Posts tagged: mobile





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Sockets and usage

The posts about Android's overwhelming marketshare miss the greater story that Tim Cook tried to highlight during the iPhone 5S launch around about usage versus unit volume. We used to live this at HP, and especially in the printer buisness where most of the economics were not in the "placement of the socket" but instead in the number of pages printed after the "install" (and therefore the amount of ink consumed). It is why HP smoked Lexmark and has held the lion's share of the economics despite pressure from Epson and Canon in inkjet printing. Whereas analysts worry about socket marketshare as a leading indicator, the real battle is in utilization.

Today we are hardly at the same place with mobile platform ecosystems because most of the gross margin is being made up front with the sale of the devices (well at least for Apple and Samsung) and with a complex value chain that relies on carrier subsidies in a lot of their core markets. But increasingly as it becomes harder to differentiate on hardware alone and software/user experience takes front stage, the bulk of the economics will shift to the services. Most people think of this shift as represented by the paid downloads in the AppStore and Market respectively but I don't believe that this is durable over time (as this blog post) argues and will shift to in-app payments and services that make recurring gross margin completely outside of the app stores but totally enabled by the mobile platform.

Just like the momentum story for app developers is going to shift from app install to app engagement over the next couple of years, the momentum story for the platform owners is going to shift from installed base to usage in a way that may expose some fairly naked swimmers in the receeding tide of large numbers.

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The other major number that caught people's attention in the recent Apple earnings call was the drop in gross margin (47% to 38% YoY) which is mostly explained by the iPad mini but definitively hints at lower margins in their future. This is a normal part of any suitably competitive market and should be expected; what might not be however, is why the post PC components of Apple's future might not currently be as well insulated from margin pressure as prior software platforms.

The theory goes something like this: Microsoft Windows was able to maintain an exorbitant margin on its Windows and Office franchise because of the combination of feature lock-in and network effects. Everyone focuses on the latter because it is easier to see: more people using Windows means that file sharing is easier as is the size of the platform target for developers which enriches the platform and makes it harder to choose an alternative. But the former is equally important in my view and can be summed up in a statement I once heard about MS Word: "no one uses more than 10% of Word's features but for just about everyone, it's a different 10%."

Compare that to any of the utility apps on iOS/Android that have more than 10M users— if everyone used just 10% of those features, you'd be using fewer than one feature of Dropbox or Evernote. Or put another way, these apps on iOS are super thin by design and new apps seem to be getting thinner. This has two benefits for app creators: first, it is easier to port stuff when all you are doing is rewriting a view layer for the specific target platform, and second, you can leverage your back end services for the real heavy lifting (such as Evernote's awesome OCR) which means that you are basically out of version hell management with 90% of the iceberg that is your app.

For the platform provider though, the world is a much uglier place. Right now, there are no significant apps on my iPhone that I couldn't find on Android or Windows Phone. And the OS provided apps are less and less relevant every day. Having already replaced music, email, the address book, and data sync, the only app truly keeping me "stuck" is the Apple Remote app and only primarily as a parlor trick.

This may dramatically affect platform differentiation/profit taking in the future (or at least completely shift the game to a hardware fit and finish one), but there is also a obvious way out. If Apple were to begin using its cash hoard to buy some of the better services of the post-PC era and closed them off of all of the other platforms, they might have a better reason to maintain their high margins. I say buy because of the lessons of iCloud and Dropbox: everyone thought Dropbox was a feature until iCloud proved to be its poor country cousin drunk on Moonshine and losing your files en route to the cloud, but they might still have an awesome service or two in house. For instance, knocking off Spotify seems like a no brainer (they are the largest licensee of music in the world after all), and working on radically simpler, Apple-esque music consumption experience when the world's catalog is at your fingertips seems well aligned to what the company that brought us "5000 songs in your pocket" could do well.

The other potentially very interesting vector for sustained differentiation would be enriching iOS as a more full featured content creation platform. Given the massive shift away from PCs to tablets that even they have felt, it seems that giving app developers compelling and differentiated APIs that allow for more expressive creative or work tasks and simply staying one or two tricks ahead of the competition might help that. This is after all, the company that gave us an API for tracking 10 fingers down on the glass first (and Siri, is neither forward looking enough, nor a core strength's of Apple's given their mediocre execution on the server side).

Who would have thought that thinness could be such a curse?

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I’ve spent a lot of time this year thinking about device modalities when it comes to personal computer use— a fancy way of saying: I’ve spent far too much time thinking about what to take on day trips, to meetings, or even to the office.

Compare 2012 to 2007 for a moment to see why: in 2007, I had one 15 inch Macbook Pro that weigh as much as a small boat anchor and cost $3,500. In 2012 I can use the same amount of dollars to buy an iPhone, an iPad mini, and iPad Retina, a Kindle and two Macbook Airs. What is more, my content creation and consumption across media, social networks, work and side projects is split across all of these devices in ways that guarantees no matter what I’ve left at home, I am going to miss something.

I know, I know— a high class problem to have. Or is it? Most people already own smartphones. And for a while now, laptops have been issued as the choice “bicycles for the mind” of information workers. Combine these two devices with a media-based subsidy model for some sort of a content consumption tablet and you’ve got the average Joe carrying (or thinking about) carrying 3 devices— again certainly for less money than they spent on their purple Sony VAIO a decade ago.

The big platform guys would do well to think about this software above the level of a single device view of the world and design use cases around it. Sure Dropbox and Evernote enable some of this but in what feels like tweener solutions; for instance, the iOS/Android Dropbox apps are nothing more than document viewers on devices which by design don’t come with filesystems. Similarly, I used to be a fan of AirDisplay which allowed my iPad to become my laptop’s external display or Type2Phone which allows your laptop keyboard to become an external Bluetooth keyboard to your smartphone but both of these are truly just parlor tricks.

And so I’m left with an iMessage experience which is still very broken across devices (the phone can bridge to texts when required but no other devices can?) or worse still, apps that carry the same name (iPhoto) but possess radically different sets of functionality. And this is all while “on the same platform!”

Navigating this world of software above the level of a single device won’t be easy but it will be increasingly a differentiator for the big companies and it’s a good place to put some cycles towards as we think of designing for abundance of devices we’re currently lucky enough to have.

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Everyone loves the Nexus 7. It's the "right size." It's "like butter." Even the Apple loyalists are questioning whether the broken nose syndrome that can come from precariously balancing a 10 inch 1.5 lb tablet on your chest late at night is worth it in the face of this little waif.

For me though, there is no clearer sign that the Nexus 7 (like the much crappier Kindle Fire before it) belongs to a new class of device: the disposable vending machine for digital content. Worth it from a software perspective only if you are ok consuming content from the hard wired app stores that each of the platform players provide. They give up the gross margin on the hardware and you give up: usability, control, and general purpose-ness for the sake of consuming content like you never have before.

Sure you can install Android Market (er, Google Play) apps. And sure you can even replace the launcher— if you are interested in getting back into the brain damage of the typical Android spring board experience. But this is not the experience of the mainstream user paying $200-250 for what seems like a "deal." And the deal? Paying for the placement of a vending machine right in your lap— one that sells you cokes while you can read up on your tweet stream.

As far as I am concerned, the main thing the Nexus 7 proves is that the e-reader form factor can be extended for checking email, playing games, and the occasional web surfing experience. But this is much more of a wake up call for Amazon (who hopes to own the category of e-readers++) than Apple who might be just fine waiting to launch a 7 inch tablet until price pressure forces them to.

I like my Nexus 7 (unlike my Kindle Fire). But primarily as an e-reader. As a vending machine, I prefer the kind where I stick quarters in...

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The iPad 3 adheres to the old saw in technology that there is magic in version 3. While it is true that this is in part due to how wonderfully rich the app ecosystem has become, from a pure hardware perspective, the combination of a 264 dpi display and a lightning fast cellular network is about as magical as the many reviews have claimed.

At HP, the ink and paper crowd was always obsessed with what was known as the "300 dpi barrier," the thought being that until affordable displays got there, there would still be plenty of room for consumers printing the stuff that wasn't going to get stuck to the refrigerator. From my perspective, the pre retina iPad had already eliminated that for most of the universe of printable disposable content, but this new display has killed one of the last bastions of the printed page: the mixed content (text & graphs), multi-column, full page (usually) PDF document. Just this weekend I was reading a Comscore report with a number of tables & graphs and for the first time ever, I didn't feel the need to print any part of it out. Incidentally, this was the market for the Kindle DX but unfortunately that device was never general purpose enough to merit its price tag.

And on the network side, it is hard to explain the improvement until you experience it. Or rather, it is easy to conceptually understand the impact of more bandwidth, and slightly less easy but still possible to grok lower latency. But LTE feels ever better than the sum of those two factors. Quite simply it just feels more immediate. Struck by what the cause might be for this, I spent a little time poking around the Qualcomm site and came across this paper (consumed on the retina display of course) that argued that startup time from a "cold modem" (one which starts from an idle state) is quite a bit faster on an LTE connection than on a HSPDA (3G) one (about 3X), driven largely by improvements in signaling. And while it is true that most tablets live and die on wifi (92% of data traffic according to Comscore is coming from Wifi connections as opposed to 25-50% for smartphones), I think the speed of this modem may be about to begin to change that particular "leave at home" use pattern.

In fact, for the first time since the launch of the original iPad, I am now convinced that we've got a fundamentally different platform for which a new class of productivity applications ought to emerge. Something like the new iPhoto but on steroids since it should go way beyond leveraging the direct manipulation interface to using both the resolution of the display and the network in new and unexpected ways. It's too early to tell but my money is on new types of collaborative applications that leverage the high pixel density to navigate large datasets and the realtime nature of persistent and lightning-fast connectivity to put the collaboration in environments where users have been forced on "batch" mode for compute resources. Architects, field folks, and even presenters at conferences are a few of the examples I can think of for starters.

Finally, it bears mentioning that the iPad3 will likely not remain the only entrant (nor even necessarily the dominant entrant) in the market now that it has defined the spec that everyone else needs to hit now that it has, at least in my mind, validated the category as more than a portable television crossed with a poor man's laptop.

I am sold. Down with laptops and up with the strokable slates!

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