Category: iPhone

CES 2014 – Wearable Technology

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It seems as we get ready for this years Consumer Electronics Show, that we are entering a new phase of technology.  The buzz this year seems to be around a new emerging category of technology, namely wearable technology.  From the pre-show buzz it sounds like we should hear a lot coming out of CES this year from new Google Glass applications, to smart watches, virtual reality, and maybe even the classic dinner fork.  It seems a foregone conclusion that this years event will signal a launch pad for this category to go towards becoming mainstream in the modern world.  It is time for a new category as the Smartphone and Tablet are in a mature phase, where it’s no longer just cool to have but expected, meaning they are one step closer to being boring.

It seems all movements forward in technology are driven by limitations in what is currently popular.  The move to laptops was driven by the fact that desktops were tied to a power outlet and users had a need to take their productivity with them.  Then as laptops got smaller we wanted something even smaller and netbooks evolved to ease our troubles.  However all these devices were limited by battery supply and a constant need to find a location with an electrical outlet.  We also need somewhere to sit and place our laptop or netbook.  Thus the advent of Smartphones and Tablets, and a bonus, no keyboard.  We could access information where ever we stood, provided we had connectivity.   The limitation now?  We still need to hold the device and use our hands.

It was with this backdrop that the first device to get notoriety was Google Glass.  They actually looked ok.  I was expecting some huge visor of a person’s forehead, but they were actually kind of sleek.  I can already see that early on these new devices will create some of the social confusion that mobile phones with ear buds  did, the “Are you talking to me?” moment.  No, they actually do not even know that you exist (that is kind of rough reality for some people).  The concept of Google Glass is interesting, it at times seems like you could be in your own world, kind of like some of the bulkier Virtual Reality devices you see attached to people’s head,  however as you walk through town you more or less can interact with what is around you and get more information on things you may see and want to know more about.  Some places have already gone as far as banning them.  The Five Point in Seattle, WA has done this.  It is a dive bar and people go there to get drunk and lose themselves.  I can understand not wanting Google Glass to record them, this is a sign of legal battles to come.

The first Smartwatch I saw was over a decade ago when Microsoft Research came up with the Microsoft Spotwatch, it was connected via FM (as in you r radio).   It could do stuff like check the weather, but it was big and ugly.   In 2013 we started to hear a lot of talk about a new breed of SmartWatches.  At the forefront was the Apple iWatch, which was conceptual at the time and despite the rumors still has yet to be released.  Samsung has since released  its own watch which is available through carrier stores.  Having seen them they have some cool features.  The gentleman at the AT&T store I was at had one, but was not wearing at the time and discussed some of the features.  You can receive your texts via your watch.  Check the weather.   I can see this is going to happen and it will reinvent the whole idea of what a watch will be.  The advantage of having a watch that is connected will be having perfect time.  No longer having to reset your watch as it may be running fast or slow, your time is managed by the U>S Naval Observatory in Annapolis, MD. Beyond time we still need a killer purpose for the watch, but then perfect time may be enough.

An area I am rather excited about is fitness technology.  Wearable devices that in time will help manage our daily fitness.  Tell us when we are doing good and not so good.  We could have our bodies monitored throughout the day.  You have devices that help you train as well, like FitStar being promoted by former NFL great Tony Gonzalez.  A device that helps you workout and stay motivated, not sure about Tony yelling at me but it may work.  Going back to our previous theme of watched, Addidas has a Smart Watch that acts as a personal assistant when you are running tracking things like distance, heart rate, time etc..I can foresee a lot of  devices and services coming in the near future to aid and assist us in living healthier lifestyles.  Accommodating our increasingly mobile lifestyle.

A final area that wearable technology will need to conquer is our vanity.  The reality is most people do not want a geeky gadget.  In order to feel good we want to look good.  In the end we are all slaves to fashion so why should wearable tech be any different.  The idea of wearable technology will become mainstream when it is on the cover of GQ Magazine  or Heidi Klum starts analyzing and commenting on fashion technology on “Project Runway”.  This is wear I think Apple with its dedication to sleek and beautiful design can take a leadership role .  Though it is one thing to make a pretty phone another thing to make accessories that you want to wear.  Technology is a cross-section and intersection of industry as it impacts every business model it touches.  It has influenced design in the back room where ideas are conceptualized, not it will impact us in what we see and wear.

The Consumer Electronics Show this year promises to have a lot of buzz around this new and emerging market segment, which should make for an exciting and entertaining show.  CES is not always a success.  One year the buzz was 3D television, which struck me as not a winner.  Most of the US population had either recently purchased a Plasma or LED television and were not interested in buying a new TV.  Let alone having to wear those awful 3D glasses.  Wearable technology is just a natural extension of where we have already been, dating back to the mainframe.  It will push are lives into new areas we have not explored and hopefully make us better.  While at the same time freeing up our lives to do more of the things that we want, to make our lives more fulfilling.   Welcome to 2014, it is going to be the year to step out in your digital clothes.

Good Night and Good Luck

Hans Henrik Hoffmann January 3, 2014

The Nokia Acquisition

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“Two Turkeys do not make an Eagle” – Vic Gudotra, Google Exec

The words of Vic Gudotra, a former Microsoft exec, now Google exec, upon hearing Nokia had selected the Microsoft Windows Phone OS over Google’s Android platform.  It makes for a nice quote and though it may seem a bit harsh given both companies performance of late in the mobile marketplace, for the interim it is pretty accurate.  With that being said this was something that had been rumoured for a long time,  It is interesting timing, given Ballmer’s retirement announcement and the massive re-org that Microsoft is going through. Ina Fried wrote a pretty interesting article on how the acquisition came to be (you can read here).   Nokia was Microsoft’s signature customer for the WIndows Phone OS, but it was never a guaranteed success.  During the entire time of this current agreement, Nokia was bleeding cash with every earnings report.  Market share was improving but it seemed very hard to sustain any momentum, when you have competitors like Google, Apple and Samsung not just increasing market share but owning the media every time they even whisper. No matter how quiet. Looking at what this relationship is and could be, is fodder for a lot of conversations and observations, moving forward this will be fun to watch.

One thing I have hated, let me please put in bold, hated is Microsoft saying there needs to be a third eco system. When Ballmer spoke about this a few years ago I was in shock, what happened to my Microsoft?  I never remembered this kind of talk when we were promoting Windows.  But as in all things in life, things change.  Even former Netscape founder Marc Andreesen says a third eco-system for mobility is necessary for the industry.  He is cheering for Microsoft.  Competition creates strange bedfellows.    Because of missteps and it reliance on its legacy, Microsoft more or less backed itself into this corner.  This ecosystem is first and foremost the developer, what Microsoft would call its birth right.  That is no longer the case as that has been eroding for years as technology advances and new and viable platforms come to market.  I have spent 20 years talking to, working with and selling to developers.  All the talk about better productivity etc… is nice but at the end of the day developers go where the money takes them.  This is an area that both Microsoft and Nokia have struggled, by coming together this could help simplify the message and opportunity for developers.

As Microsoft transforms itself into a device manufacturer the acquisition of a device manufacturer was going to be necessary.  It is one thing to say, “we are going to make devices”, it is another thing to figure out how to construct a supply chain to do it.  To hire the talent to design cool devices.  To make a device.  All skills that Microsoft was just learning.  This was an acquisition driven by necessity, by two companies struggling to compete in a space that was running away from them.  In reading Ina Fried’s article the point is made executives at both companies were becoming increasingly nervous about the fact that the Nokia Windows Phone was not creating buzz and grabbing significant market share.  This on top of the fact that unlike Microsoft earning’s Nokia was bleeding cash, Nokia does not have a Windows and Office business to hold it up.  The bigger concern was how long could hold out before it could no longer remain a viable entity.  It has not been brought up in articles I have read but the knowledge of the device supply chain is very valuable to Microsoft and unlike Nokia for the foreseeable future Microsoft has the cash to keep it afloat.

Long term it will be interesting to see how Microsoft’s relationships with its OEM’s plays out.  The OEM model that Microsoft built out under Joachim Kempin is legendary and has made billions for Microsoft and its OEM partners (Compaq, Gateway, Dell, Sony, HP, Acer, IBM, HTC, Samsung, LG and many more).  The big question is how far will Microsoft have to go.   As of today Microsoft is in  the business of creating new tablets and smartphones  Will they have to make PC’s?  Not in the foreseeable future, but those partners are being challenged as well as the PC market shrinks, what are they to do?   They will have to look at tablets, but he OS of choice by no means will be a guaranteed Windows device, especially as Android devices have an increasingly large share of the market.  The OEM’s I am sure are a bit put out as they look to new markets Tablets were going to play a big part,but  now I would say that they would be wise to hedge their bets by investing in alternate platforms like Android and Chrome. (many are already doing this).

This is the big gamble by Microsoft, it is done dipping its toes in the water with hardware project sand by acquiring a big piece of Nokia, is plunging into the icy depths in search of a bigger and brighter future.  The long run this looks like a great acquisition, but the bigger challenge will be managing the short run, the next 1-2 years.  The market will continue to move forward rapidly and is not waiting for Microsoft and Nokia to get their act together.  Approval of the deal will not be final until Q1 of 2014.  Then there is the  challenge of integrating 32,000 new employees into Microsoft.  This again will take some time.  The worry is if it takes 2-3 years to get this up and running how far will the market have moved ahead?

Will these turkey’s fly?  Will they become a great eagle?  Why are we being so harsh on the turkey?  It is very early, but one thing is clear is that if Microsoft is to become a device and services company it needed to make this acquisition.  Rather than working as separate companies, as partners, but with similar but different agendas this brings them together to work as one and set a mutual agenda.  It will also bring their different skill sets together and hopefully allow them to benefit through greater economies of scale and basic sharing of IP and best practices..  It is difficult to make these type of deals not because you want to but because you have to.  Ina’s article was very interesting in the fact that despite the situation there was a lot of executive posturing, but in the end  it had to happen otherwise it would be colossal failure by both parties. Can two turkey’s make an eagle?  We are about to find out.

Good Night and Good Luck

Hans Henrik Hoffmann September 10. 2013

The Cultural Phenomena of Technology

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It is one of those things that begins with a whisper and then continues to grow louder into the wildest of crashing waterfalls. Sometimes it confronts us in a very direct way and other times it sneaks up on us spreading like a virus throughout society. It penetrates our lives and influences others around us. The beneficiaries are our day-to-day modern society that adopts them and adores them. The victors are the people and the companies who make them. In fact we can quantify the victors with the monetary term of billions of dollars.  Those who try to stand in the way of these cultural phenomena’s are simply pushed aside and deemed not relevant.  We deem these to be the companies we refer to as competition.  In the industry this is a big deal and though sometimes accidental many times it is brilliance, such as Steve Jobs.  In the end it is about creating emotional connections and  not negative emotions but positive ones.  Looking through history there have been some big moments (and winners).

The first I remember of this type of phenomena was the build up to the launch of Microsoft’s Windows 95.  It was funny at the time as the product was continually being delayed.  When the name was announced people even began to wonder if it would even ship in 1995.  But at the time Microsoft was the darling of the industry.  Even when it seemed destined to fail in the end it always seemed to succeed.  Windows 95 would turn out to be the greatest testament to the ability of the company to succeed.  When the product finally shipped it was to mass hysteria never seen in the industry.  People lined up at midnight waiting for doors to open to a new world of wonder. It brought the idea of technology into everyone’s home.  It was exciting and a fulfillment of a vision that Paul Allen and Bill gates had as young boys.  It was really the dawn of the new age of technology and every significant technology launch has been compared to the launch of Windows 95.  The main competition, Apple, could only sit, watch and wonder, “it should have been us”.

The second phenomena that occurred I did not become familiar with until, then CEO of Novel,l Eric Schmidt left his post and joined a small company known as Google.  Google was a search engine provider and certainly not the first, but it would turn out to be by far and away the most successful.  It was not long before it seemed everyone was searching the web with  Google, as it was far superior to what was on the market.  Google’s impact beyond the technology was it changed the market dynamics and how companies made money.  They were in many was also the first to demonstrate you can not only make money on the web, you can make tons of money on the web.  The growth of Google was so accelerated it was almost hard to comprehend.  While they are making all this money they also became part of our cultural linguistics as Google became a verb.  By the time Microsoft finally launched a technological viable competitor in Bing, they were no longer visible in Google’s rear view mirror

When the iPhone stated to be discussed the whispers started early and grew loud and clear.  I had a friend working at AT&T at the time and he said everything at the corporate office was driving towards the launch of the Apple iPhone.  When the iPhone launched in 2007  it would turn out to be a huge success on many fronts, from the device to the apps, creating a new market, a new ecosystem.  As time went by what was amazing to watch was the extremely personal relationship that would develop between people and their technology.  People really get addicted to these phones and it more or less becomes an extension of the individual.  One thing Apple was always great at was creating a product that fostered loyalty.  The iPhone would do this in spades.  So much changed with the iPhone in how we as a society interact with one another, the iPhone was a truly powerful technical and social breakthrough.

It is difficult for companies to compete against these type of movements in a direct head on manner.  Microsoft has more or less tried this with Bing against Google and not seen very good results.  The biggest challenge is not the market share but the cultural awareness they are up against.  It is not even a technology gap so much as the successful technologies of today are internalized by users, who purchase and use certain technologies without much thought.  It is as if they are predisposed to certain choices, they are conditioned . It is hard and I have yet to see a marketing plan that says with our latest release we need to brainwash society and condition them to use our stuff.  I would be most entertained if someone would try doing this as I think it would be an eventful exercise.  As we have learned over and over again just because you have the better technology does not mean that you win.  Part of the challenge when competing with these social titans is that it is not good enough to create a better technology because even if you do, you have to ask, “Now what?”.  You need not only a better product but a better vision.  Vision should proceed the product, not follow it.

I am waiting for the next phenomena and it may be just around the corner.  We are nearing the age of the robot and I am warily awaiting the device that becomes a consumer phenomena.  It may also be something not so dramatic.  It could be a new social networking innovation.  Perhaps Google Glass is bigger than we think or know?  All we know is software is becoming pervasive in nearly everything we touch.  As Bill Gates said, “It is where the magic happens”. Like all things in tech it is not predicting the future, but timing it.  For any company the pot of gold at the end of the rainbow is to become a necessary fabric of society. To be wanted. A basic, necessary and powerful human emotion.

Good Night and Good Luck

Hans Henrik Hoffmann May 29, 2013

Google – threats and opportunities for the Future

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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

Apple, Apple, Apple…

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Though Steve Jobs has left us and leaves a tremendous legacy and hole to fill, he obviously left a great pipeline of products in place for Apple. Earnings for the quarter at Apple blew past every analysts expectations.  They just seem to keep coming with quarters that seem beyond belief.  As reported on Cnet, during the period, Apple posted $46.33 billion in revenue and a record profit of $13.06 billion. iPhone sales jumped 128 percent year over year to settle at 37.04 million units, while iPad sales rose 111 percent to 15.43 million units. Apple’s Macs got into the mix, too, soaring 26 percent to 5.2 million units sold.  Those are huge numbers and daunting for anyone competing against Apple.  If we break them down one by one it’s interesting to see the challenges for those competing and what to expect and do next.

Looking at the iPhone sales the number is staggering.  They sold 37 million units of primarily the Apple 4s, not 5 but 4s.  The 4s was what we used to refer to as a “dot” release, not a major release. Just a release with minor enhancements like Siri.  To put in perspective Nokia has announced they have 1 million Nokia Lumia 710 in the channel.  That is not in consumer hands but just to resellers.  Apples number reflects units in people’s hands.  The other thing is due to Apple’s channel that is pure money back to Apple.  With Nokia they get most and pay back a small percentage to Microsoft for the OS.  Then there is Google with Android, which is an indirect model as the hand set manufacturers keep the money and Google looks to make money via apps and mobile search.  The units of Android phone is impressive but to date it doe snot have the bottom line impact of Apple’s iPhone.  That could change as the mobile web grows and mobile ads increase the revenue to Google’s bottom line.  Though Microsoft Bing is challenging traditional search, Google seems light years ahead in mobile search.  With a major release from Apple due in 2012 with the iPhone5 could they beat 37 million?  One can only wonder.

Tablets are the fashionable device of the moment.  They have been since Apple made them so.  Steve Ballmer said “they will never sell those things”.   They sold over 15 million units in the quarter.  Though there are Android tablets I have not seen the excitement for Android Tablets like I do for Apple’s iPad.  The iPad seems to be playing its own game, in the short-term that could change with newer revs of Amazons Kindle Fire and further down the road with Windows 8 tablets.  The challenge for the competition is they may be talking about exciting new releases but no one I know of is putting their purchase decision on hold to wait for an Android or Windows 8 tablet.  I expect for the next 2-3 quarters that Apple to rule this domain, unchallenged.  The question will be how far in front they will be when a competitive alternative enters the market.  We will likely see a iPad3 this year, probably before Windows 8 Tablets hit the market, no one is waiting.

An interesting area of growth for Apple is its “old” business of Macs.  They sold 5.2 million units in the quarter an increase of 26%.  That is at the expense of Microsoft Windows.  Apple with around 10% market share is in an enviable position as they are not the leader and can only grow their market share.  As Microsoft Windows Revenue has flat lined (it’s still in the billions in terms of revenue) and Apple is enticing more and more developers to its platform you are seeing the first significant threat to the Microsoft crown jewel in over twenty years.  It’s interesting that it is coming from a competitor whose environment is considered very closed.  I think many people felt the most likely threat to Windows was going to come from the Open Source community in some variant of Linux.  But with Apple’s success in Smartphones and Tablets I can see the traditional Mac business was going to follow and it has.

With all this success it has led to that great American problem.  What do you do with $98 billion sitting in the bank?  When I was ta Microsoft we had (and they still do) usually upwards of $30-$40 billion in cash.  It would seem with Apples cash they could do almost anything they want, but in actuality it is a bit of a capitalist’s dilemma.  The obvious thing to do is return money to shareholders in either a quarterly dividend or one time payment.  They could also do a stock buy back, with  a market cap over $400 billion this could further drive the stock up benefiting shareholders.  They could do acquisitions, but Apple has never done the big multi-billion dollar purchases of tech companies.  I am not a big fan of these anyway as in the short run they slow progress down and when complete the industry has moved on.  It takes a couple of years for full integration, look at Microsoft’s acquisition of Skype for $8 billion and we have yet to see the fruits of this hit the bottom line.  It’s not a bad problem to have but the one thing that is for sure is they will have to do something as sitting in all that money does not seem a viable option, nor will shareholders allow for it.

Apple is truly in a state of grace.  It seems even when they do wrong, as in the previous quarter, they rebound.  It would be easy to see a future where we all are using Apple products, luckily tech and society do not work that way.  There will come a time when younger generations will not think Apple s cool as their parents think it is.  We are in a time when tech trends start with the teenagers and young adults.  Do I see a time when younger generations say “wow Microsoft or Dell is cool”.  Right now I am having a hard time believing that scenario will ever happen.  More likely it will be a young fresh start-up similar to a Facebook or Twitter.  When will this happen?  All I can say for sure is the next 2-3 years it is not likely to happen and the Apple strength will continue.  There are exciting horizons with iCloud and AppleTV.  But as I am fond of quoting Bill Baker, “The future comes slowly, change happens quickly”.  This will be the case with Apple as well but in the meantime let us just enjoy being, “Wowed!”.

Good Night and Good Luck

Hans Henrik Hoffmann January 30, 2012