPU in all my screens.

The Asus PadFone is an example of this concept. In Asus’ solution the smart phone is the most important device in the ecosystem because it is the device with the brains. The smart phone has the CPU, the OS and the software. In the PadFone solution the smart phone slips into the tablet thus giving you a two in one solution.

The Motorola Atrix 4G employs a similar idea where the Atrix can be docked with a laptop shell. The laptop shell simply has a battery and a screen and the Atrix provides the rest of the intelligence needed to have a full laptop.

Both of these designs highlight something that I think gives us a glimpse of how our future connected gadgetry may come together. The biggest indicator for this future reality is the trajectory every major semiconductor company is heading in. Namely very small multi-CPU cores performing at very low power consumption levels.

We can envision a future where we could have an eight core processor in our mobile phones. An eight core mobile chipset would be more than adequate to power every potential smart screen we can dream up. In this model you would simply dock your phone into every screen size possible in order to make every screen you own “smart.” Docking your phone to your TV would create a “smart TV” for example. Docking your phone with you car would create a “smart car.” You could also purchase laptop docks, desktop docks, tablet docks, smart mirror docks, smart refrigerator docks, etc.

What’s also interesting about this model is that your phone can also power devices that don’t have screens. In this scenario you would be able to use your smart phone to interact with all your appliances without screens like washer, dryer, coffee pot, and others. We call these specific interactions “micro-experiences” where you use your phone to have experiences with non-screen appliances.

It is obviously way to early to conclude when or if the market could adopt a solution like this. None-the-less it is an interesting future to think about.

How The Internet Saved My Keg

If you are like me you have dozen’s of stories of how content from the Internet has helped you in some way. I often take the Internet for granted. Sometimes it takes a crisis where I use the web to gain obscure yet valuable knowledge to remind me of the power of the World Wide Web. I shared a story earlier in the year in my SlashGear column about how I got information, in real time from the web, to help me deliver babies from my pregnant goat. The crisis that time was due to a complication with the labor of one of our prized goats. This time however the crisis was with my keg.

I own a Kegerator, which is a small refrigerator specially built to house a keg and dispense cold draft beer. I emptied my current keg a few weeks ago and unplugged then cleaned my Kegerator. Over the weekend I decided it was time to get my next great summer brew. I plugged the Kegerator in and left to go purchase my next keg. When I got home my Kegerator was not cooling and I began to panic.

So as I always do when I am in search of information, I pulled out my phone and searched for reasons a refrigerator would not cool.

I quickly ran through the symptoms I found online until I identified the problem (the site I used was written by a fridge repair man who listed all the steps he would take to diagnose the problem). It appeared the coils were dirty and needed to be vaccumed and scrubbed. I quickly found a how-to-video on YouTube on how to properly clean and scrub refridgerator coils then followed the steps. I then plugged my Kegerator back in and sure enough it started cooling instantly.

Prior to the Internet how would I have solved this problem? Most likely I would have had to call an appliance repair service. Even in this scenario there would have been no guarentee that the refigerator repair person could have come out immeditely or even on the same day, assuming they were open on the weekend in the first place. It would have also cost a bundle to have emergency service done.

The bottom line is prior to the Internet I would have likely been sunk and run the risk of losing my entire keg. Every time I have one of these experiences where the Internet provides me with obscure yet timely and valuable knowledge I am amazed. We have a friend who actually used YouTube to learn how to replace her roof and did the entire job herself just using how-to’s from YouTube.

I ask myself is there any bit of knowledge that is not on the Internet?

A Sure Sign of Real Trouble at RIM

The senior Research In Motion executive who chose to vent his (or her) frustration in a open letter to Boy Genius Report may not have chosen the most graceful way to make those views known. But the writer may well have exhausted other means of communications. Certainly, RIM’s response suggests strongly that the increasingly troubled company’s leadership still isn’t hearing what it needs to hear.

The fact is that the open letter was an accurate analysis of the challenges facing RIM and was full of generally very good advice. The response is dismissive and described RIM’s current situation as a time when it is “necessary for the company to streamline its operations in order to allow it to grow its business profitably while pursuing newer strategic opportunities” after “a period of hyper growth.”

Streamlining and, above all, focus is exactly what the letter writer argued for. Mike Lazaridis and Jim Balsillie should give it another read with more open minds.