April 26, 2013 10:25 AM
Posted by: Ron Miller
Apple needs to innovate to sustain growth.
I’ve been studying a lot about disruption recently, and one thing is clear. Everyone gets disrupted eventually –and in the digital age the likelihood is accelerated dramatically. So it should come as no surprise that after more than decade of dominance, Apple is facing disruptive forces in several of its product lines.
What will be interesting to watch is how Apple reacts to that unusual position, and if they can continue to innovate in an increasingly hostile environment.
It’s no secret that investors have lost favor with Apple as the stock price has gotten whacked over the last several months, even though evidence from their earnings call this week shows a company that’s still very strong, but getting squeezed on its margins. The focus for many was on the fact that Apple had a reduced year over year profit for the first time in memory, even though its sales figures were actually up year over year.
Apple is still selling product like nobody’s business (literally), selling 37.4 million iPhones in the quarter compared to 35.1 million a year ago. As for iPads? They sold 19.5 million iPads during the quarter, compared to 11.8 million a year ago.
All in all, by just about any measure it was still a healthy quarter. Would you rather have sold almost 38 million iPhones or 4.4 million Lumias? Just saying.
Meanwhile sales of Macs were flat, but as CITEworld editor Matt Rosoff pointed out on Twitter, flat is a whole lot better than the precipitous 14 percent drop for desktop PCs in the first quarter.
The trouble with eye-popping numbers is that it’s hard to sustain year after year, and this especially true as more and more interesting devices compete for our attention. As James Kendrick wrote this week on ZDNet, Apple needs to get its game on in the smartphone race because the iPhone is beginning to look a little dowdy compared to its competitors.
Steve Jobs is not walking through that door.
Same is true for the now venerable (that’s polite for having been around a long time) iTunes. As BusinessWeek reported, iTunes is facing pressure on a number of fronts, especially from streaming services like Spotify (a personal favorite) and rdio. While iTunes changed the music business when it came out, the iPod, which drove that part of the business, is a device that’s well past its prime and people aren’t as interested in owning music anymore. The article quoted, Ted Cohen, a recording industry consultant, who put it this way: “It’s no longer about individual tracks, it’s about access,” says Cohen. “The concept of buying music at 99¢ a song is becoming irrelevant,” Cohen told BusinessWeek.
Overall though, Apple still appears to be a healthy company, but what they can’t do is rest on their past successes and think they can continue to produce at the same level. Sustaining the kind of growth they’ve been on is not easy and probably unprecedented. To continue to grow with shrinking margins, they will need to expand the product line in new directions while updating popular products like iTunes and the iPhone to appeal to the changing tastes of the marketplace.
Tim Cook hinted that there would be new products and services coming in the Fall and throughout next year. I can’t imagine sitting still and getting complacent, but they cleverly plucked low-hanging fruit with the iPod, the iPhone and iPad; recognizing that nobody to that point had done a good job with these products.
Finding similar areas to exploit moving forward is going to be harder, but if Apple hopes to sustain its growth trajectory, it needs to start innovating and fast.
Photo Credit 1: Dick Thomas Johnson on Flickr. Used under CC 2.0 Share Alike/Attribution license.
Photo Credit 2: thetaxhaven on Flickr. Used under CC 2.0 Share Alike/Attribution license.
April 16, 2013 7:51 AM
Posted by: Ron Miller
Apple still has plenty of brand clout, as lines last week at the release of the $99 iPhone 5 showed.
I was chatting with a friend regarding Tiger Woods before The Masters this past weekend, and about how we were both rooting for him to do well — even though truth be told, I’m not much of a golf fan. When he was on top, it probably wouldn’t have been the case. Seems we love to hate the top dog, which might be what’s happening with Apple these days.
Seems everyone is quick to look for any sign that Apple is decline. But there’s perception and feeling and there’s reality and as much as the press seems to be hell bent on hating Apple, people just keep buying their products in dizzying numbers.
And if you wanted proof that Apple still has some brand clout, consider that on Friday, T-Mobile began offering iPhone 5s for $99 and saw lines, yes actual lines, outside their retail stores.
Apparently even T-Mobile didn’t expect this. As Wayne Rash reported in eWeek, the stores were unprepared for the popularity of the offer and just a bit overwhelmed. Apparently, they hadn’t dealt with the passion of Apple buyers before.
What those lines proved was the Apple brand still has plenty of reach and people are still willing to wait in a long line to get the Apple product. Samsung may cleverly make fun of those lines in their ads, but the fact is people have so much brand loyalty when it comes to Apple, they are willing to do that and if the T-Mobile experience is any indication, that still hasn’t changed.
Yet, people want to believe Apple is in decline in the worst way, the same way they wanted to see LeBron James and Tom Brady and so many other successful atheletes taken down a notch. Once they win, it’s human nature to want to give someone else a chance.
So now, it seems Apple is the brand everyone loves to hate because it’s so successful. But if it’s true that the youth market is the leading indicator of product popularity, consider that Business Insider reporting this week on a Piper Jaffrey survey of teen mobile buying habits, found 48 percent of teens currently own an iPhone and 62 percent (that’s almost two out of three) plan on buying one when they purchase their next phone. Just 23 percent want an Android according to the Piper Jaffrey survey.
All of these numbers suggest that perhaps, Apple is doing just fine after all and and the perception that it’s in decline could be more wishful thinking than actual fact. It may be indeed that Apple can’t keep up with the growth trajectory its been on these past several years as more competition enters the market and margins get squeezed as the markets mature, but even the strongest Apple hater would have to admit the company is still doing pretty well.
If people are willing to stand in line for iPhone 5s long after they were released, and if rumors are right, not far ahead of the next release, the brand still has some cache even though a lot of you probably wish it would just go the way of Tiger Woods.
Photo Credit: (c) Can Stock Photo
April 9, 2013 12:38 PM
Posted by: Ron Miller
Facebook as the center of your mobile life is a non-starter.
After Facebook made its Android announcement called Facebook Home last week, my first reaction was “this is nuts,” but I decided to let it sit. After almost a week, I still think the idea is a non-starter.
There are so many reasons this is a bad idea, but let’s just explore a few of them.
* Who in their right mind wants to have Facebook as the center of their phoning lives? Zuckerberg made it sound like a feature that my friends’ information comes up on my phone, even when it’s locked. As my colleague Wayne Rash pointed out, unless your socially obsessed, this approach isn’t for you. Is the latest George Takei ditty so fascinating that it can’t wait for me to open the Facebook app and see it? I don’t think so. Facebook just isn’t as important as it wants us to believe.
* Aside from the fact that Facebook thinks I want it at the center of my life, when I don’t, there are other reasons to leave Facebook safely locked in the browser or an app. I don’t want Facebook having access to my entire mobile life. It’s bad enough, the amount of information Facebook has on our lives, do we really want to give it control of our mobile phones? Om Malik thinks not. I’m inclined to agree.
As Malik wrote, “In fact, Facebook Home should put privacy advocates on alert, for this application erodes any idea of privacy. If you install this, then it is very likely that Facebook is going to be able to track your every move, and every little action.” It’s a scary scenario and no thanks, Facebook.
It’s precisely the reason if I were a Bing user, I wouldn’t add Facebook search to my results. I don’t want Facebook and Microsoft sharing all this information about me and how I search and what I do on Facebook. It’s bad enough that Facebook knows what it does, I’m not giving it any more ammunition from my mobile phone. No thanks.
* It’s a blatant power grab of the Android platform. Why would users who choose the Android platform for its openess, give that up to Facebook? The fact is most people wouldn’t. As Alexandra Chang put it on Wired, ” It isn’t a phone made by Facebook. It’s something better than that, and in some ways, more important: a deeply integrated application with its hooks set tightly into the Android platform. Think of it as an apperating system.”
With this move, if people actually did it, Facebook would get the best of all worlds. It would attack Google at the heart of its OS by taking it over before you even get past the lock screen. Great for Facebook, but for users, not so much.
Facebook Home is Zuckerberg’s wet dream of what he wants the mobile experience to be — centered around his service while weakening a key competitor in Google in the process, but this isn’t some teen dream about mobile. It’s reality and nobody in their right mind other than the completely Facebook-obsessed (and even my teen has backed off from it a great deal) are going to go for this.
This makes great theater for tech journalists like me and we love the drama of the announcement and watching Zuckerberg grow as a pitch man, but this approach is a non-starter and I’m predicting right now it’s not going anywhere.
Photo Credit: Kris Krug on flickr. Used under CC 2.0 Share Alike/Attribution license.
March 29, 2013 10:46 AM
Posted by: Ron Miller
, Blackberry 10
BlackBerry is like this Zombie, still walking, but not really alive
So Blackberry had a good quarter and it sold a few Z10s. Good for them. They’re a company that’s been down so long, looks like up to them, but don’t confuse a smidgen of success with a turn-around.
Chances are the surge is nothing more than a short-lived little burst of energy. As Zack Whittaker cleverly put it on ZDnet, they have done little more than “lived to die another day.”
Sure, it feels good to write something positive about a once dominant company that somehow defies the odds and finds its way to profitability, but that’s not what happened here. As Whittaker wrote, “[In spite of the good quarter], the picture was still pretty bleak on the top line, reporting revenue of $11.1 billion, down 40 percent year-over-year.”
That’s a precipitous drop in revenue, folks and even though many including Wayne Rash at eWeek think BlackBerry hit the requisite homerun here with the hardware and the OS, there are fundamental issues with a lack of apps.
I can say personally saw a Z10 at the Mobile World Congress last month and it has style and polish and some very neat OS features that differentiate it from the competition. In short, it was a competitive high-end phone. I walked away impressed.
But what even Rash, who gave the phone a positive review, acknowledged that its achilles’s heel could be its dearth of decent apps. You can have the best phone in the world, but if you don’t have apps, nobody is coming to your party. And that could be a huge issue for Blackberry going forward.
It could be why Larry Dignan reported on ZDNet that BlackBerry is predicted to lose money in every quarter in fiscal 2014 and only survive on its substantial cash horde, a situation that is obviously not sustainable long-term. Of course, it’s worth noting experts predicted a loss this quarter too and they were wrong. Unfortunately, even beating expectations didn’t impress investors all that much as the Wall Street Journal reported the stock dropped 0.08 percent after initially rising 10 percent on the earnings report.
The same WSJ report called a new plan by BlackBerry to distribute a range of phones a risky one. The feeling at BlackBerry is it ultimately can’t compete at the high end of the market with Apple and Samsung, so it’s aiming lower down where it might sell more phones across a range of price points in a wider variety of markets.
Regardless of the plan or the quality of Z10 or the profitable quarter, BlackBerry has been toast for a long time, they just have too much cash to lie down and die. The best they can hope for is that they have set themselves up as a more attractive takeover target.
I know it would be a nice story if they could rise up and compete again, but this isn’t a fairy tale, and no matter how good the Z10 is, it’s not saving the company. It’s too late for that.
Photo Credit: My name is Randy on Flickr. Used under CC 2.0 license.
March 25, 2013 1:14 PM
Posted by: Ron Miller
Amazon Web Services
Oracle’s business model is under attack from cloud alternatives and shifting priorities as companies begin to support more and more mobile devices.
As disruption from cheaper, smaller and more agile upstarts begins to have an impact on Oracle’s business, it reported its third losing quarter in the last two years, according to a report in the Wall Street Journal.
The WSJ article reported subscriptions slid 2 percent in the latest quarterly earnings report and the stock market didn’t deal well with news as the stock price dropped 9.7 percent.
Oracle is in fact just the type of company ripe for disruption by smaller more agile ones offering the same types of services, whether database management or CRM and marketing monitoring and automation (to name just a few of the enterprise categories in which Oracle has products), customers who once turned to Oracle are turning to cheaper open source and cloud alternatives.
As an example, the Wall Street Journal article cites the price difference for Oracle’s marketing software and the similar offering from rival Salesforce.com. Oracle charges $5,795 per user license with a 10 license minimum. Salesforce.com charges $125 per user per month for a similar service with a year commitment. Any way you slice it, that’s undercutting Oracle’s offering in a big way.
Oracle faces disruption on a number of levels. As a company trying to sell hardware and enterprise software to run on it, it faces competition, not only from Salesforce and other cloud alternatives, but from open source choices like Hadoop for data analysis and cheaper cloud infrastructure providers such as Amazon Web Services.
When companies looking to cut costs look at the bottom line, Oracle faces tough going against cheaper alternatives. What’s more, after years of aggressive pricing, customers are happy to find other options.
Meanwhile, in spite of the fact that Oracle has bought a number of cloud vendors over the last several years in an attempt to move some of its offerings to the cloud, it remains at its core very much an on-premise enterprise software vendor trying to sell a stack of software at a time when IT is looking for cheaper and faster vendors.
As the WSJ article points out, Oracle has a loyal customer base, but companies looking at new offerings aren’t looking to Oracle anymore when it comes to enterprise software, not when they can find alternatives that are far more economical — and that doesn’t bode well for the long-term future of the company.
What’s more, Oracle faces the classic “innovator’s dilemma” as defined by Harvard professor Clayton Christensen. They are forced to protect their most lucrative clients, and even though they must recognize the competitive pressure from younger, faster, cheaper companies starting out at the bottom end of the market and working their way up. Yet because companies like Oracle want to protect its most lucrative customers, they can’t afford to pay attention to the lower end ones the competition is gobbling up.
Oracle isn’t going anywhere because it has a bad quarter, but it’s the third bad quarter in two years from a company that used to consistently hit its targets and could be a sign that the disruptors are having an impact.
It can try to answer the disruptive forces, but it can’t fundamentally change what it is: A large company that was created to answer an enterprise need in a different decade under different market conditions. As such, it will very likely continue to suffer a death by a 1000 cuts as disruptive forces attack it at every turn.
Photo Credit: (c) Can Stock Photo
March 18, 2013 7:39 AM
Posted by: Ron Miller
With so many flavors of Android, is it still a single operating system?
As Android becomes increasingly fragmented, it’s fair to ask if it’s a single operating system or many separate ones. I’m inclined to believe that it’s breaking into separate ones, but a couple of experts I spoke to think as long as generic apps run on the platform, it’s fair to call it a single platform
At the recent Mobile World Congress, I had a chance to play with the new HTC One, which was a nice piece of hardware. I’m not an Android expert by any means, but a colleague who was with me indicated HTC had gone out on its own on this one in terms of the interface and Android fans might find it confusing as a result.
Meanwhile, Twitter was aflutter on Friday with news of the Samsung Galaxy s4. Ryan Faas writing on CITEworld suggested Samsung is introducing its own Android platform (with its eyes on the enterprise). He wrote that with so many flavors, that some of these can “credibly considered to be their own platform.”
Steven J. Vaughan-Nichols, a freelance technology journalist who writes frequently about open source including Android, see it differently though. He says all these flavors of Android remain essentially the same OS even though each manufacturer is putting their own stamp on it. “Android has always been fragmented. Even today there are seven–count ‘em 7–different Android variations ranging from Eclair to Jelly Bean with at least 1% of the market. But, not counting corner cases like Aliyun OS, it’s never been forked. What HTC and Samsung are doing is just adding their own special sauce on the Android goodies,” he said.
Vaughan-Nichols adds, “Now, when it becomes impossible for a third-party generic Android app. to run on those devices then we’ll have something to worry about.”
The Samsung Galaxy s4 has its own unique flavor of Android.
Rob Pegoraro, a freelance writer for USA Today and other sites, who covers Android agrees and doesn’t see it as an issue. “If you look at Android as a way to run apps, it still appears as a single platform–thanks to a lot of hard work by developers that users don’t see,” he said.
He notes, however, that for users, the look and feel could change fairly dramatically from device to device. “But if you consider it as a common interface that you only need to learn once every few years, it’s pretty much forked. You can’t count on something as basic as the back button being in the same spot on different vendors’ phones,” he explained
The problem for me is that every member of my family could have Android phones and they could all look, feel and operate completely differently. Yet they are all called the “Android” OS because at their core they are Android and run Android apps.
But Pegoraro explains it might be better to think of the different flavors in the way we think of dialects. They are the same language even though they sound a lot different. “The difference between an HTC-style Android interface and a Samsung-esque one used to be something like the difference between Boston and New York accents. Now it’s more like the gap between Cajun and Nebraskan dialects, or maybe American and British English: There’s a lot more distinct vocabulary, and you need to work more to decipher the other party’s speech at first,” he told me.
For now, Android gets counted as a single OS regardless of flavor, but you have to wonder if Samsung and HTC continue on their own path if this will continue or if at some point we will have different Android flavors counted as separate operating systems. Time will tell.
Photo Credit 1: (c) Can Stock Photo
Photo Credit 2: Samsung
March 14, 2013 8:15 AM
Posted by: Ron Miller
During my recent trip to Mobile World Congress in Barcelona, I got to handle a bunch of phones I had heard about, but never actually held and saw updates to some I hadn’t seen in a while. After playing with phones for a few days, I came to a couple of conclusions.
First of all, there is a lot of nice hardware out there — the BlackBerry Z10, The Nokia 920, The Motorola Droid Razr HD — and there were lots of others made with quality hardware and gorgeous displays.
There are tons of nice phones out there, but Samsung and Apple dominate the market.
Second of all, I came to the conclusion it didn’t matter how nice a phone was because the market is essentially frozen in place and the two manufacturers that rule the roost are Samsung and Apple. Too bad, so sad for everyone else.
That may sound harsh, but it’s the truth. The Wall Street Journal reports that Samsung and Apple dominate the worldwide market with a combined share of 51 percent (according to IDC). This is in line with Strategy Analytic’s numbers which found the two companies had a combined share of 49.8 percent for 2012. Close enough for rock and roll.
The numbers tell a story and, it’s the two dominant players have a strong-hold on the smartphone market. I don’t have break-downs by country, but I suspect it holds pretty consistently, although there is a fight in the works for emerging markets.
ZTE announced a new phone called the ZTE Open phone, a low-end device running the open source Firefox mobile OS. I checked out the phone. It’s not great, but it’s not aimed at a market looking for greatness. The target market is young people in Latin America and to a lesser extent Spain who currently have feature phones and can’t afford smart phones. I heard Telefonica planned to sell it in Latin America for well under $100. I asked how they could make any money at that price, but nobody at the Telefonica booth could answer my question.
Nokia, not to be left out, also announced a low-end smartphone running Windows Phone 8 called the Lumia 520. It’s like a baby version of the Lumia 920. It doesn’t have the polish outside or inside of its much more expensive older sibling, but a Nokia spokesperson at the Nokia pavilion told me it’s only $129 Euro ($167 USD) off contract. That means it’s very likely free with one. According to VentureBeat, only T-Mobile will be offering this phone in the US.
All of these companies are trying desperately to break the market stronghold of Apple and Samsung. For a long time Nokia controlled the low end of the market and was the best selling brand in the world, but no longer. Nokia is going to back to its roots in a sense with this lower end Lumia (although its Asha line of phones really is much more suited to the low end of the market).
The conundrum for all these companies is that no matter how hard they try and no matter how sweet the phone looks and feels in your hands, nobody seems to pay attention — or at least not enough people to matter. No matter what the competition does, it seems they are stuck fighting for the scraps left over by Apple and Samsung.
The reality is though that half the worldwide market is still a big piece of the pie. Unfortunately after you subtract Nokia’s 5 percent share, the remaining 45.2 percent is divided among such a wide variety of players with shares so small Strategy Analytics didn’t even bother counting them. Unless somebody emerges from that pile, the numbers don’t lie and it’s harsh market. It’s Apple and Samsung’s world and everyone is just picking up their table scraps.
Photo Credit: Ron Miller. Used under CC 2.0 Share Alike/Attribution license.
February 28, 2013 6:44 AM
Posted by: Ron Miller
Sony defined the portable device market when these were popular, but never were able to capitalize on it in MP3s or smartphones.
I’m camped out at Mobile World Congress this week and as I’ve wandered the halls of this massive conference, I’ve tried to get my hands some phones and tablets I’ve heard about. Some vendors have surprised me by the quality of their phones including Nokia and BlackBerry. Others, not so much — and then there’s HP and Sony.
These two were once mighty brands who wielded great power in the marketplace, but they never quite got mobile and as such they have been left behind. Now they appear to be a couple of brands going through the mobile motions because they pretty much have to, whether their heart is in it or not.
Sony is a particularly sad tale because if you think back to the 80s, the Sony Walkman was the first true portable device and people loved them. It was extremely hip to have one and all through the 90s, Sony was the star consumer electronics brand. I personally was very loyal to the Sony brand in those days. I had a Sony Vaio laptop, two Sony televisions and Sony stereo components.
But the Sony brand hit a bump in the road about the same time Apple came up with the iPod. Like any disrupted company, it didn’t react quickly enough to the MP3 player market, which given their Walkman market, should have been a natural fit. Instead, Sony floundered.
Today they have new Xperia line of tablets and phones. When I went to their booth the other day, I was surprised to see a big counter devoted to the press. Step in the right direction, but I noted on the counter was a big, fancy print catalogue meant to show off the features of the phone — not sure a big old full color catalogue showing off the Xperia screens is quite the right approach these days.
To its credit, Sony did give away a bunch of the phones to journalists here (I didn’t get one) . I spoke to a couple of journalist who received the phones and weren’t super impressed. Both commented that the finish on the back of the phone is quite cheap feeling and they weren’t likely to adopt it as their standard phone.
Then there’s HP, the company that makes one bad decision after another. They have gone through multiple CEOs. They’ve had many major layoffs. They appear to be a company in decline. You know the story of their first foray into tablets with webOS (which got sold to LG this week, who plans to use it for televisions), which lasted all of 45 days.
This show, they’re showing off the new $169 7- inch Android tablet. When I visited their booth they were highly disorganized, didn’t have a ready demo to show off the features of the unit and tried to discourage me from reviewing it because it wouldn’t compare well with existing units on the market. And you wonder why this company has issues?
HP’s last tablet venture lasted 45 days before it pulled the plug. There is little reason to think low-priced Android devices will do well for them.
Both of these companies, once powerful brands have both lost their way and now live on the island of misfit brands hoping a boy, girl or IT pro will come along and love them. Unfortunately for the two companies, it’s Samsung and Apple’s world now and these two are offering way too little, way too late.
Photo of Walkman by Mike Licht, NotionsCapital.com on Flickr. Used under CC 2.0 license.
Photo of HP tablets by Ron Miller. Used under CC 2.0 Share Alike/Attribution license.
February 20, 2013 5:06 AM
Posted by: Ron Miller
More than 18 months after its first failed attempt at a tablet, HP is poised to try again. This time with Android in a crowded marketplace. Don’t expect different results.
HP has decided to take another hack at tablets, this time using Android as the operating system. I don’t expect the results to be much different from last time.
For those of you who don’t remember — and HP’s foray into tablets was so brief you would be forgiven if you’ve forgotten — HP bought Palm in April, 2010 for $1.2 billion. The idea at the time was take webOS, Palm’s mobile operating environment and build an HP line of tablets and mobile phones.
It seemed like a surprisingly sound strategy. A year after purchasing Palm, HP came out with the TouchPad tablet running WebOS. There were mobile phones in the pipeline. Everything looked rosy, then a mere 45 days after releasing the first TouchPads, HP pulled the plug on the entire strategy and held a fire sale.
Since that fateful decision to axe its mobile strategy, the company has been in downward spiral. There were plans to spin off the printer and PC divisions that also fell through. There have multiple CEOs. The latest Meg Whitman has overseen a massive layoff and the company appears to be in decline.
Yet HP remains the largest PC maker in the world — for now. The problem being that PC sales are declining as tablets begin their ascension as primary computing devices. As I wrote last week in Tablets are Taking a Bite Out of the PC Market, “Last quarter Apple sold 23 million iPads, while HP — the world’s largest PC maker — sold 15m PCs.”
Even myopic HP can see that having a tablet is essential to any company’s hardware strategy these days. So more than 18 months since it gave up the last one, rumors have surfaced that HP is planning on building and marketing a high-end Android tablet. Talk about being a way too late.
First of all it’s unclear anyone would want a high-end Android tablet. Apple is already firmly entrenched at the high end of the tablet market. Microsoft is trying to offer an alternative hybrid device for even more money than the most expensive iPad. I don’t see how HP can fit into this market and find any space to operate.
It’s even more crowded at the lower end of the market where Amazon is offering the Kindle Fire HD for as low as $199. Google is offering the Nexus 7 for $199 and the Nexus 10 for as low as $399. There are countless other competitors including Lenovo and Asus offering a range of alternatives.
The problem for HP is that market is far more difficult to maneuver in than it was in 2011 and the Android market is crowded with competitors who have been doing it much longer.
Whether HP comes out with a tablet or ignores the tablet market altogether doesn’t really matter because the market has moved on, and HP like so many other decisions in recent years has waited too long and is way late to the game.