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

5
Feb

Investors buy up shares of prominent social media ISVs despite slowing user growth

2-Color-Design-Hi-Res-100px-widthPerhaps investors are changing their taste in prominent social media ISVs. Could the search for a telltale sign of promise have shifted from substantial growth in users to what may be a meaningful increase in revenue? From the after hours trading experience of LinkedIn and Twitter on February 5, 2015, it would appear to be the case.

Twitter and LinkedIn both reported solid revenue growth in the quarter ending December 31, 2014. But in the case of Twitter this plus was offset by anemic growth in the number of active users. Tiernan Ray wrote in Barrons: “[Twitter] said its monthly average users (MAUs) rose 20%, year over year, to 288 million from 284 million in the prior quarter. That was down from a rate of 23% growth in Q3. Of those MAUs, 80% were on mobile devices, about the same as the prior quarter.”

Hannah Kuchler of the Financial Times also remarked on management’s forward-looking guidance, “that was above the average analyst forecasts”.

Investors looked like they liked what they were hearing and reading. Twitter’s share price was up over 10% after hours.

LinkedIn shares were also up substantially, approximately 6% above the close. The quarterly earnings report included very similar highlights: substantial growth in revenue. But I found a different nugget: Maria Armental wrote in the Wall Street Journal:“The professional social network, which this month launched a localized version in simplified Chinese and traditional Chinese that has nearly doubled its Chinese member base to more than 8 million, said nearly 70% of total members come from outside the U.S.” Eight million users is certainly not a very big number for the country with the biggest population in the world. But LinkedIn is succeeding (as Apple is also succeeding, though in a much bigger way) in a market that continues to elude Microsoft and curiously enough Google (Android).

As a user I must attest to a much more promising experience from my efforts with Twitter than has been the case for how I have worked on my LinkedIn profile. I make a lot of use of Twitter’s Analytics. As my tweets have magnetized more impressions there has been, over time, a substantial increase in the page views of this blog. But perhaps the best result of all has been a growth in our following on Facebook. But I will write more on this point in a later post.

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

23
Jan

SQL remains a useful foundation for building tools to analyze data

2-Color-Design-Hi-Res-100px-widthA lot of editorial content about data, and tools built for data analysis, includes a Pavlov-like association between “big data” and “modern” computing. Relational database approaches to addressing data in a form built to accommodate analysis with Structured Query Language (SQL) tools are treated as a dated approach, somehow behind the times.

But much of this content fails to inform the people reading it about just how these “modern” computing systems actually work. For better or worse, Relational databases, which provide a structure (perhaps backbone would be a better word) for information, are, at some point in the process of analyzing electronic information (data), indispensable.

As a rule of thumb, the best examples of editorial content written on topics relevant to this subject, will incorporate some respect for SQL. David Chappell of Chappell & Associates has written a white paper for Microsoft, titled Introducing DocumentDB A NoSQL Database for Microsoft Azure, which, follows this route. Chappell writes: “To support applications with lots of users and lots of data, DocumentDB is designed to scale: a single database can be spread across many different machines . . . .DocumentDB also provides a query language based on SQL, along with the ability to run JavaScript code directly in the database as stored procedures and triggers with atomic transactions.”

From Chappell’s description it should be clear DocumentDB has been built to replicate some of the core planks of Relational Database Management Systems (RDBMS) best practices. These certainly include SQL tools along with stored procedures, and triggers. Enterprise consumers of RDBMS and/or NoSQL collections of data will approve of the end of Chappell’s sentence: “atomic transactions”. This phrase provides these readers with an important assurance: DocumentDB has been built with ACID “Atomicity, Consistency, Isolation and Durability” transaction process in mind. ACID data communications is the floor supporting today’s commercial quality electronic transactions. Without an ACID compliant structure on both sides of a commerce transaction, businesses are not likely to exchange information. The negative ramifications of such a condition are great, so “modern” best practices have been built with an assumption of ACID compliance as a given.

Unfortunately non relational database systems are challenged to demonstrate ACID compliance. This fact is not lost on Chappell. The white paper he has written for Microsoft presents a balance between big data, NoSQL and SQL and RDBMS concepts in a coherent presentation. In my opinion other technical writers would benefit from his approach. I suspect Chappell’s success at his effort is a direct result of his technical understanding of how these systems actually work.

Ira Michael Blonder

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

16
Jan

Is the response to Intel’s Q4 2014 Results overdone?

2-Color-Design-Hi-Res-100px-widthOn Thursday, January 15, 2015 Intel reported the results of its Q4 2014 business activity. In the aftermath of the report, which included conservative guidance for the coming business quarter below analyst estimates, analysts expressed skepticism.

I should also note the conference included details about the extent of the costs Intel continues to incur to enter the market for CPUs for mobile devices. Finally, rumors circulated about the possibility of Apple changing CPU architecture for its Mac PCs and laptops.

But is the analyst negativity overdone? In my opinion it is. Market entry is never an easy process, especially when the business attempting to enter a market is the largest manufacturer of PC computer CPUs, and the target market is already mature and dominated by other vendors with well received products (the ARM chip architecture and its licensees, including Qualcomm). So there is a cost associated with this entry, which, admittedly, Intel has been paying out for several quarters.

However, the Q4 2014 results included a beat on the profit number and an increase in gross margin. These numbers, of course, include the losses just mentioned. If Intel is not only able to carry the cost of mobile market entry, but to, at the same time, increase its overall profitability and still hit estimated sales targets, then why all the gloom? Perhaps the answer is Q4 2014 is behind us and we are already nearly a third of the way through the next coming quarter.

I am not interested in debating this argument. Nor am I interested in analyzing the Apple rumors. What I am interested in doing is merely pointing to a very positive reception for one of the new Android tablets on the market powered by Intel’s Atom processor and the new Broadwell chip set. The tablet is manufactured by Dell, the Venue 8 7000. No less a fierce Intel naysayer than Joanna Stern of the Wall Street Journal wrote a very positive review of the device, in sharp contrast to reviews she published earlier about Microsoft’s Surface tablets.

The value of positive consumer press about these devices should not be underestimated. Stern’s review may mark a change in sentiment for precisely the right group of critics to influence affluent consumers to think hard about just which tablet they ought to buy next.

Ira Michael Blonder

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

15
Jan

Just how accurate are advertising predictions produced by machine learning systems?

2-Color-Design-Hi-Res-100px-widthThanks to Mikio Braun, who on Thursday, January 2015 published an article on the InfoQ website. Braun’s article includes mention of a Google acknowledgement about the role played by machine learning (also known, at least in part, as data processing by algorithms) as a predictive tool in its ad placement technology for its click ad business. Readers interested in this topic should read Braun’s article, which is titled Google on the Technical Debt of Machine Learning.

I have written about the inaccuracy of click advertising in earlier posts to this blog. To quickly summarize my opinion on this topic, I found the systemic tendency towards poor ad placement to be especially difficult to overcome when the items to be promoted provide subjective, intangible benefit. So gaining a perspective on just how much of the ad placement technology behind Google Adwords and, in all likelihood, its direct competitors (principally Microsoft’s Bing advertising system), as Braun points out in this short article is very helpful.

What is also very helpful in Braun’s article is the manner in which the Google researchers (Braun’s article is really a news report on a presentation at a recent conference event held in Montreal, the Software Engineering for Machine Learning workshop, part of the annual Neural Information Processing Systems, NIPS, conference held in Montreal) shed light on the precariousness of proper performance for machine learning systems, in this (online advertising) context, given the effect they have on other related computer processes. These researchers make clear how the basic assumptions powering Neural Networks can actually adversely affect these siblings, and, thereby, produce erroneous results along with very little value to people depending on them. Readers should note this conclusion is my own, and not a conclusion expressed anywhere in Braun’s article.

From Braun’s article, and the technical précis of a research paper on the algorithmic process behind machine learning, which was also published by Google researchers, online advertisers should be careful to set realistic expectations about paid placements. Perhaps it will make sense to horizontally structure these campaigns, with a panoramic reach wherever possible, if they are to produce any meaningful results.

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