9
Mar

Android remains a difficult opportunity for Google to successfully manage

2-Color-Design-Hi-Res-100px-widthGoogle recently announced its intention to proceed with a wireless data service. The latest spin on this decision, exemplified by an article published on the Wall Street Journal web site on March 8, 2015, takes this step as an indicator of a new, more frugal Google. But seen from a different angle it looks like an aggressive shot at Google’s partners in the Android alliance.

The title of the Journal article is Google: The Value of Thrift. The piece was written by Dan Gallagher and points to some recent steps taken by Google, which Gallagher presents as evidence of real follow through on points made during their most recent Quarterly earning report. Gallagher writes about the report: “Google hinted that it might curb its spending after a year in which capital expenditure surged 49% to nearly $11 billion.”

Gallagher finds an important example of this new campaign, at work, in some public announcements from Google about their decision to go forward as a wireless data provider. Gallagher notes “The Wall Street Journal also reported that the [wireless service to be offered by Google] will be limited to customers using Google’s own Nexus phones, which make up only a small portion of the overall Android market.”

But if I were the President of Samsung, or LG, or any other of Google’s partners in the Android mobile O/S effort, I don’t think I would be too pleased to learn the team managing the overall Android stack has just now decided to debut a promising wireless data effort (to deliver high quality/very high speed wireless data services from pipes supplied by T-Mobile, Sprint and more) for only its own phones. Why not mine too? I venture this phrase bounced around a few conference rooms when the news of this plan broke during Mobile World Congress 2015.

In my opinion this move is simply the latest in a series of steps likely to cause more headache for Google than anything else. The real sore spot, of course, is the damage a self-serving deal like this one can wreak on a very important recent effort on Google’s part to improve its penetration of the enterprise computing market. Certainly Android partners like Samsung are critically important to the success of this effort. Research has demonstrated enterprise IT organizations look at the Samsung Android device platform as one of, if not the only, line of Android devices worth serious consideration for an enterprise rollout. So why leave them out in the cold on this one?

It’s hard for me to get behind Google’s “moon shots” when they stumble around as they appear to have done on this one.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2015 All Rights Reserved

24
Feb

Lenovo, Public Relations and Superfish

2-Color-Design-Hi-Res-100px-widthIt has been a mere 5 – 6 weeks since public announcements appeared about the security threat represented by preloaded adware from Superfish on Lenovo personal computers first magnetized public attention. But in this short interval the Lenovo brand has taken a big hit, especially around the question of whether or not public announcements from them can be be trusted — not the kind of stuff a public relations team will likely want to handle. CMSWire, for example, published an article on this topic, which is titled Can Lenovo Regain Consumer Trust After Secretly Installing Adware?.

I see little point in raking through the stacks of opinions on this topic. But I would like to present three points I hope early stage ISVs will carefully consider should they find themselves in the kind of quagmire besetting Lenovo at the moment:

  1. Please do not choose the denial route
  2. As well, please take responsibility for any failures to carefully evaluate products before deciding to add them to a core offering
  3. Finally, please defend the important positions you have taken to make a best effort to establish a profitable manner of doing business

The public perception appears to be Lenovo failed to follow these three points, starting with a denial of responsibility. One may argue the denial statement was subtly presented to the public. After all, the earliest headlines were all about the security risk represented by the Superfish adware product. The public appeared to believe Lenovo’s hardware had been hacked. Perhaps this perception was nurtured by the surrounding publicity climate, which was rather full of news about reports from Kaspersky Lab about spyware baked into the hard disks and even CPUs powering desktop and laptop computers manufactured in the US.

In my opinion Lenovo’s PR team should not have allowed the public discussion about the presence of Superfish adware on Lenovo computers to take this “sidetrack”. The inclusion of Superfish was really not a surprise at all, but a method Lenovo chose to exploit in an attempt to squeeze more revenue from the sale of its computers. There is nothing wrong, on paper, about making this kind of effort. Most any business in the type of commodity market Lenovo finds itself as it competes as a PC manufacturer would look for some opportunity to lower its costs to produce product by selling marketing opportunities to third parties.

If readers are hard pressed to accept this point, I would point them to an example from another commodity market — airplane travel and one of the main contenders in the market — Delta Airlines. The Delta branded American Express card is out there for a big reason perhaps lost on the consumer, but certainly one rarely lost on product marketers — to lower production costs. Whenever a customer buys a ticket on a Delta flight with a Delta AMEX the cost of the sale has been lowered by upwards to 4% simply by removing a third party clearing fee.

In my opinion there was nothing, on paper, wrong with Lenovo stuffing its PCs with an adware product. They just did not do a successful job of selecting the right partner (because Superfish product comes with big security concerns), which may result in a very big problem for Lenovo, should someone experience a hack attributable to Superfish. They also appear not to have done a very good job of plainly educating the consumer about the presence of adware on their computers. Finally, they were unable to provide their customers with an easy to follow method of completely removing adware from their purchases, should they wish to go this route.

The whole method of handling this problem has been a failure of public relations, sorry to say.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2015 All Rights Reserved

3
Feb

People buy iOS devices for more than their impact as status symbols

2-Color-Design-Hi-Res-100px-widthMuch has been written about the journey Apple’s promotional efforts for iOS devices have taken from functional feature presentations to depictions of a luxurious life style. “Luxury tech” may be Apple’s market message of the moment, but let us not forget the rationale for consumers buying these devices in the first place — for many people they simply work better.

We recently purchased an iPad 2. Our reasons for purchasing this tablet amounted to a need to fill in some functionality not available with either of our other tablets:

  1. a Microsoft Surface 2 RT
  2. and a Samsung Galaxy Note 2.1 10.1 running Android JellyBean

We continue to be impressed with the performance of the iPad2. Three features of mobile computing on a tablet device:

  1. Battery life
  2. Display
  3. and, finally, a high quality tablet experience without recourse to an external keyboard

meet our requirements. We routinely experience two day operation between charges. The display, while bright, is not shiny (unfortunately this is the case with our Surface 2 tablet). The virtual keyboard works very well, in particular the text highlighting feature works great.

So why all the talk about “luxury tech”? Perhaps the driver for this new promotional theme is an effort to convince consumers already outfitted with an iPad to purchase a new one. Repeat-buy customers are rarely motivated to purchase new product based on the compelling features driving the initial purchase. There has to be something new. Better yet, there should be a feature consumers always consider “new”. There is no better example of this category of feature than device as status symbol.

But the bad news is the indication this strategy reveals of market saturation. There are simply no more new consumers to whom Apple can look to further increase device sales volume. The only recourse is to cannibalize its current customer base. By opting for the “luxury tech” moniker, Apple, I would argue, has achieved a graceful method of achieving its objective.

In contrast, manufacturers on the lower end of the product spectrum (I include Samsung in this group), out of necessity need to implement comparatively more risky methods of motivating consumers to step up and buy new product. For these unfortunate companies, the only option is to abandon any effort to support their customers when something like Google’s decision to walk away from supporting Android Jelly Bean and earlier versions of the Android O/S arise. Nobody likes to hear a vendor tell them to take a hike when a product with some financial heft to it is no longer usable. But for Samsung, et al, this is the only recourse. Ugh.

The result of all of these efforts is the present hierarchy of mobile device manufacturers, with Apple at the top. Because the iPad 2 is actually a market-leading product, it is unfortunate to see “luxury tech” as the primary product promotional theme. But one can understand why this is the case, given the extent to which the available market for these products has already reached saturation levels.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2015 All Rights Reserved

2
Feb

Consumers pass on smaller tablets to take advantage of offers for smartphones with bigger screens

2-Color-Design-Hi-Res-100px-widthOn Monday, February 2, 2015, Tiernan Ray of Barrons reported on a research note published by Canalys. Ray’s article is titled Tablets Fall 12% in Q4, First-Ever Decline, Says Canalys; 7-Inch Models Cannibalized. Ray mentions this note claims “that shipments of tablet computers fell in Q4 by 12%”.

Anyone with an interest in consumer preferences for small, smart devices for computing on the go will likely look at the Canalys claim, especially if other published research affirms the numbers, as an indication of how Apple’s product marketing has successfully convinced buyers in mature markets, and even China, to value the iPhone as a status symbol. When this product magnetism is combined with carrier incentives, consumers apparently passed up opportunities to buy tablets to obtain an iPhone 6 or 6S.

Apple does not appear to be suffering much pain from these changing consumer tastes. According to Apple’s most recent quarterly earnings report, the surge in iPhone buying more than offset the 18% drop in tablet sales Canalys notes. But will the same scenario play out next year, when Apple debut a new iPhone? Would it not make sense for analysts to discount future earnings estimates based on an understanding of just how consumers of luxury electronics might behave, over time?

Unfortunately there is not any mention of this type of skepticism in Ray’s article. When buyer sentiment can turn quickly negative when products “[fail] to wow” it is reasonable to call a market top, of sorts, for this category of products. Regardless of the size of Apple’s operations, and its deep pockets, it is not likely we will continue to see widely popular new product releases time after time after time when the only real incentive for buyers is to announce to their peers they can still afford to buy the newest pricey gadget.

The Canalys report also mentions a serious drop in sales for Samsung tablets. In my opinion there are legitimate reasons for this, not the least of which is a combination of Google’s decision to no longer support “early” versions of Android, and Samsung’s own poorly timed introduction of new tablets, too often to the detriment of customers unfortunate enough to buy a product about to be obsoleted. But I argue the luxury market condition also weigh heavily on Samsung’s results. By crafting product promotion around a “competition to be the best” assumption, Samsung rendered its own small form hardware devices fair game for buyers to cannibalize in their frenzy to consume an iPhone 6 or 6S.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2015 All Rights Reserved

28
Jan

Competitors exhibit a strong desire for some of the recent success of Microsoft’s Office 365

2-Color-Design-Hi-Res-100px-widthOn Wednesday, January 28, 2015, Amazon announced the launch of a new product: Amazon WorkMail. This new offer is targeted to enterprise businesses in need of email and calendar management offered on a subscription basis via a cloud service.

The announced features of Amazon WorkMail position the product as an alternative to Exchange, Microsoft’s backend for Outlook Web App (OWA), one of the core components of the Office 365 application suite. A lot of the editorial comment already published on this product makes additional mention of Google Apps for Business as a target. But Amazon WorkMail operates just fine with Microsoft Outlook as the client interface, something Google Apps for Business does not do.

With Amazon challenging Microsoft on the email and calendar front, and Facebook challenging Microsoft’s Yammer and, arguably, the rest of the collaboration features built into Office 365, it looks safe to say enterprise business consumers have increased their appetite for cloud SaaS productivity suites. Microsoft reported strong growth in the number of subscribers to Office 365 during its Q2 FY 2015 earnings conference call. Three big competitors are now on the playing field looking for some of the same action.

With consumers trending in this direction, the likelihood of competitors addressing product development from the perspective of “competition to be the best” certainly increases. As I have written on numerous occasions in this blog, Dr. Michael Porter argues this strategy is a mistake. I like Dr. Porter’s position. Readers interested in learning more about what he has to say on the topic may want to read a piece written by Joan Magretta back in 2011 for the Harvard Business Review titled Stop Competing to be the Best.

The cost of product development, together with a substantially narrower prospect horizon for multiple players marketing to, in theory, the same prospects (in actuality I would argue no two enterprise organizations are really the same, nor do they often exhibit the same needs), are two warning signs ISVs should take very seriously as they consider jumping into direct, brand to brand competition.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2015 All Rights Reserved

9
Jan

Intel establishes a position in the Android tablet market

2-Color-Design-Hi-Res-100px-widthOn February 19, 2002, Microsoft and Intel announced a “Wireless Development Initiative” at the 3GSM World Congress. The Congress, in 2002, was held in Cannes, France. Now, nearly 13 years later, Intel has established itself as one of the premier chip manufacturers for one segment of the mobile device market – tablet computers.

An Intel® Atom Z3580 CPU powers Dell’s new Venue 8 7000 tablet computer. This tablet also includes Intel’s RealSense R200 SnapShot camera. Readers can learn more about this new camera technology on Intel’s website. The operating system is Android 4.4 KitKat. This Dell tablet has an MSRP of $399.00, with 16GBs of storage, 2GBs or RAM and an 8.4″ OLED HD screen (2560×1600 resolution).

Earlier this week, the Wall Street Journal website published a review of the Dell tablet. The review was written by Joanna Stern. She really liked the device. Readers should note Stern has yet to come to the same conclusion with regard to Microsoft’s Surface 3, at least as I read her opinion. So winning a “like” from Stern is no small feat.

But the Dell tablet is not the only example of Intel’s penetration of this market segment. Lenovo is using another Intel Atom processor, the 3745, to power a tablet in the sub $200 MSRP range, the Lenovo TAB S8. The Lenovo tablet also runs on Android 4.4 KitKat O/S and offers an 8″ HD screen (1920×1200 resolution) and 2GBs of RAM. HP is also offering Android tablets powered by the same Intel Atom CPU technology.

Intel has provided incentives for its OEMs to produce devices running on Intel technology. Mention has been made of these incentives in the most recent Intel earnings conference call. Intel has also announced it will implement a new way of reporting on its business activity in this market. Mobile administration, marketing and sales costs will be rolled into its PC device business, as Aaron Tilley reported in Forbes last November, in an article titled Intel Is Combining Its PC And Mobile Units As The Lines Between The Two Blur.

In my opinion the negative analyst reaction to this announcement, and, in fact, the overall analyst impression of just how much effort Intel has invested in this activity, to date, is overstated. The fact is they are now winning at the effort, which, going forward, should be very good news.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2015 All Rights Reserved

6
Jan

Promotional content for tablets running on Intel processors still comes up short

2-Color-Design-Hi-Res-100px-widthIntel® announced the availability of a set of 17 new CORE microprocessors at the CES 2015 event this week. The specs on these CPUs are impressive. Perhaps Intel OEMs can accompany the debut of these new chips with substantially more effective marketing communications than has been the case in the past.

Readers may wonder about the gap. Just how has the editorial branding of tablets, smartphones and even laptops, notebooks and 2-in-1 small form factor mobile computing devices powered by Intel missed the mark? Where Intel’s technology has been used to power mobile computing devices running a Microsoft operating system, the promotional content presented to consumers, in my opinion, has been calibrated too tightly to speak to the needs of the low end of the market. This rigidity may be a reason for comparatively low sales volume for these devices. Windows tablets are something different from desktop PCs. Then again, they are also something very different from Android tablets

There are 2 big reasons why any consumer should seriously consider purchasing a tablet running Microsoft Windows 8.1 vs a comparably priced tablet from, for example, Samsung, running Google’s Android O/S:

  • There will certainly be an update path on the O/S, which is likely not going to be the case for the tablet produced by Samsung
  • The computing experience will be consistent with any desktop computer running Microsoft Windows 8.1. This cannot be said of the Samsung device. I own a Samsung Galaxy Note 2.1 10.1, which is less than 2 years old, but is, nevertheless, entirely obsolete. The device does not support a web browser useful for highlighting and copying text, ets. The $700, approx, paid for the Samsung product amounts to a throwaway

But the marketing communications hasn’t spoken to these points. Instead, the typical marketing communications campaign for a tablet powered by Intel, running Windows, is built around an effort to highlight features directly competitive with Android and iOS powered tablets. This is a big oversight and one which should be corrected as soon as possible, if this new line of CORE processors is to perform better for the OEMs making the investment required to build them.

After all, no one likes losing money, so if consumers are better informed before they proceed down a dead end as they will should they opt to purchase an Android tablet as I did, OEMs can rest assured their change in editorial direction will benefit everybody.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2015 All Rights Reserved

30
Dec

Don’t put too much stock in Amazon’s list of top selling computers for the 2014 holidays

2-Color-Design-Hi-Res-100px-widthOn the day after Christmas, December 26, 2014, Amazon published a press release titled Amazon Prime Experiences Another Record-Breaking Holiday Season. This press release included a listing of the most popular purchases for the holiday gift-buying season. In the computer category the winner was the Acer C720 Chromebook.

Some writers made a point of this press release. Brooke Crothers wrote a piece for Forbes titled Chromebooks From Acer, Asus, HP Top Holiday Sellers On Amazon.

But a mere 4 days after the publication of this list, on December 30, 2014, the top selling laptop was an Asus running Microsoft Windows.

So what is the significance, if any, of the Amazon statistics? Readers approaching personal computers as pure commodities (I admit to membership in this camp) may want to note the decline in street price represented by these transactions and consider the impact, if any, on adjacent hardware computing form factors (namely tablets). But even by this measure the Amazon statistics can be misleading: the best selling computer device on the Amazon web site on December 30, as of 5:30pm, was the Kindle HD tablet, with a price of $99.00. So, is it, therefore, safe to say the street price for personal computing devices is now firmly established below the $100 mark? Further, does this mean we are looking at a substantially higher volume of devices sold?

I don’t think so. The dollar impact of all of these comparatively inexpensive computing devices is not, in my opinion, likely to mean much of anything good for the bottom line of manufacturers. Commodities are all about big volumes and very low margins. So all of these sales may amount to more of a headache for Asus and its competitors, than anything else.

But what about the impact of the volume of operating system (O/S) licenses associated with these sales? The Amazon press release identifies Google’s Chrome O/S as the winner. So is it safe to say Microsoft took a hit from the season? I don’t think so. Chrome is a cloud O/S. If, for argument’s sake, I buy into the notion Chromebooks were the real best seller for this holiday season, then the impact of choice associated with cloud (and the possibility some of these new Chromebook owners will opt for a personal subscription to Office 365) is a big factor rendering any call too early to tell.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

5
Dec

Look for even more feature hype as ISVs present new features somehow failing to reach consumers as promised

In an earlier post to this blog, titled Enterprise IT ISVs Contributed to the Bloated Feature Set for PCs this writer published comments about how the very close relationship between Intel and Microsoft, which first began, one can argue, when IBM turned over the chip manufacturing pieces of the original PC to Intel, actually worked to the disadvantage of both parties. The outcome of this mismatch of efforts was, we argued, the Complex Instruction Set Computing (CISC) hardware architecture, which covered far too many bases to successfully compete with its Reduced Instruction Set Computing (RISC) rivals. The RISC machines won the contest. The mobile device world is filled with small, smart devices built to conform to RISC architecture principals.

Now, in late 2014, we think it would be better, (and consumers would, ultimately, benefit more) if hardware, firmware, and software all actually worked closer together. Unless/until these players warm up to each other, devices are simply not going to work as advertised. Marketing communications messaging about new features will simply devolve into just more hype.

Over the last several posts to this blog we’ve presented some examples we’ve found of this problem eating away at some of the opportunities computing hardware consumers may hope to enjoy from their purchase decisions:

  1. Solid State Drives, purchased after market, do not work well with Intel PCs running Microsoft’s Windows O/S.
  2. Android devices, at least from Samsung, can’t be upgraded to new versions (for example, a Samsung Galaxy Note 10.1, 2.1, requires a “root canal” if a consumer wants to avail of the new KitKat or Lollipop O/S, and chuck JellyBean).
  3. A new Apple iOS O/S is made available to older iPhones and iPads, but performs poorly once it is installed; consumers suspect they have been hoodwinked into downloading and installing the new O/S as a means of pushing a new hardware sale.
  4. Finally, Personal Assistants aren’t equipped to understand complex verbal linguistics, and fail to work in high demand situations. Bi-Directional voice conversations don’t sync well with hands free bluetooth audio in cars

This list could go on for quite a while.

In this writer’s opinion, ISVs will do better to either completely abandon the notion of an after-market for new hardware products, or work closer together, perhaps via standards committees, etc.

But there is nothing on the horizon pointing to either of these events happening any time soon. For now, consumers are simply better off researching very carefully each nuance of any planned changes before embarking on them.

Ultimately ISVs will likely suffer more than consumers from this condition.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

4
Dec

The holiday buying season, 2014, opens with promise for PC manufacturers and Microsoft

The Friday, November 28, 2014 online edition of Barrons included a story written by Tiernan Ray on the outlook for this year’s holiday buying season for consumer PCs. The title of the story is Intel, AMD: This Is the Beginning of the Consumer PC Recovery, Says Wells. The article is written around comments from an analyst at Wells Fargo, David Wong about the condition of the consumer PC market. Wong’s comments, in turn, are based on comments made by HP CEO Meg Whitman, which she voiced during an interview on CNBC. The CNBC interviewer was David Farber.

Whitman’s comments: “We saw pretty strong results from the consumer in the fourth quarter and again, I think it’s a refresh cycle” in my opinion are conservative. The key phrase, for me, is “refresh cycle”. But perhaps renewed consumer interest in PCs goes beyond merely refresh cycle replacement of existing equipment. After all, with laptops running Windows 8.1 available from HP at a cost of a mere $229.00, it’s difficult to see how some segment of the tablet market (not to mention the Chromebook market) won’t pause to think long and hard before plunking down cash on a device without a keyboard and a much higher retail price.

If this segment of the tablet market converts into buyers of ultra low cost PCs, then, in my opinion, we will be looking at something more than simply a refesh cycle. Bottom line: with an improved Microsoft Windows 8.1 O/S, a keyboard, reasonably light weight, and manageable dimensions, these low end laptops represent a much better deal than their tablet competition for consumers in need of a computing experience (as opposed to simply a home entertainment smart box).

Microsoft certainly stands to benefit from any uptick in the consumer segment. One can argue the cost of the Windows 8.1 O/S for OEMs marketing these ultra low cost PCs is likely to be a giveaway, but the opportunity opened for sales of Office 365 Personal, Office Pro Plus, etc. shouldn’t be discounted.

The whole Microsoft, Intel, AMD and hardware OEMs ecosystem looks pretty good, at least on Black Friday.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved