Tag: trends

MWC 2012: Clear Android Differentiation and Other Trends

I suspect that each MWC will be better than the last. This show, I believe, is quickly becoming the leading industry conference for mobile smart device technologies. Therefore, Mobile World Congress will be one of the shows were we can expect to dig into the trends of our mobile computing tomorrow. On that point, this year a few things stand out.

Android Differentiation
Bloggers, journalists, some pundits, etc, mostly seem to believe the world would be a better place if Google’s OEM partners simply did not change Android and just shipped a stock OS the likes of the Nexus line of devices. Unfortunately in that reality hardware companies go out of business. Therefore differentiation is key if pure hardware players hope to stay in business.

Related Column: Dear Industry Dare to Differentiate

After seeing many of the Android device announcements from the leaders like Samsung and HTC, it is clear they are fully marching down the path of strategically differentiating from the pack. This I believe is a good thing all together.

Samsung for example is taking a stab with their Galaxy Note line of products at differentiating their device experience by pairing it with a companion pen experience. HTC did something similar with the Flyer but has seemed to have abandoned that path for now. For Samsung however, including the pen as an accessory (which is where it belongs) has opened the door to bundling exclusive and proprietary software in order to enhance the pen experience. Samsung is shipping with the Galaxy Note Phone (I refuse to support the Phablet term), and the Galaxy Note 10.1 tablet, Adobe’s touch suite of products like Photoshop and Ideas. Samsung is also including their own S Note application for note taking and other useful pen experiences. Samsung is wisely using this strategy as a key differentiator and if you watch any screen media you will see their marketing is fully committed to this direction.

HTC has also been going down this path and has now furthered their strategy even more with the new Sense 4.0 UI.

Beyond Samsung, pen accessories at large seem to be a trend around Android tablets. LG announced their Optimus VU with a pen accessory and I expect pen accessories to continue to be used as a differentiator for the time being.

It is clear at this point there will be no stock Android prioritized devices by the OEMs, thus I question the market at all for Nexus devices. Throw on top of that the fact that the stock Android devices running the latest release take over a year to roll out in any large fashion. John Gruber makes a great observation:

Best to think of today’s Ice Cream Sandwich as a developer preview of next year’s mass market Android phones.

Focus on Device Family Brands
The other trend I am noticing, which is also a positive sign, is that HTC and Samsung for example are focusing more on family lines of devices. Peter Chou of HTC during their press conference announced that HTC intends to streamline their roadmap and focus HTC innovations. HTC kicked this off by releasing a new family line of devices called the One “series.” Their flagship product is the HTC One X which sports the latest Tegra 3 chipset from NVIDIA.

Samsung also is heading this direction with the Galaxy S series, Tab family and now with the Galaxy Note. Motorola also hopefully continues this direction with the Razr family. And Nokia as well with their Lumia line of devices. This direction is needed within the industry in order to stop the absurd device naming syndrome that has plagued many OEMs. When you have dozens of devices in channel all with different names and marketing material blitzing consumers with dozens of device names etc, the landscape can look incredibly confusing.

By focusing on a family line of devices, OEMs can differentiation and then position those differentiating features within a family line of devices for their appropriate target audience.

All in all, I am seeing some positive trends coming out of MWC 2012 that encourages me about the state of healthy competition within the mobile smart devices landscape.

You Can Never Have Enough Tablets

One of the things my firm focuses on is spotting trends within the technology industry. As a part of our constant search for trends we employ a concept we call “live the future now.” What this means, is that we as trend analysts, ourselves being early adopters, attempt to look for and implement things into our own work, play, family, life, etc, that we believe consumers may use technology for in the future. We also hunt out and study other people or groups of people, mostly early adopters, who are also using technology today the way we believe the masses will in the future.

So this column is going to be more about the future than the present.
Because I live and breathe this industry I also acquire quite a lot of technological gadgets as a part of this process. For the past six month’s I have been utilizing in different capacities no less than five and upwards of eight tablets at any given time all throughout my house. Not all my tablets are running the same core OS as some are iPads, some run Android and one runs Web OS. This helps me evaluate the strengths and weaknesses of a range of tablet operating systems and device features. Regardless of the OS I basically keep a tablet in every room of my house, except the bathroom, at all times. In basically every room where we spend significant time you will find a tablet of some shape or form. Living with a tablet in every room of my house is a fascinating experience. It is also a very convenient experience.

In the future I believe having access to these “smart connected screens” in every room will be a staple of most consumers’ homes in the developed world. What this enables is a situation where consumers don’t need to carry their tablets with them from room to room. They simply move to each room and as necessary, at their convenience, pick up the closest tablet and begin using it.

In my own experience doing this, I found that quite often I simply wanted to look something up on the Internet. What I looked for was the most convenient screen to access the Internet with. My notebook is rarely near me on the couch or bed and my smart phone suffices but the screen is a little to small for the job most times. This is where tablets come in. They are more mobile than notebooks and sport bigger screens than smart phones. And when you have one in every room you don’t have to think about bringing your tablet with you or where you left it last. Having a tablet in every room ready to be picked up and utilized was not only extremely convenient it was also extremely useful.

Now in this reality we must recognize that we may potentially shift from tablets being mainly personal computing devices to perhaps more communal computing devices–at least in the home environment.

Shift from Personal to Communal Screens
With the role of the personal cloud, I can see a situation where you just pick up the most convenient tablet/screen to your proximity, in whatever room you happen to be, log in to your personal cloud, and instantly the tablet becomes “your tablet.” It would contain all your personal settings, preferences, access to media, etc.

In this environment what is personal is your cloud not the device itself. This is a different take on the concept of personal computing. This of course does not mean that we consumers will not own personal computing devices, like smart phones for example, but that there will also be screens we use in our daily lives that are not personal but more communal. The personal cloud we subscribe to is what turns any screen into our personal computing platform for the amount of time we choose to use that screen as such.

Google’s Chrome OS is very similar in concept to what I am outlaying. Any person who has a Google account and has invested in the Chrome OS, via a ChromeBook, could log into my or any ChromeBook and begin using the device as if it was their own. When this concept makes its way to tablets I believe it will enforce this idea of a screen agnostic tablet, in every room, future that I am outlining.

Now of course for this to happen the cost of tablets will have to come down. That is why I pointed out at the start of this column that I am talking more about the future than the present. However, what if someday we can sell a $99 or less tablet that runs a very light OS, with access to cloud services, and wi-fi? Another way this reality could happen is with a hardware-as-a-service model where as a part of a subscription, perhaps to your cable provider, the devices are provided for free.

The bottom line is that over the next five years the BOM cost of tablets will come down. If these devices rely more on the cloud than native software, some of the costs will move from the device to the service. Making the hardware more affordable as it relies more on a service to become “personal.”

It is with these types of “smart connected screens” that I believe we will see the explosion of devices into consumers homes. Prior to tablets we may have assumed that the dominant computing screen in consumers lives was going to be a notebook PC. In essence we would have said that there would be a notebook in every room, owned by every consumer. I think we are rapidly learning that, that future is going to be given to tablets.

Tech Trends and Disruptors to watch in 2012

You may not know it yet, but when we end 2012, we will look back on it and realize that it was the most disruptive year we will have had in personal computing in over a decade. In the next 12 months, the market for personal computers of all shapes and sizes will have changed dramatically and I believe we will see at least one of the top 10 PC vendors leave the PC consumer business completely.

So what will be the major disruptive forces that could re-shape the PC business starting in 2012? There are four technologies and trends in the works that I believe will force the computer industry in a new direction.

The first will be Intel and their partners huge push to make ultrabooks 40% of their laptop mix by the end of 2012. Although I don’t believe they will achieve that goal, especially if ultrabooks are priced above $899, the fact is that ultrabooks are the future of notebooks. Instead of thin and light laptops driving the market for laptops as they are now, ultrabooks, which are thinner and lighter with SSDs and longer battery life, will eventually be what all laptops will look like within 5 years. The heavier and more powerful laptops that exist now won’t go away completely as there are power users who will still need that kind of processing power. But ultrabooks will be the laptops of the future and 2012 will be the first year of its major push to change the portable computing landscape.

There is an interesting twist with ultraportables that could be even more important starting next year. This will be the introduction of ultraportables with detachable screens that turn into tablets. In the past, this hybrid as it is called, ran Windows when in laptop mode and Android when in tablet mode. But this approach was dead in the water from the start. But with Windows 8 tablets ready to hit the market next fall, you will see ultraportables with detachable screens that will run Windows 8 with the Metro UI on the laptop and Windows 8 tablet version with the Metro UI in tablet mode. This would bring a level of OS consistency across both device modes and I think that this concept is a sleeper. In fact, if done right, this alone could reshape the traditional PC market in the near term.

The second major disruptor will be the acceptance of tablets in enterprise in greater numbers in 2012. Although IT directors will still be buying laptops, there is a real push by some to add tablets to their overall business use cases. At the moment, Apple has a huge lead here with 475 of the Fortune 500 either buying iPads for deployment or pilot programs and some, like American Airlines, United Airlines and SAP have each bought 10,000+ iPads for use in their IT programs already. As for Android in IT, that boat has sailed. Google screwed up their version releases of Android and not one IT director I have talked to is willing to trust Google with their Android roadmap always being a moving target. And don’t get me started on Android’s security risks. Recent reports that 37% of all Android Apps have some sort of bogus code or malaware has pushed Android out of most IT discussions.

Instead, the option to the iPad that is really on their radar is Windows 8 for tablets, especially the version done for Intel processors. What they want is the ability to run Windows apps as is on a tablet even though they may actually write their own custom programs for Windows 8 and its Metro UI as well. But this is sort of comfort blanket to them and this Windows 8 tablet has many, especially hard-core Windows shops, waiting to see how good Windows 8 will be when it debuts in Oct of 2012 before making a final decision on what device/platform they will integrate into their IT programs over the next 5 years.

The third disruptor will be the proliferation of tablets at the “low” end of the pricing spectrum, which will give birth to the “good enough” category of tablets. There is no question that the iPad will pretty much represent the higher end or “most” desired tablet, but for many, $499 is still too steep a price for them to buy into a product category that they want to participate in. Even with this competition, Creative Strategies has still forecasted that Apple will sell north of 70 million iPads in 2012. But the Kindle at $199 and the Nook Tablet at $249 has opened up the tablet market to millions of new users who will jump on the tablet bandwagon in 2012. This will be the most explosive year for tablets yet and by the end of 2012 we estimate that well over 120 million people WW will be using a tablet of some kind for personal and business use.

The fourth disruptor that will impact the 2012 computing and mobile market is related to processors. By the end of 2012, Intel should have its latest version of Atom that will have it greatest level of processing power and low voltage efficiencies built-in. That means that for the first time, Intel can aggressively compete with the ARM processors for smartphones and in some tablets where low voltages is important. Although Intel is very late to the mobile processing party, you can’t count Intel out, as they are known as a very powerful competitor. And, being this late, they could be very aggressive in pricing to buy into this market in a big way.

The other thing related to processors is the fact that Windows 8 for ARM should debut in 2012. That means that, at least in principle, the ARM guys can start going after the ultraportable market as well. On paper this is good news for the consumer as it could help rapidly bring prices for ultrabooks down. However, Windows programs cannot run on ARM processors as is and apps will need a lot of re-written code as well as UI enhancements to work on this new device platform. But the ARM camp is pretty excited about being able to move their chips upstream and supporting Windows 8 and this dynamic alone will shake up the market in 2012.

As for a top 10 PC vendor pulling out of the consumer PC business, I think that this is inevitable. All of the PC vendors are working on 5% or lower margins for their PC’s sold and given their costs of advertising, overhead and channel support, it is really hard for any of them that do not have a major enterprise business to help bolster profits through software and services, to compete. That is why I believe that at least one of the top 10 PC vendors pull out of the consumer market by the end of 2012.

Yes, 2012 will be a most interesting year in computing. And with these disruptions in the works, it is poised to perhaps become most explosive year we have seen in some time when it comes to altering the direction of the PC market.

Highlights of KPCB’s Mary Meeker Presentation at Web 2.0 Summit

One of the smartest people covering our industry is Mary Meeker, formerly of Morgan Stanley and currently with VC giant Kleiner Perkins. This week she gave a major presentation at the Web 2.0 summit and as usual, here material is stellar and significant.

Image Credit: Matthew Ingram
Here is the link to the presentation itself and in this post I want to highlight a couple of her observations.

In slide 6 Mary points out that the top Internet properties by global monthly unique visitors are, Google with 1.1 billion, Microsoft with 850 million, Facebook, with 775 million and Yahoo with about 700 million. Interestingly by her account, Apple only gets about 300 million unique global users and China’s Baidu, the largest search engine in China, records just about 210 million per month.

From these charts you can see that the real power brokers are Google and Microsoft and along with Facebook and Yahoo they have the most influence through the Internet around the world. With this type of power, comes significant responsibility. These are huge numbers and you can see why the battle between Microsoft and Google is so fierce. Ultimately, these eyeballs translate into billions of dollars in quarterly earnings and keeping this type of momentum with consumers is critical for all of these companies growth. One really interesting note to this is what if Baidu buys Yahoo. Jack Ma, CEO of Baidu has stated he wants to buy Yahoo and merge it with Baidu. If that happened, could a Chinese company become the biggest Internet player influencing the Internet World? This is one to watch.

In slide 7, she points out that China added more Internet users than exist in the USA.

Another interesting data point is in slide 8 where she shows how many hours are spent on social networking sites per month in certain countries. Israel leads the pack with 11.1 hours, followed by Argentina with 10.8 hours, Turkey 10.3 hours and Chile at 10.2 hours. And the USA is last on her list at 6.8 hours per month.

On slide 13, she shows that smart phones have surpassed feature phone shipments in W. Europe. But in slide 14 she puts this into perspective by pointing out that there are 5.6 billion mobile phone subscribers WW and that only 835 million have smartphones. The upside in smart phone growth will be spectacular. In fact, in our research projections we believe that by the end of 2102, 65% of US cell phone users will have smartphones and by 2015, 65% of WW users will have smartphones.

In slide 17 she gives the numbers to show that at the moment the smartphone and tablet market is a two-horse race. To date, cumulatively, Apple has shipped 129 million iPhones while Google has shipped 152 million Android Phones. At the moment, Apple has shipped 29 million tablets to Androids 16m WW. Although with Apple’s numbers released yesterday on iPad sales for this last quarter, they are closer to a 39 million installed base now and we believe it will top 50 million installed base by the end of Q4 2011.

A most important slide is #20. This outlines the sharp growth in mobile advertising and highlights the fact that quarterly smartphone mobile ad impressions have grown from 37 billion impressions in Q 4 2010 to Q3 1011, which had 250 billion mobile ad impressions.

Mary ends her slides with these comments;

On the economy

“Often darkest before dawn. At least we know what the problems are. Now we need the resolve to fix them. Across-the board sacrifice in needed.

On the tech industry

Wow! Unprecedented times! If you can keep your head when all about you are losing theirs. * Rudyard Kipling- “if”

These are just some highlights of a deck of 66 slides and a rather thorough presentation. But if you follow the tech market, it is worth spending time perusing this presentation as it has a lot of good information to think about.

Why Microsoft Should Buy HTC Not Nokia

I don’t want to be in the predictions business. I like being in the industry analysis business. However to be an effective analyst and in particular focus on industry trends like my firm does we need to not only analyze the current markets but what the future markets may look like as well. Sometimes we are lucky enough to have some of our forward thinking analysis come true.

When I wrote the column on why Google Should buy Motorola two weeks ago, it was part of my own internal excersise to anticipate possible scenarios based on which companies are more valuable competitively together rather than alone. We do this often because we do a great deal of competitive analysis.

As I stated in my Techland column last weekend, the industry has changed. With the announcment of the Google / Moto deal and the HP PC division spinoff, companies will be forced to opperate very differently if they want to compete and stay relevant.

It is inevitable at this point that we see more large company acquistions or mergers and/or more companies exit certain business’ to focus on more profitable ones.

As I stated above, some companies are more valuable and competitive together rather than alone.

Many believe that Microsoft should buy Nokia, including our president and my father Tim Bajarin. It is hard to argue with his logic or his historic background in the technology industry. In his article on the subject, he pointed out that a vertically integrated Microsoft and Nokia would have a better chance of competing with Apple and Google/Motorola in the future.

I can certainly see Microsoft buying Nokia, but if I was Microsoft I would buy HTC.

HTC Needs More Than Hardware

I’ve stated almost everywhere I write and give keynotes that making money on hardware alone in consumer markets is extremely difficult. If you don’t have proprietary value to add to your hardware to differentiate yourself in the market and drive extra revenue, then you have a rough road ahead.

HTC has always taken this approach and understands this. The problem is their software partners Microsoft and Google don’t want them customizing their software and makes it increasingly difficult for HTC to do so. I don’t see this changing anytime soon.

This is why many in the media have rightly made the point that HTC could benefit greatly from webOS. I completely agree, however it is yet to be seen whether webOS gets spun off with the hardware business. If it doesn’t then one strategy would be for HTC to license it, but again the question of differentiation will come up.

Microsft Needs More Than Software
I believe the trend to verticalization in this industry is real and signficant. The fact of the matter is optimizing software for hardware is a challenging task when an OS is licensed. Steve Wildstrom points out in this article the challenge with open(licensable) operating systems. Apple accomplishes this better than anyone because of their control of the hardware, software and services related to the Apple ecosystem. Apple’s model is closed but it is also a complete holistic ecosystem. And it is obviously working.

Microsoft has two of those three elements and if they want to control their own destiny they need to either enforce much more strict requirements of hardware or they need to own a hardware business for smart phones, tablets and possibly more.

I don’t think enforcing more hardware restrictions is the right path because it doesn’t allow for differention. Microsoft with Windows Phone and Google with Android are not positioned to help their partners differentiate. This is a strategy that will suffocate hardware only players.

The bottom line is that in the future consumers will gravitate more toward ecosystems rather than products. That ecosystem will consist of hardware, software and services.

Companies who orient themselves to build products will have very little consumer loyalty in future product decisions. Companies who build ecosystems will find more loyal customers year after year. In this column I point out why some ecosystems are more sticky than others.

HTC and Microsoft could together become a very powerful global player in mobility. HTC makes great hardware and has some excellent software expertise as well. Both benefit Microsoft greatly.

Competing with Apple is for many companies the worst thing to try and do. However if Microsoft bought HTC I would argue that together they have the best shot.