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

12
Jan

Another reason why the Android segment of BYOD is problematic for enterprise IT organizations

2-Color-Design-Hi-Res-100px-widthThe Wall Street Journal published an article on what appears to be a decision made by Google not to support so-called older browsers (Jelly Bean 4.3 and earlier) for Android smartphones. But Android Jelly Bean 4.3 appeared as recently as June, 2013 (less than 2 years ago). So it may be safe to assume enterprise IT organizations are about to experience another big headache as they struggle to support BYOD policies permitting personnel to bring Android smartphones (and I would add tablets) into the enterprise. Some of these devices will certainly appear current (merely half way through a typical 3 year use cycle). But permitting them for use inside corporate firewalls might be a big problem.

This article is written by Danny Yadron. The article was published on Monday, January 12, 2015 and is titled Google Isn’t Fixing Some Old Android Bugs.

It is also likely consumers wouldn’t have a problem with Google’s decision, if the devices in question were truly older, meaning the first Android smartphone which appeared on the market in 2008, and its siblings. If the set of devices was merely limited to smartphones from 2008 to, say, 2010 (a full 5 years back), then Yadron’s reference to what he contends is the same posture Microsoft adopted with regards to its Windows XP Operating System, when it decided to stop supporting the product for production computing, would make sense.

But, in my opinion, Yadron’s statement is not tenable. “The security blind spot illustrates the challenges companies face as they try to move customers onto newer products and focus security resources on patching more-current software. Microsoft . . . applied the same reasoning when it stopped supporting Windows XP, first released in 2001, in April [2014].”

When we make reference to the Windows XP operating system, we are talking about software on the market for almost fourteen years. Sure the structure of the two announcements may be the same, but to equate a decision about products purchased as recently as 18 months ago to a decision about products purchased almost 156 months ago (nearly 10 times older) doesn’t make sense.

There is really very little similarity between the stances of these two big ISVs. Enterprise IT organizations are not likely to be fooled into thinking the two statements are the same. When they face an inevitable decision about whether to prohibit the use of mobile computing devices powered by Android Jelly Bean 4.3, on-premises, or not, they are not likely to enjoy their position as an unfortunate “bad guy”/spoiler for their community of computing users. Nevertheless, the best of them will likely have to prohibit these devices (which some personnel may still be paying off) if they are to preserve the comparative security of their internal corporate networks.

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

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

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

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

3
Sep

Even Apple Listens When Microsoft Debuts New Themes for Product Promotion

For several days in August, 2014, the online New York Times web site ran a front page advertisement for Apple’s iPad tablet computer. This ad presented readers with a short success story illustrating how tablet consumers have been using the iPad for some real work, and not the leisure activity more often used for a promotional opportunity like this one.

The same type of marketing communications content filled up the middle portion of Microsoft’s online, audio and video webcast debut of the Surface Pro 3, which was originally published on May 20, 2014.

But Apple’s attention to Microsoft’s style of product promotion for the Surface Pro 3 evidently didn’t just stop with providing its audience of potential consumers with its own examples of business applications for its tablet computers. If rumors about Apple’s product development plans can be taken as a reliable indicator of where the iPad is headed, this attention appears to have also permeated the actual design of the new iPad. On August 26, 2014, Daisuke Wakabayashi published an article for the online Wall Street Journal titled Larger iPad Heralds Blurring Among Apple Devices.

With a rumored screen size of 12.9 inches, the new iPad will be larger, by nearly one inch, than the Surface Pro 3 (which has a 12 inch screen). But of even more importance, Wakabayashi’s contention about the new iPad and a “blurring among Apple Devices”, if it proves accurate, places Apple in lockstep with Microsoft along a path of positioning its tablet as a laptop competitor.

If readers remain skeptical about Apple following Microsoft’s lead, it may be helpful to reflect on what segment of the consumer market for tablets likely remains “untouched”, despite nearly 4 years of heavy marketing of this product. The remaining segment at the top end, one can argue, is largely made up of enterprise business consumers, and their siblings in the public and not for profit sectors. For these markets, the entertainment features of tablets are “nice to have”, but not “mission-critical” capabilities. Given Microsoft’s position in these consumer markets, it makes complete sense for Redmond to be leading Cupertino around the neighborhood.

Ira Michael Blonder

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

28
Aug

Despite diminishing consumer interest in tablets across global markets, Intel remains focused on capturing more share

Anyone paying a recent visit to Intel’s homepage will note the promotional emphasis on tablet computers built on Intel’s processors. Despite holding the position of an “also ran” in the processor market for tablets, Intel still stands to benefit should it successfully capture share ion this market from its competitors (Qualcomm, NVIDIA, ARM licensees, etc). On July 24, 2014 IDC reported an 11% year-over-year growth, for merely the second quarter of 2014, in the global market for tablet computers to 49.3 million units. So there is clearly an opportunity here for Intel.

Intel’s path forward in the tablet processor market is more a two lane highway than a country walkway. One lane remains consumers after Windows 8.1 tablets, while the other lane is occupied with Android tablet OEMs dissatisfied with ARM architecture and/or how this processor platform has been implemented by Qualcomm, NVIDIA, etc. Earlier this year Microsoft was reported to be working with Qualcomm on a “Surface Mini”, but on May 20, 2014 Bloomberg published an article by Dina Bass and Ian King, titled Microsoft Said to Back Off Plans to Debut Smaller Surface, which reported this project had been put on the shelf. Intel processors power the new Surface Pro product line. Each of Microsoft’s OEMs have come to market with Windows Tablets. In each case Intel chips power these devices.

But the Android lane is presently wide open. The success of Intel’s strategy for the global market for Android tablets is, to some extent, dependent on its ability to convince Android firmware developers to switch over to Intel chip architecture.

Intel’s tactics align nicely with Microsoft’s efforts in this market. We wrote earlier in this blog about a partnership between Microsoft’s MSDN business and Xamarin. Xamarin’s counterpart in the Intel version of this tactic is Unity Technologies. Tellingly, readers visiting Unity’s website will note the same benefit statement promoted by Xamarin, essentially “write code once for any platform you’re after”. But unlike Xamarin, this benefit statement is not broadly applied across the whole range of software running on iOS, Android, or Windows, but specifically at game developers (who happen to be, one can argue, a big driver of consumer appetite for tablets).

It will certainly be interesting to measure Intel’s success, over time, in this effort.

Ira Michael Blonder

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

1
Aug

Writing About Better PCs While Focusing on Macs

In a manner emblematic of the times, on Saturday, July 26, 2014 Barrons published an article written by Alexander Eule on the topic of the resurgence analysts have recently noted in consumer interest in PCs. But, with the exception of a paragraph or two about Intel, and the evident success of its 3 year old objective of re-architecting CPUs for thinner, lighter laptops, the rest of the article is entirely about Apple iPads and Macs.

This article, titled What Comes Next in the Post-PC World? Better PCs, begins with some remarks about the troublesome sales plateau Apple’s iPad has apparently reached, at least according to its latest quarterly earnings report. Eule attributes diminishing consumer interest in iPads to “tablets [getting] squeezed out of the picture”. He suggests Apple may be looking to “cannibalize” its own position in the tablet market by introducing a larger iPhone in the fall.

But, despite quoting Gartner analyst Mikako Kitagawa, who reported (within a quarterly review of global PC sales) “‘[t]he availability of affordable thin and light notebooks have drawn consumer attention'” along with, perhaps, renewed interest in touch O/Ss: “‘Touch-enabled devices are also widely available with decreasing price premiums compared to a year ago'”, there is absolutely no mention, whatsoever, of Microsoft’s Surface 3 hybrid tablet/laptop.

Given Kitagawa’s comments, and Eule’s report on the success of Intel’s project to re-architect its PC CPUs for thinner, lighter, battery-powered devices, omitting mention of the Surface 3 is at least curious, and maybe a lot more.

This writer visited a local BestBuy in the metropolitan New York market recently and spoke directly with floor sales staff about the Surface 3 and the level of customer interest in the product. What he heard was very positive. While he was in the store he noted a lot of floor traffic interest in the Surface pavilion, as well as a lot of effort by sales staff to point prospects to these very thin, but very powerful computing devices.

When these same sales personnel were asked to characterize the type of customer moving to one of the Surface Pro 3 models, there was no mention of Macbook Air converts. Rather the Surface Pro 3 appears to be taking market share from laptops.

Ira Michael Blonder

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