Bing-ality

Microsoft Bing since its launch has been considered the primary competitor to the behemoth known as Google search. It is a valiant effort in a very lucrative market space. However despite the immense opportunity,the term success has so far eluded Microsoft Bing.  When you look at Search Engine market share the numbers continue to improve for Bing as it hit over 17% in April, however the revenues have so far failed to materialize.  In Q2 of Fy13 for Microsoft’s Online Services Division lost money, $283 million.  In Q1 Google generated over $11 billion in revenue.  Granted Microsoft’s OSD is not just Bing, but all the other online services such as MSN and Outlook Mail.  The flip side of course is we really don’t know how Bing as a stand alone business is doing, despite the market share increases.

The history of Bing some may say is one of failed opportunity.  I am not so sure it is so much that as it is understanding online reality.  Bill Gates and Steve Ballmer often have said they blew it on search and I have often said they would never have figured it out.  Even if they had I am not so sure they would have been willing to take the financial risk to challenge Google at the time (remember we are going back to the 2002/2003 time frame) .  In his short stint at Microsoft Ray Ozzie provided the best analysis of Google.  He stated that they were using their immense revenues to fund software development projects that would compete against Microsoft. It was an indirect model, where ad revenues funded software engineering.  As has been shown Google has a lot of revenue to fund these projects.  It was difficult for Microsoft to grasp as they for so long have lived off of volume license revenues.

In the past decade it took a long time for Bing to come to the forefront.  First Microsoft toyed around with  Live search.  It was not a well named product.  Certainly not as fun as saying, “Google”.  But globally it did ok and when you looked at the top 100 websites, Live did appear in the top twenty.  It just did not have an ad word business model set up that could compete with what Google was doing.  Microsoft was slow in understanding the competitive threat that Google posed, if not holistically, at least opportunistically.  My view is Microsoft viewed it as another software market to conquer rather than the threat it was to existing businesses, namely Microsoft Office and Microsoft Windows.   This is just another market space in which we are entitled to own.

As things progressed so did Microsoft’s desperation ending in an audacious bid to acquire its competitor Yahoo.  Luckily for Microsoft and many grad schools across America this would end in the ego of Yahoo founder Jerry Yang as he made every attempt to kill  the deal. In the end this may have worked out for the benefit of Microsoft as they entered onto a partnership rather than spending $40 billion on an acquisition that may have been doomed to fail. While Jerry Yang seemingly failed business 101 which is to increase shareholder value, not decrease it.  He is now a case study for business graduate school history.

What has happened as these events have unfolded  is that Google has systematically found other business opportunities to augment and promote its search business and increase revenues.  Namely using the mobile phenomena to launch Android.  This has led to great headway in the mobile phone business and the tablet.  In 2013 it is projected that there will be 800 million Android devices sold.  None of these devices will have Bing as the default search engine.  In addition there will be 300 million iOS devices sold in 2013, again none will have Bung as the default search engine.  I only wrote this to share with Steve  as he seems to be unaware of this fact, but hey, he is a numbers guy.

So what does Bing do?  For starters that Apple iOS number is key.  One of Steve Jobs last talks to the Apple faithful at their corporate headquarters was about the evils of its key competitor Google.  There is no question that there is no love lost between the two.  Apple has tried to compete with Google head to head.  The failed Apple Maps comes to mind.  In my opinion a rare case of me saying, “Whose stupid idea at Apple was this?”  Google owns that space and barring some catastrophe, I do not see them losing in that space.  So with all that hate and failure what if Bing was the default search engine for Apple iOS?  Instantly Bing would have access to 300 million users.  Granted this would be a bizarre twist of fate, but Microsoft is not in a position of power in this space and Apple would like nothing better than to hurt Google.  If Bing can meet Apple’s high quality standards they could have a very compelling play in this space and be considered attractive to Apple.

There is also a bigger question of “if Not Microsoft than who?”.  Competition  that is not challenged is a threat to the greater benefit of society.  They can dictate terms, which is never a good thing.  When we look at companies that are able to challenge Google there are few with the cash reserves to do it.  One of the few would be Microsoft.  And frankly they owe it to us all.  Fundamentally competition is a good thing and maybe Bing is competing, it’s just that Google is pushing their game to a higher place.  If that is true than Bing needs to set a higher bar, not just compete at parity.  Faster more accurate search is nice, but we are reaching a point where for the end-user it is becoming increasingly difficult. to distinguish in milliseconds.

Another factor is much of Bing’s success is tied to other products like Windows 8, Surface and Windows Phone.  To successfully get people to switch alla Coke versus Pepsi, is not so easy as there is a lot more tied to it than just switching a can. The effort Microsoft must put in will take years, which in technology is worlds away.    So far it has been slow in coming and market share has increased at a snail’s pace.  This may drain Microsoft’s cash reserves but the reward is high Once yo have been great there is always a thirst to be great again and I think that more than anything drives Microsoft.  To get there search will be a key cog in the engine.  Information rules the world and if Bing is not successful Google very well could rule that world.  Bing is in a tough place but it is a fight worth fighting.

Good Night and Good Luck

Hans Henrik Hoffmann July 10, 2013

Microsoft – Threats and Opportunities

It is an industry legend and the company, along with Apple that started the PC revolution.  It brought technology to our desks and to our homes. It created a lot of young millionaires.  It was a shining star in the technology industry.  That was now what seems a long time ago. The Microsoft of today is one  that is a lot different from the one I joined in 1991 as a young, wide-eyed, fresh out of college customer service representative.  Then everything was new as PC’s were just starting to take off.  We were wiping out the typewriter.  In those days we were still talking about our different lines of business at Microsoft in terms of making our first billion.  Today Microsoft has annual revenues in excess of 70 billion.  Despite this growth, at times Microsoft can appear like an old and tired company.  One longing for a past glory, a glory that likely will never come again.  When you look to the horizon there are storm clouds gathering that could lead to catastrophe, but at the same time there are opportunities that could lead to greater horizons. Let’s have a look at what those different threats and opportunities are.

Google:  No company has the potential to hurt Microsoft more than Google.  They are threat numero Uno.  Ray Ozzie addressed  this in one of his first memo’s at Microsoft.  Google was using its ad revenues derived from search to fund software development projects, like business productivity applications.  Google  was changing the playing field and redefining the competitive landscape.  Google’s bet is pretty simple.  We live in a connected world, a world that is getting evermore connected with each passing minute.  If we assume we will have ubiquitous connectivity 24/7, whenever and wherever we want we need a simple device that can connect us, ala a Chrome Book (kills Windows).  Then you just need some cloud based applications for business productivity like Google Docs (kills Office).  Then you have just shaved off $25 billion in Microsoft’s earnings.  Not to mention ISV’s would flock to Google and the city of Redmond would file for bankruptcy similar to Detroit.  I assume someone in Redmond has figured this out, but these days when Microsoft is competing on so many fronts it seems hard for Redmond to prioritize.

Three Screen:  One of those great ideas that at a high level made and still makes sense.  Who can provide an experience for the PC – Phone – Television and it is all integrated?  Microsoft has the teams and technology to do it.  When this was first discussed it was around 2007.  The problem?  The TV platform was still nascent and Windows Phone 6.0 was a piece of junk.   Microsoft has since then released a new user experience in Windows 8, added a compelling tablet, and now have a competitive smart phone.  What is missing is TV, the holy grail of user experiences.  The three big companies – Microsoft, Google and Apple are all trying to create an experience that changes the consumer paradigm.  This is a big bet by all involved but the rewards could be immense.  If one figures out the TV experience and then can seamlessly integrate with other devices, well then the world will be their oyster.

Apple:  The obvious villain.  Microsoft versus Apple.  Gates versus Jobs.  Despite all its recent success I think Microsoft’s failing here happened because of one single reason:  Microsoft was not focused on the consumer.  They became like the Republican party and did not understand basic demographics.  While Microsoft was focused on the enterprise a new generation of consumers was being born and raised, with technology present from the first day they opened their eyes.  In the old days the belief was you were a software company or a hardware company.  Apple changed that school of thought and created a new market, an experience company.  Though I maintain Google is the biggest competitive threat, I think what Apple did really hurt Microsoft as a company. Not just financially but psychologically   It seemed every time Microsoft tried to say anything negative about Apple they looked foolish.  The “I’m a Mac, I’m a PC” ad campaign was so dead on and the response from Microsoft was so minimal.  Apple humbled Microsoft and remains a significant threat to their future.

Enterprise Customers: If you can think of one major impact Steve Ballmer had on Microsoft it was the transformation of the company from a consumer company to an enterprise company.  It made sense from a Steve standpoint.  Enterprises sign large deals to long-term commitments and provide a stable cash flow.  They are predictable.  Consumers are fickle and change directions quickly, loyalty is earned, but never guaranteed.  So the enterprise business has grown to tens of billions o f dollars.  That being said there still is room to grow in the enterprise.  Sharepoint became a billion dollar business and Lync looks like a sure bet to join that crowd as well. The Microsoft Azure Cloud offering could turn the corner and potentially be the largest new business.  An interesting area is consulting services.  Efforts have been made in the past to make this more of an IBM global services model.  This would go against Microsoft’s partner driven model, but these days that seems under threat anyway.  If they did do this I have no doubt this could be a multi-billion dollar business.  If Microsoft decided to focus on the enterprise excessively that would be a successful venture.  The risk of course if Microsoft ignored consumers they would be at risk, since so much of enterprise IT is being driven by consumers.

Xbox:  Whenever the subject of Microsoft futures comes up people inevitably say the Xbox is the future direction Microsoft.  Probably because it is the one group that has a cool factor associated with it unlike the other door knobs, called Product Groups at Microsoft.  With that being said if Microsoft wants to revitalize and market its three screen vision Xbox has inadvertently taken the lead as the platform to bring all three screens together.  Xbox rose at Microsoft because it operated outside the corporate structure.  They were not part of Windows or Office’s legacy.  They were new, fresh and exciting.  In my view they should own all things consumer.  However the rumblings I hear over in Redmond is they are being brought more into the legacy corporate fold.  If I knew what the grand vision.of doing this was I may support it, but since I don’t all I can say is “leave well enough alone”. I would have expanded their playground rather than constrict it.  I would brand as much stuff “x” as I could; Xphobe, XMusic, Xwhatever..would have used the logo, but that is an opportunity I think Microsoft will bypass.

Focus or lack there of:  One thing that I think kills Microsoft and maybe the biggest threat is just what seems to be a lack of focus and cohesive message from the company.  I remember in one week they had a big Windows Phone launch followed by the Xbox Kinect.  The Windows Phone got absolutely no momentum out of the launch.  If a kid hears you launch a cool new phone followed by a big announcement around Windows Server what are they supposed to think?  The marketing folk at Microsoft view this as two different audiences so they don’t intersect, but in the end they do.  IBM does not have this problem because everything they do is targeted towards the enterprise.  Could they split the company into a consumer entity and a enterprise entity and create a wholly owned subsidiary…called Xbox?  Retain ownership while spurring creativity? Increasing overall revenues with a new focused approach? Just a thought.

There you have it, in many ways it’s the “is the glass half full or half empty” argument  In many ways a threat is an opportunity it is just a question of how you attack it.  Could Microsoft do to its competitors what they are doing to it?  Sun Tzu, the Chinese author if the “The Art of War”., written around the 500BC period., wrote “when confronted by superior forces one must change the battlefield”.  This is what Ray Ozzie wrote about when talking about Google using ad driven revenues to fund software development.  Microsoft needs to do two things: Seize the opportunities and take the leadership position and embrace the threats to provide for a brighter future.  Another option would be for Microsoft to read about history because they are history.  Your call Microsoft.

Good Night and Good Luck

Hans Henrik Hoffmann January 30th 2013

Technology History Mistakes and Opportunities

In 20 years in the technology sector I have seen a lot of both good and bad strategic decisions. At Microsoft I was with a company that was on the good side and then was on the bad side. I saw many competitors make what were poor strategic decisions. Decisions that in the end would either sink them or put them in a place of constant struggle for success or viability.  I thought it would be good to look back on some of my favorite “stupid” decisions made by companies in the industry.

Lets head to Utah for bad decision number one: WordPerfect.  This was a company that when the personal computer first came onto the scene quickly became the number one player in Word Processing.  Competing against other notable companies like Wordstar, Wang, and Microsoft Word.  If one thing killed them off quickly it can be summed up in the acronym GUI (Graphical User Interface).  When Apple launched the Mac, Microsoft used it as an opportunity to learn about creating software for the GUI.  WordPerfect on the other hand dipped their toes in the water and when they did not see the sales they wanted on the Mac, killed it.  As Microsoft became more enamored with something called Windows, WordPerfect dug their heels in and supported DOS, where they were a leader.  The problem being Microsoft owned both DOS and Windows and had more or less stated Windows was the future.  Towards the end the only thing WordPerfect had going for it was free technical support.  Sounds nice from a  customer perspective, but if you looked at the costs, not sustainable.  WordPerfect over time just seemed to disappear.

Apple actually makes the list.  During the period where there was no Steve Jobs.  Early learning here is Steve Jobs killed  himself off when he hired Pepsi executive, John Sculley.  Steve’s pitch to John was, “Do you want to change the world or sell sugared water”.  As Steve learned people who sell sugared water don’t change the world.  However they are master politicians which led to Steve’s ouster.  Apple would go through several CEO’s  before Steve returned.  Some like, Micheal Spindler would start to pursue a OEM model where they license the software, like Microsoft.  A nice form of flattery, but not in the Apple DNA.  Steve would come back, kill this plan, and we know the rest.

Next up we return to Utah and Novell Netware.  When the computer network first became popular, Novell was the dominant player for our file and print services.  However one stupid decision killed the company.  Why just a file and print server and not a app server to?  I remember I was in a meeting with Bill Gates and he went off about why Novell did not do this.  He was stunned that they did not have the foresight to see what was coming in the industry. In his view had they just added application services, Windows Server would never have garnered the market share it did.  A second more technical item was Novell had a proprietary protocol called IPX/SPX.  They did not support the dominant internet standard called TCP/IP. Eric Schmidt, when he was at Novell worked on fixing this, but then this startup called Google came knocking and he left for greener pastures (much greener as it turned out). As I am sure you all know this internet thing became rather large and Novell played themselves out of the market.  Oops.

As we entered a new millennium things would change.  My old company, Microsoft, which seemed to do no wrong would make plenty of mistakes in the new century’s beginning.  They might say search was a big mistake, but as I have said they never would have figured it out.  Google developed a new software business model.  They did a classic Sun Tzu, when faced with greater numbers change the playing field.  Probably the first blunder was the mobile phone space.  Though they might say they were successful prior to the iPhone I never saw it that way.  THe Microsoft strategy was a smartphone was a business phone and they went head on after RIM.  I never saw it that way.  I saw smartphone’s just a natural evolution of mobile phones and as more intelligence was put in the phone, the smartphone would be a consumer phone.  Then the iPhone launched and that was the end of the Microsoft mobile story.  I know they have this Nokia thing going on, but as good as the phone is, everything I am reading is it is too late.

Going back to search the big loser was Yahoo.  Jerry Yang had a dotcom success story, but was really just pushed aside by a competitor with a better search engine and a better business model.  Google ate everybody up in this space.  They proved the age-old business adage, revenue is king.  It was not long before Yahoo was on the defensive in everything they did.  Google was the tech darling and Yahoo had fallen into the worst place in the industry:  Yesterdays News.  Even when they got a get out of jail free card in the form of a massive Microsoft takeover offer they blew it.  Jerry Yang managed to convince everyone they had a future.  With the recent news of a massive layoff and reorganization, all is but lost. Jerry Yang will be a case study in graduate school, and it will not be flattering.  It will be along the lines on increasing shareholder value.  But then Mr. Yang is an engineer not a finance guy.

Amazon was not a likely candidate to be the early leader in cloud computing.  Next thing you know everyone was left standing with their pants of the ground.  Some rode the wave very well, companies like VMWare.  But across the lake the from Amazon’s Seattle headquarters a  Redmond based power was scrambling.  Google was also behind in this space.  When I look at Cloud based posting these days I see many references for people with experience in Amazon Web Services.  I am not sure I have seen one for Azure (Microsoft’s cloud service). VMWare is always in the conversation with its virtualization software, it is always a good place to be, “in the conversation”.  Most companies building out cloud services usually have either Amazon or VMWare, if not both, as part of their cloud offering

Finally there was the tablet phenom.  When Apple founder Steve Jobs announced Apples plans to make and sell the iPad, Microsoft CEO Steve Ballmer was quoted as saying, “They will never sell those things”.  As it turns out they can sell those tablets.  In the last quarter they sold over 15 million of these items Steve said they could not sell.  In the meantime a slew of Android based tablets have hit the market and as for Microsoft, we wait for Windows 8.  Why do I feel like this will be the Windows Phone all over again?  When the new tablets hit the market will it be revolutionary or just another Tablet?  The market is already 3 years down the road and the company that changed people’s lives sitting on the couch and watching TV was Apple.  That is what technology has always been about, changing people’s lives.

In all the examples I have given one thing is clear.  To create these industry and societal changes it takes a leader who see’s beyond today and looks to tomorrow.  When we look at what I provided in each case we have visionaries that we all know Gates, Jobs, Bezos, Maritz, to name but a few.  In the also ran category you see companies always flat-footed and never embracing the future, but reacting to a race that has already began.  If you are racing Usain Bolt and you are slow off the starting blocks do you think you will win?  Even if you were that fast and physically fit you cannot make up a half a second in a sprint.  That is how today’s tech sector works.  Even if you were to catch up the industry has moved on to a new race.  To win you need to jump the gun otherwise you will be but a  distant reflection in the rear view mirror.

Good Night and Good Luck

Hans Henrik Hoffmann April 9, 2012

Apple, Apple, Apple…

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

CES 2012

Well this has been the week of the big Consumer Electronics Show (CES) in the glamorous city of Las Vegas.  It is a show, sad to say, I have never been to but would love to go someday.  Still with today’s interactive technologies it is pretty easy to follow from far away.  The great thing about CES is that it gives consumers a window n how they might spend their money in the upcoming year.  Or not.  Last year was a big year for 3-D TV’s, but I don’t think consumers were ready to give up their new LCD or Plasma screens just yet to experience 3-D at home.  This year promises a whole host of new gadgets and who knows what will be the biggest.  But it is always fun to hear what the big industry players are planning.  Even more exciting can be the young start-ups.

This year, as always, CES started with the keynote from Steve Ballmer, the loud and proud CEO of Microsoft.  Of course the big news had already broke, this would be Microsoft’s last CES.  This was the last chance to see Steve.  It was a draw and then Steve went on to present, uh, well, nothing really at all.  Most of which he talked about had already been announced in previous talks about Windows 8 and Windows Phone.  The biggest announcement was really that Nokia was coming back to America with the Lumia 900.  It is sad to see Microsoft leave the event.  I am not thrilled that they have chosen to do big releases via internal style events and over the web.  My preference is in person events but I may be a bit old school in that thinking.  The problem I have with over the web is it usually means at a desk at work where there are many distractions.  Such as Bob’s vacation or Steve i snot happy at work or..well you get the picture. You may see higher numbers but how many people are really engaged in what they are hearing and seeing?  In any case we bid Microsoft a fond farewell.

Google Executive Chairman Eric Schmidt participated in a “pseudo” panel.  Not sure what kind of panel this was intended to be as it sounded like a group of Google partners just nodding their heads to everything Eric said.  But there were some valid discussion points, mainly the idea of ubiquity between connected devices.  Just think of it this way..walk around your home and see how many devices, appliances etc have digital displays.  You would find dishwashers, washer and dryer, clocks, stereo’s, etc..They should all be talking to one another and to the cloud.  And according to Eric they should be built on a foundations of, drum roll please…Android.  To be clear this idea is nothing new.  Microsoft had this idea of Microsoft @Home over ten years ago.  Novell had its embedded systems technology(NEST).  But like so many things in technology it is not predicting the future, it is timing the future.  As Eric points out with mobility and wireless pretty much everywhere making this “connected” home is much closer to reality.  Google is taking the lead.  Lets see how soon others begin to follow.

The term Gorilla Glass was new to me but it made a splash as Sony showed a Viao made out of Gorilla Glass v2.  First question o I want a laptop made of glass?  It will be a little bit heavier, but the environmentalist in me asks the second question: Is it recyclable?  IN any case they did show hat this glass could withstand 120 pounds of pressure making it fairly durable.  Given how often I drop things this is a good thing.  From a pure aesthetics standpoint it would seem you would be able to do some pretty fancy stuff with color.  I think more than anything this highlights advances being made in the materials that make up our technology toys.  A good thing and though not “sexy” now it will be in the future.

When we look at the best in show winners there, as usual is some interesting stuff.  Kudos to Nokia for coming through with the best smartphone of the show the Nokia Lumia 900.  The Asus Memo 370T Tablet running Android and priced for $250.  It has 16bg storage, oh how far we have come.   The features are nice and with those low price points it makes total sense.  I found the best software app, Bluestack interesting.  It brings all 400,000 Android apps to Windows 8.  It used to be the other way around, with competing platforms looking to run Windows Apps.  Remember Apple had dual OS capabilities.  If you want to be a real old-timer who remembers IBM OS/2 v2.0 with the Windows Subsystem?  To be fair these type of subsystems traditionally ran slow and were painful.  I would hope that Bluestack brings something new to the table and is…fast.  Which it should be ok at since Android Apps for phones and Tablets are not like running Microsoft Office.  Size matters.  One thing to note Bluestack is not yet in beta.  Murmur.

My summary of what I have read and followed about CES is there was a lot of focus on Tablets.  A lot of new and upcoming releases tied to Windows 8 and Android.  The one thing I am interested to see when Windows 8 Tablets roll out is cost.  It seems like Apple has staked out the high ground and Android the low ground, and both have lots of applications.  Is the middle ground a viable place to be? On the TV front I think we are waiting for the next big revolution.  Google did some talk about interactive television, however we are not there yet.  Apple has been strangely silent of lat  in this topic.   But I expect them to bet big on Television.  I do expect in the next 2-3 years for this to be a huge focus of CES.  The interesting question and one of great anticipation is who will lead.  Overall though this was not a great year at CES as there was no break through announcements.  No technology that came out and said this is what will be big in 2012, right or wrong (think 3-D TV).  Looking at the products it was more claims of, “This will be a big improvement on what currently exists”.  Take your pick, Tablets, Smartphones, mobile gaming etc…Next year will be bigger with Windows 8, though I don’t hear of anything ground breaking coming from Redmond…yet.  But what we want from CES is not an upgrade but something that changes how we experience life.

Good Night and Good Luck

Hans Henrik Hoffmann January 13, 2012

Windows Phone..where are we today

Mobility is always one of the topics I like to write most about as I find the world fascinating. From the carrier networks and billing systems down to the actual consumer devices. I was at Microsoft in Bldg 117, home of Microsoft Mobility, when the first Windows Phone was released. I had every Windows Phone OS from v1.0 on up to 6.5. I won’t go through the whole history, but needless to say, things started to fall apart for the Microsoft Phone business after the release of the Apple iPhone.  With the latest release of Windows Phone, code-named Mango and the flowering relationship with Nokia, Microsoft at long last seems in a position to compete with Apple and Google.  However so far Windows Phone, despite every positive reviews seems to be at a cross roads.

Recently former Microsoft Windows Phone GM, Charles Kindel on his blog wrote about his thoughts as to why, despite in his view, WP7 is a superior product, sales were so lack luster.  Though I don’t agree with all his points some are very valid.  He highlights four areas of the mobile eco system. They are as follows:

  1. Carriers
  2. Device Manufacturers
  3. OS Providers
  4. Users
  5. Developer **

As noted in his blog he intentionally left the developer community off the list, but I shall add it back in.  So there you have it 5.

Carriers are kind of the Mitt Romney of tech, he wants to be popular to the conservative base of voters but he is not.  The carriers want to be like Silicon Valley, but they are not.  Telco execs are closer to Depends than Huggies.  Silicon Valley kids are definitely in the Huggie category.  Carriers at the end of the day own the last mile to the customer.  Any service for mobile devices will run through them.  They get us all connected.  It’s exciting stuff.  That being said no one gets excited by their carrier.  High School kids do not say they are cool now that they have Verizon Wireless.  Kids are excited by the device and  the functionality it provides them.  Voice and data plans are a necessary evil.  The only talking points are quality of service and the cost of the service.  But make no mistake these old boys wield a lot of power and would like nothing better than to be recognized as “cool” for it.  If you want your device sold you have to play with them…unless you are Apple which managed to dictate their own terms.  This leads us to the next category.

Device Manufacturers do some of the really cool stuff that make the handsets we buy..well cool.  But how do carriers select which handset they will place in their storefronts and promote?  Well we have two different approaches.  One is very monolithic and takes control away from the carriers.  That of course would be Apple.  Apple s the only device manufacturer that I can think of that was able to dictate how their phone would be sold , which at first was sold exclusively through AT&T.  Steve Jobs knew he had broken new ground when Apple created the iPhone.  It was a leap-frog step in mobile phones.  He knew it and he negotiated it.  AT&T sold voice and data plans for the iPhone, but Apple got the rest, including the App Store.  All AT&T could hope for was that the iPhone would drive more subscribers to their network.  It did.   a lot of new subscribers.  On the flip side is Google and what they have done with Android.  Buy a mobile OS, leverage open source and let device manufacturers create.  It was a good plan that gave some leading handset manufacturers cool software so that they could compete and sell against the iPhone.  Quickly HTC went from being a dominant Windows Phone shop to a dominant Android shop.  Other handset manufactures fell quickly into line such as Samsung and Motorola.  Device manufactures had the flexibility to innovate and not have to adhere to a rigid set of software design practices.  Charles Kindel highlighted this in his blog and I am in strong agreement with him on this.  Microsoft has not done this and it has caused friction with device manufacturers. The carriers liked this model as it was less friction between the carriers and device manufactures.  It gave carriers more variety to sell and also more inexpensive devices. Cost was an area where Google could innovate and compete with Apple.

For the providers of OS’s there are primarily three: Apple, Google and Microsoft.  Apple is a walled garden or prison cell, which ever analogy you prefer. Google is on the flip side as it pursued more the open source model and courted developers heavily to their Android platform. I flatter Microsoft by putting them here as they are around 2% in terms of market share, but they have over $30 billion in cash so I guess I should.  Operating systems, whether they are on a tablet, laptop, phone  or other don’t matter as much as the makers would like to think.  But they do enable our experiences so to minimize them would also be wrong.  Really Apple is a soup to nuts shop so they own hardware and software design,  Google and Microsoft differ in approach and cost.  Google has a better developer model and doe snot cost.  Microsoft is less open and does charge for the OS to hand set manufacturers.  In my view these two things will slow down their progress in the market place and to get to a substantial market share is going to be a hard journey.

Users in the end decide where they want to invest their money.  Sp much of what they invest is not necessarily for cool features and cutting edge technology.  It is for how the product makes them feel.  Don’t get me wrong all the technical stuff is very important in making the end product successful, but at the end of the day users want to feel good.   Apple has been far and away the best at this.  Android is good, but it is a cheap alternative to Apple.    Though Charles Kindel claims the Windows Phone is the best bar none, it is hard to substantiate when it’s hard to find anyone (as of yet) who owns one.  My view is tainted toward the positive as I live in Seattle so I have plenty of Microsoft employees happy to show me all the cool features.  Note to Microsoft employees here.  Stop showing features and hand the phone to whomever you are talking to, so they can “experience” the phone.  Feature demo’s are for geeks.

Finally we come to developers.  The are the Windows Phone is weakest in.  Remember Steve Ballmer saying, “Developers, Developers, Developers” .  Apparently he forgot.  Recently Apple hit 500,000 applications, Google has a few hundred thousand.  Microsoft announced they hit 50,000..  Apple amazed me as they used Object C as the development language for the  iOS.  I sold C compilers in the early nineties.  It seemed dead.  However after the release of the iPhone it went from dead to one of the top ten programming languages.  Developers g where the money is.  The development language they use is secondary.  Google use of open source made sense, since the open source community is a whole lot of developers at heart.  It’s a large community so leverage their brain power.  Which brings us back to the Microsoft developer.  Who is Microsoft asking to write Windows Phone apps?  Simple the large and robust Microsoft developer community and yet they are still not even visible in the rear view mirror of Apple and Google.  Why?  For starters mobile apps are simple and cheap.  It is based on a high volume lower margin principle.  Plus a lot of Microsoft developers are not targeting consumer apps.  One of two things has to happen.  Either Microsoft has to create enough consumer demand for Windows Phone to bring developers over to Microsoft or they need to attract non-Microsoft developers to the Microsoft brand.  Not easy but it has to be done.

In the long run I expect that Microsoft will pour enough money into Windows Phone to drive some success, but how much and what is deemed a success is to be determined.  I think short-term it makes more sense for Microsoft to go after Google and Android as Apple has extremely high consumer satisfaction.  A recent study cited 85% of Apple iPhone users would buy Apple again.  Android is ow cost but it is also in danger of fragmenting as the OS layer as more handset manufactures modify the OS , thus creating apps that are compatible on some devices but not all.  This needs to happen fast as Android sales are sky rocketing.  Microsoft and Nokia will have a successful launch and Windows Phone will increase in market share (how much?!?), but the next big question will be can it create and sustain momentum?  Though Charles Kindel claims the Windows Phone is the best mobile phone on the planet, that does not translate into success.  Technology is littered with products that were deemed the best and yet failed to catch on.  It is early for Windows Phone 7 and Microsoft is way late to the game.  Their key partner, Nokia, is making a last stand with the Microsoft mobile platform.  In the mean time Apple and Google have not slowed down.  It seems impossible to overcome.  But what does Microsoft have to lose except for ….the future.

Good Night and Good Luck.

Hans Henrik Hoffmann –  January 9, 2012

The App Store Craze

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