Do or die for Nokia and Microsoft?

Well they are finally rolling out the Nokia Lumina 900 series running the Windows Phone OS. They are doing this with AT&T and offering cut-rate prices.  You will be able to pick these phones up for $100.  I think the price point reflects that fact that Nokia is desperate in the US market and Microsoft is desperate to catch up with Apple and Google. I It was Google VP (and former Microsoft GM) Vic Gudotra who tweeted when this unlikely partnership was announced, “Two turkey’s do not make an eagle”. For the record I support t turkeys, if you have seen them in the wild they are a damn cool bird.  But the quote did summarize the state of Nokia and Microsoft in the mobile space at the current time

I was actually meeting with an old co-worker at AT&T who let me handle the Windows Phone. It was the HTC Titan.  The screen was bigger than my iPhone3 (I am always running behind the latest and greatest). When the iPhone5 comes out I may upgrade.  In any case back to the HTC Titan.  The much discussed Metro interface was nice, is it a game changer? No, but nice and I guess it comes down to personal preference.  Some will like the iPhones, others Android and yet others will like the Metro interface.  There does seem to be high hopes around Windows 8.  I remain skeptical, but Microsoft has the clout to make the new operating system a success.  Not just on the desktop but the smart phone and the tablet.  Back to my friend, he let me hold the device. Which was the first time some one had let me do that.   Note to Microsoft phone people stop withe the demo’s and geeky talk, let people experience the phone.

Can either of these two companies create an Apple size comeback?  Nokia is more Apple like in that it is spiraling towards rock bottom.  Microsoft still has Windows and Office generating over $20 billion so though not a company with a lot of “panache”, they are not dying yet.  My fear for Nokia has always been the move away from software and going head to head with Samsung, LG, HTC and the Chinese handset manufacturers.  It will be hard to distinguish themselves as different from the others.  Of course they did do just that when they selected Microsoft as their phone OS vendor.  Nokia had also blown the US market years ago when they refused to make a flip phone.  For a decade Nokia was a much bigger provider outside the US than inside.  For a time it seemed to be ok, “hey we don’t need the US market”.  Odd, but it is what they did.  Then like so many things in mobility, the iPhone hit and changed the landscape.

Moving forward it is apparent that Nokia will need a tablet play as the idea of just providing smart phones is simply not enough.  Due to their relationship with Microsoft, Nokia is in a holding pattern until Windows 8 arrives in the fall.  If I have a concern here for Nokia/Microsoft it is that no one is holding off on their purchase of the new iPad 3 in hopes of a better Windows 8 tablet.  The iPad has garnered so much mind share that I think many people do not realize Microsoft and its OEM partners are coming out with a tablet.  It does not hurt that Apple stock is now trading over $600 a share and they just announced a quarterly dividend of $2.64 a share.

What about Microsoft in this space?  Well as discussed they will not go broke anytime soon, but this is a last stand in the phone space.  Never has Microsoft attached its sails to one strategic partner like it has with Nokia.  For Microsoft it is important that Nokia maintain and start to regrow its international footprint.  An area where Windows Phone has traditionally been weak.  It i also a major reason for partnering with Nokia.  Nokia invested early and heavily in India and China so it makes sense, this unique partnership. It also needs success in the US market, it only to offset the market presence of both Apple and Google.  Apple really rocked the industry with the iPhone, but no company was caught as off guard as Microsoft.  I was there at the time and there was a flippant view towards Apple in this space, thinking they were naive and would fail.  Revolutions happen and if you don’t anticipate them you will be over thrown.

In conclusion, the next 12-18 months will determine if this partnership will succeed or fail.  There will be challenges.  Microsoft has other mobile handset partners.  What if one of them makes the ultimate Windows Phone experience?  How quickly would Microsoft dump Nokia and how quickly would Nokia run to Google’s arms?  If share doe snot grow but remains stagnant when does one throw in the towel?  AT&T is the largest carrier and promoter of Windows Phone in the US, but how long will their commitment be if the Windows phone continues to falter?  Will Nokia and Microsoft be able to build up a strong developer community to build applications?  There are a lot of unanswered questions and only time will tell.  Some say this partnership needs to succeed, to create an alternative eco system to what Google and Apple provide.  I have always found this a perplexing and humorous notion.  Why do we need a third system?  That is something only the technical people say.  The “people” I cannot see really care one way or the other.  If they did care the Microsoft Zune would still be around.

Good Night and Good Luck

Hans Henrik Hoffmann March 27, 2012

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Google – threats and opportunities for the Future

I was having coffee with a contract recruiter for Microsoft recently and he mentioned he had just been in New York meeting with some of the Microsoft Advertising folks. He mentioned they were kind of down as when they went looking for business (I can only assume for Bing), things were not going so well. As it turns out the ad agencies only wanted to talk with one company: Facebook.  It makes total sense.  If I were wanting to place ads I would much prefer Facebook to search providers such as Google or Microsoft.  The reason being simple, unlike a search engine where I do my search and click my link.  In Facebook I log on and stay.  And judging by some of my friends they are on Facebook a whole lot.  This is a big threat to both Google and Microsoft, but primarily Google.  Microsoft has a lot of other business groups that generate revenue (Windows, Office, Server and Tools etc..), and Bing frankly has been a cost sink hole.  However for Google the avenues are not as plentiful. Facebook poses a challenge to the future of the company, that is well worth getting excited about.

There is no doubt the traditional Google business is under threat.  The very business landscape that Google pioneered is shifting as companies look to spend their ad dollars in places where the perceived monetary return is greater than ad words.  Facebook will be a big test to that business, as will Twitter.  Don’t get me wrong Google has been nothing short of amazing.  It’s end of year statement in December showed a company with over $37 billion in revenue.    This from a company that was incorporated in 1998.  When I started at Microsoft it was already 16 years old and talking of its business units in terms of its first billion.  The fear for Google, from the start has been, is Google a one trick pony?  Can it take sits enormous revenues and invest those in other web-based services to generate new streams of revenue.  There is some hope on the horizon in this area.

The good news for Google lies in the success of its mobile platform, namely Android and the mobile search business.  In our increasingly on the go and mobile society the opportunity for new revenue streams in the mobile search business is immense.  If you go by one Gartner report mobile search revenue will grow worldwide to over $20 billion by 2015.  Based on last years earnings Google already generates $2.5 billion in mobile ad revenue.  Google has been very successful in getting mobile handset providers to adopt their Android platform as the mobile OS.  Premier providers like HTC and Samsung have been major advocates of Android both for the smartphone, and in the case of Samsung its tablet offering.  If there is one note of fear, it is the amount of mobile ad revenue generated from Apple’s iOS platform.  Apple and Google are direct competitors in the handset space, so how long Apple chooses to ship Google’s search as a part of its standard offering of apps with both the phone and tablet is open to debate.  I am sure Microsoft just waits in the wings waiting to provide Bing as the default search offering for the iPhone.

The other bets will be the continued growth of Chrome as a browser and internet platform.  Chrome continues to increase market share ( Use Chrome as my default browser).  This is significant as the browser war is the battle fr the internet OS.  Today we have four to five players: Chrome, Internet Explorer, Firefox, Safari and Opera.  In my view it will come down to three as we are already seeing Mozilla people leave the Firefox camp and Opera is still very small in market share.  The other three combined have close to $200 billion in the bank, so I feel safe in choosing them to fight the last battle.  This is an area where I feel Google is well positioned as they don’t have a PC OS.  Apple has its MacOS and Microsoft Windows.   It can be a big advantage to not have a legacy mindset in the industry.  Hardware manufacturers have introduced a “PC” without Microsoft Windows.  A Chrome Netbook was released.  The reviews were mixed as it is a bit different to have a Netbook with no hard drive.  Thus your experience is dependent upon connectivity.  It is too soon for this device, but if you envision a world where we have ubiquitous connectivity you can see the writing on the wall.

As you see, primarily, Apple has taken the lion share of the tablet market place a new thing is happening.  The Windows growth rate over in Redmond is slowing and in some quarters shrinking.  The big concern here is not just Windows, but down the road Microsoft Office.  Luckily for Google they have been investing in the desktop productivity space with Google Docs.  It is not a bad bet on their part as when you are competing against a product with 90 percent market share the only way is up.  Given the large cash hoard that Google has they can commit to this space for the long-term and with the rise of tablets and, if we believe, the disk less netbook then the outlook for Google Docs long-term is fairly bright (I wrote about Google Docs in a previous post).  They can charge far less than Microsoft and still make billions.  It will not be an easy task however we can see the paradigms for the  future of how we consume technology changing.  One thing for certain in the information age is nothing is forever.

This is the new paradigm we have entered into as the web seems to build up companies overnight into social phenomena’s.  Especially with web-based services like a Google, Facebook, Twitter or Groupon where nothing is manufactured.  There is no physical output.  No handheld device.  No PC.  Just a bunch of services out in cyber space.  The fact that Google has become a $37 billion business in a little over 13 years is truly amazing.  Facebook pre-IPO already is generating $3.7 billion in revenue.  The internet is creating a velocity of business we have not seen before.  The ability to communicate and spread the word of whatever is new and cool is what makes the technology space the most exciting industry on the planet.  For a company like Google to continue its path of success it will constantly have to adjust and seek new business opportunities.  As long as you have smart people envisioning the future, you can determine your own destiny.  Ball is in your court Google.

Good Night and Good Luck

Hans Henrik Hoffmann March 20, 2012

Rethinking Detroit and the automotive industry

In his Mobile World Congress keynote in Barcelona, Ford Motor Company Chairman Bill Ford rolled some eyes with his thoughts on technology and the future of the automotive industry.  The move to driver-less vehicles, envisioning a future still in development but very much on the horizon.  To many this may seem far-fetched, a future beyond our years.  However Mr. Ford’s comments were  based on some sound statistical metrics.  With the world population set to grow from 7 billion to 9 billion by 2050 and  automobiles set to grow from 1 billion on the road today to 4 billion by 2050.  In conjunction with these numbers it is expected people will continue to migrate to large metropolitan areas.  We are entering an era where we are going to be creating some major environmental issues and huge traffic congestion issues.  Is what Mr Ford touting revolutionary?

Well on the surface yes and I would argue and agree with Mr Ford that in time, we will enter a future where we are not as responsible for our driving as some would like to be.  Many cars today already come with a GPS system, many have satellite radio, have a connection for our iPhone so we can stream music via Pandora or play whatever we have purchased and loaded from iTunes.   As car technology matures the amount of data we will be able to capture, analyze and utilize will only increase.  We should be able to get a lot of information about drivers driving behavior. As cars move through the streets of America, we will also be able to capture information about the surroundings that they are traveling through.  Your insurance company would love to have this information so they could adjust your rates up or down.  A car is becoming a data collection device among other things.  How we manipulate and utilize that information will be a topic of hot discussion in the years to come.

The most dangerous thing about a car today is the people who drive them.  In fact it has pretty much been that way since Henry Ford rolled the first Model T’s off of the assembly line in Detroit.  The thing that makes humans interesting is their imperfections.  In most cases we inspire by doing the right thing or taking the right action.  However when we make the wrong decisions the results can be disastrous.  How many people are killed every year due to a drunk driving accident?  Or perhaps drivers who just have the thrill for speed or are just in a plain hurry and make reckless driving decisions?  Overall the statistics are pretty grim as is pointed out in Wired magazines article between 2001 and 2009, American roads claimed the lives of 369, 629 people. What if those choices were taken away?  To some (like myself), oh great joy.  I can just program in an address and let the vehicle get me there.  I might even be able to read a book or just enjoy the landscape on my drive.  No traffic issues as my auto computer has determined the quickest route to my destination base on up to the second traffic information received through the wireless network it receives.  My gas mileage will also be regulated and optimized, thus increasing my miles per gallon.  To those who scream at the thought of not being able to drive their beloved roadster and push the pedal to the metal I have but one phrase, “Get over it”.  As drivers you need to all understand.  Your precious driving ability can be summed up simply compared to what you will be competing with, “You suck”.  Your human, live with your imperfections. In the end technology moves forward gaining velocity as it does.  To try to stop or deny its progress is a waste of energy.  Look at the bright side you will now be able to text while driving.

Now that I have railed against everyone’s inadequacies I shall give you room to breathe.  When will all this happen?  As Mr. Ford has observed on his travels to the Silicon Valley, Detroit is in Michigan not California.  The entrepreneurial spirit is not evident in Detroit, at least not at the speed in which to make these changes happen.  The ability to shift and move quickly is not part of the old school automotive industry DNA.  This has always been a challenge for Detroit.  They did not see any of the oil shocks over the past four decades.  Every time oil prices go down they abandon ship on any typo of alternative fuel.  They seemingly have an amazing ability to not think about the future.  When you think of hybrid vehicles who do you think of?  The Toyota Prius.  There is about to be a slew of new competitors as both India and China get in the game.  Given their limited natural oil resources they are motivated to look at alternative fuels to feed their increasing upward mobile societies. Given the current price of gas (over $4 a gallon n Washington State). Are we looking within ten years?  Maybe.

The February issue of Wired magazine had an article regarding the state of robotic vehicles today.  Companies like Google are at work on creating the driver less experience on the roads of Silicon Valley.  They have prototypes on the road of the bay area today creating the experience of a vehicle with no driver.  Many auto manufacturer for years have had offices in the Silicon Valley to push technology into the vehicles we drive.  These include the likes of BMW and Mercedes.  Anyone who has had an older car can always marvel at the simplicity of the motor.  Look under the hood of today’s vehicle wonders is their room to out anything else in the vehicle’s engine space.  But cars are evolving as many come with new digital features with every iteration.  We can regulate temperature, get directions, satellite radio, cruise control,break systems, etc..It does raise a whole new set of regulatory issue that will need to be addressed. In Nevada they having already passed law regarding unmanned motor vehicles.  Many auto accidents today you can point to driver error.  What happens when you have a bug in the software that leads to an accident?  Do you then sue Chrysler?

The car, as Wired writer Tom Vanderbilt explains, is becoming a digital platform that we can, through the magic of software, create new value streams.   When the discussion of digital convergence first became a phrase we limited ourselves to media converging and being made available via the internet. But in the future it is apparent it will be far greater  than media, Technology will be pervasive in everything we touch.  We have entered an error where software in increasingly flying away from our desktops (Remember the Flying Toasters Screen Saver??).  Software will invade every aspect of our mechanized world in ways many have not imagined before.  The Americans beloved motor city automobile is no exception.  Detroit is a city as has well been documented that has struggled mightily since the oil shocks of the seventies.  A major US city that is actually shrinking as housing projects are being torn down and turned back into farm land.  As has always been the case in US history to see the future one only needs to look west.

Good Night and Good Luck

Hans Henrik Hoffmann March 9, 2012

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