Google Docs vs Microsoft Office

Ok I know right now this is no contest. Microsoft Office 2010 is a huge success in the 4-5 billion range per quarter and it is the ultimate cash cow. Anyone in business school would probably call Microsoft Office the definition of cash cow. They would be correct in doing so.  Over the past couple of years we have seen a new competitor come to the market in the form of Google Docs.  Competition to Microsoft is nothing new.  It has been tried many times before.  But I am seeing things a little differently with regards to Google Docs than I have in the past.  My son does his home work using Google Docs.  At my current place of work when we order out for food we place our orders through Google Docs.  A lot of start-ups choose to use Google Docs in order to cut costs.  These are things that just did not happen in the past   So what has changed and what is going on in the industry?  Lets look back and take a look.

When I started at Microsoft the competition was WordPerfect and Lotus 123.  Those two products feature wise were considered better than the Microsoft alternative Word and Excel.  But some bright people at Microsoft got an idea. Not so much a technology idea but a marketing vision.  Let’s create a bundle of products targeting the office space. And so Word, Excel and PowerPoint become the first bundled suite of office productivity tools. As a customer service rep it made for an easy sale as when customers asked a bunch of questions about products and were looking for both a word processor and spreadsheet application I could just say buy the bundle with presentation software and get 3 for the price of 2.  It was not so much sales as common sense. Over time Microsoft would standardize the interface between the applications, standardize the macro language, make it easy to cut and paste between applications add a database, Microsoft Access and many more over time.  Before the competition knew what hit them Microsoft Office was pulling in billions in profits.

This is not to say over time there were not efforts to provide an alternate to Microsoft Office.  There were.  Borland struck up a partnership with WordPerfect and they combined assets to create a bundled alternative.  But there was no standardization of the interface and no integration.  It was a rather weak effort.    Then they sold assets to Corel, a Canadian based outfit.  Now everything was under one house and they were going to capitalize on the open-source craze that was catching fire in the DotCom bubble.  When the bubble popped you never heard of Corel Office anymore.   Then of course there were open source efforts like StarOffice, out of Germany.  This was acquired by Sun who was acquired by Oracle and eventually everything transitioned over to OpenOffice.org.  This has received more traction than other competitors but remains relatively small   Like many open source communities, its audience tends to be very technical and anti-Microsoft.  The problem is they just cannot relate to real people.  Sales and marketing has a place in the product feedback loop.

Google Docs represents a new form of competitor.  There are a few things that make this a different and much stronger competitor.  From a technical stand point it is a cloud based application.  It just requires an account, no set up.   It provides 90% of what users need, which is primarily the ability to type and format.  Second, Google is an established company with lots of cash at its disposal.  It can continue to invest in product development and do the necessary marketing it will take to be an effective competitor.   If it takes ten years to get 10% market share they have the ability to wait that long.   Any company in the Office Productivity space who were to get 10% market share would inflict significant pain on Microsoft and specifically its share holders.  Finally there is the current Generation Y or whatever label you want to give them, but they grew up with technology.  They are not intimidated.  They are not beholden to any one company.  The idea of cloud based apps makes no difference to them.  In this “i” everything society they are quite comfortable with a SmartPhone, Tablet, Laptop etc..Breaking free from Microsoft Office is not that hard.

Which brings me back to my opening statements, which in short states that a lot of people are familiar with and are using Google Docs today.  The other competitors mentioned, you would find it hard to find people who know what they are or what they do.  With Google Docs anyone who has a gMail account has access to Google Docs.  The days when you receive a document and automatically you open Word for Windows, is no longer the case (this sometimes creates its own source of headaches for older people such as myself).  Google has done a great job leveraging its name to drive new services to customers.  They are gaining familiarity in the home as kids bring new technology home and then the next thing you know PTA members are sending you Google Docs.  To be successful in technology you need to go viral.

Down the road you can begin to see chinks in the Microsoft Office armor.  Everyone who uses Excel or Word say the same thing, “I only use about 10% of its capability”.  Which is true, it has become so big and bloated that a streamlined word processor like Google Docs has an opening it can penetrate.  Any College student working on a mid-term paper would appreciate the ease of use and set up of Google Docs, not to mention the cost savings.  College students are poor. Anything to save money and buy beer.  I see Google taking an Apple approach and penetrating the educational system.  The current economic climate only helps their cause.  It seems not a day goes by without a state or city announcing major budget cuts to education.  Every crisis kills someone but is an opportunity for someone else.

These are interesting times in technology as fundamental change in computing technology seems to be in the air.  It is a time for disruption.  Disruptive technologies change the industry climate.  Certainly the advent of the affordable PC changed how we viewed technology.  The internet created a connected society.  Mobility allowed us freedom.  The cloud could threaten entrenched players, who thought their business model was a birthright. Google seems to have jumped on this disruption early and it will be interesting to see if the Office folks can catch up.  They are trying with Office 365.  So far the only disruption they have caused is how I view a Word doc in Hotmail.  That would be disruption in a non flattering way.  The future is happening now.  Will it still be a business of billions of dollars or is disruption going to cause fundamental shift in revenue (someone is making money, just possibly not in the traditional sense).  Change is starting to happen in a fundamental way in traditional technology business categories.  The Office productivity suite will not resemble what we have today in 10 years, that is for certain.   It may be Microsoft Office, it may be Google Docs, it may be someone else.

Good Night and Good Luck

Hans Henrik Hoffmann October 25, 2011

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The Downer of Digital Music

In this day and age so much has changed in how we consume and how we live.  Technology has been the primary driver of those changes.   But for all the significant enhancements to our day-to-day lives I do feel we are replacing a sense of adventure with convenience.  A lust for now and not the search.  One area I loved dearly in my youth that has undergone fundamental change is music.   Some of my biggest changes in life and fondest memories were of finding new music and going through a journey of self discovery and self fulfillment.  I remember in 9th grade at Tillicum Junior High in my hometown of Bellevue, we had the final school dance. In order to celebrate a group of six of us decided to rent a limo, go out to eat, go the dance and then head into Seattle. It was our grand finale. After dinner and the dance we were heading into Seattle U-District to go to Arnold’s and play video games for the rest of the evening, well everyone except me I had a far grander plan…I was heading to Tower Records. So the chauffeur dropped the other 5 off at Arnold’s and drove me up to Tower Records and opened the door for me.  Many on the ave, as it was called. gazed and wondered who was this high-class dignitary?  Or so I thought (you can only imagine the kind of put together outfit a 15-year-old boy dons for such events).  When I entered the Tower records store it was like a musical Mecca.  It was completely overwhelming the aisles or records…of music.  I had never seen anything like it.  Prior to this it was the Sears record department.  I did not have much time to browse and had to decide quickly.  As I had just been introduced to the whole New Wave and Punk scene that was happening I went for the new classics. I settled on The Sex Pistols “Never Mind the Bollocks”.

Through the years, especially my high school days, I would hit Tower often, usually with my friend Carl.  The great thing was the University district had a lot of small new and used record stores as well as Tower Records..  It was fun just to adventure up and down the avenue looking for music. Looking at today’s tech driven consumer society we have seen music evolve into the digital download age and provide us avenues of access to music that are truly wonderful.  As I write I listen to Pandora, which I am completely in love with as it has allowed me to rediscover music lost in my soul and introduce me to a ton of new artists.   But in the iPod/iPhone/iTunes driven age something has been lost.  One thing I always enjoyed about an album was it was a constant process rediscovery, as often the music you originally bought the album for grow tiresome, but when a year later you played that same album you discovered new uncharted songs grabbed you attention.  Now in the download age the entire album is replaced by the purchase of individual songs.  When you burn out of that song you got on to the next latest and greatest hit, rarely listening or even being interested in listening to the artists body of work.  The album.

Buying music now is completely different as the hours spent going to record stores are replaced with the instant gratification of online retailing.  I guess the cool thing is I could be in the middle of Stanley Park, hear a song, and purchase and download within a few minutes.  Or I could be at my favorite restaurant.  Does not really matter where, to be honest.  I just need to be connected.  The days of making your girlfriend the “love” tape are gone.  No more hours spent going through albums and painstakingly recording the onto cassettes.  No reason to write down the songs with little love quotes next to them.  My wife recently found one of these tapes and read out load what I had written.  Painful.  Today you can have 20 romantic songs, title it, hit shuffle and play and be done in minutes.  Despite my nostalgia for the past I have to admit this is pretty damn cool.

Of course these dramatic changes did not just happen one day when Apple released the iPod.  It happened over time and through many changes.  The start of MTV, the move to the compact disc, Sony Walkman, peer-to-peer networking and the creation of Napster, Internet Radio, etc..But despite it all this disruption the music labels did not see the big change coming.  Focusing on short-term revenues and not envisioning long-term revenue.  How people would purchase music and when that change happened, they were ill prepared and left playing catch up in a rapidly changing digital world.  I remember an interview in Wired magazine with a VP of Sony discussing the transformation tat was going on in how music was being consumed.  This was around the time the Apple  iPod was taking off.  His view was that the hard drive was interesting technology. Interesting?!? Really?!?  I wish I could remember his name and only hope that he was fired.

These changes have also changed the artists.  It used to be taboo to be a rock start and market products, but the dear departed Michael Jackson was ahead of the game when he became the spokesperson for Pepsi.  Now it seems like pop stars are created to sell products.  Look at Brittany Spears, Jennifer Lopez, Beyonce, etc..Members of the Who must be rolling in their graves…hold it some are still alive (sorry Pete and Roger).  In fact it seems in many cases a lot of  pop stars are corporate entities.  They can cry me a river about the money and fame but in the end we all want it so I shed no tears.  The move to digital, to be fair, has caused the industry to expand on how to make money off of the artists work into new arenas.  It’s similar to comic books.  You don’t make money off the comic, but the movies and the accessories can be sold to a large buying public.

As for me, yes I have put all my music onto my PC and play on my Zune (yes I actually own one).  But recently thanks to Pandora I have had a desire to revisit my youth and go looking for music only to discover that there is not many places left to do that.  The future took off and when I went to return to my happy youth it was sadly gone.  The downer of digital music is also the downer of aging.  However I still have my memory of those days walking up and down the aisles of many record stores and the adventure it inspired and the joy it provided. I shed a tear for the departure of the album, the departure of my youth.

Good Night and Good Luck

Hans Henrik Hoffmann October 17, 2011

The Walking Dead

I will preface this blog article and say it will target mainly people who are at Microsoft or have been at Microsoft.  For those who have no association it may be a bit dry, but hopefully my writing can make it a bit entertaining!?  Just a thought.   It’s time to talk reviews. What do you mean reviews Hans? Well the time of year has just passed at Microsoft where people receive their annual review. This determines their level, pay scale, bonus and future growth at Microsoft. Are they invaluable or are they expendable.  The review process was new this year going from the Exceed – Meet – Below format of previous years to a 1 is great and a 5 you suck. format.  The irony of the new format is it’s the inverse of the of format of 5 your great and 1 you suck format of years.ago.  There are differences, however, and ramifications.

In the old format I can say a score of 5 was rarely if ever attained.  A great score was 4.5 and above avg was 4.  Many strove for a 3.5 and 3.0 was the average employee and most employees in the end received the 3.0 score.  If you got a 2.5 (which was the lowest I ever heard of anyone getting) you had to work your way back and those few who received, many did fight back for a better day.  In those days it was policy and  pretty much everyone followed the rule that you did not discuss your review score. Fast forward to today and you have a strictly applied bell curve for each group and so that there are those who can get anywhere from a 1 to a 5.  If I understand correctly you could have an over performing group, but some people will still have to fall under te “bell” and receive a score of under performing.

The new bell curve is pretty hardened in the sense that a few will get 1 a few will get 2 many will get 3 a few will get 4 and a few will get 5.  It does not matter how well the group did as a whole, there will be one of 5 scores for everyone.  It’s almost a bad thing to work for a high performing group as you could do really well and still get a 4 or 5.  A big change is how open people are about review scores these days.  I have heard from many either directly about their own score or that of a colleague. It’s as if some do not care or have accepted their fate.  The problem is, when you get these low scores  your future is reduced to pretty much zero.  Many groups will not hire anyone with a low score of 4 or 5.  It is a group policy. If you are a 4 you have a limited set of options.  Maybe you have an old co-worker or manager willing to vouch for you and take you into their group.  Or you work hard for two years (hiring manager’s always ask for your last two review scores) and get high scores and live for another day.  If you get a 5 you are next in line to either get fired or laid-off.

In the end, of your 85,000 employees nearly 20% will fall into the lowest tiers.  In all honesty for them there is no road back.  They will just exist at Microsoft. The good news is they will be paid,  The bad news is their days are numbered.  they are what I term “The Walking Dead”.  Some work hard trying to make up for their mistakes.  Hoping to make enough of an impression that they will be allowed to stay.  Others see the writing on the wall and plan their escape.  Looking elsewhere for work, but in this difficult economy that is not easy to do.  Then there are those who do not see it coming and one day they walk into work only to discover an HR rep waiting to greet them and then point them to the exit.  On the latter I seem to get emails monthly from former Microsoft friends now out on their own looking for the next big job opportunity.  If you read the Microsoft blogs, part of this apparently is an effort to “youthanize” Microsoft, however I refer to it as the effort to euthanize Microsoft.

In the end these walking dead will have an impact on Microsoft.   When you are talking about up to 20% of the work force what type of attitude do they bring to their day-to-day jobs and what type of impact does that have across Microsoft?  It concerns me as if I look back in the day when things were growing fast people came inspired to make a difference in the world, it was not just a job but something bigger.  For such a huge revenue generating machine I am constantly amazed by the low moral.  I am also shocked how readily middle and upper management by into this new system, without question. Finally probably the saddest thing is just the concern and fear that has gripped many in the company.  I think we all know fear is a great motivator.  To be innovative, though, you need passion.  Passion is driven out of love for what one is doing. It’s hard to love anything when you are scared.   It’s hard to walk away from a job these days, with no prospects, however is it better to live or just exist?

Good Night and Good Luck

Hans Henrik Hoffmann October 11, 2011

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The Return of Steve Jobs and the Rise of Apple

With the passing of Steve Jobs yesterday at the age of 56 I felt it appropriate to revisit a post I did originally in March of 2010.  Steve Jobs always pushed the limits of the industry and brought it to new heights.  In many ways Microsoft owes Steve Jobs for introducing the graphical interface and pushing Microsoft to create Windows.  But maybe most importantly Steve Jobs is a comeback story that we all admire.  The industry is a little less today without Steve Jobs.  We all want to change the world but so few of us actually do.  Steve Jobs changed the world.  Thanks for everything Steve, you will be missed.

When I first started at Microsoft back in 1991 Apple was more or less a relic of what it used to be. Keep in mind it was still a cash cow for Microsoft as we owned the core application set for Apple, Microsoft Office for the Mac. However it was a company seriously lost in what it wanted to be and where it was going. the one thing Apple did have going for it was a fiercely loyal user base. Even though Microsoft was 90% of the market, Apple had 10% and it was going nowhere.

At the time the original founders of Apple, Steve Jobs and Steve Wozniak were not to be found. Jobs had been forced out by then CEO John Scully and was off trying to do the next big thing at NeXT computer. In addition he bought a small company from Lucas that became Pixar (it did pretty well). On the other hand Wozniak nearly was killed in a plane crash and not too long after would walk away from Apple (though he still is on the Apple payroll). In a lot of ways you can parallel Woz with Microsoft Co-founder, Paul Allen. John Scully grew Apple significantly after the release of the Mac, however, he was never able to generate the buzz and excitement around Apple that it deserved. Scully came from a successful career at Pepsi and was no doubt a talented marketer. However after 18 years in technology one thing I firmly believe in is if you are going to be a cutting edge technology company you need someone from the industry to guide you and set the vision for the future, to generate buzz, to generate excitement. I have always said the tech sector is more Hollywood than Wall Street. Technology leaders who cater too much to Wall Street, will ultimately doom the company.

For the next 5 years at Microsoft I watched as Apple went through various CEO’s and considered licensing the Mac OS similar to what Microsoft was doing with its OEM channel. I watched as they launched a Windows Virtual Machine so they could run Windows Applications. It always seemed like Apple was throwing darts at the board trying to find someway that something would stick. At one point Microsoft even made an investment in Apple, just to show we were good guys. Things would start to change in 1996 when Apple purchased NeXT Computer, bringing back Steve Jobs to the company he helped found. It ushered in one of the great comeback stories in the history of high-tech.

It used to be said in the industry that you can have a PC any color you want as long as it is beige. It was sadly very true. In addition to the giant CRT screens we had in the day it made for a very ugly desktop. One of the first things that was noticeable when Steve came back to Apple was the launch of Mac’s in color. The orange and lime green seemed to be favorites. Some of the best ideas in the tech industry are the simplest. In 1999 I remember Bill Gates showing off some new Dell PC’s that had some color to them and he mockingly said “We can do color to”. It is and will always be a challenge for Bill to understand the “hollywood” side of technology. Color was important because the beige was so ugly.

For those who remember around this time in the late 90′s a company called Napster became very popular. Napster did some things that Microsoft liked a whole lot. Mainly it allowed end-users to share music files over the internet. Thus promoting the power of the PC and leveraging the value of the internet. Now at this point I can only guess, but my feeling is that someone at Apple could see the real value here – which was that these PC’s had large hard drives that enabled you to store a lot of music, would it not be cool if it was mobile? You could put a hard drive in a little plastic case with ear phones and carry it with you. In October 2001 Apple launched something called the iPod and later a music service called iTunes. As we all know these have gone on to be gigantic success. Microsoft has partners doing their own MP3 players and I remember going into the Best Buy looking at some of them, then I picked up a iPod. At first I was not impressed with its DOS like interface than I started touching and trying to click the wheel, at first it did not seem that responsive. Then I took my thumb and made a semi-circular motion..cool! After that those other MP3 players were dust. The iPod was huge for Apple in the sense they were no longer the niche player the Mac, they were now the darlings of the every day end-user. As momentum continues Microsoft finally scrapped the partner model and came out with the Zune (I have had several). These devices work well, are cool and have the “wheel” like feel (apparently Apple forgot about the patent process). The challenge for any company is once a competitor has established a huge market lead, can you ever catch up? Not to mention on the advertising front I see Apple iPod ads everywhere, on TV, on Billboards. I cannot recall seeing one Zune ad. Another area that always has concerned me is what our response at Microsoft, while I was there, was to Apple. the typical, it is very proprietary. They really don’t work that well. As Steve B would say, “blah, blah, blah..” I would say, “who cares?” If end users like the experience and are happy with the $.99 price tag, they will continue to download songs from iTunes. As of this writing more than 10 billion songs have been downloaded from iTunes.

Then came the iPhone. At a time when the smart phone had yet to “realize its potential”. As the story goes Randall Stephenson, CEO of ATT Wireless (then Cingular Wireless) was in a meeting with Steve Jobs. Steve had just shown him a new mobile phone Apple had been developing. Randall just kept playing with the phone, fixated on its beautiful and responsive touch screen user interface. Steve Jobs is known as one of the toughest negotiators in the business. Randall was a long time telco guy who had net and negotiated withe th best. He also knew that what he was holding represented something bit, something that could turn the tables against some of ATT’s biggest competitors Verizon, Sprint and T-Mobile. Unlike most phones carried in a store which are in many cases subsidized by the manufacturer, Steve wanted it sold and all the revenue. ATT could get the voice and date plan revenue, but Steve wanted everything else. In the end the device was too good to pass up. Steve Jobs had just got an unprecedented deal in the wireless industry. This launched the march towards the delivery of one of the most “revolutionary” hand-held devices in the mobile phone industry, the Apple iPhone. I had a friend contracting at ATT at the time working on getting the online payment for mobility set up and all he would say was everything being done in Atlanta was geared towards the launch of the iPhone. This was a device with a serious amount of weight being thrown behind it.

The iPhone launched on June 29, 2007. As Bill Gates would say later on, “Microsoft did not set the bar high enough”. The iPhone was a huge success and that is an under statement. It did a number of things better than had ever done before. First was the touch screen. It was responsive. Very responsive. You could be up and doing something within seconds. Second the mobile browser experience was easy and the content you got back was readable. Every device I have ever had the mobile browse experience has been different with each device and very painful. Third it created a market for mobile applications. Prior to the iPhone making money on mobile applications was a dream more than a reality. Competitors will argue, again, Apple is a closed environment (for you non-technical folks – it’s Apple’s way or the highway). I will say again and again, that is the argument of technical people, if end users like the experience they support with their wallets and do not care about open environments versus closed. The iPhone will go down in history as a major technology milestone and another big hit for Apple and Steve Jobs.

Apple about a year ago launched yet a new device, the iPad. The orders are built up and Apple has done it again. Now the iPad was yet another attempt at the Tablet. Does anyone remember the Apple Newton? Microsoft Pen for Windows? The Microsoft TabletPC? I wrote a year ago “Will this time the idea of a usable tablet finally become reality? My view initially is that Apple is riding its wave of success to create yet another blockbuster in the industry”. THey did create a blockbuster. Then I wrote the following: In the latest issue of Wired Magazine they do raise the question of interaction with computers. If you think about how we as people interact with our technology it has not changed on over 20 years. We have a monitor, keyboard and mouse. I will say having been at Microsoft 18 years there were many efforts from the top down to drive the success of tablets. To change the interaction of user and technology. If Apple succeeds with the iPad it will be a huge psychological blow to Microsoft. Apples first attempt in over 15 years after the many attempts by Microsoft and it is a huge success? The success Apple has had with the iPad has led to a huge change in how people want to interact with technology and spurred a new wave of innovation. Not far behind has been Android which was quick to respond with their own Tablets. I cannot count the amount of emotional responses I hear from people with iPads “I Love”, “I adore”, “I treasure” . Not far behind are business ideas for their iPad. It is really quite amazing what can happen with success. It creates a force of gravity that cannot be stopped. A Wall Street dream.

Bill Gates has left Microsoft. Today Steve Jobs is the poster child of the technology industry. He is the rock star pumping out hit after hit. The movie star who cannot make a bad film. He is in the zone. From when I started to when I was let go at Microsoft the journey of Apple has been an interesting and amazing story to watch unfold. All tech stars rise and fall. The list is long WordPerfect, Lotus, Borland, Netscape, AOL, etc Apple certainly did this, but then to rise again bigger then what they were before has been a spectacle to behold. What they are doing now is not so much about how they are influencing technical innovation, but how they are impacting the global culture. The future can still be bright despite the illness that has removed Steve Jobs from day-to-day operations. In my view the next holy grail will be television and how we interact with our oldest of friends. AppleTV is a start but it is not there yet. GoogleTV is on their heals. But given their track record it’s dangerous to bet against Apple right now.

Good Night and Good Luck

Hans Henrik Hoffmann, October 6, 2011

Categories Uncategorized

Amazon Kindle Fire

Well the news broke today that Amazon was releasing its own Tablet based on Android, called the Kindle Fire.  The most compelling thing about this product, initially, is the price point of $199.  It’s an interesting time in the technology space as we have this new category of device that is still being understood.  The debates are numerous.  Is the category a tablet?  Should it be a laptop? How does this effect market share…in what?? But with Amazon entering the game it does change the dynamics a bit as they are not a traditional device manufacturer but grew up as an online book store.  Which in addition to being unique provides them with some distinct advantages and ability to provide differentiated offerings.

The Kindle Fire is an extension of the Kindle, which was the original “successful” ereader.  It’s a case of a fish swimming upstream looking for bigger and more profitable markets.  In the case of Amazon the Kindle Fire gives them a chance to sell existing services to new customers.  To go beyond just being a device where I read my ebooks, but can do more. Amazon has a lot of relationships with content providers and will be able to utilize the Kindle Fire to drive additional services revenue.  It adds excitement to the tablet  space where to date only Apple has been able to generate excitement (OK a lot of excitement).  I commend Amazon as they have made the Kindle software available beyond their own device realizing they need to provide their services beyond their own ecosystem.

A key area I think where Amazon can make inroads is bringing cloud computing to the masses.  A few weeks ago at the Microsoft Build conference which was about Windows 8, they demonstrated a lot of features that tied into the Microsoft Cloud Services, the problem is it is a year away.  The Amazon cloud services will be here by the holidays this year, building and adding to the success of Amazons Web Services, which is already a billion dollar a year business.  Today cloud computing is a “buzz” word that is rapidly gaining traction but has yet to reach the mainstream.  Sure there are what we term cloud based services such as DropBox, various emails services, The Microsoft Live brands offer a variety of services such as SkyDrive.  But in my view and I think where Amazon has a shot to get it right is people want the vision and security of what the cloud offers but they want it to be a seamless experience that they just do and do not have to think about or worry about.  The Cloud will become real when it is in afterthought.  By bundling these services into the Kindle Fire, Amazon has a chance to hit a real home run in the market place.  There will be other like the Sky drive and iCLoud but the first to get it right will have a clear advantage in the market.

Release cycles are very compelling and necessary in the Tablet space – Apple has been able to maintain and sustain momentum by releasing new Tablets annually.  They generate excitement leading up to the release and then deliver. Having consistent release cycles is important, gone are the days of 3 year release cycles.  The market is far too impatient for such lengthy waits.  Apple. Amazon’s main competitor is pretty good at these release cycles and really has mastered generating PR excitement around the release of  their Tablets (not to mention “i” everything).  Microsoft, the other perspective player in the tablet space, may have more of a challenge on release cycles as their tablet is pinned to the traditional Windows OS.  For a refresher Windows has traditionally been on 3 year life cycles.  It will be interesting to see if they can foster a consistent stream of yearly innovation.  As technology innovation increase in velocity it will be important for players to keep up lest the fall behind, far behind.

Pricing for the  Kindle Fire is set to be $199.  This may be the most important development in the Tablet wars yet as Amazon is clearly set on losing money to garner additional services revenue.  It’s the HP printer model but in the cloud. Apple has panache but it is relatively expensive and is almost more of a status symbol.  At the low price Amazon is offering they have a real opportunity to drive market share and a lot of retail traffic to….Amazon (remember the business they started as back in the dotcom days).  I would assume Wal-Mart may be following these developments very carefully.  If the Fire is as slick as advertised then this low price point could be a big game changer and further enhance Amazon’s image as a consumer company.

Amazon constantly amazes me as it seems to re invent itself on a constant and consistent basis.  Starting off as an online retailer to driving a lot of innovation in cloud based services to making the ereader successful (they were not the first, many had tried).  The initial buzz seems to indicate the Kindle Fire should have great success as it will be available for the holidays and could gain a significant piece of market share (depending on how we define market share).    The industry needs a strong competitor to Apple, if anything to further innovation in the industry.  Amazons unique position to deliver cloud services and content services put’s it into a strong position to be that alternative to Apple.  We are still waiting to not just hear, but see another alternative from Microsoft, but I am continually perplexed by my former employers behavior.  They seem to live on their legacy not the future (which is kind of what technology is about).   It sounds like we are a year away from the Windows 8 tablet, which means the market could have moved somewhere else by then.  We are probably waiting for someone else to enter the fray – the market opportunity is just too big for that not to happen.  based on what we are seeing wherever the market goes in the next few years Amazon will be there with presence and power.

Good Night and Good Luck

Hans Henrik Hoffmann October 3, 2011