Well, Amazon finally announced its tablet. The event itself might have offered some clues because Apple would have done this in the Superdome, and Amazon had something that looked more like a high-school auditorium.

Bezos set the tone for the launch with a long praise-fest for the Kindle and the ebook and e-ink concept.  Then he jumped to talking about the Kindle Touch, which is an e-ink product that’s an advance from the current Kindle but much more like Barnes & Noble’s newest Nook model, a cross between a tablet and an e-reader, but much more the latter than the former. This new Kindle Touch has a $99 buck price point (for WiFi; $149 for 3G), which undercuts the new Nook. 

But it’s obvious that Bezos couldn’t stop there. Ten thousand or more media and PC analysts would likely have stormed his castle and burned him alive. After blowing Android Kisses, then touting new media and app stores and Amazon Prime and even EC2, he finally got to the point. The future is media and cloud service offerings!  It’s Kindle Fire. It’s not a tablet, but a Media Cloud Appliance!

Let’s come back to earth for a moment for the specs. Fire will have a dual-core processor and a seven-inch screen, making it a less-than-iPad right there. The announcement is likely to be disappointing to many who had expected Amazon to field an iPad-like product for about the same price as the HP TouchPad sold at  “after-the-market-exit” fire sale. Yes, that would have been wonderful, but as my readers know, I’ve never believed for a minute that was Amazon’s intent, and clearly it was not.

Fire is based on an Amazon-customized older version of Android, the latest to be available as open-source, and like the Color Nook, there’s an overlay GUI on it that harmonizes the look and feel with something a reader-focused buyer would want. But it’s really a bit more than books, it’s CONTENT. But it’s a bit less than a real tablet, or the iPad in particular. The seven-inch form factor is one big difference. The smaller screen is essential for a reader-focused tablet; people don’t want to really read books on something the size of a cocktail table book. But its size limits the entertainment value of the device and its value as a generalized Internet portal.

The price point for the Fire is within a dollar of the level ($199 versus $200) I have blogged about as the likely floor price for a subsidized tablet/reader. My model says that you can make money overall at that price because of the ebook sales (and Prime membership sales) you’ll then get as a follow-on. But at that price, the subsidy of follow-on sales is critical – and that shapes the nature of the Fire. No matter what others (including Amazon) might say, it’s a “Nook-alike”; more of a Barnes & Noble competitor than an Apple competitor.

But it does redefine that competition by adding in the video content dimension that Amazon has and B&N lacks. That makes it a kind of reader-plus or tablet-minus. You can see that Amazon isn’t trying to say Fire is an iPad, but it’s trying to say that the Fire is a better content device than a generalized tablet, and obviously a much better e-reader.

Cloud service backup for a tablet

One innovative feature of the Silk browser is the split architecture. There’s EC2 back-end processing linked to a Fire front-end. This may be the first example we’ve seen of a cloud service backing up a tablet experience at the GUI level. It’s also certainly a model of how the cloud hosts what I’ve always said was a “service-layer” function. Certainly it cements the relationship between the cloud as an IT model and the service layer.

Fire cements the role of Amazon’s EC2 in the web-front-end application model and even expands it a bit. EC2 is used to enhance the viewing experience by pre-processing stuff that would normally be done on the client, but it seems likely that the role of enhancing the experience could easily be expanded to the functional level under the same model. Along the way, this pre-processing might reduce communications load.

It’s clear that this isn’t a direct challenge to Apple, but it may just be a formidable indirect one. Fire is a clear partnership between content, appliance and cloud services. That’s what I think Apple has been aiming for with iCloud and has not yet achieved. Why? Because clouds are fuzzy and hard to market. Apple had the disadvantage of having a stable of appliances in place before they fielded their cloud approach, so it pretty much had to let the cloud stand on its own. To make it less complex, Apple kind of dumbed it down. Amazon can make Fire the face of the cloud, which is what I think they intend to do. That is a serious challenge to B&N ,but it’s also a challenge to Apple because the Amazon store retail model is much broader and more successful than Apple’s stores. Retail is more directly suitable to profit-building than ad subsidies too, so Fire may threaten the Hulu and Netflix models as well.

Fire will disappoint many, as I’ve said, but it may also have a greater and longer-term impact on the industry than it would have had it simply gone head-to-head with Apple.

It’s fair to ask what this is all going to mean, and I think one thing that’s certain is that the network of the future is going to revolve around the CDN. Content is the majority of traffic growth. Content is the majority of monetization opportunity. Content that has any monetization is served by a CDN to manage QoE. Content that has none is served by a CDN to control bandwidth utilization. Getting the picture here?

But the CDN of the future isn’t the old Akamai model peering-point connection. It’s deeply distributed, it’s highly policy-managed with respect to where caches go and what goes into them, and it’s highly componentized so that it can be composed into flexible media offerings that are specific to the operators’ local needs and rules. You can see this model emerging from both Alcatel-Lucent and NSN, and also being expressed at least by Cisco and Juniper. You can even see it from CDN startups like Verivue.

The fact is that every operator is going to need both bandwidth optimization and content monetization.  That these missions are very different means that CDNs and the logic that’s built around them has to be very flexible.  We’re working to find out just how flexible all these options really are, and we hope to provide some of that this month in Netwatcher, and more in future issues.

The whole video thing is going to be impacted by the fall season of technology product launches, among which are supposed to be Apple’s new iPhone and Amazon’s tablet. We are seeing iPhones and Android smartphones gaining traction even as gaming platforms, and obviously we’re seeing tablets increasingly as personal media portals. There will be people who will use smartphones more (youth), people who use tablets more (everyone else), and all of these people will be both stressing networks and generating opportunity. I don’t think that the OTT video market will really threaten channelized TV because I doubt that the delivery of that much material can be made affordable to the consumer and still return anything reasonable on investment for the operator. I do think that the revenue kicker it can add to commercials embedded in standard content could be very significant, and so I think you’re going to see more from vendors to address streaming and monetization of video.

• First of all, the iPhone created an appliance magnetism that broke many customers away from having cellular services from their home carriers. It disproved the notion that you could create loyalty with non-functional bundles alone, and that in itself was a major factor in limiting interest in quad-play economics.

• Second, it has proved more complicated to create FUNCTIONAL bundles, active symbiosis between wireless and wireline, than was previously considered. Yes it’s possible to create apps to let you do something on or with your TV, but for the key youth market, those tools are less interesting because they’re not home anyway. And service-layer technology, an architecture or framework that would let operators (including MSOs) build sophisticated componentized services from features, has been hard to come by.
• Third, tablets are proving that if consumers have a larger form factor and a place to sit, they will consume “TV Everywhere” . On one hand, this might appear to promote a cable company’s entry into cellular, but it doesn’t for two reasons — usage costs and hospitality hot spots. You don’t have to stream many videos to your tablet to run into extra-cost territory, and in any event, why pay for mobility when you need to sit down to watch?

Since tablet vendors offer WiFi tablets at a much lower cost than cellular-equipped models, more and more consumers are jumping on that approach, and TV Everywhere doesn’t have to include that many places that don’t offer WiFi. I think we’re going to see WiFi exploding at the same pace that tablets have exploded, and I think we’re going to see less focus on “wireless” and more on WiFi. One more reason why the DoJ should let AT&T and T-Mobile merge.

The move comes at a critical time for Apple. While the company has almost been the single-handed driver of the mobile revolution, the product cycles in that space are getting shorter, and it’s harder to say what the next generation of devices might be. A smartphone is a logical extension of a standard phone and one that exploits the broadband mobile connectivity that was already in place. A tablet is in many ways an extension of a smartphone. What extends the tablet? What is the Next Big Thing? The answer is the cloud, the mobile/behavioral ecosystem that will create the electronic virtual world we’ll all live in, in parallel with the real world. For Apple, it’s the iCloud, a course Steve Jobs has already charted.

Google knows that, of course, and sees a similar vision. One could argue that Google sees it even more clearly than Apple, in fact, because Apple’s culture has always been just a tad elitist and thus egocentric. Android and the MMI deal are Google’s appliance play, and for now, ChromeOS is carrying the flag of the cloud, in the form of hosting the thinnest of all possible clients. ChromeOS, in my view, is just a placeholder for an eventual shift toward a more Android-centric future, but one that focuses on exploiting Android as a cloud conduit, just as Apple wants iOS to be.

The thing is, the secret sauce of the future is the mobile/behavioral stuff, and neither Apple nor Google have any particular incumbency there. Nobody does, in fact. My work with operators suggests that they understand there’s a lot to be done and a lot of money to be made in the mobile/behavioral symbiosis. The problem they have is that this particular area of service innovation is even more vague than content monetization, and they can’t get anyone on the vendor side to talk effectively about content. What hope do they have for mobile?  If you’re a vendor and if you want to own the market of the future, this is the problem you need to solve for your customers.

Interestingly, Alcatel-Lucent has just issued a press release calling for more thoughtful use of mobile assets in customer care, and when you read into the details, you see some of the elements of a mobile/behavioral solution at a more general level.  The Alcatel-Lucent mantra is “contact me, connect me, know me,” and that is pretty much what I believe to be the key to mobile/behavioral opportunity. You have to be able to reach the customer proactively with social/behavioral changes to their virtual world, to connect them to the other partners (human or cloud-machine) in that world, and you have to know a lot about their interests, desires and prohibitions to make inferences about what’s best for them at that moment in time. I’d like to see Alcatel-Lucent take this story more into the general consumer market. I’d also like to see some competitors push the story even further.

First, Android is still going strong; last month it had 10% more device activations than the month before. The Android store had more than 6 billion downloads, and there are more than 400 devices licensed to run Android. For those like me who remember the early PC-versus-Apple wars, the similarities seem obvious. Even in those early days, Apple wanted complete ecosystem control, and IBM promoted an open platform. The result is history; IBM PCs swept the market.

But Apple is still in the PC business, and IBM isn’t. That raises what I think is the key question for Apple. Is the best way to succeed in the long run to develop a new market, hunker down on a niche segment of it, and then milk that segment until another market comes along? Or is it to develop a concept that sweeps the market, share in its success, and move on?

I think that everyone realizes by now, at least reluctantly and subliminally, that Apple is going to lose dominance in the tablet space and the smartphone space, and that Google will gain it. Apple may be the BMW brand of both these device markets, but they’ll never lead them again. But BMW makes some nice change, and that’s not necessarily a bad thing. The badness might come in elsewhere though.

Ultimately, tablets and smartphones are our agents in the cyber-world. What we do, what we get, what we want, where we are, and how we spend and even think are getting wrapped around the gadgets. You win with those agents, and you win in that much larger behavioral space. Apple “lost” the appliance race. Did it also lose the agent race? Maybe not.

Steve Jobs’ big mistake isn’t that he wants a closed ecosystem, but that he wants everything to be in that ecosystem. Making it impossible for others to clone Macs became an obsession with Steve, and that meant surrendering the option to run Apple software on other systems. What Apple needs to do to counter Android is to license iOS. Or maybe to establish the concept of the personal agent as residing in the network, the cloud.

“Hal” was disembodied, after all. In modern terms, we don’t necessarily see a difference between a locally hosted intelligence and a local agent of a distributed intelligence. The iCloud might become Apple’s Camel’s Nose under the Android tent. Make it strong. Make it accessible to every mobile device user.  ut Android off from the larger, more enduring, food chain. That’s Apple’s choice. Accept another second-tier positioning, license iOS, or make iCloud the focus. Think on it, Steve.

Amazon needs to make sure that it doesn’t lose customers to the Color Nook because it needs to be sure that it doesn’t let B&N create a legion of book-hungry semi-tablet enthusiasts that can’t get Kindle without rooting their Nooks.

The question is whether they can do something at this point, when the B&N device is already out there and competing effectively, without giving away too much and hurting their profits even if they win the t-reader race.

This doesn’t mean that video streaming to tablets is without adherents. Verizon is going to provide free hotspot services to offload traffic from its 3G/4G network, and that trend is accelerating worldwide. WiFi is a great strategy for pulling cellular traffic out of expensive 3/4G facilities in locations where users are likely to settle for a while. I’ve been calling tablet users “migratory” rather than mobile users because most tablet use will come in sites where users can sit and focus—home, work or hospitality. Some providers and some tablet players believe that there’s a strong tablet opportunity in WiFi alone, in fact.

Truth be told, we don’t know what the consumer will do with tablets—exactly—because the consumer doesn’t know. That’s the big challenge of the mobile broadband revolution. We’re building what I’ve previously called a “life fabric” that links us to services through appliances and ubiquitous broadband. It’s like building an interstate highway system at a time when interstate travel was difficult or impossible. What will it be used for? We probably would think that hauling of goods would be the big application, but in fact it was just personal mobility. We’ll probably get some surprises out of the evolving mobile broadband space too.

On the enterprise side, Alcatel-Lucent released a study that says that 74% of workers believed their productivity could be improved via UC/UCC tools but that two-thirds of this group don’t have the tools they need. I’m a bit skeptical of this kind of study for a couple of reasons. First, my own 30-year history in market research suggests strongly that people aren’t very good at conceptualizing the value of something they don’t have. Everybody thinks something is holding them back from grasping the productivity brass ring. Second, both my own research and other dispassionate university studies I’ve looked at show that most “collaboration” that takes place in business is pairwise (two-party), and there’s been no evidence that video or much of anything else really facilitates this sort of collaboration better than what we already have.

There is one exception to this. Most companies have a problem with collaboration created by the fact that the parties involved aren’t in a stable location, and also are not equipped with a consistent set of tools and access to data. That’s where tablets could come in, but tablet empowerment is independent of UC/UCC in that the application of collaboration doesn’t change, only the appliance you collaborate through. Like consumer use of tablets, though, business use is a work in progress and we’ll probably have to see how the space matures. ]]> http://itknowledgeexchange.techtarget.com/telecom/tablet-evolution-depends-on-consumer-and-enterprise-uses/feed/ 0 http://itknowledgeexchange.techtarget.com/telecom/embedded-control-and-top-flight-appliances-how-intel-can-face-the-future/ http://itknowledgeexchange.techtarget.com/telecom/embedded-control-and-top-flight-appliances-how-intel-can-face-the-future/#comments Wed, 18 May 2011 22:41:22 +0000 Tom Nolle http://itknowledgeexchange.techtarget.com/telecom/?p=2587 Intel has embarked on what might be the biggest battle of its corporate life—the battle to become relevant in the embedded system and appliance space.

While Intel has a license to produce ARM chips, it realizes that exercising it isn’t the answer to getting into the smartphone and tablet spaces. Not only would it suffer in terms of profits after the license fees, it would be perpetuating someone else’s processor architecture in the hottest space in the market. But wanting relevance doesn’t mean you’ll get it.

The big barrier for Intel to cross is getting big-name appliance OSs, which I’ve been calling “embedded control OSs” or ECOSs, ported to its architecture. One reason why Intel got so into the MeeGo Linux model was that it could easily support the porting of that OS to its architecture. Intel can do the same with Android, and in fact are doing just that, but it’s harder to get iOS moved over; Apple is in sole control there.

However, even getting the OS ported isn’t going to solve the problem, because there are hundreds of smartphone and tablet models out there already and more arriving every day.  Given that Intel won’t be ready with even a minimal offering until 2012 and won’t be competitive in performance until likely 2013 or even 2014, things could get tough.

The reason Intel cares is shown by another thread of discussion in its recent conference. The company was very defensive about the future of the PC, saying it wasn’t going to become an irrelevant dinosaur in a world of tablet mammals. Intel made the PC market and still commands it (AMD’s efforts notwithstanding). If that market takes a hit because consumers start buying tablets (which HP’s results say is already happening, but clearly there haven’t been enough tablets shipped to have had the widespread effect), then the loss to Intel in PC chips has to be made up. That means not just matching the volume of CPUs lost, either, because appliance CPUs have much lower prices and profits. They have to command the appliance space.

The only thing Intel has going for it there is the fact that both the key appliances—smartphones and tablets—are going to enter a kind of “window of susceptibility” in late 2012. In the smartphone space, the combination of 4G rollout and normal product cycles will put a large number of users in the market for a new phone.  In the tablet space, the Apple iPad onrush will have generated effective Android response, which means that mass-market rollout of tablets will be starting.

If Intel can be ready for that two-barreled market shift, it can be a player. The question is: How?

What Intel needs to avoid at all costs is linking up with Microsoft and Windows Phone 7 on this point, something that we hear is being promoted by Microsoft/Nokia to Intel even now. As tempting as re-launching the “Wintel” alliance might seem, Phone 7 isn’t the star Intel wants to hitch its wagon to. Similarly, Intel need to abandon MeeGo in favor of Android, simply because it can’t promote another OS at this stage. There are already too many out there; developers won’t latch on.

PCs are not seeing the growth they once did, and that of course reduces the new-system licenses for Windows. Some of the slowing is due to tablet encroachment, but most is likely due to people just not upgrading as often. Windows 7 drove a spate of refreshes, but that’s over. I don’t think there’s much of significance in this particular data point.

What’s more interesting is that the server and Office portfolios did very well. The media has Linux running rampant in the data center, and cloud productivity tools kicking Office’s butt.

The truth is apparently not quite that dramatic. In fact, both Microsoft’s server sales and its Office sales were well ahead of IT spending trends overall. I’ve noted for quite some time that Google Docs isn’t equivalent to Office, and that’s for now enough to keep the Faithful in line, Office-wise.

I do have to admit surprise at the server numbers; 11% growth is twice the industry rate. I think a decent chunk of this is SMB spending; SMBs adopt Linux at half the rate of enterprises.

This is a classic story of how not being innovative will hurt you, perhaps fatally. The iPhone caught everyone by surprise, to be sure, but it should have generated a fast and insightful feature-differentiated response.

There was at least a year when RIM could have cemented its franchise with the enterprise and then built into the consumer space. RIM worried instead about first trying to enter the consumer market, and in that period, Apple made the iPhone more competitive in the enterprise. Then we had the iPad, which even in its first release was light-years ahead of the PlayBook. Moral: Differentiate or die.