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 (http://blogs NULL.barrons NULL.com/techtraderdaily/2015/02/02/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

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 (http://news NULL.microsoft NULL.com/2002/02/19/microsoft-and-intel-announce-wireless-development-initiative/). 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 (http://iq NULL.intel NULL.com/realsense-3d-camera-technology-help-people-cant-see/?wapkw=intel+realsense+3d+camera). 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 (http://shop NULL.lenovo NULL.com/us/en/tablets/lenovo/s-series/s8/?sb=:000001C9:00012926:). 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 (http://www NULL.forbes NULL.com/sites/aarontilley/2014/11/18/intel-merge-pc-mobile-units/).

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 (http://newsroom NULL.intel NULL.com/community/intel_newsroom/blog/2015/01/05/the-5th-generation-intel-core-family-of-processors-arrive-to-transform-computing-experiences-cherry-trail-shipping) 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

2
Oct

Has Samsung fallen victim to its own product marketing strategy?

Once the leading manufacturer of smart mobile devices (based on volume of units sold), Samsung looks to have fallen on some tough times. But is the stall in its revenue momentum the result of its own product marketing strategy? In this writer’s opinion the answer is yes.

Lots of analysts follow Samsung. The trend in market commentary about this manufacturer is to 1) remark on deceleration in global sales of Galaxy smart phones, and tablets, and 2) to posit notions as to how Samsung is attempting to remedy the slower sales growth based upon public announcements of changes. The latest example of 2) is an article written by Ming-Jeong Lee, which appeared in the online Wall Street Journal on September 24, 2014. The title of this piece is Samsung Drains Software Power from Mobile (http://blogs NULL.wsj NULL.com/digits/2014/09/24/samsung-drains-software-power-from-mobile/?mod=ST1). Lee interprets Samsung’s decision “to move a number of software engineers out of its mobile unit to other parts of the company” as an indicator its decision to retreat, to some extent, from the competition for smart mobile devices, presumably based on the above mentioned decelerating revenue condition.

But readers may want to consider some other points about Samsung’s decision to move software personnel elsewhere. We maintain a Samsung Galaxy Note 2.1, 10.1. We find the software to be very much below our standard for suitable usability. There are many annoying features of the software, too many, in fact, to mention here. So from our perspective, this decision may actually be good news, and a pointer to Samsung finally deciding to make some long overdue personnel changes in a team responsible for a large segment of how consumers actually engage with Samsung tablets and smart phones.

This writer points to other reasons for Samsung’s current slower pace of revenue growth for these products. The comparatively clumsy user interface (which is also cluttered with overlapping features) pales as a point of weakness when compared to Samsung’s hyper pace of introducing new product, and, thereby, rendering products already consumed obsolete. Again we point back to our own purchase and must note strong dissatisfaction with the paltry resale value of our tablet, should we decide to sell it, and the lack of new software enhancements to the user interface, etc.

We don’t think it’s credible to assume mid market consumers of smart mobile devices will just continue to purchase new models, year after year. Granted, Samsung is not the only advocate this tacit product marketing assumption to cannibalize a current customer base for new product sales. Android certainly has a seat at this table as, this writer would argue, does Apple. Nevertheless, Samsung may have a highly valuable opportunity to recharge revenue growth should they 1) clean up the clunky and ineffective user interface (perhaps when they launch Tizen, which should be a free-of-charge upgrade for any/all existing Samsung customers) and, 2) come to market (after serious premarketing) with a set of new features consumers truly find useful.

Ira Michael Blonder

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

9
Jun

Are Product Marketers Changing Direction on Tablet Computers?

Anyone watching the webcast of Microsoft’s debut, late in May, 2014, of the Surface 3 Pro computer would think tablet consumers are really after more traditional computers, but with an enhanced set of features for mobile work. But this view isn’t consistent with the opinion of some analysts, at least up to now.

In a review of this new hardware device from Microsoft®, titled Microsoft Surface Pro 3: A Tablet That Desperately Wants to be a Laptop (http://online NULL.wsj NULL.com/articles/microsoft-surface-pro-3-a-tablet-that-desperately-wants-to-be-a-laptop-1401209377?KEYWORDS=surface+pro+3), which was written by Joanna Stern, and published on the Wall Street Journal website on May 27, 2014, Ms. Stern expresses her opinion on tablet computer product marketing. Pointing to the Apple iPad, she notes: “Microsoft is clearly going after its original vision of the tablet here (stylus and all), rather than Apple’s more limited—but more successful—approach”.

While her review does not include a clear statement about tablets, and why they should provide consumers with a superior electronic reading experience, and a great method of viewing movies, she does state: “You can’t hold the Surface Pro 3 for hours, reading in bed. Its weight and cumbersome size wear out your arm, and the back corners of the tablet can get quite warm.” So, perhaps it’s safe to surmise she’s content with the tablet benefits statement Panos Panay summed up at the Surface Pro 3 debut – tablets are great for reading ebooks and great for watching movies, but not much more.

But, if these are the sole benefits consumers realize from their tablet computer purchases, manufacturers should plan on selling fewer of them, going forward. Once again, anyone following IDC’s periodic forecast for global tablet sales will note a recent revision downwards: IDC Lowers Global Tablet Shipment Outlook by 5.9% (http://online NULL.wsj NULL.com/articles/idc-lowers-global-tablet-shipment-outlook-by-5-9-1401375094).

Since there are few PC manufacturers who would be pleased about the future prospects of a progressively diminishing world wide market for hardware, like the IDC report on tablets presents, Microsoft’s product strategy for the Surface Pro 3 may make a lot of sense.

In fact, anyone reviewing the press releases coming out of Apple’s world wide Developers’ Conference, 2014, will note efforts to closer align Mac OS X Yosemite with the iOS experience, kind of like the Surface product strategy, but in reverse.

As to the remaining major player in the tablet O/S arena, Android, clearly Chrome is Chrome, is it not? Whether one consumes the Chrome computing experience on a Chromebook, or on a Nexus tablet, or even a Samsung smart phone (but Tizen may be just around the corner), the bottom line is still the same — a lot of Apps and a set of variants on the same browser (Chrome).

So, in my opinion, Tablet product marketers are looking for opportunities to win market share from laptops, and vice versa. If they cannot succeed in this effort, there really isn’t much of a future for them, unless they plan on going head-to-head with the television set.

Disclaimer: I’m long Microsoft and do not have a position in either Google or Apple

Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)

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