Pardon My Disruption: March Edition

Posted on March 19, 2013 by jyarmis

I’m a little late getting this post up here — we recorded the session a little over a week ago — but better late than never.  And for the second time in a row, snow interrupted our plans so instead of recording with a live audience at the Stamford Innovation Center, we participated remotely (using Google+ hangouts).  I do need to work on my video skills. Despite having two lamps just out of camera range, my lighting is suboptimal.  Then again, my pretty face is never going to carry the day… 🙂

For those of you who want to watch the full video (an hour), you can find it here.  This month, we talked about:

  • Yahoo and Marissa Mayer’s work-from-the-office edict
  • Groupon’s CEO resignation
  • The new Facebook feed
  • Microsoft’s EU fine
  • iWatch (we didn’t really talk about this in the video here but I’ve got a few observations)

Yahoo and Working from Home

This is odd, coming from someone who has spent large portions of the last 20 years working from home and who is such a big believer in collaborative technologies, but I totally understand and support Marissa Mayer’s decision to require Yahoo employees to work from the office.  Fundamentally, she inherited a broken company.  I’m a member of a group called the Internet Oldtimers and one of the group’s members described the scenario perfectly.  He said that good people in a bad system become bad people whereas bad people in a good system become immediately evident.  Yahoo had a bad system which encouraged even the best of people to perform at substandard levels.  How do we know Yahoo had a bad system?  Mayer came from Google, as data-driven an organization as I’ve ever encountered, and simply, she went to the data.  It would be one thing if people were working diligently from home but the data just showed another story.  Mayer looked at the VPN logins and quickly discovered that people weren’t connecting to the company’s internal network.  It’s one thing to say collaborative tools enable remote working.  It’s a whole other scenario when your workers aren’t using the collaborative tools!  They didn’t even bother to fake working very well.  Yes, the system was broken.  You could argue that this is a draconian step and that it will cost Yahoo in terms of current employees and ability to recruit new staff.  That may be true but the bigger challenge is reorienting the organization and bold, decisive moves are required.  I don’t expect this to be a permanent work condition but until and unless Mayer showed her commitment to a new Yahoo, she would have been merely rearranging deck chairs on the old Yahoo.  I applaud and support the move.

Groupon’s CEO Resigns

Too much of this story has been about Groupon’s ex-CEO Andrew Mason and his polarizing style, his company accounting challenges and his flamboyant resignation (refreshing in its candor). I actually wrote about Groupon over two years ago, questioning their business, and in the intervening time, I think their challenges have only grown larger.  Here are the fundamental problems for their business (and not just theirs, but LivingSocial and many other daily deals purveyors):

  • The deals are not great for merchants.  They’re indiscriminate, send a bad message, encourage “bad” business, don’t help the merchant’s information-gathering and give the merchant almost no control.  Other than that, they’re great. LOL
  • The wrong party is in control.  Deals should be structured, offered and managed by the merchant itself.  You should be able to offer deals whenever you want to whomever you want.  My favorite talking point here is to use the example of a donut shop.  Let’s say you’ve had a slow day and it’s looking like you’re going to have to throw out a bunch of donuts.  Wouldn’t you want to run a deal at the last minute, just in time for the evening rush hour, offering a special? You could make this look like a customer incentive for your best customers instead of the existing model where you’re discounting products/services that your loyal customers have been paying full price for.  You could make this decision at 4 p.m., instead of weeks or months in advance.  You could do this every time your inventory is high instead of once every few months.  This is a fundamental problem of approach for Groupon and its ilk, and not one a new CEO is going to solve.
  • To feed the public market appetite for growth, Groupon moved from daily deals into an adjacent market, Groupon Goods.  I’ll never understand why companies move into businesses that jettison much of what’s attractive in their legacy business.  The great thing about the daily deal business is that you have no inventory.  Your only three cost buckets are technology, marketing, and your sales commissions.  This is a business with minimal risk as you can align costs relatively easily to revenues.  With Groupon Goods, you’re now taking possession of inventory.  If you don’t sell it, you’re stuck with it…or you have to lower prices, cutting your margins.  Before this, Groupon could have been run out of a phone booth.  Your servers were in the cloud, your salespeople were on the phone or on the road, your inventory was totally digital.  Instead of pushing, and fixing, the core business, Groupon went broader.  Big mistake in my mind.

The New Facebook Feed

Facebook is rolling out a new look and feel.  Again.  I wrote about this challenge even longer ago, almost four years back now.  Back then, the challenge was competing with Twitter and its real-time impact.  That challenge remains to this day and we’re now hearing of Facebook’s plans to incorporate hashtags, mimicking yet another Twitter feature.  Facebook is now fighting battles on multiple fronts.  In addition to Twitter, there’s now a battle for approach and design with Pinterest and Instagram.  Yes, I know Facebook now owns Instagram but if you look at Instagram, Pinterest and even Microsoft’s new platforms, you’ll see a more richly graphical approach.  I won’t get into this approach…well, maybe I will, briefly.  I think much of this is eye candy at the cost of value, information and time.  A picture may be worth a thousand words in some contexts, but in a lot of these instances, I’d rather see the thousand words or at least something that conveys greater value than just an image and a text headline.  I think a lot of the motivation behind this approach is to get people to actually click through on something.  More clicks = more opportunities to display ads or at least pump up your metrics.  For the user — at least for me — more clicks = more time to get to value.  I really don’t like the approach.  But Facebook seems to be embracing the approach, whether it’s to increase its advertising footprint or contain Pinterest.  There are laudable goals in the redesign — more easily connect users with the information they want to connect with — but I’m not convinced this is the real motivation or, if it is, that this redesign accomplishes that goal.  But as always, we’re stuck with it.  Expect to see tons of posts from your friends decrying the new approach…until we accept that this is the way it’s going to be.  Oh well.  At least maybe they’ll fix the multi-columnar approach, the logic of which I still can’t figure out.

Microsoft’s EU Fine

Microsoft was fined $731 million by the European Union.  Why? Because it didn’t fully implement its deal to open up the browser market to competition, a deal struck in 2009.  At that time, Microsoft had a near-dominant share of almost 80% of the desktop market.  We all know what’s happened since then. Despite not keeping up its bargain, Microsoft’s share has steadily decreased and it now represents only about half of the desktop market and, if you factor in mobile, considerably less than half.  In fast-moving markets like technology, somehow markets do a better job of adapting to competitive situations than governmental remedies.  I’m not saying that the EU’s fine was misguided — they have to enforce their agreements — I’m just saying that the EU sanctions were, and continue to be, largely ineffective.  Fining someone for four year old behavior (several generations in Internet time) while failing to act on current issues is, unfortunately, what we’ve come to expect from governmental bodies.  I’m not advocating that they go sue Google but if they’re genuinely concerned with fostering real competition, going against emerging and existing monopolists with sanctions with real teeth would be much more impressive than what amounts to a (soft) slap on the wrist to a former monopolist.  If anything, this action would encourage me if I were considering a current offense.  If this is the timeframe and scale over which remedies will be extracted, it’s no deterrent at all.

iWatch

Somehow I can’t get excited about this one.  Perhaps Apple’s going to surprise me.  Again.  But I just don’t see an iWatch as the product which is going to reinvigorate Apple’s prospects.  Back at the beginning of the year, I said their big opportunity is the digital home, and I stand by that belief.  Yeah, yeah, the watch market is a $60 billion market.  But if you’re under about 28, you probably don’t wear a watch.  Can Apple make it cool?  Probably.  But the trend is to bigger screens, not smaller, and I’m just not convinced that anyone can make a watch a compelling companion to my smartphone, and make no mistake about it, this will be a companion product.  I feel bad enough when I have to shell out $100 with every new phone for screen protectors, batteries and the like.  Is it that much more powerful to have reminders on my wrist instead of in my pocket?  Perhaps it could be a little more interesting if it incorporates the emerging niche category of activity monitors like Jawbone’s Up.  We’ll just have to wait and see.

What’s perhaps most problematic for Apple is that their time to market advantage may be non-existent.  Apple has had huge market advantages when it has launched its category-defining products, with competitive responses often lagging by a year or more.  Not so with the watch.  In fact, while the Apple iWatch remains merely a rumor, Samsung has come public with its intention to do one, and its indication that it has been working on it for a long time.  While I question how genuine that effort was prior to the Apple rumors, it’s clearly a different world when a rumored Apple product introduction is met by immediate competitive responses, not stunned gasps of “they did it again.”

What’s Next

In addition to these timely news items, we talked about a couple of larger thematic subjects:

  • The “IT-ization of consumers”
  • What’s next, after social, mobile and cloud

I’m not going to get into these here and now — this blog post is already long enough — but i’m going to write at greater length about these topics in the coming weeks.  I identified social, mobile and cloud as my three disruptive trends, over five years ago.  As they begin to coalesce as I predicted, people started to ask me “so what’s next?”  For a long time, I answered that with “more commercialization and better integration of those pillars.”  We still have a long way to go there. But I already see the seeds of the next big transformation which will, once again, change the face of technology and business.  I just love that about this business; it’s never static…even while we all struggle to keep up with the pace of change and have to fight to incorporate new technologies and approaches.  But the next change is coming and I’ll start surfacing that soon.  (If you want a head start on your competition, you know where to find me.)

 

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Pardon My Disruption, Episode 3

Posted on February 12, 2013 by jyarmis

Pardon My Disruption, Snowbound Edition

I have been working with the Stamford Innovation Center to produce a monthly show I call “Pardon My Disruption.” I am a big fan of the ESPN show “Pardon the Interruption” in which two literate sportscasters (no, not an oxymoron but clearly a small universe) banter about and debate the news issues of the day.  If you’ve never seen an episode of PTI, you can watch it here.  It’s a great format and if you’re interested in sponsoring this for technology in a big way, get in touch with me.  I’m really going to see if I can get this done.  Until then, I’m taking this tentative first step with the Center’s Marketing Director, Peter Propp.  We generally do this live the second Friday of every month at the Innovation Center but with Nemo hitting the region last Friday, we did the session remotely (using Google+ Hangouts).  You can enjoy the show at the link which opens this post.

Our subjects this time included:

  • Meetup.com
  • Dell goes private
  • IBM Connect trip report
  • The New York Times gets hacked: Cybersecurity

Meetup.com

Meetup is one of the best kept secrets of social media.  Some of you may remember the blockbuster 1988 business book Megatrends by John Naisbitt.  That was one of the very first business books that captivated me and to this day, I remember Naisbitt promulgating a “high tech/high touch” philosophy.  (This wasn’t the dominant theme of the book but is one of the points that sticks with me to this day.) Remember, at this time, technology was nowhere as prevalent in our lives as it is today.  At this point, Windows was still a new product, the Mac was still in its infancy and the leading PC manufacturers were Compaq and IBM.  Anyhow, Naisbitt’s point was that the more technology invaded our human lives, the more we would have need for a human touch to counter the impersonal nature of computer interactions.  Even as we move more interactions to social platforms, email and other technology-based platforms, it would be folly to forget Naisbitt’s forecast.  Tweetups — where Twitter users actually get together in a physical location — and Meetup are two of the more obvious manifestations of this phenomenon and bring with them a power that’s not present in virtual-only communities. We’ve seen this with getting Pardon My Disruption off the ground.  We tweet about, we Facebook and LinkedIn it, but the largest driver of traffic to the physical event is Meetup.  If you haven’t looked at Meetup, you should.  Some of my best meetings of a month are Meetup groups (New York Tech Meetup, New York Enterprise Tech Meetup) and I find a fair number of social activities there as well (e.g., the Bucket List Bunch).  The New York Tech Meetup is a powerful force in the New York tech community and gathers over 700 people to an NYU auditorium every month.  Getting tickets to it is akin to getting tickets to a Springsteen concert on Ticketmaster; you have to keep clicking refresh on your browser and get tickets in the first 10 minutes they’re available or basically they’re sold out.  A powerful platform to bring people together physically.  How quaint in this virtual world.

Dell

I’ve often chided Google for being a one-trick pony…but it’s a damn good trick.  Dell (nee PCs Limited) came up with a great trick 30 years ago — build PCs to order.  In the intervening years, even slow-moving behemoths like HP have caught up with that trick and it’s now an industry standard.  Meanwhile, Dell has tried to change the story, moving upstream into servers, networking and services.  But it has been a slow slog. In today’s next quarter obsessed world, it’s hard to make radical surgery on a company.  And make no mistake about it, Dell needs radical surgery.  Going private doesn’t solve their problems, by a long stretch.  Even as a public company, Dell has, charitably, underperformed in its efforts to remake itself.  You just have to scratch your head and wonder how so many tech stalwarts managed to miss the mobile and cloud revolutions. And Microsoft’s involvement in the Dell financing only complicates matters or, more troublingly, sends the message that Dell’s “reinvention” won’t be so different from today’s Dell. And this deal leaves Michael Dell firmly in charge and one has to wonder if he’s the man to lead the reinvention.  Dell has largely been off my radar screen for a decade.  We’ll see if this move leads to a more disruptive Dell or just incremental, and insufficient, changes.

IBM Connect

I’ve posted recently about IBM Connect and the remake of IBM so I won’t say much here.  The only thing I’ll add here is a few thoughts about the impact of its Smarter initiatives internally.  While suggesting that the external market may not be precisely aligned with the way IBM is selling its collaborative solutions, there’s no ignoring the fact that the Smarter message has served to focus and align the company internally.  It’s almost nauseating  how universal IBM people talk about Smarter this or that.  It permeates all levels and functions of the organization.  One of the challenges of large companies in a fast-moving world is getting all facets of an organization focused on a consistent and aggregated message.  IBM’s ability to get the disparate business units aligned around consistent messaging and even more, deep product integration is a truly remarkable accomplishment.  If customers start to align with IBM’s messaging, IBM is unassailable. No one can deliver what IBM is delivering.  It’s a big if, but as a long-time IBM watcher, a fascinating story to watch unfold.

Security

As much of a technology lover as I am, in my rare dark moments, I have grave concerns about the fragility of the systems we’re building.  Quite simply, no one really understands how they all work and so that leaves us vulnerable in some deeply troubling ways. From what can only be called state-sponsored cyberwarfare down to more mundane financial theft, we live in fragile and troubling times.  The solution is not simple, complicated by the disgusting politicization of this issue in Washington. I won’t turn this into a political screed but instead in the webcast, we focused on what we as individuals can do.  Bottom line:  you need better password practices.  It used to be that we didn’t want to write our passwords down because the biggest risk was someone sitting down at our computer and stealing things.  Now the biggest risk comes from someone who steals your password over the Internet.  For those of us who can’t be bothered to have different passwords for different sites, once they’ve got your password, they can harvest it in myriad ways.  So, do what I’ve done.  Get a password manager — I use Dashlane — and make sure you have strong passwords and different ones for every site.  And if you’re concerned about the security of the password vault, and it’s a legitimate concern, write your passwords down…or get used to the “reset password” function of your web sites.

—–

See you March 8 at the Innovation Center.

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Stalker Heaven: Snap a Picture, Get an Identification

Posted on March 31, 2011 by jyarmis

I’m generally someone who lives a very public existence and suggests that most people get used to that notion.  Google, however, is about to test our limits here.  They’re apparently about to introduce a mobile application comparable to their existing Goggles but instead of identifying places, it identifies people. [UPDATE:  Google denies working on such an app or at least terms it speculative.  In any instance, my observations below stand.]   Even to me, this one is creepy.  They’re already defending it by saying the default is “opt out” and that users must explicitly choose to share their pictures and information.  I have so many problems with this approach that I can’t begin to address them all.  But here are just a few:

  • “Informed consent” is only reasonable where the individual involves is making an “informed” decision.  Are people really going to read the fine print before they opt in?  Of course not.  And even if they did, is Google going to manage things in a “do you really want to do this” fashion or are they going to say “great, you agreed, let’s move on and forget about what you’ve really just done here.”  They’ll do nothing to discourage participation.
  • These things are a moving target.  Remember when you signed up for Facebook?  If it was more than a year ago, your privacy options were fairly limited then.  Only under extreme scrutiny and now the threat of governmental intervention has Facebook made its changes and defaults more open and user-friendly.
  • We’re doing things we never thought about when we signed up for a platform.  Facebook at first was about connecting with “friends” and sharing status messages.  We’re now sharing pictures and, even more  intimate, location.  I’ve only friended people on Foursquare (a location-based service) who I care to have know where I happen to be.  I’ve got over a thousand friends on Facebook, some of whom I don’t care to have know where I’ve checked in and where I happen to be.  I’ve set up a group on Facebook called “location OK” and have only included those friends whom I’m comfortable having know where I’m located, and I’ve set my privacy settings on Facebook so that Places check-ins can only be seen by members of that group?  Have you done that?  Do you know anyone else who has done that?  Probably not.  You set up your settings for a use case that may no longer be the case, and haven’t adapted.  This “creeping  incrementalism” has made it easy for you to ignore this stuff.  Managing Facebook and Google is no longer simple.
  • Deep integration.  You have no idea how much information you’re sharing across networks.  Every time you click “allow” to sign in with Facebook or Twitter, you’ve set up a data-sharing arrangement that goes well beyond what you ever intended.  Go look at your Twitter and Facebook settings and see how many people you’ve enabled to have access to your data and credentials.  I’ll bet you don’t even know what half of the things you’ve got in there are.  When I sign in like this, I change their default setting so that the approval is good for one day only.  Of course the default is “until revoked” which is polite language for saying “forever, because you’ll forget about this 10 seconds after you clicked it.”

As I said, I could go on and on.  So what’s going to happen here.  The scariest thing is that this mess has created a situation where the government’s going to step in to help save us.  Yikes!  Grandstanding politicians.  Just what we need here.  What we really need is for someone to create a really great privacy management tool that helps us manage all the complex relationships we’ve established and manage all the information we’re sharing in an easy-to-use, coordinated, centralized fashion.  Apple and Facebook and Google and Amazon are going to fight you at every step.  That leaves you, Microsoft.  Symantec?  Cisco (who needs to boost its consumer initiatives anyhow)?

Someone tell me a legitimate use case for this software, beyond stalking.  “I should know their name but I forgot”?  “They look familiar but I’m too embarrassed to ask”?  If this were anyone but Google (or other big players), I might ignore this app.  But Google?!  Do no evil??  This will be used for evil.

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Microsoft Tries to Derail the Barnes & Noble Juggernaut (!?)

Posted on March 24, 2011 by jyarmis

In the legal morass that is Android comes the latest news that Microsoft is suing Barnes & Noble, alleging patent infringement.  Think about the surface absurdity of that one.  Microsoft suing Barnes & Noble.  Even The Onion hasn’t contemplated this scenario.  So, what’s really going on here.

At a macro level, here’s what’s happening:

  • These kinds of patent lawsuits are so common that I’ve almost stopped looking at them altogether.  Usually it goes like this:
    • Someone sues someone else.
    • The someone else counter-sues.
    • The two companies exchange patent cross-licensing agreements, usually with one side or the other having to kick in some cash.
  • There’s a slight twist to the whole Android scenario, again though one that’s not uncommon.  Most of these patent lawsuits have focused on Android licensees and not the deep-pocketed Google.  It only makes sense to go after the weaker players, albeit ones with sufficient funds to pony up.

What are all these people suing in the Android space trying to accomplish?  It’s real simple.  If you’re trying to sell an operating system into a market where Google is giving it away, you need to make the OS appear not to be free.  In other words, you may not pay for the OS but by the time you factor in legal costs, your free OS all of a sudden isn’t so free.  Somewhere along the line, Google is probably going to have to ante up to help its partners by resolving all of these patent infringement issues.  It probably means Google’s going to have to write a check.  The good news:  they’ve got $34.9 billion in cash on hand and are printing more each quarter.  So much for the chilling effect on Android licensees.

What’s particularly interesting about the Microsoft/Barnes & Noble case is that presages interesting competition in the tablet marketplace.  Why should anyone be worried about Barnes & Noble or, by extension, Amazon?  The Barnes & Noble Nook e-reader actually runs on Android.  In effect, they’re selling a specialized Android tablet for $249.  How can they do that when the rest of the Android tablet marketplace is horribly overpriced as I’ve recently blogged?  Welcome to the new world of ecosystems and razors and razor blades.  Amazon and Barnes & Noble can sell these devices at low (or no) margin because the economics of incremental margin on the razor blades (books and other digital content) is so compelling and predictable that it pays to seed the market with devices.  That’s another reason why Apple, asides from supply chain efficiencies, can sell the iPad so competitively.  It can count on a reasonable income stream from the AppStore while in the Android space, those margins go to Google.

Yes, I know that the Nook and the Kindle are not general-purpose tablets.  Today.  But the color Nook is pretty darn close.  The Wall Street Journal’s Brett Arends even recently told readers how to turn their Nooks into tablets.  He overstated his case to make a point:  Barnes & Noble can do this easily and likely will.  If not, they deserve to follow Borders into bankruptcy.

Netting it out:

  • Google is likely to have to share some of its profits with its ecosystem to cover legal exposures.
  • Google is likely to have to share some of its app store revenues with partners.  Otherwise, the situation with competing app stores (already a fracturing standard) is going to get (much) worse rather than better.  They need to do this one quickly.
  • In other words, Android tablets need to get cheaper and Google will have to share its app and advertising revenues to make that happen.
  • Players like Barnes & Noble and Amazon can become strong players in the tablet marketplace because they have the economic model and ecosystem to compete with Apple.  Selling hardware alone is not much fun these days, and is only going to get worse.

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Why Letting AT&T Buy T-Mobile Sucks for All of Us

Posted on March 21, 2011 by jyarmis

Letting AT&T buy T-Mobile sucks.  Even more insidious are the rumors that regulators have already given this a wink-wink approval.  Why does this suck?  For many years, we Americans lived in a mobile telecommunications backwater.  Large portions of the industrialized world had better, more advanced telecommunications systems than we did and even emerging markets were leapfrogging over our infrastructure and approach.  Then along came Apple.  Regular readers here know I’m no fan of Apple’s business practices but give credit where credit is due.  Apple knew it had something big and knew that it could strong-arm one of our carriers into playing business by its terms.  So committed was Apple to this approach that it was willing to go with AT&T when we all knew, and have come to see more and more, that its network sucked.

Apple begat Android and for a brief period of time, we lived in a world where capabilities and platforms and ecosystems ruled, not carriers with their focus on profits at the complete expense of user experience.  We were already seeing how much carriers hated that world.  Have you seen the crapware loaded on your phone these days, crap that can’t be removed?  Look at Skype on Verizon’s Android.  I can download Verizon’s version of Skype (and not uninstall it after that), which not only just works on 3G, it requires that you turn off WiFi (so that no other applications can access WiFi while you’re Skyping).  I’ve never understood this but I’m guessing that Verizon is scared enough of Skype as a competitor that they want to give it minimal functionality.  This also means that I can’t use WiFi for Skype internationally, even while Verizon’s CDMA technology is deployed only in a few other countries around the world.  Oh by the way, I can download Skype’s version of Skype, but that works only over WiFi.

Get used to it.  This is the world we’re going to see.  We’re likely to see a trifurcation of the app store world.  Trifurcation?  Yes, we’ll probably see app stores emerge from the carriers since they’ll each impose their own requirements for apps to be certified for their networks.  At the very least, since both networks are likely to impose data caps, each with their own byzantine pricing structures, you’ll have to download the app that’s best optimized for the network pricing model.  (You’re going to love that one, app developers.)  And trifurcation?  Well, the cable companies have already banded together to offer unified WiFi in many markets (e.g., TimeWarner and Cablevision in New York City), to better compete against mobile/telco Internet/TV incursion.  We’ll likely see an app store emerge from there, with apps that are designed around a very different model, whereby you do your high bandwidth transactions when connected to WiFi, in an online/offline synchronize model as opposed to the mobile model of perpetually available bandwidth.

This is not progress.  This is not innovation.  In fact, it will stifle innovation and inhibit the deployment of broad-based mobile applications and infrastructure.  What can we do about this?  Not much, I’m afraid.  I’d love to say “write your congressman and write to the FCC,” but I’m not so young and naïve as to believe that would help much.  What would I like to see the regulators do here?  For starters, I’d love to see them disallow the deal on anti-competitive grounds.  If you believe the scenario I outline above is possible or even likely, this clearly is a combination in restraint of trade.  If they won’t do that, at least impose these regulations on the merged entity:

  • Limitations on data caps for a period of 3-5 years.  Anyone with an unlimited plan at the time of the merger gets to keep that as long as they maintain a data contract with the carrier.
  • A prohibition on a carrier app store.
  • Limitations on the crapware installed on phones and/or the ability to remove it, at least after 90 days of phone ownership.
  • Serious notifications of potential data overage where there are data caps.  We’ve only recently gotten that protection for call overages — long overdue, and prompted by European regulators, not ours.  In data, it’s much more insidious because we don’t always know when/how much data we’re using.  There should be onerous requirements on the carriers here, such that we can effectively meter our usage.  And there should be rollover of unused data.

I wish I believed any of this would happen, but I don’t.  Instead, I think we’re about to enter a period where the ironically named Long-Term Evolution (LTE) is actually a major step backwards on the evolutionary scale.  We’ll have faster speeds…and much less ability to exploit them in interesting and game-changing fashion.  It’s a shame that AT&T, who was once broken up by the regulators, is so adept at the regulatory game that it is about to win via acquisition what it could never win the open marketplace.

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Why Do Android Tablets Cost More than the iPad?

Posted on March 3, 2011 by jyarmis

You know me.  I don’t own any Apple products any more.  I have:

  • HP desktop
  • HP convertible tablet laptop
  • Android cell phone
  • Sansa MP3 player

I can see the utility of a pure tablet given how much I travel (which I think is its optimal use case:  on the train/plane/Starbucks).  I’d like to buy an Android tablet.  With yesterday’s introduction of the iPad2, I am however left scratching my head.  Even before this, I was wondering “how in the world can the Android tablets be priced 20-50% more than an iPad?”  Hence, my list of the top 10 reasons someone would buy/pay more for an Android tablet.

  1. What’s an iPad?
  2. I’d pay anything to avoid enriching Apple.
  3. I work at Google…although Google employees may hold out until the holidays to see if they’re getting one free.
  4. Google Maps.  Oh, you mean I can buy a third-party GPS solution that is every bit as good and works off
  5. I’m too unhip to be let into the Apple Store.  (There are those who actually posit the Apple Store as part of the reason.  Apple doesn’t have to worry about retail margins so they can price below those who must support those margins too.  I don’t think this is an excuse, though it is a factor.)
  6. I hate waiting in lines to get technology products.
  7. I drive a Lexus and have gotten used to paying premium pricing for the same products.
  8. There must be a TCO argument in favor of Android, right?
  9. XOOM sounds so much cooler than iPad.
  10. If I’m stupid enough to buy an Android tablet right now, I’m stupid enough to pay a premium for it.

Truthfully, I really don’t understand it.  I’d expect Android tablets to cost $100 less than an iPad.  At least.  At current price points, they’re going to kill the market.  So, what do I think the real reasons are?  I’m stretching here.

  • They know Android isn’t really ready yet for the tablet form factor so they’re pricing it so only the really committed will buy in now.  Purposely keep the market away even while you’re dipping your toe in.
  • The various parties to the ecosystem are really that clueless to think that their Smartphone success will translate to the tablet market and that they can support comparable/premium pricing.

Honestly, I’m baffled.  If they’ve got me ready to buy an iPad, they’ve really accomplished something very bad.

Filed under: Consumer Electronics, Mobility | Tagged: , , , | 10 Comments »

Toy Fair 2011: Where Technology is Largely Lacking

Posted on February 22, 2011 by jyarmis

I attended Toy Fair 2011 once again (with my friend and one of the smartest people I know, Larry Smith) which filled New York’s Javits Convention Center last week and it was a journey through quieter times.  I was shocked how little cutting-edge technology there was nor tie-ins with mobile devices, cloud services, virtual goods and other ways to extend the reach and impact of traditional “toys.”

I suppose I should have realized things were going to be a little different when I went to pick up my press/analyst badge (for which I had received email confirmation).  “No, you don’t qualify,” I was told on-site.  Instead, they gave me the badge for financial analysts.  I tried to explain the difference between the two but was met with blank, uncaring stares.  I was told, however, that my badge would get me pretty much everywhere the press badge did except the press room (and I didn’t really want to spend time there anyhow).  In retrospect, it was a great advantage.  At times the show floor was pretty barren so if I had a press badge or, even worse, a buyer badge, I’m sure I would have been besieged by booth personnel wanting to tell me about their wares.  But with the red badge I was wearing, no one particularly wanted to talk to me.  (At least I assume it was the red badge.)

Having immersed myself for the last five years in social, mobile and cloud technologies, I was shocked how little of this there was on the show floor.  There were lots and lots of toy blocks, lots and LOTS of stuffed animals (referred to in the trade as “plushes”) but not so many microchips or web connections.  I’ve become accustomed at tech trade shows to 90% of the booths having iPads for demonstration purposes; here, it was more like 4% (no exaggeration).  It was so low-tech, there were some booths who had old traditional CRTs and not flat-screen TVs.  I think the industry is missing HUGE revenue and engagement potential by not only not having toys that contain intelligence but also by not linking them to web sites that add functionality, engagement and further revenue opportunities.

In its story about the show, Time Magazine pulled together an article on the 100 all-“Time” greatest toys.  It’s amazing how consistent themes remain over, um, time.  Clearly this is an industry that doesn’t like change.  Even more, look at what Time picked as the top 10 tech toys they found at the show.  They included:

  • Monopoly Live.  I would characterize this as how not to add technology to a classic.  Gratuitous technology aimed at “appealing to interrupt-driven kids” does not an improvement make.  This approach should die a quick death.
  • Angry Birds.  Yes, if you haven’t had enough of it on your iPad, you can now play the board game.  The video game industry understands the concept of “brand extension.”  Not so the “traditional” manufacturers.
  • A “kid-tough” camera.  With full-featured adult cameras going for under $100, I’m not sure there’s much of a market here.  In fact, I’ll bet most five-year olds can better handle the new generation of touch-screen, feature-rich cameras than can most adults.  Maybe they should repackage these as cameras for seniors.

Three things did catch my attention.

  • The richness of really good scientific experiment kits is wonderful.  As a kid growing up, I was pretty much contained to a microscope and slides.  Kids today have an amazing array of real science kits focused on timely issues like potable water, renewable energy and the like.
  • I don’t remember exactly where in Disney World I saw this for the first time but they have this set-up where you wave your arms and motion-detecting devices sense your movement and turn it into music, varying the pitch and speed with how you wave your arms.  This has now made itself into home-sized and -priced technology.  And at the very low end, you can build your own musical device by just painting a piano.
  • You’re probably already seen ads for the Parrot AR Drone, a flying device that uses the iPad or iPhone to control it.  It makes for great demo though it strikes me as one of those toys where after 10 minutes of using it, you’d get bored.  The gimmick may be better than the reality.  More broadly, though, you’d think the toy manufacturers more broadly would understand the appeal of (a) the iPhone and (b) a device containing accelerometers.  If it’s useful in a phone, surely they can think of ways it would be interesting in a toy.  And price is probably not an issue here.  The componentry is cheap enough.

All in all, Toy Fair was a wonderful retro journey for me but caused me to reflect on how much of mainstream industry still hasn’t understood the power of technology, now available at incredibly low price points.  “Gamification” is a growing trend in technology (“funware,” as my friend Alan Berkson calls it).  Technology is embracing games.  If games/toys don’t embrace technology, there stands to be another industry where the technologists take over and the traditional players get shunted aside.  To their credit, the largest players in the toy industry (e.g., Mattel) seem to be the most advanced with technology.  That’s perhaps not as I’d expect it.  The disruptors should be driving the trend.  Maybe it’s because of the tech savvy required, or the capital investments.  For whatever reason, though, this is a space likely to see a lot of change in the next few years.  Here come the technologists.

Filed under: Consumer Electronics, Hardware, Mobility, Social networking | Tagged: , , , , | 4 Comments »

The New Math: When 5 + 4 = 1 (Nokia and Microsoft Get Together)

Posted on February 11, 2011 by jyarmis

The rumored partnership of Nokia and Microsoft has come to pass, as Nokia announced today that it is going to embrace Windows Phone as their primary smartphone platform.   I’m not going to go into a deep analysis of the keys to success.  That will be well covered in the news today.  The big one obviously is how many platforms will developers support?  iPhone, of course.  Android is on the cusp of becoming 1a to Apple’s 1.  A must-do platform.  In certain markets (e.g., enterprise), Blackberry is 1b or at least a strong contender.  HP made its WebOS move earlier in the week, with some interesting value propositions, linking computers, tablets, phones and peripherals.  What would make Windows Phone compelling for developers?

Nokia has had its own set of challenges.  While they long said they were the world’s largest Smartphone company, they were kidding no one.  Once the iPhone came out, they were yesterday’s news.  Once Android gained momentum, they were in full denial mode.  They missed key trends (like Americans were buying clamshell phones) and took years to rectify the shortcoming, never to regain market position.

So now Nokia and Microsoft are partnering.  Not surprising, considering where Nokia’s new CEO, Stephen Elop came from.  (Microsoft, if you don’t already know.)  It didn’t take him long on the job to conclude that Nokia’s own efforts were failing and ultimately failed.  Nor did it take him long to conclude that his best strategic bet was Microsoft.  Given his background and their mutual desperation, it didn’t take long to conclude this deal.  In some ways, it’s almost stunning in its rapidity.

I just want to ask one simple question:  when have  two waning market players ever combined together to create one market-winning entrant?  I was sitting in a session yesterday at New York’s Social Media Week next to IBM AR star Mauricio Godoy and I asked him to come up with any examples of where this had worked.  Interestingly, he came up with a couple of situations.  Involving musical artists/groups.  I’m not sure they were entirely compelling but at least they had merit worth discussing.  But neither he nor I, nor anyone else I’ve asked this question to, could come up with a compelling instance where two fading businesses combined to reassert market leadership or even competitiveness.

Combining my problems with your problems sometimes solves both our problems.  More often, however, it increases complexity and amplifies both of our problems.  Friend and fellow analyst Bob Egan Tweeted this morning “Execution has been Nokia’s shortfall yet now it seems they are taking on even more execution complexity. Was hoping for simpler more focused.”

Often in business conversations, you hear people say that they’re looking for situations where 1+1 is greater than 2.  Here we have a situation where 5+4 is supposed to produce 1 or 2.  Now I admit that I’m just old enough that I missed the “new math” in high school.  (My sister, two years younger, learned it.)  But I don’t see the math working.  And in a market so dynamic and fast-moving, combining these two entities, neither of them known for their speed, may just hasten their mutual demise.  (I would, however, love to hear of successful business combinations in this vein in the comments.  Anyone?)

Filed under: Mobility | Tagged: , , , , , , , | 6 Comments »

Verizon to Randomly Punish Heavy Data Users

Posted on February 3, 2011 by jyarmis

Apparently, Verizon is going to begin throttling the data speeds of the top 5% of heaviest data users.  While I am sympathetic to the need to manage capacity on their network, this approach is just wrong on so many levels.

  • Most importantly, you have no knowledge or ability to control your situation.  If they said “over 500 gigabytes will get you penalized” (and gave you tools to understand your consumption; for now, this requires third party tools), I would be somewhat sympathetic (though probably not happy).  Now, however, you only know you’re offending after the fact.
  • This also creates a situation whereby if we all start conserving data access, to avoid being in the top 5%, we’ll reduce data usage and yet the top 5% will still get penalized.
  • I think Verizon is going after the wrong party.  I’m guessing the biggest issues are with high-bandwidth consumption sources like streaming video.  Hmmm…like their Vcast video service.  So, basically they’re selling you access to video services (for which you pay a premium) and then when you actually use the service, they say you’re doing it too much and cutting your service.  I don’t pay for any Verizon premium (high bandwidth) services like their GPS solution or their video packages but if I did, I’d be screaming bloody murder.  (How much do you bet that under the covers they’re actually going to exempt their own services from counting towards bandwidth consumption?  Next to scream, then:  Netflix.)

If Verizon has a data capacity issue, here’s how I would solve it:

  • Set pre-defined limits so that we know the playing field.
  • Give us tools so that we know when we’re approaching those limits and, more importantly, what our offending apps are.  I don’t know which of my apps are bandwidth hogs under the covers.
  • Figure out how to throttle speeds selectively.  If you throttle my low-bandwidth applications, like Foursquare check-ins or text emails, I probably won’t even notice the difference.  For me, no notice.  For you in aggregate, maybe enough of a difference that you don’t have to pursue these other painful approaches.

Congratulations!  You’ve bought a smartphone.  You paid big for the phone.  You pay big for the data package.  Now go in the corner.  You actually use all of the things we sold you.  Who told you to listen to us?!

 

Filed under: Mobility | Tagged: , , , | 1 Comment »

Apple: When is Enough Enough?

Posted on February 2, 2011 by jyarmis

I’m a big admirer of Apple.  They design incredible products.  They innovate and, beyond innovation, they create new categories and approaches.  They have been richly rewarded for that and are now the second highest valued company in the world, behind ExxonMobil.  You know there’s a “but” coming.  And it’s a big one.  Is it good for anyone (other than Apple) — even you — when they put their hand so deep in everyone’s pocket and when they tell you and me how to do business?  (Full disclaimer:  I don’t own any Apple products.  I have a Sansa MP3 player, because I like the Rhapsody subscription music model.  I actually like the Microsoft Zune subscription model even better, because then I get to rent and own music, but that’s maybe my next device consideration.  I have an Android-based Motorola Droid, largely because I’m on Verizon and won’t buy any electronic device without a replaceable battery, so no, I’m not getting on line for a Verizon iPhone.  I do, however, own some really old Macs and an original, and still working Newton.  And my introduction to the technology industry in 1979 was on an Apple II+.  But I digress…)

The latest flap is over Sony’s e-reader application where Sony wants to enable users to buy books without paying Apple its 30% “tax.”  Apple, however, is insisting that all purchases must be made “in-app”…and as such, Apple wants to take its share of the transaction.

So, let’s get this straight.  Apple owns complete control over whether your application makes it into the app store and if they say no, there’s basically no “legitimate” way for you to get an application on to your phone.  With Android, while the default is to only allow apps to come in through the Android market, a simple uncheck in settings allows you to install applications from any source.  Apple will tell you that’s to protect the user experience.  That’s the same argument the telcos used to exclude devices from their network until, paradoxically, the iPhone came along and led to a new OS-centric model of wireless carriers here in the States and opened up the market to innovation that had been stalled for a decade.  In other words, bullsh**, Apple.

But that’s not enough for Apple.  Once the app has been approved, they want their full share of any revenue generated and won’t allow solutions that circumvent their taxing mechanism, regardless of how consumer-friendly and/or app provider-friendly those solutions are.  If you want to make money on the iPhone, pay us our 30%.  (This one will get really interesting the first time Oracle and SAP get serious about mobile apps.  Clash of the Titans anyone?  But it probably won’t get to that.  Read on.)

If this were any vendor other than Apple, the hue and cry would be so incredibly loud that it would drown out conversation about American Idol.  But Apple, our little darling, gets away scot-free.  Imagine if Microsoft said “any transaction that occurs on a Windows machine will henceforth and forever more involve a payment to Microsoft.”  The antitrust lawyers would move so fast that time would actually go backwards.  But Apple?

Actually, I think this time Apple made a mistake.  A big mistake.  This one is so outrageously wrong that it’s sure to draw scrutiny from all corners.  This could be the proverbial straw that broke the camel’s back.  Apple probably thought “well, it’s only Sony.  Who cares about them any more.”  The real target, of course, is Amazon whose Kindle software is available on all platforms (imagine that, not just iPhone and iPad) and whose sales enrich Amazon’s coffers.  Amazon is a threat to Apple’s control of the ecosystem.  If Kindle is the standard for some forms of digital content, how can Apple own the whole process they way they do with music and, increasingly, video?  If someone is able to stand up to Apple and not pay their ransom, what does that mean for all the others who feel they are being held captive?

So Apple started with Sony.  A trial balloon if you will.  This, however, could instead become Apple’s trial by fire.  What Apple’s trying to do here makes Google’s and Facebook’s privacy intrusions seem like a walk in the park.  Quite simply, Apple is trying to put a meter on the flow of digital content over the Internet.  I’m loathe to draw comparisons to what’s going on in Egypt this week.  Clearly, that’s a real-life saga that dwarves anything we’re talking about here.  However, it’s hard to ignore the parallels.  Enough is enough.  Whether it’s a military dictatorship or a technological one, at some point the citizenry/customers say this has gone on too long and we need to push back.

While I’m not of course predicting such a dire outcome, this could some day be remembered as Apple’s Waterloo.  They’re inviting legislative scrutiny in the United States and around the world.  They’re forcing their “partners” to stand up and revolt.  And most dangerous of all, they’re risking the love and support of their fan base.  If there’s a coordinated effort on the part of content creators across all media types (books, music, video and, with today’s announcement of The Daily, news and information) — heck, even without a coordinated effort — the risk to Apple’s reputation, position (and market cap) is considerable.

Apple is restricting choice, controlling innovation and enriching its coffers.  And it’s not benefiting you.  Enough is finally enough.

I do believe that this week may well have been the Zenith of Apple’s power.  And that’s pretty remarkable to contemplate.  Pride goeth before the fall.

Filed under: Consumer Electronics, Mobility | Tagged: , , , , , , , , , , , | 7 Comments »

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