Month: August 2011

Steve Jobs moving on

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It was not a stunning announcement but it still surprised us all when it happened. Steve Jobs was resigning as CEO of Apple. Unlike his peer, Bill Gates, not by choice, but because his health had deteriorated to a point he could no longer continue as leader of one of America’s most admired companies.  It’s hard to measure the impact Steve Jobs has had not just on technology but on popular culture.  It’s has been a journey of a young brilliant arrogant man to the top of the pack as one of the most admired and respected leader’s in the industry today.  During that time we saw a transformation from youth to mature dignitary.  He has been the an ultimate leader in technical discipline and a  marketing mega star.

When I started in the industry, back in 1991 Steve Jobs was a legendary lost soul, having been booted from the very company he helped create.  Apple at the time was led by former Pepsi exec John Sculley, while Steve was working on something called NeXT.  I did not have much insight into Steve Jobs at this point until I was part of the account team at ATT Wireless.  I worked with a partner, Accenture at the time, and we were all trying to bid on the call center business.  We needed to replace their existing system built on…NeXT.  Who used NeXT?  It was hard to believe, but according to my counterpart from Accenture, who was in the room, when it was pitched to ATT Wireless it was the single best sales job he had ever seen, delivered by none other than Steve Jobs.  Everything I ever heard about Steve Jobs always spoke to the power of his personality and when he was in a room you knew it, he was not to be ignored.  It was a force of will.

By the time I was covering ATT Wireless and heard the legendary stories, Steve had already returned to Apple.  It was one of those announcements that I am sure for anyone who loved Apple or worked for Apple was greeted with a sense of joy and relief.  Apple at the time was a company in the wilderness.  Losing market share and ceasing to do anything innovative.  It was funny early on that the first release under Steve Job’s direction was the iMac which really only introduced one things of note..lot’s of colors.  Up until then you could have any color that you wanted as long as it was beige.  I think this little fact goes unnoticed but whether by accident or design the introduction of color was important as it was recognized that the personal computer was becoming  more than just a productivity device, it was becoming a lifestyle device.  From there on the history is easy to follow as music went digital.  The web went mobile.  The PC became entertainment. All starting with a little “i” as went from iPod to iPhone to iPad.  All the time the attention to technical superiority and integrating that with the desire to be free and human.  The panache that was the computer geek gave way to the individual, regardless of the technical level of ability.  It was and remains the realization of the way technology is meant to be.

What will happen now that Steve Jobs is transitioning away from Apple. will Apple remain the same?  First the pipeline of innovation is strong with iPhone, iPad and iTV.  Not to mention the traditional sales of the iMac, Air, MacBoox etc…seems to be flourishing.  Every time I got to Starbucks I estimate that half of the laptops have the familiar Apple logo glaring at me.  I predict that in the not so distant future you could see Apple break the 10% mark in total market share for personal computers, which would be huge considering the decades it has been less than ten percent. computers.  Then there is the question of leadership, with the reigns being handed to COO Tim Cook.  In an odd way Steve’s illness has made this transition easier as Mr.  Cook has been running the company at various times while Steve took a leave of absence.  I think they are in good hands, with an experienced leader who has been very close to Steve Jobs over the last ten years, who knows the Apple culture.

As long a s Apple does not get to arrogant and continues to listen to consumers and be innovative they will move on and up just fine.  The reality is most people like Apple.  It will be a company that can reflect upon one of the great business leaders of the last hundred years and will have a legacy to move forward with.  As for Steve Jobs we can only hope for the best, though the announcement seemed to be an indicator that he is gravely ill with not much time.  He had a liver transplant which is never an easy thing to go through or a treatment with a “longer life span” as an option.  It simply buys one time, which he has made good use of.  STeve Jobs is moving to a different place in life’s long road, but many of those places on the road, he defined.

Good Night and Good Luck

Hans Henrik Hoffmann August 30, 2011

The Fall out from HP

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Last week Hewlett-Packard made the stunning announcement that they were dropping the development of the Palm WebOS and would be spinning off their PC business.  The news was greeted rather harshly by the critics and the stock market as they have continued to batter the company since the announcement.   I cannot say I blame anyone as it seems a certain amount of ineptitude has taken place in the HP boardroom.  Why do you announce you are exiting the PC business but have no plan in place or buyer for the business?  They are killing their Tablet business only having recently launched it, not to mention they just acquired Palm a little over a year ago for $1.2 Billion.  Rather than die a slow death they have decided to immediately sentence to death the Palm, setting off a selling frenzy at Best Buy and pissing off a lot of consumers, who just bought one. HP has that look of that all too often used phrase, ” A deer in headlights”.

For starters I don’t think this is necessarily a good thing for the United States as if HP exits the PC business it is likely to go over seas, namely Asia.  I guess I am surprised they just did not follow the IBM model and create a Lenovo competitor. But if you think back in the day there were a lot of US-based PC companies (IBM, Compaq, Gateway, Dell, HP etc..).  Now e we will basically be reduced to one: Dell.  I guess in today’s world it’s not surprising as anything that requires a manufacturing base eventually ends up in Asia.  But the bigger concern with Headquarters in Asia a lot of the R&D focus will move there as well and that will have ramifications to the US down the road.  With a higher education base emerging in these markets we are at the beginning if the Asian dawn – though some would argue this has been underway for sometime, in my view it is still very early in the game of shifting global balances of power.

The second big impact will be to HP itself as it seems to be operating as a rudderless ship at the moment.  HP has been, by enterprise standards, a revolving door of executives.  First we had Carly Fiorina who drove the acquisition of Compaq.  Then we had Mark Hurd, who was doing just fine until his sexual impulses got him in trouble with a reality actress. Finally we have the German Leo Apotheker, who unless he does something drastically different soon could be the next CEO to be shown the door.  This is a company that I used to hear Steve Ballmer place above all  others in the tech industry.  The company that Microsoft should try to emulate. Not such a good idea now. What I am sure is frustrating to shareholders is this is not technology issues dragging the company down, but complete ineptitude at the top of the company.  A fundamental lack of leadership. This, in the end, will have a demoralizing effect on the employees. More troubling will be if it starts to impact customers, where HP has always had strong entrenched relationships.

The third will be Microsoft.  On one had it loses a tablet/mobile competitor in the WebOS.  But much more significantly it loses a major partner in the licensing of Windows and Office.  This is a tentative time for the Windows OS.  Though it is still early there are emerging alternative options in the market place, that are more realistic than previous competitors such as Linux.  Google’s Android is a viable option because there are applications for the platform.  Whomever takes over the HP PC business would be wise to leverage this (on the flip side they would be stupid if they did not).  The Compaq/HP relationship extends over 25 years and was  a major reason that Windows was able to rise and take its existing place in the market.  This change will bring a level of uncertainty to Microsoft’s core business.  Microsoft right now could use a bit of stability in the marketplace with its existing relationships.  HP on the flip side will have to restructure a lot of relationships now that they are exiting the PC business, from Microsoft to all the suppliers of the parts that make up the PC’s.

The long-term ramifications of this, dare I say, titanic shift in the PC business is going to be an environment where countries with manufacturing bases will enter a world where they will increasingly look to develop and patent their own technology.  With the US PC business being reduced to Dell.  Another benefactor of this, on the plus side for the US, will be Apple as its monolithic technology stack had a window to further enhance its current momentum, while the rest of the industry waits for the fog to clear.  HP,a s far as anyone can tell, is focused on competing against IBM in the services business.  But where IBM always seemed so clear, HP of recent times has appeared clumsy and unfocused in what it is attempting to do, in what it is attempting to become.

In the end handling transition in the technology sector is challenging and it requires some long-term vision to handle those challenges.  As fast as technology moves if you don’t have along term vision as to where you are headed you can carve a very bumpy path for yourself.  You end up with a lot of stat and stops and find your self changing direction and positions often, much to the confusion of the end customer.  HP fins itself in tha position today and as observers we are all left to ponder, “hey HP what are you doing?  Where are you going”.  What we seem to be getting back as answers or non answers is a deer in headlights syndrome.  The problem with the syndrome that no one ever seems to contemplate is that the deer usually dies.

Good Night and Good Luck

Hans Henrik Hoffmann August 26, 2011

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The App Store Craze

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I was at a family event and all my nieces had a iTouch. I had never played withe the iPhone or iTouch at this point so when handed one I gave it a drive. First I ran some YouTube videos. A soccer clip of at the time Manchester United player Christiano Ronaldo. Connected to the house wi-fi it performed really well, which was an eye opener compared to previous experiences on my Windows Mobile phones, which frankly you just did not try. then with the wave of my fingers I cruised around the iTouch software. Soon I landed on what I viewed as a boring feature “The App store”, then with a simple touch if my finger a new world was opened up.  At first I could not believe how fast I was moved from one screen to the next and then all the options available to me, either for free or for purchase.  The categories available, the large number of apps available was all very impressive and very different from my previous experiences with mobile applications.

Prior to the app store developing apps for mobile devices was painful and not very profitable.  The first problem was which mobile phone did you write to?  Symbian, RIM, Microsoft, etc..Then their was the carrier issue as each carrier wanted to own the ecosystem.  I had to choose between Verizon, T-Mobile, AT&T, Sprint etc..it was a real pain in the ass.  Not to mention that by the time you broke it all down there was not much of a market to go after.  Then ever if you did write the app the user experience of finding the app and loading it was long and painful.  Lastly the applications you downloaded were not very good or enjoyable, largely because there were not that many available.  It led to one conclusion writing, selling and running mobile applications was for the world of mobile geeks, other than that don’t bother.  Apple solved all three problems by owning the ecosystems, providing lots of applications and making it easy for everyone to get access, find and download what they wanted to.

Now it seems everyone is playing catch up with Apple – Apple has over 500,000 applications, Google has 200,000 – 300,000 and beyond that not a whole lot of applications or excitement for the other players in the space;  Microsoft, RIM, Nokia etc..Microsoft is already discussing Windows 8 and including an app store for the OS.  One  question is how many successful markets will there be?  It’s apparent for the foreseeable future there will be two but a third?  I will be interested to see what a Windows 8 store means.  We are talking about the desktop after all and will it mimic the Android or iPhone app store with a bunch of free and low-priced apps?  This would mark a paradigm shift for the desktop as traditionally you bought apps that costs into the hundreds of dollars.    What will the Windows 8 tablet look like and will it be successful?  Another burning question are Windows developers like their counterparts in the Apple and Google world. interested in low-priced slash high volume sales?  The one thing I think Windows 8 does have riding for it, is it can be different, since it’s legacy is the desktop.  For RIM it’s harder as they are targeting just a mobile platform and thus cannot differentiate.  For RIM the future I believe is only a painful one.  Then there is Nokia.  I have yet to see or hear what their plans are – will they just consume off of the Windows 8 app store, thus ceding the whole app store revenue stream to Microsoft? It seems there can be only one here.  But that it the downside of Nokia letting Microsoft be their primary partner for the mobile OS will deprive Nokia ownership of the ecosystem.  Nokia can claim what it wants but its survival is dependent on Microsoft’s ability to deliver in spades.  More so from a sales and marketing front than a technology front.

Is there another paradigm to be explored?  Something around the corner we have not seen yet?  Without question there is, but I think sometimes we think it is something not invented yet, when many times it is something from the past yet re-hashed and improved.  The mobility phenomena will continue to evolve. We are always connected but the experience will continue ti improve as 4G technology becomes more prevalent.  Before you know it we will be up to 5G and 6G (if it is still called that).  The traditional software pricing structure of 90% margins is being torn down and that will continue as new indirect revenue models take its place.  It is just beginning in the area of mobility.  Soon you will hear of huge revenues from mobile advertising used to subsidize software development.  Ray Ozzie at Microsoft discussed this in his first memo at Microsoft.   For some it is just hard to take the plunge.

The App Store craze is here for now and how long it will be is hard to say, but how we acquire our digital delights will move away from packaged software, similar to how we download music today or stream movies.  The winners will be those who committed and as we see in Apple’s earnings calls probably has already been determined.  The key to success will be creating an experience that us simple and useful.  There still is opportunity in the areas of the cloud, in particular in small and midsize business and the enterprise.  There are companies making their imprints, such as Salesforce.Com, Amazon and Rackspace, but the game is still wide open.  It’s interesting to note in the last decade how the cutting edge of technology has moved from the ivory towers to the hands of our teenage kids and the impact it’s had on traditional tech powers.  The days of home desktop productivity software at $500 are over as the app store has created a mass market shift in how we consume our software and how we expect it perform.  There are those who can choose to take the plunge into the deep or perish in the tidal waves that follow.

Good Night and Good Luck

Hans Henrik Hoffmann August 23, 2011

Apple vs Android

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I guess it’s time I offer up my comments on these two  behemoths battling it out. Right now Apple is king. It’s market share continues to rise, the number of apps available continues to grow at what at times seems an exponential pace, it is no longer confined to just ATT’s network. It’s a fast paced enjoyable story. On the other side you have Google’s “open source” OS Android. The one the press is hailing will  be king. It has developer panache. It’s market share continues to grow at a very impressive rate.  If you look at one of the latest surveys, Android in Q2 of 2011 amassed a startling 43.4 % market share in the smart phone markets .  On top of all this Google just decided to acquire  Motorola Mobility for $12.5 billion. Who will win?  Will there be a winner?  Does there need to be a winner?  Will others challenge the two dominant players? Each phone has advantages and disadvantages.

Nothing revolutionized mobility like the iPhone.  It was a titanic shift in how we use and interact with technology on a day-to-day basis. Within a short time frame it seemed everyone in the streets, in the mall, at sports events were doing something more than talking and texting on their phone.   They even got ATT to join in the fun , all 300,000 employees.  Then they did the double “whammy”.  They got people excited about the web on mobile devices and applications.  Before you knew it the mass audience of the whisper campaign was the mass audience of consumers.  Thanks to the iPhone and also Google, the idea of a Garmin GPS was pretty much thrown out the door.  Apple did not change phones, they changed mobility.  Phones were merely a by-product of their success.  The latest estimates for the iPhone 5 is total shipments of iPhones will hit 95 million by the end of 2011.  This would be cause for concern for some of the also ran’s, like RIM, Nokia and Microsoft.  At some point in time the gap between competition becomes so great that the bottom feeders will never catch up.  The success of Apple launched Apple into some new territory, namely with the success of applications on the iPhone, Apple was suddenly more attractive to developers on a large-scale.  As I have stated before  it goes to show all this talk of open versus closed environment’s is a load of crap.  Developers go where the market goes.  Like so many things it’s all about market opportunity and money.

It was not long after the release of the iPhone that rumblings in the valley started murmuring about a phone from Google. It was a smart campaign as it was decided early on that Android would be released on the web as an open source project.  If you are going to create an effective “whisper” campaign one thing that is a must is mass.  Google did something a bit different is that they really got developers on board in their campaign, initially not as consumer driven as Apple.  But what it did was through developers get the consumer base listening.  Since it was open source anyone who wanted to build a phone could participate.  Pretty soon you had Samsung, HTC, LG, Motorola etc all lined up to deliver their first Android phone.  Being open source it provided the hand set manufacturers a better ability to tweak and tune the mobile OS to the handset’s.  This enable Google to scale the available marketing budgets as the handset manufacturers had a stake in the game and were clamoring for something to compete against Apple.

New to this is the Google decision to acquire Motorola Mobility, which to me is simply about two thins: Patent protection and owning the user experience, head to toe.  Patents are the legal area, nit my core, but I do understand in technology you want to have a fairly large patent library to protect yourself from lawsuits.  From that standpoint I get why Google is doing this.  From the other side I understand the attraction of owning the hardware soup to nuts, but I don’t understand why Google is doing this.  The side I don’t understand is to date Google has pursued more of a Microsoft Partner model in getting companies to use their Android OS, with this acquisition they are now saying they will compete against them.  This does open an opportunity to the other provider of mobile OS software, Microsoft. My one piece of advice to my old friends is give the software away, there never was nor will there be a huge market for operating systems in the mobile space.  The real money will be in mobile advertising.  Maybe a light bulb will go off over in Microsoft mobility, it would go something like, “Bing”.  Maybe.

There has been talk among the smaller players about a third eco system.  It has not been very well vocalized, but rather just drowned out as a bunch of noise from “wannabe’s”.  A third way is nice but you have to create excitement.  The mobile space at its core is about lifestyles, about making people feel good about themselves.  It’s about handling an important call or email and then getting back to your beautiful view of the Grand Teton’s.  It is there to make us happy.  When potential competitors dumb it down to features, killers applications, etc..they are missing the point.  make no mistake it’s a very big hill they have to climb, and as I pointed out with the Google – Motorola acquisition it may take one of the big two to make a mistake.  Apple, for certain has made those mistakes before and as long as they continue to pay attention to history I do not see that happening in the imminent future.  Google at this point depends on how head to head they want to go with Apple.  If the Motorola acquisition is about patents, they should be fine.  As far as I am concerned the third eco system is more a “niche” play then about gaining significant market share.  Some circles discuss Microsoft buying RIM or Nokia.  If that is what it takes to get market share I think it will end up being a colossal waste of money.  Don’t buy market share, innovate.

In the foreseeable future we are going to see the battle taking place on two fronts – the iOS versus Android.  It’s not a battle of phones, it’s a battle for the soul of mobility.  The next innovations will remove us further from our dependency on hardware while making our devices seem more productive, like our old desktops, without the handcuff’s.  Don’t get me wrong I enjoy sitting down and typing these blog entries, and I do not do it on my tablet..yet.  It will change and it will change soon.  Just don’t thin of it as a physical keyboard.  To break the dominance of Apple and Android it will require yet another big breakthrough, like the one’s the iPhone introduced.  These type of titanic shifts do not happen that often – it could be in an area not related to software. such as alternative energies and longer battery life (I think we are all hoping for that one), or new virtual experiences.  In the meantime we can enjoy the battle as it is leading to new innovative technology and form factors that will enhance our life experiences.  At the end of the day we are human and we are designed to live.  Today that living is being done in two worlds, which is about all I can handle.

Good Night and Good Luck

Hans Henrik Hoffmann August 16, 2011

Is Apple a threat?

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As I a watch with a great amount of envy the success Apple is enjoying its always fun to hear the critics. It is always the same story about too much control, no flexibility, a single entity dictating everything, in short it’s about power. A glaring human weakness that these days is finding more comfort in big corporations rather than big governments. In the industry of technology it seems to take on a heightened significance.  After all technology is about defining the future based on what does not exist today.  Much like the classic tales by Jules Verne and H.G. Wellls, we peer into that future with a bit of foreboding and cynicism as it charts un-tread waters that threaten the soul of humanity.  Apple is enjoying a run of success that seems to be defining our future interaction with technology. It seems natural that those old fears would surface.  It seems the human soul is always threatened.

To retread some of history, before we move forward, this sence of doom is not new.  In the old days some 40-50 years ago the technology threat was IBM.  There was a time where IBM spoke and the whole industry just followed in their coattails. It led to many concerns and protests within the industry.  However the rest of the industry had a friend, I simply call the Department of Justice (DOJ).  While they spent many hours in court a new revolution took hold called the Personal Computer (PC).  In a twist of fate IBM would give the rights to the software operating system to a small company called Microsoft.  Before long Microsoft had 90% market share and the industry began to cry of too much power, a single company dictating to the masses, but once again the industry had a friend to turn to, the Department of Justice.  While millions of dollars were being tied up in court the industry did an interesting thing…it changed.  New things like ad driven revenues via search were created and the term mobility took a twist to mean more than just a mobile phone providing voice services.  Before we knew it Apple had returned from the dead and new names like Google, Facebook and Twitter, to name but a few were now the face of the technology industry.

Why do we fear control by a single company – that ability to define what the industry will do and when they do it?  In some instances it is misplaced.  A large part of the fear is not created by the market but by the industry insiders competing against the perceived leader.  There are a couple of areas to consider, one is the developer and two is the competitive landscape

Developer, rightly or wrongly, are the gods of the computing world. for ultimately they bring our imagination to life. There always seems to be this mood against locking developers into a single “stack” platform, what god would be locked into anything? .  Having spent a fair amount of time with developers, they go where the business is plentiful.  Code is code, whether the developer is using Visual Basic or C the difference is not great enough that the VB developer cannot learn C or Java.   The fact that Apple has an army of developers using Object C, which is rather ancient is a testament to Apple’s ability to generate end-user excitement, which then brings an army of developers to their camp.  SO the fact that they are writing in a language that is over 30 years old is not a relevant point.  They are chasing the money, which always seems to be a relevant point.

The competition certainly fears control as it minimizes them.  No one is talking Windows Smartphone, because at least for now there is no business.  Even when Microsoft or HP (remember they bought Palm) talks about a developer platform it is treated rather silently in the press.  When Apple talks it’s like EF Hutton (older folks remember those commercials).  The room goes quite and everyone listens.  Does Apple control the press to?  I am sure to some it may seem like it, but the press is smart and goes where the news is best.  In short they don’t.  It does leave the competition in a quandary.  Do they try to forge their own path, very hard to change perceptions.  Do they play along with the devil?  It could be profitable, but the flip side is it could be suicide.  The biggest fear I would assume is just the fear of being shut out of a very lucrative market.

Could Apple gain a position where they dictate to everyone what their technology experience will be?  Could they be in a position to tell partners and competitors who gets to play in their pen?  Perhaps as it’s an age-old fear.  I am sure some felt that way about the American big three automakers at some point in time – they controlled manufacturing, distribution etc..but does anyone feel that way now?  I am not a free market purist, but the market is efficient.  As long as Apple does not get to arrogant they could influence the market to think the way they would like them to.  I would say so far they seem to be doing a pretty good job of it.  Apple’s iTunes represent sa good example of Apple and the market holding the record labels in check.  The record labels would love to dictate to Apple the  terms of music pricing, but due to the popularity of the iPod they are more or less to listen and adhere to Apple’s pricing guideline.  The music labels make money (I have been told by one of the music labels they get $.20 of the $.99).  The labels would probably like to own the whole channel, but it gets way beyond their core expertise.

At times technology companies get to seem so powerful that they could control their destinies by sheer will power, but at the end of the day it’s people who choose where they want to spend their dollars.  If the fruit looks rotten we don’t want to eat it.  The consumer ultimately decides if a company like Apple is providing an experience they want to buy and participate in.  It’s also a very American condition to build up the big guy and then tear him down when we feel their ego and success has become too big for their own good.  Why do we all hate the Yankee’s and Red Sox? At the end of the day I don;t think Apple is a threat to the industry or society, but just in case we should keep our eyes and ears open, because if we don’t , well maybe then they will.

Good Night and Good Luck

Hans Henrik Hoffmann August 10, 2011