April 11, 2014 9:18 AM
Posted by: Ron Miller
As I watch BlackBerry these days, I’m frankly astonished it’s still here. The company that once ruled the smartphone market in its hey day, has watched its marketshare slip to levels so low, they barely register. The question at this point is how this company is still standing?
We have watched the once proud BlackBerry (nee RIM) stumble and bumble through attempts at touch screen smart phones and hard keyboards and back around again. We have watched the parade of CEOs and we seen them grasping at strategies, any strategies to find something that would stick.
Food writer Anthony Bourdain once wrote (and I paraphrase from memory) that once a restaurant starts making changes to the menu or the hours it’s open trying a variety of ways to make the business work, you know it’s in trouble. That’s how I see BlackBerry these days, desperately trying to change their menu and nobody is coming to buy their food.
Unfortunately for them and the few hard-core fans left out there, nothing has seemed to work. How low can you go? We saw this week that BlackBerry has yet to hit rock bottom when CEO John Chen decided to cut ties with T-Mobile. As my friend and colleague Wayne Rash wrote on eWeek, Chen was clearly putting pride before profits in his decision to drop T-Mobile.
At this point, Chen can’t afford the luxury of dropping anyone, even if he’s upset that T-Mobile is apparently no longer making BlackBerry phones available in their stores, and have actively marketed iPhones to BlackBerry customers. I get how this could upset Chen, but as Rash pointed out he’s putting pride before common sense here. Rash also pointed out that the deal could be salvaged, but that remains to be seen.
It would be reasonable ask if it even matters because Reuters reported this week that BlackBerry could be considering exiting the handset business. That wording suggest that BlackBerry actually has a choice in the matter because if nobody is buying their phones, they have little recourse, but at some point, to stop selling them. Quoting Chen himself in the Reuters’ piece, he seemed resigned to the situation, “If I cannot make money on handsets, I will not be in the handset business,” he told Reuters, adding the timeframe for such a decision was growing short.
As though to prove my restaurant comparison, Chen talked about a number of approaches including small acquisitions, strategic partnerships and machine to machine (M2M) communications. I wrote recently about their strength for now at least in the car OS market as they struggle to find a new identity.
Chen was frank in the Reuters article acknowledging his predecessor’s errors and that he had little time left to waste to right this ship if it was going to be righted, saying “You have to live short term. Maybe the prior management had the luxury to bet the world would come to it. I don’t have the luxury at all. I’m losing money and burning cash.”
At this point, it seems some sort of ending for this company is inevitable and we are only counting down to the end days while Chen tries all manner of strategies to help his struggling company survive. Unfortunately, it seems at this point, he can only hope to make it more attractive for a potential suitor.
(c) Can Stock Photo
March 31, 2014 12:48 PM
Posted by: Ron Miller
It can’t be easy for BlackBerry CEO John Chen. He basically took over a sinking ship, a company that once dominated the smartphone market finds itself dropping well below 5 percent market share. Clearly it can’t survive simply as a handset maker, but could there be another way for the company to redefine itself?
It’s no secret that BlackBerry was once the darling of big business, but that was in the days before iOS, Android and BYOD, and despite a still fiercely loyal base of users, BlackBerry has watched while its market share plunged and the company desperately tries new phone strategies. Just last week, CEO John Chen suggested that BlackBerry would go back to its roots and offer a new high-end phone with a hard keyboard, but that clearly didn’t work with the Q10 last year, so it’s unclear how it would work going forward, even on a redesigned phone.
And even while BlackBerry tries to find ways to staunch the bleeding, even its most diehard customers in finance appear to be moving on. A recent survey found that a third of respondent companies had already abandoned BlackBerry and 41 percent of others are exploring alternatives in preparation for moving on. Even the government, the other hardcore customer is looking at alternatives.
Just last week came more bad news in the form of BlackBerry’s latest earnings report, but even as CEO Chen pleads for shareholders to be patient, it’s hard to imagine after watching the company decline for so many years, that there’s much of that left.
Against this back drop, was there any good news for BlackBerry?
Well as a matter of fact there is a glimmer of hope for the beleaguered phone maker. Bloomberg reports that BlackBerry’s QNX operating system is the system of choice for many of the world’s car makers including Ford and BMW. And this is an area that both Google and Apple would desperately like to exploit. Chen sees an opening in the car market along with the burgeoning connected device market (also known as the Internet of Things) and the data these devices are going to be producing.
But the question remains whether BlackBerry can make this pivot and find a way to transform itself.
When I attended Mobile World Congress in February, a BlackBerry spokesperson also suggested that the phone maker would be trying to enter the low-end phone market in attempt to jump start marketshare anyway it could.
BlackBerry desperately needs to lead something and the developing car market is a good start. It’s hard to imagine at this point that they can hope to capture any significant traction in the phone market, even with the new strategy to capture low-end market share, but if the company can begin to expand in different directions, it offers some hope that they can find a way to redefine themselves as a software and services company, a direction Chen has suggested could offer a future for the company.
At the very least, Chen could make the company more desirable for an outside buyer and provide a way to maximize the shareholder’s return on investment. For now, Chen continues to push buttons and pull levers and hope for the best. What else can he do?
Photo Credit: m lobo on Flickr. CC 2.0 Attribution-ShareAlike License
March 27, 2014 9:02 AM
Posted by: Ron Miller
Scott Boras is the premiere agent in Major League Baseball. His players tend to make top dollar, and there is nothing Mr. Boras likes better than when two big market teams like say the Boston Red Sox and the New York Yankees have their eye on the same player and that starts a bidding war which drives up the value of his clients even further. Competition you see is a beautiful thing when it comes to ball players maximizing their value on the open market.
Competition in technology has the opposite effect though. Instead of forcing the price up, it forces them down. If one major player makes a price adjustment, it’s pretty much a given that the others are going to follow.
We saw that in force this week when Google and Amazon, two companies going toe to toe in infrastructure services both announced aggressive pricing changes. On Tuesday, Google got the ball rolling when it announced a set of price cuts on its Compute Engine services, designed to draw people from competitor Amazon Web Services. Google was offering a 32 percent price reduction for on-demand instancing and 85 percent on its BitQuery service. It was clear Google was going for Amazon’s throat with these moves.
But not to be outdone, Amazon held a press conference of its own the next day and announced, you guessed it, a series of price cuts. Nancy Gohring, writing on CITEworld (where I’m also a contributor) did a nice job of breaking down the price war and offering some means of comparison
Competition has always been a positive force for markets. It fights complacency, drives innovation and as we’ve seen, brings down prices.
Amazon had a massive head start in Infrastructure as a Service game, just recently celebrating its eighth birthday. As I wrote last week about AWS’s birthday, it really was a game changer:
“And this week, that little service that could turned 8 –and it’s a huge force that helped change the way we think of provisioning hardware, software and programming platforms. It helped change the business of enterprise computing and created entirely new businesses.”
But being first is never enough. It only gives you the advantage of having a head start, but that advantage can melt away pretty fast when a company the size of Google decides to get involved. Google up to this point has been content providing other cloud services, especially around software, but now it has set its sights on infrastructure and just by virtue of its sheer size and reach, it’s an immediate and formidable opponent for AWS.
But just because Google is big and rich doesn’t mean it can come in and take over the market. It still has some things to prove and IT pros who were afraid of the cloud aren’t very likely to be warm and fuzzy about Google, a company that many still don’t trust with software, nevermind their hardware infrastructure.
Google has lots of cash though and it can afford to undercut Amazon and that could draw some customers away in the short term, but Google is still going to have to do more than cut prices. It’s going to have to aggressively innovate and prove to a skeptical public that it’s committed to this project for the long term.
Amazon might have changed everything, but Google is trying to sweep in and take away some of its customers –and as the competitive fires heat up, one thing is absolutely clear –consumers are going to win.
Photo Credit: Ron Wise on Flickr. Used under CC 2.0 license.
March 19, 2014 11:22 AM
Posted by: Ron Miller
Over the next couple of weeks, the Microsoft hype machine will be out in full force. It started quietly like a slow moving train leaving the station at the SharePoint Conference a couple of weeks ago. It picked up speed with the OneNote announcement this week, and it will reach warp speed next week when Satya Nadella himself, the new face of Microsoft, is expected to announce Office for the iPad.
You will hear many people say positive things about how Microsoft has new leadership and new direction. You will be told that this is the beginning of the beginning of a new day at Microsoft. You may even believe it because you will hear it a lot from a lot of people who should probably know better.
But when you get down to it, and you look under the hood, and you peer closely at what’s going on, you will see there’s not much to see at all. Sure, Microsoft is presumably coming out with Office for the iPad –see the machine is cranking already –but sorry to be the bearer of bad news, no matter how much that hype machine spins the news, it can’t get around the fact Microsoft waited way too long for this announcement.
It should have released this two years ago. No, it should have released it three years ago, but Steve Ballmer was probably too fixated on fighting Apple, his Don Quixote-esque quest, to see that if you want to be the software of choice, you have to be on the machine of choice –and people were moving to the iPad in huge numbers. Perhaps Steve was too blinded by his odyssey to see that.
But in 2014, a full five years after the release of the iPad, it’s way, way, way too late for Microsoft to play catch-up now. In fact, no matter how loudly that hype machine drones to the contrary, people simply don’t care enough about Microsoft Office anymore, not the folks who have moved on from a PC-centered world, and if the numbers are true, that’s a lot of people.
Microsoft wants you to believe its Reagan-esque message. It’s morning in Redmond. A new day is dawning, but when you wake up the day after the announcement and the hype machine is jacked up like a meth head, nothing much will have changed.
Microsoft is not exactly a dead company walking, but its best days were over a decade ago when it ruled the desktop world. It still thinks of the world as a desktop, even as it gives a new cloud and mobile message.
The fact is I don’t need a monolithic desktop-style office suite to do my work on a tablet, and if I did, I wouldn’t use a tablet, I would use a laptop. Microsoft’s cloud and mobile strategy to this point sounds great on paper, but when you look at it closely, you see it’s just desktop Microsoft in a different guise.
Look, disrupted companies have come back from the abyss. IBM looked dead in the water in the 90s and it managed to reinvent itself, only to be disrupted again today. Adobe just announced a good quarter as its move from desktop to cloud seems to be working. It could happen that Microsoft suddenly gets it and puts out products for the cloud-mobile paradigm, but don’t expect Office for the iPad to change all that much –no matter what that old hype machine might tell you.
Photo Credit: niXerKG on Flickr. Used under CC 2.0 license.
March 18, 2014 7:15 AM
Posted by: Ron Miller
There was an SNL skit in the 1990s with Mike Myers called If it’s not Scottish, it’s crap, and when people mixed up Scotland and Ireland, he would angrily point to a map and say “There’s Ireland! There’s Scotland! There’s the bloody sea! They’re different!” I feel that way when I hear old-school IT pros try to argue that the cloud is just an update of mainframe time-sharing.
Can we please put that comparison to rest. While they both involved sharing in a sense, they are not really related at all, anymore than Scotland and Ireland are.
Don’t make me pull out my map and pointer.
Mainframes in the 70s were huge computers and when people needed computing power to do anything, they got in line, paid a fee and they got their few minutes of power for whatever time they got access. Computing power was a scarce resource. Memory and computing cycles were expensive and you used what you needed and nothing more (and there probably wasn’t a lot left over even if you did need more).
In other words mainframe system sharing was based on an expensive scarce resource where little computing power existed.
Now, let’s compare that with the cloud.
The cloud developed at the same time computing power was growing ever cheaper. It provided infrastructure (servers, memory and storage) for pennies on the dollar. Instead of being expensive and scarce, it was cheap and abundant. If you needed more, you paid for more. So if you had an event like an election or a Black Friday when you knew you would require much more server power temporarily, you could easily scale up for that event, pay for the extra resources and scale back when the event was over.
Imagine requiring 100 extra servers for a two-day period. It would make for awkward planning in a private data center, or it would be impossible. No CIO in his right mind is buying a bunch of servers for a temporary event, only to put them in storage when the event is over. It’s simply not going to happen.
And it’s not just infrastrastructure, programmers can build programs on cloud development platforms and have access to a bunch of services such as security and authentication and not have to build them from scratch. They only have to connect their application to those services, a much faster, easier and cheaper development path.
And of course, there’s software as a service. Instead of worrying about seats and licenses you will probably never use, in most cases you buy only the number of seats your company requires and as your company grows or shrinks –because that happens sometimes too –you only pay for what you use.
The breadth of the cloud is completely different from the mainframe. The costs are turned on their head and you have access to as many resources as you need and competition is actually driving costs down over time. Just last week, for instance, Google dropped its storage prices in response to a similar move from Yahoo!. That’s competition working for you as a consumer.
How low did they go? They dropped the monthly price of a 100 GB of extra storage from $4.99 to $1.99 and a terabyte from $49.99 to $9.99. That’s a steep and significant price drop and it comes from abundance and competition, the opposite of what we saw with the mainframe.
The mainframes might have also involved shared computing resources, but it was an entirely different level and scale and today’s cloud tools provide companies with the ability to build businesses for a fraction of the cost it would have if they were required to build their own data center. The Mainframe provided computing resources where little existed, but it didn’t have the disruptive force that the cloud has precisely because it’s so cheap and so widely available.
What’s more, mobile and apps have developed in large part because of the cloud and the ability to store and access content across multiple devices from anywhere at any time. The cloud pushed this development.
Mainframes in the absence of PCs simply provided some computing resources for the few where none existed. The cloud provides resources for anyone in virtually endless abundance.
As Mike Myers might have said, “Cloud, Mainframe, resources, different!”
Photo Credit: (c) Can Stock Photo
February 28, 2014 9:40 AM
Posted by: Ron Miller
It’s no secret that Microsoft is on the verge of completing a deal to buy Nokia’s handset division, but Nokia raised eyebrows this week at Mobile World Congress when it announced an Android phone running Microsoft services.
The announcement triggered questions about Microsoft’s mobile strategy moving forward, and highlighted their continuing struggle to gain additional marketshare.
I spoke to Greg Sullivan, who is a 24 year Microsoft marketing veteran. Sullivan was honest about the challenges Microsoft faces in an entrenched mobile market, but he was quick to point out Microsoft’s successes and he was proud of the device ecosystem that’s built up around Windows 8.
While Sullivan pointed to the huge growth numbers last year and the gains in certain markets, it’s hard to get around the 3.5 percent worldwide share reported by IDC in its most recent report. The situation in the US is even worse with Windows struggling mightily to gain any traction, but Sullivan says Microsoft isn’t about to back down any time soon.
“Here’s what we believe: If you are in third place, you have to be faster than the guys in front of you. We agree there are challenges. It’s an incredibly dynamic and competitive market. We are doing what we need to do to grow share.”
The question is whether that’s enough.
But Microsoft continues to push buttons and pull levers and hope that the market begins to develop for them. One way to do that is to offer a variety of phones at different price points. It’s clear that Android was able to scale quickly by open sourcing the OS and watching as manufacturers all along the pricing spectrum built Android devices. This helped grow their market very rapidly.
“One of the strategies, is for our platforms to enable scale through a broader range of devices along the price curve,” Sullivan told me. This could be the thinking behind the extremely low-priced Nokia X line, 3 phones that run 89, 99 and 109 Euro respectively. While Sullivan and the Microsoft PR team were quick to point out at the beginning of the interview, they couldn’t address this approach because they are still separate companies, a Nokia spokesperson told me the phone had been designed to run Microsoft services and the shareholders should be pleased by this approach. Nokia also saw these phones as a gateway or feeder system to the higher end Windows phones as emerging markets where they are marketing these low-end phones mature.
Sullivan told me that when Microsoft bought Nokia they weren’t just buying the Nokia Windows phone division, they were buying the whole package which includes many phones that aren’t part of the Windows ecosystem. He pointed out that Nokia was selling millions of non-Windows phones before the acquisition was ever announced, and the X Line is simply an extension of that.
“[The X line] makes it more interesting because it’s Android, but if you look at the larger picture, [Nokia] sells 100s of millions of devices that don’t run our OS, and that [has the potential to] bring millions of people into the Microsoft system and act as onramp for Windows phone.”
Microsoft is clearly not going to cede the mobile market to Apple and Google without a fight, and as a colleague and I were discussing earlier this week, having a healthy Microsoft mobile product line is good for competition, but getting over 5 percent is looking like a struggle for now, even while Microsoft is hoping they can attack the low end of the market to build share moving forward.
Photo Credit: Ron Miller. Used under CC 2.0 license
February 18, 2014 6:12 AM
Posted by: Ron Miller
China is such a huge country, it probably seems like a bottomless pit of market potential to smartphone manufacturers, but nothing goes up forever, and growth took an unexpected tumble last quarter, as IDC reported, smartphone shipments to China dropped for the first time in 9 quarters.
Let’s start with the raw numbers. According to IDC, manufacturers shipped 90.8 million units to the Asia/Pacific region last quarter compared to 94.8 million in the previous quarter, a 4.3% quarter on quarter drop.
Engadget kindly broke down these numbers a bit further by phone manufacturer.
For mainland China, Samsung was the big winner with 19 percent. Lenovo was second with 13 percent, Coolpad (which I’ve never heard of) came in next at 11 percent, followed by Huawei at 10 percent and Apple at 7 percent. No, that doesn’t come close to 100 percent and the remaining phones were lumped together under Other with 40 percent of the phones shipped to mainland China apparently from a variety of manufacturers with percentages too small to measure on the pie chart.
Whatever the reasons, and IDC offers several theories as to why the shipments dropped, they predict it’s likely temporary glitch, but there is also the possibility that China could be reaching market saturation. In spite of the population figures, those who have the money to buy smartphones, might have already done so or moved onto other devices such as phablets, leaving smaller screens behind (at least for now).
So where will manufacturers begin to look for growth areas? India is looking like the biggest up and coming market rising to the number 3 market in 2013, passing the likes of Japan, the United Kingdom, South Korea, Germany and France, all of which ranked hire just a year ago.
For companies marketing low-end phones, this could bode well, but for a company like Apple, which lives at the high end of the market, and has not traditionally sold well in India because of the high price of its phones, it might not be great news.
Apple signed a couple of key deals toward the end of last year with Chinese providers, which on their face would seem to point to market growth for Apple in China, but if the market is shrinking that could have an impact on Apple’s ability to grow its worldwide market over the next couple of years.
There is also the matter of Lenovo buying Motorola Mobility, which could give it further inroads into the higher end of the Chinese smartphone market in the coming year giving Apple more competition from a local company, possibly making China an even bigger challenge market for Apple. The Moto X is the most sophisticated Android phone I’ve seen to this point and perhaps the fact it’s so customizable could appeal to that market.
It’s clear that Asia represents a huge market for smartphone manufacturers to sell their wares, but it is also a tremendous challenge to conquer these markets and find a balance between phone quality and market demand to take advantage of the numbers that await them. The winners are obviously going to have great gains because even a small percentage of China and India represents huge numbers.
Photo Credit: (c) Can Stock Photo
February 13, 2014 11:54 AM
Posted by: Ron Miller
Satya Nadella has been on the job for just over a week now, and he may be wondering why he took it. That’s because he knows that one thing he absolutely must do is capture some mobile marketshare –and IDC’s latest numbers have to be pretty darn discouraging.
IDC released its most recent worldwide mobile marketshare numbers recently, and they weren’t pretty if you weren’t Apple or Google. In fact, the two big dawgs accounted for over 93 percent of all smartphones shipped last quarter. That doesn’t leave much room for Microsoft.
And for the year it was even higher with iOS and Android accounting for almost 96 percent of all phones shipped worldwide. Even when counting shipments and not sales as IDC does, it certainly doesn’t bode well for Microsoft when there is so little left of the pie to fight for.
There is actually a silver lining hidden in these numbers. For the fourth quarter Microsoft accounted for just 2.6 percent of worldwide shipments, which doesn’t sound like good news until you look at the growth. According to IDC’s numbers, Microsoft had the biggest growth for the quarter of any smartphone OS at almost 47 percent –and for the year at almost 91 percent, but the fact is that they almost doubled from very little to a little bit more. It’s not as good as the growth numbers might suggest.
If I’m Nadella sitting in a meeting my second week as the head of the company, I’m probably going to be a glass half full kind of guy. Look at our growth guys. We can build on this, but in reality Microsoft is scraping near the bottom with only the pathetic Blackberry looking worse.
If Microsoft wants to feel good about itself for a few seconds, it can look at Blackberry which had 77 percent loss for the quarter, but still finds itself ahead of Microsoft with 3.2 percent of worldwide shipments.
When you’re still losing out to Blackberry this far down the road, it certainly doesn’t look very good, not for a company that desperately needs to do well in mobile moving forward. Maybe Bill Gates, his new advisor can help, but I kind of doubt it.
No matter how you spin these numbers, they don’t look good. Windows phone’s promise is supposed to be outside the US, but their US numbers according to comScore are actually a little better in spite of actually losing ground in the latest figures. When comScore measured the total number of subscribers for fourth quarter in the US, Microsoft weighed in with 3.1 percent, down 0.2 percent from September’s figures.
However you look at it, Microsoft is not gaining any significant ground in the US and is mired below 3 percent worldwide. This is the challenge Nadella faces and he’s looking up at an entrenched market without very much room for growth, not when iOS and Android control so much of the market.
He had to know this going in of course. These numbers can’t be a surprise, but moving the needle in a maturing market is going present one of the biggest challenges Nadella will face as head of the company. Nobody said it was going to be easy.
Photo Credit: Jules Antonio on Flickr. Used under CC 2.0 license.
February 6, 2014 10:07 AM
Posted by: Ron Miller
This week the mystery was solved and Microsoft finally revealed that the new CEO was none other than Satya Nadella, the former engineer and head of the cloud and enterprise group was the choice.
Notice that he came from a technical background and has some experience in the cloud. He’s not as many have pointed out, a sales guy like Ballmer and I don’t think it’s a coincidence he came from the cloud division.
That Microsoft chose a cloud guy is a smart move and shows they at least recognize that the market is shifting. This probably isn’t news to them and they have been preparing for it in the Ballmer era with Azure and Office 365, the purchase of Yammer and other moves, but Microsoft is at its core remains a desktop software and operating system company.
When you look at Microsoft’s most recent earnings report, it looks as though they’re doing just fine, thank you very much. The cloud properties are growing. Windows appears to be selling in fairly large numbers, but Windows phone hasn’t caught in the US, and while it has pockets of success in Europe, the overall worldwide numbers as reported by IDC have remained dismal sitting under 4 percent of worldwide share. Analysts are looking at around a million Surfaces sold. These are not huge numbers.
The future is not on the desktop, but those desktops that remain are very likely going to be in business as consumers move to tablets and smartphones for more and more of their computing. That means to compete in this changing world, Microsoft (and everyone else), needs to pay attention to cloud, mobile, social and data. Microsoft clearly understands this too.
The challenge for Nadella is not understanding the problem, but executing on a vision to take the company in a new direction, and that’s not exactly a simple matter. It involves taking a huge company with an entrenched culture and politics and making them all move as one toward a new vision.
It also involves turning a proverbial battle ship. This is a company that has been firmly focused on the Windows desktop for years. It has made a lot of money doing that, and while forward-thinking shareholders understand that dynamics change quickly in the technology industry, it’s not easy to shift a company’s focus from what’s highly successful to something else, even if it makes sense in the long run to do it.
The trouble is we live in a world of quarterly reports and short-term thinking and investors have a hard time playing the long game. Heck, there are probably many people inside of Microsoft who have a similar problem.
But just because they are still selling units of Windows today doesn’t mean that money spigot is going to stay wide open forever. As PC sales drop, it’s inevitable that the well is going to run dry sooner or later.
Nadella no doubt sees this, but getting his employees to move on could be the biggest challenge of all for the new cloud guy at the top of the heap.
(c) Can Stock Photo