Hans Hoffmann's Blog

Google Buys Nest for $3.2 Billion

Published on January 17, 2014 by hansh51Leave a comment

Why comment on this acquisition? Google buys a company known for making your thermostat “smart”. But in so many ways it looks like a smart move and a logical move. Technology has changed our lives in so many ways over the past 25 years, but those first 25 years were confined to devices that housed the technology, the PC, the Smartphone, the tablet etc..Now we are seeing a different trend emerge as the technology now makes its way into everyday devices, many of these devices have been around for a hundred years. Many have not changed a whole lot in those years, but change is now upon them where they will leapfrog in the coming decade what they did in the previous century. Google’s purchase of Nest will have many ramifications in the industry and across industries and promises to set wheels in motion for both the right reasons and the wrong.

I ditched on the PC a bit in my opening statement, but I should retract my statement a little as it was one of the first example’s of a device several hundred years old being updated, namely the typewriter. Does anyone remember these devices, which were rather loud as individuals punched the keys. When you made a mistake you needed whiteout. With the advent of the PC things were simplified. You could easily edit a document. Not only could you now write long documents you could save and file them away without ever having to use a printer if you did not want or need to. Overnight the college nights spent writing term papers that took forever with the old typewriter were out and a new tool was available that allowed us to easily type, format and print a final document in a professional manner. The typewriter really had not gone over much fundamental change since Johannes Guttenberg invented the printing press in 1450, it had pretty much been ink and paper for over 500 hundred years

So what is NEST and why should we care? Well if you think of our typewriter example there are a lot of devices in the everyday house that have not undergone a lot of fundamental change since their inception . NEST basically got in front of two household items: the thermostat and the smoke detector. Industries are about to go under fundamental changes as technology evolves every device. Items like refrigerators will be made more efficient by the software, while providing manufactures more information on their use as all devices will be connected to the network. You see examples of this from both old companies like General Electric and new companies, such as the one that was just acquired, NEST. But beyond efficiency we are really talking about making many old household devices from refrigerators to washers and dryers smart and on the internet grid.

We can analyze the acquisition by Google in a number of different ways, but make no mistake this is about the future of technology and where it is taking us. Should we be concerned? Certainly. The internet has fostered an environment where corporations (and our government) can track user behavior in ways never before imagined. At first this was limited to what you did on your laptop or desktop. With the emergence of connected devices we could get to a point where all our actions in the home are tracked and stored. Any event that occurs in your household can be accessed and turned into a sales and marketing opportunity for some and soon to be many corporations around the globe. This is why the acquisition of Nest by Google has been met with a degree of skepticism. We already as a society are a bit freaked out by the Edward Snowden and NSA leaks. Now companies want even more of our private data. If all this behavioral information is really about you, is it yours and should you get a kickback in dollars?

Fundamentally our right to privacy is being challenged. It is happening softly as we browse the web and purchase connected devices, but longer term could have very hard and serious ramifications. Any web page you type in is captured information. There are benefits. I enjoy when I go to Amazon that it knows what books I am interested in or music and offers up suggestions and deals. The price you pay is you do not own that information, you have given that over to Google, Amazon or Twitter. As we have seen when national security becomes a significant and real issue the government can come calling in a clandestine method. Does Google in an effort to aid the government in a terrorist investigation hand over specific information to that case or just dump a bunch of information for the FBI or NSA to pursue? Now that privacy is about to be further challenged by our thermostat and smoke detectors.

What in the end makes this acquisition both daunting and exciting is the disruptive nature of technology. Google is entering an area where the traditional players were the utility companies and the old big American corporation, like General Electric. For the utility companies this is upside as a more efficient method of monitoring and distributing heat and electricity means they will not have to build power plants as often, a huge capital expense. Of recent times given the every increasing demand for energy something any utility would love to delay or forego. On the opposite side it is a scary time. A GE does not want to get into a fire fight with Google. Google is a disruptive company which wins by changing the existing battlefield. No one wants to fight on Google’s battlefield, it is an effort in futility. As always it is driven by the need to collect information, which fuels its search business. How does GE compete? Try and buy Bing from Microsoft? When does Microsoft get into this game? Facebook? Twitter? The winner in the end will be consumers, but as noted earlier it comes at the cost of privacy.

My expectation is in the future you will see more acquisitions like this one, where companies enter into new industry with the intent of disrupting an industries existing business models. Could an automotive company become a target? Maybe. Appliance companies? Sure. At the end of the day it is about where can I get access to more information about user behavior. As every device gets update and connected more information will become available. It will make our lives much more convenient, but like all things it will come at a cost. The Google acquisition of Nest is just the beginning of a much larger play and the only thing guaranteed is it will take billions of dollars to play.

Good Night and Good Luck

Hans Henrik Hoffmann January 17, 2013

Google Chromebooks Momentum

Published on January 9, 2014 by hansh51Leave a comment

The Google Chromebook has been around for a few years now, but lately it seems to be gaining some traction in the market place. It is showing up in Best Buy and other retail outlets. It’s sales are steadily increasing. There are Chromebooks winning “Best of” categories at CES. They are being recognized and targeted by competitors, as recently as part of Microsoft’s “Scroogle” campaign they felt it necessary to address their perceived inferiority of Chromebooks. Not a big fan of these Mark Penn negative spin driven ads, but then I am not on Steve Ballmer’s Harvard buddy list. The idea behind a Chromebook is we do about ninety percent of our work on the internet why not just have a connected device with a browser? It is a new category of laptop, where technology has taken us in a slightly different direction based on innovations over the past decade. Chromebooks are coming of age and getting attention, moving beyond cute gadget to contender.

I had the chance to use a Chromebook once a year ago. It struck me as a fairly simple device. What is immediately evident is that on the home screen there is pretty much nothing. You launch your Chrome Browser and off you go. Having been a Windows guy my entire life this was a bit hard for me to overcome. Despite the fact that on a Windows machine about 90% of the icons that appear I never even clicked on. It just seemed so barren to me. Perhaps secretly I like clutter? The Chromebook is a Google Device, so not surprisingly you are directed to Google products, like Google Docs or Google Drive. If you are an Microsoft Excel fanatic this device with no hard drive is not for you. Even a PowerPoint guru would find this a hard sell. Probably the one product from Google that holds up OK is the Word Processor. Your experience with a Chromebook from an application perspective is in the cloud, but as more and more traditional desktop apps become cloud enable the appeal of a Chromebook will improve. My first glimpse into a Chromebook was kind of a “not for me” experience. But as technology proves over and over again, times change

Google has done a very effective job in attracting schools to use their platform. My children all use Google Docs and Calendar for their school homework. A large part is driven by price as a Chromebook retails for between $200-$300. I honestly do not know how schools budget outside of the fact that my taxes pay for them. But a key component on particular for schools is price. When you have a Chromebook and all the Google cloud apps you have a pretty cost-effective financial model that will be attractive to academic institutions. Technology is being introduced at very young ages in schools and as is often the case people stick with technology purchases based on what they know.

The laptop market is changing as all laptops regardless of OS have dropped in price. Because of price, functionality and usability the Google Chrome platform has become much more appealing that what competitors offered in the Windows world. Given the increasingly competitive landscape expect prices to continue downward to less than $100 in the not so distant future. The price reduction will be driven by OEM’s offering both Chrome and Windows. This will also impact Apple as they will have to reduce prices. In the end the winners will be consumers as they will have lower prices and choice. If the DOJ had understood the competitive landscape and nature of tech they would have foregone the lawsuit against Microsoft. Things move to quick in technology and what is understood one day is misunderstood the next.

One of the negative critiques of the Chromebook is that it requires connectivity to the internet in order to be of any useful use. In the short-term, sure I understand the point. Not everyone is connected via carrier network or near a Wi-Fi hotspot. Longer term I believe that will be a non issue as we will have ubiquitous connectivity where ever we are whenever we want it. From Google’s perspective that is a bet they are making and I would say it does not to appear to be a very risky bet. It is betting the obvious when you have a Royal Flush, you have to go all in. That being said until we are always connected there is a window of opportunity for the competition to steal Google’s thunder with an always connected device that has more features and functionality and works offline. First in does not always yield all the rewards, ask MySpace.

At the time of this writing some reports have Chromebooks seizing ten percent of the laptop market. Unless all ten percent came from Apple this is a pretty significant development. For the last 20 plus years ninety percent of the market has always been Microsoft Windows. This will signify in the shift in the market as there now exists another low-cost laptop choice that is able to compete. The good news for consumers is there are choices with different operating systems at different price points. This is how a market is supposed to work and the greater the competition the more pressure that will be put of pricing. How the different OS’ are bundled and priced with hardware impacts not just consumer prices but the various vendors. Apple makes money from the sale of hardware. Microsoft receives revenue from the licensing of Windows. Google does not directly profit from Chrome but uses Chrome to drive search revenue to Google, which is their primary way of making money.

Google is often criticized as a one trick pony. They only make money off of search. But where I give them credit is they keep coming up with news ways for you to access their search engine and search. They started as a url that people learned to use and search from any PC or laptop. Then mobile devices became a heavy focus. They realized they needed a browser to compliment search. Then they have now combined the browser with hardware to create a new category of laptop to drive more search. On the old growth curve ChromeBooks are steadily moving towards their inflection point. It is now up to the competition to prevent them from getting there.

Good Night and Good Luck

Hans Henrik Hoffmann January 9, 2014

CES 2014 – Wearable Technology

Published on January 3, 2014 by hansh51Leave a comment

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

June 29th 2007 – the day developers left Microsoft

Published on December 31, 2013 by hansh51

There was a time when Microsoft owned the developer community. It could almost say or do anything it wanted, the developers would always follow. However loyalty in business relationships is fragile, it can span time but lacks the core depth of personal relationships. It is governed by the most shallow and transparent of currency the almighty dollar. During my career the developer has always been at the forefront of jobs that I have had. Developers were the key to Microsoft’s success and did more than anybody to drive the success of the Windows empire. Developers were Microsoft royalty. If you wanted to get lots of free swag attend a Microsoft developers conference. Laptop bags, T-Shirts, Polo’s, Pens etc..Parties were key as they went late into the evening with lots of food and drink. Developers were the royalty of Microsoft, treated better than anyone else.

When the world changed it happened quickly. That change happened on June 29, 2007 when Apple launched the much anticipated iPhone. It was a breakthrough event in terms of the user experience. Catapulting what we had known of the mobile experience into a new dimension. It happened on so many different levels, from touch screen to browsing the web. But most importantly it fostered a new eco-system of mobile app developers. Within months Objective C went from being a forgotten development language to a top 5 language. All of a sudden Apple was the pace to be. The iPod had been successful, but it was the iPhone that created the new Apple developer mantra.

Mobility would breed new competition. The biggest threat to all being Google with its Android platform. They understood that they would need developers and that developers were attracted to open source. It was interesting that to head up this effort they picked a Microsoft guy, Vic Gudotra. I had seen Vic speak several times and the word, “showman” would define his speaking style. He was an acquired taste, a little over the top for some. Seeing him on TV at an Android Developers Conference was interesting. As he walked around the Partner booths (just like Microsoft in the old days) he talked each partner up, saying that Android’s success depended upon them. Every thing he said was not something new he had invented, it was borrowed from a Microsoft past, except now Windows was no longer the platform being promoted.

Ballmer pleaded at the Microsoft Worldwide Partner Conference in 2012, to stick with the company. We have not let you down in the past and we have a bright future. This was leading up to the Windows 8 launch and having applications at launch was critical. It was now a decades old Microsoft formula. Not sure why he needed to beg and pander to his audience. But I can tell when it happened. When it became necessary. The technology is driven by change and sometimes changes generates tidal waves, mass hysteria, a sense of I need to go there if I do not want to be swept under by the massive crash of thunderous waves. This was the case when Steve Jobs had his moment where he eclipsed the sun. It seemed just a matter of moments where developers left Windows and flooded to iOS. Job postings all of a sudden begged for developers who could write mobile iOS applications. When it comes to money loyalty is a fickle thing.

When you look at the Windows Phone and Surface the designs have come a long way from where they started, as has the OS. But unlike Microsoft’s origins getting developers to write applications to the Microsoft platform has become much more difficult. Since the launch of the Apple iPhone and the subsequent success of Android Microsoft has struggled to recreate the sense of nearly spiritual community it had before. Developer’s have options, but more importantly, as has been said, they have options that can make them money. The iPhone has created so many opportunities for developers that they dare not stop and go back to Windows development

It does not seem that long ago Microsoft owned the developer community. That they could whisper anything and a developer movement would naturally coalesce around it in an organic manner. Every launch of the new Windows operating system began and was defined by the Microsoft developer community. In the enterprise Microsoft still has a lot of pull with developers however in the consumer space it is a struggle for Microsoft to garner the attention of developers to write to the Windows OS. Consumers, unlike enterprises, do not have deep roots with legacy systems. They are governed by emotion. Their gut. Visual stimulation. Things marketers talk about but only after they have already occurred.

The industry is driven by momentum, by big swings in the technological landscape. When these sea changes happen it is best to be in front and on-board with the change otherwise you will be left behind in its wake. Ballmer knew this but he just did not have the vision to see the road ahead. Now what is left is a company trying to get developers to listen, when in the past they never had to do that. Apple to its credit saw the move to mobility and enlarged the opportunity. Once a company or companies develop momentum it is very hard to catch up. As for every one application developed on your platform, the competition gets ten. To be a leader on the industry you must have developers, when they start migrating it puts your future into question. For Microsoft that happened one summer day over six years ago.

Good Night and Good Luck

Hans Henrik Hoffmann December 31, 2013

The Amazon UAV future

Published on December 18, 2013 by hansh51

It was with great interest I read about Jeff Bezo’s bold plan for Amazon and using Unmanned Air Vehicles (UAV’s) to ship products directly from an Amazon warehouse. As Bezos pointed out 84% of shipments weigh less than 5 lbs. Why do I need to use FedEx to send packages that get routed through Memphis, TN, even when I may be shipping something just three miles away? I could have a fleet of UAV’s that could simply launch from an Amazon warehouse and deliver directly to the end customer. if we take a step further based on what Bezos claims, it could literally be within 30 minutes of the order being placed online. First this is a bold and audacious vision of the future, which I like. It also will create new industries and new scenarios across every industry we know. Not to mention we area society in the US that likes instant gratification, 30 minutes will still be long for some but it beats 3-5 days.

We first started to hear about UAV’s during the hunt for Osama Bin Laden after the 9/11 attacks. If you know any history of Afghanistan then you know that the mountains in Afghanistan throughout history have proven rugged and impenetrable. Time and time again invaders have fallen as Afghan rebels retreated high into the remote caves of this rugged mountainous landscape. Most recently the Soviet Union learned this lesson when it made an ill-advised invasion of Afghanistan. However in the post 9-11 world the United States was able to send troops into the mountains with far better information than had ever existed before as US drones patrolled the skies. Since that times we continue to hear about the military’s use of drones to carry out attacks in the Middle East, In fact they are used so much that they have made it into Hollywood films (A high compliment in American society). They are now a standard and core component of the US military complex. Increasing our military capacity while removing military personal from harms way.

As is so often the case the US military may have the technology first but eventually it makes its way into the private sector. As the technology matures it moves beyond its roots for battle and entrepreneurs’, the great savior of American capitalism, figure out how to build a business case for the technology, secure venture capital and build either a small business or business empire. Amazon may not fit nicely into that description, as it already is a well established business, but they still have a very entrepreneurial spirit. More importantly the idea of a fleet of drones either owned and run by Amazon or outsourced to a UPS or FedEx has broad appeal to Amazons business model. One of the big, not so hidden costs, for Amazon is fuel. Maybe Amazon does not spend a lot relatively speaking but its carriers do. Those fuel costs then get passed on, to you, I and Amazon. A lightweight device that can carry small packages can be a potential bonanza in savings for us all.

As Bezos pointed out the first hurdles will be the regulatory barriers faced by launching something that is not really regulated by the FAA. There are a lot of questions about airspace that need to be answered. What altitudes can these UAV’s fly at? How many UAV’s can occupy a specified airspace? Remember these are small devices, not 787’s. Potentially ten or a hundred can occupy the same space as a jetliner. What will our skies look like? Do you want your mountain views blotted out by thousands of UAV’s? What about environmental impact? Because it is fairly new technology if we race full steam ahead, we may discover down the road irreparable damage has been done to the environment. These type of mistakes end up costing both the government and the tax payer more down the road. Granted predicting ramifications of future ill’s created by technology is more an art, than a science.

The reality is beyond basic transportation of goods UAV’s are going to play a bigger role in the United States. From crop dusting to Homeland Security. Industries that traditionally required a labor force will see the need for skilled labor decrease. As in everything where humans get replaced on one line of work there ends up being a demand in other lines of work. It can be a difficult transition as the people being replaced are not necessarily suited for the jobs that are being created. One thing the United States is well positioned is the ability to create the entrepreneurial spirit that fosters risk taking and creates new industry. Companies like Amazon and Google push that needle.

At the end of the day what Amazon is attempting could be and should be viewed as disruptive , if successful, it could lead the competition scrambling to catch up. How would any e-commerce site react to having to compete with a company trying to deliver within 30 minutes from the time it was ordered online? Luckily for the competition today they can thank the US government for giving them time to catch up as governments move slowly and trying to get FAA regulations liberated and updated, takes time. What Amazon is suggesting will prove to be a bold new en-devour moving forward into the great unknown. But the industry is built on big bets. The bets that most people comfortably say will not happen. However if they do happen it disrupts the existing business models. Most companies who manufactured typewriters did not predict or foresee the impact of the personal computer. Where are they now?

The Amazon vision will happen. It is already happening. In nearly a dozen countries there are already case studies of various scenarios ranging from mapping to terrorism where UAV’s have been used. The number of countries will continue to grow as will the number of scenarios by country. We are entering a new race as these type of robotic creations expand into every walk of life. The age-old arms race will take a significant turn towards the future. Within the next five to ten years, however, expect your delivery service to be less personal, but much quicker from the time of online purchase to delivery. Amazon is thinking big and believing big in this future and may be the company to make it happen.

Good Night and Good Luck

Hans Henrik Hoffmann December 17, 2013