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

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

24
Nov

Consumers should not be expected to deliver repeat buying opportunities for mobile operating systems in process

Android may be the leader in the mobile operating system popularity contest, but it shouldn’t take rooting a tablet or smart phone to migrate from JellyBean to KitKat or, most recently, Lollipop. Nevertheless, the only process this writer can find to upgrade a Samsung Galaxy Note 10.1 2.1 from Android 4.1.2, JellyBean to KitKat is to root the device.

Perhaps it would help readers to better understand the point by mentioning why an upgrade makes sense for this Samsung device. The multi-tasking capabilities available with JellyBean pale in comparison with the advances Android has made and included with KitKat. Why should consumers have to pay for improvements to features already available in an older version of an operating system?

Apple, in contrast, consistently offers a free-of-charge upgrade to the latest version of their iOS operating system. Not all of these upgrades go smoothly, but, if nothing else, Apple iPhone and iPad customers are relieved of the necessity of simply “repeat buying” a tablet or a smart phone they already own, for what amounts to no more than an enhancement to features already offered to them.

If one follows the reasoning here it should be plausible to attribute some of the pace of deceleration in consumer appetite for smart phones and tablets to a pervasive dissatisfaction with “half baked” feature sets. Samsung, to cite merely one Android OEM, has recently reported on this deceleration, and received a lot of investor punishment as the result. But as long as consumers have no option but to engage in a complex procedure to decouple a piece of hardware from its original operating system, it’s very likely consumer dissatisfaction will continue to mount and sales will continue to plummet.

This is regrettable. In fact, the multi-tasking improvement in Android KitKat is substantial and likely to be well received by even average consumers of these devices. In turn, should these upgrades be made available without additional charge to existing customers, sales should pick up. Android OEMs will realize the financial benefit. Enterprise customers, with a clear need for multi-tasking will be more likely to purchase the hardware, rounding off the benefit for the whole Android ecosystem.

The message for early stage ISVs is to think long and hard about the upgrade path consumers will have to traverse as new features are rolled into existing, core, products. In this writer’s opinion, “Ready, Fire, Aim” cannot be used as an excuse to justify raising consumers costs when limitations with advertised features are merely corrected.

Ira Michael Blonder

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

14
Nov

Any meaningful feature gap between high end and low end smartphones has been obliterated

Consumer markets for smartphones no longer present any gap, whatsoever, between high end and low end entrants as regard high value features. With this gap obliterated, industry players will do well to implement product marketing strategies with a proven effectiveness in pure commodity markets or else risk extinction. This means product marketers should emphasize methods of lowering the cost of manufacture, and secondary markets to prop up revenue expectations while closely scrutinizing new model planning.

Here’s a case in point. We just purchased, outright, an LG Optimus L90 Smartphone from our wireless data provider, T-Mobile. Our total cost to acquire this device amounted to a one-time charge of $99.99. We should also note we maintain 2 Nokia Lumia 925s, which we purchased from T-Mobile at a cost of approximately $600.00, each. We are still paying, monthly, for each of the Lumias and will likely continue to do so for at least another few months.

But with an Android KitKat O/S, and a very extensive set of app options, we can’t find anything we’ve given away by opting to purchase the LG-D415 instead of a new Lumia, or even an iPhone 6. Sure the Lumia and the iPhone 6 offer many more powerful features than our LG Optimus L90, but we have no need for them. In this writer’s opinion, when features reach a usefulness plateau as they have in the smartphone market, consumers have zero incentive to migrate up the ladder to more expensive versions of the same commodity.

Leading manufacturers of smartphones are already exhibiting a set of strategic moves befitting general agreement about the nature of the market as, in late 2014, entirely commodity driven. Accordingly, Apple is talking about producing a gold version of its iPhone 6, which is already available for custom monogramming. This move makes sense for a manufacturer with a leading product whose principal attractiveness is its position as a status symbol for a highly concentrated set of consumers habituated on only buying the leading product in the category.

At the low end manufacturers like Samsung are feeling the pain as competitors with a substantially lower cost of manufacturing, for example, Xiaomi, seize market share. For this segment of the market, app stores look to be an oasis in a profit desert. No wonder Microsoft is racing to win a place on the radar of app developers as its best hope to capitalize on the smartphone market.

Look for further consolidation in this market as manufacturers either drop out, or consumer rivals.

Ira Michael Blonder

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

20
Oct

When features reverberate from product to product, consumers are likely to become indifferent while markets take the on ramp to commodities

Over the last year, or more, the same computing hardware feature set — very thin portable computers with ultra sharp displays, light weight, and rapid boot times — has reverberated across devices from different manufacturers targeted to the same market. This type of condition is a harbinger of product marketing producing commodities, leaving little room for brand differentiation. It’s time product marketers did their homework. Consumers are not likely to be lulled into complacency and just continue buying new versions of devices they already own.

Apple’s recent debut of the “new” iPad Air 2 is a case in point. The web site promotion for this device emphasizes features already claimed by Apple competitors, principally Microsoft, for its Surface Pro 3 2-in-1 computing devices.

But if I’m someone who recently bought a Surface Pro 3, does Apple product marketing really believe I’m going to chuck my investment of somewhere between $1 and $2K, or more, to buy yet another product claiming to be the thinnest device ever? If they do, I’m afraid they’re not likely to successfully achieve their objective. As Dr. Michael Porter has illustrated, competition to be the best is a comparatively low profit, zero sum game.

What the Apple iPad Air 2, and Microsoft Surface Pro 3 MARCOM illustrates is a disconnect between personal computer product marketing and its targeted customer base. To be fair, the video included with Microsoft’s Surface Pro 3 debut did include several portraits of how customers are actually using the first and second generations of Microsoft’s Surface. Post Surface Pro 3 launch, Apple purchased a series of online ads, which were displayed on the New York Times web site, providing much of the same information about organizations using iPad tablets. But connecting with your customers and coming to market with inherently unique products, which, in turn, deserve a fitting MARCOM statement conveying what’s unique, and different about them, is something altogether separate from a set of portraits of how customers are using your light, very bright, and thin ultra portable personal computers.

Actually, connecting with customers, as a short video presentation titled Managing the Uncertainty of Innovation illustrates, is the kind of high-value activity early stage ISVs can and should use to mine for truly unique product notions.

No doubt the iPad Air 2 has some truly unique capabilities, which can be compelling for a specific audience/market, but the current promotion about the product isn’t getting this message across. The same opinion covers current promotional efforts for the Surface Pro 3, and even very high ticket software — Microsoft’s Delve, IBM’s Watson, and Salesforce.com’s entry into the same space.

Bottom line: “the same space” is a mirage. No two “spaces” are ever the same. Product marketers need to find out just what “space” they want to target and then go for it.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 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. 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

14
Aug

BlackBerry BES wins at U.S. Defense Information Services Agency

On August 6, 2014, Blackberry announced the U.S. Defense Information Services Agency (DISA) had approved its Secure Workspace for iOS(R) and Android(tm) solution at the level of DISA’s Security Technical Implementation Guide (STIG).

In this writer’s opinion this win is notable for three reasons:

  1. The win demonstrates the strength of an entrenched device and its supporting platform for enterprise businesses and comparably sized organizations (such as DISA) in the public and not-for-profit sectors
  2. Despite BlackBerry’s position in the “Niche” quadrant of Gartner’s Magic Quadrant for Mobile Device Management (MDM), DISA opted to approve this solution, apparently unconcerned about the position of this platform, relative to its competitors in the market place. DISA’s decision may include important clues about how U.S. Federal agencies may buy technology solutions in the future
  3. The win is, perhaps, a blow to Samsung’s Knox Enterprise Mobility Management. Given the role Google apparently intends Knox to play in its efforts to repackage Android for enterprise consumers, this win for BlackBerry may have implications across a wider range of enterprise opportunities

1) It is very difficult to unseat an entrenched incumbent

The BlackBerry press release about this win does not include specific detail about how DISA decided to approve BlackBerry’s solution, but it is likely safe to surmise the large installed base of BlackBerry 10 mobile phones played some kind of role. On the other hand, the press release does mention BlackBerry’s Global Enterprise Services group. So the win may be emblematic of the quality of customer account management this group has achieved as it has worked with DISA

2) The Magic Quadrant May Not Be What It Seems When It Comes Down to Costs

Enterprise computing is highly complex, with a rich set of influential factors. As mentioned above, without further detail, it is no more than pure conjecture to posit answers to questions as to how DISA went about making its decision to approve BlackBerry’s solution. But it is likely cost had something to do with it, as is often the case. Perhaps the cost of implementing a best-of-breed solution for Mobile Device Management (MDM) far exceeded the cost of consulting with BlackBerry to bring its solution up to compliance with STIG. Bottom line: this win demonstrates how vulnerable an argument built on no more than authority (meaning pointing to the position of a couple of products in a market study like Gartner’s Magic Quadrant) can be when long standing customers weigh the pros and cons of making a platform change and funds are tightly controlled.

3) Samsung’s Knox is, perhaps, not as formidable as its namesake

As written in several older posts to this blog, Google’s I/O event for 2014 included the presentation of what this writer took to be a serious effort to repackage Android into a platform more worthy of serious consideration by enterprise IT organizations. A segment of the enterprise presentation at this event included an announcement of Samsung’s decision to make Knox available to the entire Android developer community. So this win by BlackBerry may put a damper on the enthusiasm driving this enterprise IT initiative for the Android developer community.

Ira Michael Blonder

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

15
Jul

Is Apple Poised to Fare Best on the Smart Phone Plateau?

Samsung’s earnings guidance for the second quarter, 2014 generally disappointed analysts and stimulated some broad downward revisions in likely global market consumption of high end smart phones and tablets. Some of the downward direction indicated by Samsung’s guidance was also attributed to stiffer competition for the low end of these markets from Chinese manufacturers.

Regardless of how one reacts to this guidance announcement, it should be clear global market appetite for smart phones, and, perhaps, tablets, has been generally satisfied. In the opinion of this writer, the slowdown can be attributed to feature exhaustion for the current form factor and chip sets. Consumers have bought up what they need. When hardware OEMs and their ISV partners finally come to market with solutions for the remaining areas of burning need — richer voice feature sets enabling more utility for mobile consumers, and true integration within mobile transportation beyond a peripheral to be plugged in, to name but two of these — then high velocity sales can be assumed to occur.

But for now these features are not available. Apple looks poised to perform the best in these kind of conditions. iOS devices sit at the very top of the smart phone heap. As many analysts have written, despite a much smaller market share than the combined reach of Google’s Android partners, including Samsung, Apple just makes much more money in the market and enjoys much higher margins than its competitors.

Two recent hires: Angela Ahrendts (late of Burberrys) to head the Apple Store operation, and Patrick Pruniaux (formerly the Vice President of sales at Tag Heuer) provide solid support for the notion Cupertino plans on protecting its position as the name brand at the very top of the smart phone market.

Once a commodity technology market plateaus, in this writer’s opinion, brand recognition, price, and reputation all trump technical features for the top cut of consumers. Apple does not look to be giving back any territory in this arena anytime soon.

On the other hand, Microsoft has demonstrated some of the voice features likely to stir up consumer demand (“Cortana”). But the expected release of Windows Phone 8.1 has gotten off track, so consumers have yet to experience, first hand, the improvements Cortana appears capable of delivering. In the meantime, other analysts claim Windows Phone is losing market share globally. As to the Surface Pro 3, this device is positioned as a better solution for the laptop market, rather than a tablet killer.

Ira Michael Blonder

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

11
Jul

Android’s New Enterprise Features Aren’t Likely to Overtake Microsoft Office Anytime Soon

Sundar Pichai presented the latest innovations from Android targeted to enterprise IT and business consumers during this year’s I/O Developer conference. Samsung’s Knox is one of the two anchor tenants of this latest tech strip mall, with Quickoffice (ostensibly a seamless way for users to “natively” edit Office documents without a file conversion) providing the big box store magnetism.

The big neon sign pointing drivers to this new shopping paradise was Pichai’s big claim of much higher levels of Android penetration of enterprise business markets–58% of the Fortune 500. The shock value of this statistic is, of course, diluted by what Pichai did Not report, meaning he did not answer the following question: “Is this penetration contributing to these same enterprise consumers deciding to drop other methods of processing computing tasks?”

While we don’t know the right answer to this question, the likely choice would be “no”. Technology consumers from enterprise business and comparably sized organizations in the public and not-for-profit sectors are notorious for having an interest in consuming several different solutions for the same problem, albeit at different levels of intensity. Sure, 58% of the Fortune 500 uses Google Docs, Drive, etc. But they are also using Box, DropBox, SAP, Oracle, and everything else out there with any kind of pervasive market credibility as a solution worth having.

Missing from the above list, of course, is Microsoft® Office. This writer omitted including Office in the list for one big reason. It is highly likely that 100% of the Fortune 500 uses this one solution, and with much greater frequency than any of the others.

So, with all due respect to Android, 58% is “chump change”. When we factor in the unique features of Office 365, which is reputed to be Microsoft’s fastest selling product of all time, the significance of Android’s latest moves diminish further. There is simply nothing comparable to SharePoint, and SharePoint Online in the Google set of enterprise applications. Any highly regulated business can still save a bundle by customizing SharePoint components into a satisfactory records management, or enterprise document management solution, complete with analytics.

Should Google opt to offer something directly competitive to SharePoint (this writer sees little incentive for them to do so) the situation may stay, as is, for quite some time to come.

Ira Michael Blonder

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

23
Jun

Why Isn’t Amazon Instant Video Available on Samsung’s Galaxy Note 2.1?

On Wednesday, June 18, 2014, Amazon has scheduled a new product announcement. A lot of the talk, online, is about the likelihood this new product will prove to be an Amazon smart phone. But, of all this talk, only one writer, David Streitfield, of the New York Times, in an article titled With an Amazon Smartphone, the Retailer Seeks a Tether to Consumers appears to appreciate the urgency, for Amazon, to debut yet another smart phone. Mr. Streitfield alludes to the inevitability of Amazon taking a very late step into a very mature smartphone market: “Now Amazon is giving this brutal business a shot. On the one hand, analysts say, it has no choice. On the other, the rewards could be tremendous.”

Actually, perhaps it is more accurate to say Mr. Streitfield reports on some analysts who actually appreciate why Amazon actually has no choice but to take this step. But why is Amazon forced into this move? Unfortunately, Mr. Streitfield provides no further detail on this point, beyond painting a picture of a likely shrinking market for the various items in its massive inventory and offering to consumers, if search engines, like Google, continue to roll in further enhancements to their location based search features.

This writer caught more of a tangible sense of why Amazon might need to take this step when he attempted to use his Amazon Prime account to watch “Amazon Prime” instant videos on his Samsung Galaxy Note 10.1, 2.1, and/or his Surface 2 tablets. Neither device would run the videos. This writer experienced no problems running the instant videos on a desktop PC, but the tablets would not work,

A discouraging message came up when he tried to play an Instant Video on the Samsung Galaxy Note 10.1 2.1. The message amounted to a warning the video would not be able to be played on this device, so try playing it on a PC.

With the Android O/S deeply entrenched in the position of the most popular smart phone (and tablet) O/S, by far, Amazon cannot afford, much longer, not to have a viewer of its own for this market. If an Amazon smart phone is an effort to solve this big problem, and, at the same time, a reliable player for Android and Windows 8.1 Mobile Devices is also announced, then the decision will likely be the right one for Amazon to have made.

But the question still remains — why do is there no player for these other mobile device O/Ss? Does Amazon’s position in the Instant Video market, as a competitor to Google Play, and Samsung’s own online entertainment marketing effort, have anything to do with it?

The answer to this question is a likely “yes.” If Amazon implemented the same bully negotiating style it called on for its issues with Hatchette, with Google Play, Samsung, and even the Windows Store, the the lack of a viewer on any of these platforms makes sense.

Ira Michael Blonder

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