Category: mobile

Breaking out of the gilded cage – Microsoft’s challenge with Windows

How can Microsoft adapt to a market that’s shifting away from the products which have delivered spectacular profits over the last thirty years?

Update: With the announcement that Steve Ballmer will be stepping down as Microsoft CEO, the future direction of the company now becomes the biggest challenge for his replacement.

Over the last three weeks the news for the personal computer industry has not been good. How does Microsoft, the business that leads the sector, move on from the product which has been its mainstay?

Three stories in the last three weeks have shown how dire the situation is for personal computers, Windows and Microsoft.

Consulting firm IDC’s report that global PC sales had dropped a stunning 14% was a clear signal the PC era is ending.

A Gartner report two weeks ago warned that Microsoft faces a slide into irrelevance as Android device sales dwarf Windows’ numbers and Apple sales catch up with PCs.

Industry commentators Asymco made similar observations about the state of the PC industry noting that Apple takes 45% of all profits from an industry that is in decline.

In the past Microsoft has responded quickly to industry threats, one of the great management feats of the 20th Century was Bill Gates’ turning the company around to meet the challenges of Netscape and the newly popular internet.

So how can Microsoft meet the challenges of today’s much more competitive world, while protecting their impressive revenues and profits?

Replace the management

Steve Ballmer was employee number 30 at Microsoft having been hired in 1980. Since his appointment as CEO in 2000 the company’s stock price has wallowed.

Regardless of Ballmer’s performance, 13 years is a long tenure for a CEO in an industry that has radically changed in the last decade. A new perspective in the executive suite may well help the company leverage its strengths and weaknesses.

Microsoft’s management problems shouldn’t just be blamed on Ballmer however, a stunning Vanity Fair profile of the company last year blamed human resources policies, specifically ‘stack ranking’ employees, for poor performance.

Overhauling the company’s notoriously siloed management would give Microsoft much more flexibility in meeting the cloud and mobile challenges to its business.

Ditch Windows

At the core of Microsoft’s success is the Windows operating system which in 2012 delivered a quarter of the company’s revenue but has reported no growth for two years in a stagnating PC market.

It is still a cash rich business though and as a stand alone entity, the operating system division could still be an attractive private equity investment.

The story of Michael Dell’s attempt to take his company private is instructive as investment companies fight for a stake in a business with a turnover is less than Microsoft’s Windows division and far less profits.

Double down on Windows

The counter view to floating the Windows division is to double down and concentrate on the company’s core business. While the PC industry is fading, the need for embedded systems in machines is growing.

Microsoft though hasn’t executed well with non-PC operating systems – the continued failure of tablet versions of Windows XP is a good example – so it may mean a new management team to guide the company down this path.

Claim the cloud

The biggest cash generator for Microsoft is their business division that includes their Office and Dynamics products. These are most at risk by the market’s move to cloud services.

Paradoxically, Microsoft has a track record on the cloud products having acquired Hotmail in 1997, developed the Azure platform and taking steps to move its business products across to Office 365.

Microsoft’s experience with Hotmail is instructive of the company’s uncertainty with cloud services having renamed the product constantly. Currently its incarnation as Outlook.com indicates further integration with Office 365.

With a focused management, Microsoft may well be able to compete against both Google and Amazon on the cloud by leveraging its traditional market strengths and its army of evangelists, developers and support partners.

Buy Nokia

So far the alliance with Nokia has been underwhelming with Windows Phones being met with market indifference.  A purchase of the struggling mobile phone giant would give Microsoft more depth in understanding the mobile marketplace.

A more interesting aspect of Microsoft buying the mobile vendor would be the acquisition of Nokia’s mapping technology. This would give Microsoft an advantage over Apple and give them an opportunity to compete with Google in the still developing mobile and local markets.

For Microsoft, sticking with the status quo is tempting – a business with seventy-three billion dollars income and $17 billion in profits still makes it one of the world’s most impressive businesses.

The risk though is all of the company’s major revenue streams are being challenged by mobile and cloud service and Microsoft have to adapt to a world very different to the one they grew in.

As Gartner have pointed out, the company risks becoming irrelevant in an era of mobile devices accessing cloud services.

The Challenge for Microsoft’s management and board is to find the spark that keeps the company relevant in a marketplace where the company is no longer the dominant player.

Can maps change the way we work?

Big data and mobile computing are changing the way business operates as maps become an important part of our normal work and leisure time.

“Work the Way You Live” is Google’s motto for their enterprise maps service which the search engine giant hopes to make as ubiquitous in business as it is in the home.

At Google Atmosphere the company showed off their mapping technology and how it can be used by large organisation. It’s a compelling story.

The technology behind Google Maps is impressive – twenty petabytes of images, one billion active monthly users, 1.6 million map tiles served every second and a target of getting those tiles onto the users screen within ten milliseconds.

Maps are one of the Big Data applications that cheap computing makes possible, until a few years ago even desktop computers would have struggled with the sort of mapping technology that we take for granted on our smartphones today.

Rethinking products

google-street-view-enabled-treadmill

Adding mapping technologies to products allows businesses to rethink their products. A good example of this is the internet connected treadmill.

Using the treadmill a jogger, or a walker, can map out a route anywhere in the world and the screen will show them the Google Street View as they travel along the route. The treadmill even adjusts to the changing gradients.

The Google Maps driven treadmill is a trivial example of the internet of machines, but it gives a hint of what’s possible.

The search for truth

ground-truth-and-google-maps

The success of a map depends on whether it can be trusted – this is what caught Apple out with their mapping application which was released before it was ready for prime time. Google, and most cartographers, take seriously errors and changes.

In the early days of Google Maps, the company would pass errors and changes onto the private and government mapping providers they licensed the data from. It could take months to fix a problem.

“It was really hard, you have to get maps from all over the world to create the product,” says Louis Perrochon, the Engineering director of google maps for business.

“That’s a limitation if you work with third party data so we started a project called Ground Truth where we build our own maps.”

Google pulls together its Street View data, satellite images and information sent in from the public through their Map Maker site and the Maps Engine Lite to build an accurate map of an area.

Changing consumer behaviour

Having accurate and accessible maps has changed the way consumers have behaved; “this revolution hasn’t happened slowly,” says Google Enterprise Directore Richard Suhr, “it’s happened really quickly.”

“Customers have become savvy about spatial. What this means is that businesses are starting to rethink the problem.”

“What are the exciting things I can do with maps, what else can I do with my data.”

That’s a big question of all businesses – how they use the massive amount of information in their organisation will mark the winners from also runs over the next decade. Maps are one way to visualise their data.

While Google Atmosphere was a marketing event for the companies mapping technologies the message is clear – mapping is changing the way we work and play and it’s affecting business.

How is mapping changing the way your business works?

Three screens, one screen

Is Blackberry, Apple or Microsoft right about the way we’ll use computers in the future?

One of the points that came out of Blackberry’s Z10 launch last week was CEO Thorsten Heins’ talking about the company’s ‘one screen’ strategy.

Blackberry sees the smartphone as being the centre of people’s computer usage with them replacing personal computers and tablets as the main computing tool.

This is at odds with the rest of the phone and computer industries who are struggling with managing the three or four devices that most people use.

Apple overcame this by having different operating systems – OS X and iOS – and even then the mobile iOS is subtly forked for the different ways people use tablets versus  smartphones.

With Windows 8, Microsoft chose to go the opposite way with an operating system which works on all devices. Sadly it doesn’t seem to have worked.

Blackberry’s strategy is to assume smartphones will be their main communications device. It’s a big bet which doesn’t align with what seems to be experience of most people.

Over the last few years Blackberry’s smartphone market share has collapsed from 40% to 4%, so it’s the time for brave bets although its hard to see that customers will use smartphones instead of PCs or tablets is the right call.

It’s an interesting question though – can you see your smartphone being your main computer?

Retail and the internet of machines

Paypal and eBay are using the Internet of machines to put service station cashiers out of work.

Online retail and payment giants Ebay and PayPal hosted a media lunch in Sydney yesterday to publicise their Australian Business Update.

While eBay dominates the online selling market, PayPal’s position in the payment market place is extremely powerful with Internet monitoring company Comscore reporting in their Digital Wallet Roadmap how PayPal dominates the US market and does likewise in other markets like Australia.

PayPal's US market lead

Their update confirms the trends which have been obvious for some time, particularly in how mobile devices are now driving retail. eBay’s research indicates properly implemented multichannel strategies drives six times more sales than just having an online presence.

What was particularly notable with eBay’s presentation was how the Internet of Machines is changing the retail and logistics industries as smartphones and connected point of sales systems are cutting out jobs and middle men.

Paypal are particularly proud of their US partnership with cash register manufacturer NCR that integrates smartphone payments with the point of sales systems in restaurants, convenience stores and gas stations.

eBay illustrated this with their examples of coupon offers being tied to smartphone payment systems so people paying for gas with their smartphone get a voucher offer for various up sells.

Studies in the US have found a $10 offer can result in sales of up to $100. A pretty compelling deal for most merchants.

With these technologies, we’re seeing how connected machines are changing even the most mundane business tasks.

It may well be that the days of the service station cashier are numbered; it’s quite possible that in one generation we’ll have gone from full staffed gas stations to totally automated facilities.

The example of gas station attendants and cashiers is just one example of how automation is changing many retail and sales tasks. It would be a brave person to say their job isn’t safe.

ABC Nightlife February 2013

For February’s ABC Nightlife segment Tony Delroy and I are looking at software prices, the new breed of smartphones for seniors and the future of the telco industry

Paul Wallbank joins Tony Delroy on ABC Nightife across Australia to discuss how technology affects your business and life. For February 2013 we’ll be looking at the software rip-off, smartphones for seniors and Telstra’s roadmap for the mobile economy.

The show will be available on all ABC Local stations and streamed online through the Nightlife website.

Some of the topics we’ll discuss include the following;

We’d love to hear your views so join the conversation with your on-air questions, ideas or comments; phone in on the night on 1300 800 222 within Australia or +61 2 8333 1000 from outside Australia.

Tune in on your local ABC radio station or listen online at www.abc.net.au/nightlife.

You can SMS Nightlife’s talkback on 19922702, or through twitter to @paulwallbank using the #abcnightlife hashtag or visit the Nightlife Facebook page.

Seniors and smartphones

A phone for seniors shows how the smartphone market is evolving to meet people’s needs.

One of the opportunities with Android based smartphones is the ability for companies to offer modified phones aimed at certain industries and markets.

Ahead of next week’s Mobile World Congress, Fujitsu has announced a phone designed for seniors with larger icons and a less sensitive touchscreen.

The senior market is one that’s been ripe for savvy manufacturers as older people move onto smartphones and demand devices that meet their needs.

Over the years there had been attempts at mobile phones designed for seniors but most of them had been pretty lame and none had sold well.

The difference with smartphones is that most of the design changes are involved in the software and with open source platforms like Android and Ubuntu it makes it easier for companies to build easy to use devices.

Now it’s fairly easy to make these devices, we can expect to see more of them and as smartphones are becoming cheaper – a quick look at the Alibaba website shows wholesale prices for Android based phones as low as $10 (although you have to buy a container load of the things.)

There’s some opportunities for some smart entrepreneurs with these devices and we’ll see some interesting smartphones aimed at certain groups.

What happens when software is wrong

A phone company software glitch puts one man’s life and the safety of thousands at risk. It reminds us that computers are not always correct.

The Las Vegas Review Journal yesterday told the story of Wayne Dobson, a retiree living to the north of the city whose home is being fingered as harbouring lost cellphones thanks to a software bug at US telco Sprint which is giving out the wrong location of customer’s mobile devices.

While it appears funny at first the situation is quite serious for Mr Dobson as angry phone owners are showing up at his home to claim their lost mobiles back.

Making the situation even more serious is that 911 calls are being flagged at coming from his home and already he has had to deal with one police raid.

While the local cops have flagged this problem, it’s likely other agencies won’t know about this bug which exposes the home owner to some serious nastiness.

That a simple software bug can cause such risk to an innocent man illustrates why we need to be careful with what technology tells us – the computer is not always right.

Another aspect is our rush to judgement,  we assume because a smartphone app indicates a lost mobile is in a house that everyone inside is a thief. That the app could be wrong, or we don’t understand the data to properly interpret it, doesn’t enter our minds. This is more a function of our tabloid way of thinking rather than any flaws in technology.

The whole Find My Phone phenomenon is an interesting experiment in our lack of understanding risk; not only is there a possibility of going to the wrong place but there’s also a strong chance that an angry middle class boy is going to find himself quickly out of his depth when confronted by a genuine armed thief.

For Wayne Dobson, we should pray that Sprint fixes this problem before he encounters a stupid, violent person. For the rest of us we should remember that the computer is not always right.

Samsung’s place in the market

How will Samsung respond to the challenges from Apple and Google?

Samsung’s announcement of a 7 billion dollar quarterly profit yesterday tops off a big 2012 for the Korean electronic manufacturer in which they became the world’s biggest mobile phone manufacturer after overtaking Nokia’s sales.

Android phones have been the great success for Samsung as other providers, including Google, have been comparatively slow to offer devices which give telcos the opportunity to claw back some margins they’ve been giving away to Apple over the last few year.

Despite these successes Samsung have a number of challenges ahead in 2013.

The biggest challenge is channel conflict with Google and Motorola working on launching an X-Phone which they hope will compete against both the iPhone and Samsung products

Channel conflict was always going to be a problem for handset manufacturers using the Android operating system when Google bought Motorola Mobility and now we’re seeing the effects of this.

The Koreans aren’t taking Google’s threat lying down having joined with Japanese manufacturers in a joint venture to develop a Linux based operating system for smartphones and Samsung expects to release Tizen equipped phones later in 2013.

Just on its own, the conflict with Google would be a problem for Samsung but the ongoing fights with Apple over tablet and smartphone patents continues to be a management distraction as well.

Apple’s relationship with the Korean conglomerate is a classic case of co-dependency as Samsung supply the bulk of the processors used in the iPad and iPhone. While Apple may want to kill the Samsung Galaxy tablet range, they have to be careful about going too far with a key supplier.

On the Asymco blog wonders if Apple’s announcement to bring some manufacturing back to the US may be part of a strategy to deal with the company’s dependence upon Samsung.

With threats from ‘frenemies’ like Apple and Google one of best defenses Samsung has is the companies varied range of products along with its willingness to strike out on its own into customers’ markets.

At the Computer Electronics Show in Las Vegas, Samsung showed off its range of OLED TVs, laptops and other equipment alongside smartphones. That breadth of product frees the company from being locked into one or two markets.

Of course the best example of such an electronics conglomerate in the past was Japan’s Sony which is now truly lost and wandering in the business wilderness.

Whether Samsung can avoid Sony’s mistakes will be worth watching over the next few years, for Apple and Google it may determine who is the biggest competitor in the 2020s.

On being evil

Microsoft learn what its like to be the weakest kid on the block while Google consider a future of being evil.

“Don’t be evil” are the opening words of Google’s corporate code.

When it was framed in the late 1990s there was one company in particular everyone in the tech industry thought of when the word ‘evil’ was being used.

At the time Microsoft defined evil in the technology industry. The main reason was their crushing of real or potential competitors like Netscape, Java or the troubled IBM joint venture of OS/2.

Topping everything though was Microsoft’s tactic of fake error messages designed to scare customers away from the competing DR-DOS system in the early 1990s.

So it’s rather delicious that Microsoft seems to be getting a taste of its own medicine twenty years later as Google Maps returns an error message on Windows Phones.

This is particularly galling for Microsoft as Windows Phone is essential for the company’s resurgence and, as Apple have learned, maps are a critical feature for smart phone users.

It’s too early to accuse Google of having become evil as Microsoft did during their period of dominance as Tim Wu discusses in Why Does Everyone Think Google Beat The FTC but the search giant is flexing its muscles on many fronts.

For Microsoft, they are learning what life’s like when you’re not the toughest, meanest kid on the block.

Karma can be a real bitch.

Twenty years of text messages

A BBC interview with the inventor of the SMS service illustrates how fast technology changes.

When the mobile phone arrived we thought that text, particularly those clumsy pagers people used, would be dead.

Little did we know that an overlooked part of the newer digital cellphone technology would see short messaging become a key part of the phone system and a major income generator for telephone companies.

Short Messaging Services – or SMS – was an add on to the digital Global System for Mobile communications (GSM) standard which became the second generation (2G) of mobile phones.

While intended as a control feature on the phone networks, SMS took off as a popular medium in the mid 1990s and soon became a major profit centre for mobile carriers.

The Twentieth anniversary of the first SMS being sent passed last week and the BBC has a great interview, conducted by text message, with Matti Makkonen who came up with idea.

One of the notable things in the interview is Matti’s humility – he doesn’t like being called the inventor or founder of text messaging as he explains,

I did not consider SMS as personal achievement but as result of joint effort to collect ideas and write the specifications of the services based on them.

We can only imagine what would happen if the idea of SMS messaging was invented today, there’d be an unseemly struggle over patents while hot young Silicon Valley entrepreneurs would pitch venture capital firms with plans for niche services that will make a billion dollars when sold to Yahoo! or HP.

As it was, SMS services were insanely profitable for the telcos. In the early days, text messages were being charged at over a dollar each – for a service that cost the carrier almost nothing.

Over time those handsome profits have been eroded as SMS became bundled into all-you-can-eat packages and then the internet introduced new mediums to send short messages.

While SMS isn’t going away while mobile phones are an important part of our business and personal lives; the service isn’t going to be as critical, or as profitable as it was over the last twenty years.

Short Messaging Services are a great example of how individual technologies rise, evolve and fade with time. They are also a good lesson on how quickly a premium, highly profitable service can become commodified.

Windows Phone 8 launch

Can Windows Phone 8 reclaim Microsoft’s lost mobile crown?

This week’s launch of Window 8 Phone is part of Microsoft’s strategy to remain relevant in a world where personal computers and laptops are being left behind by smartphones and tablet computers.

In many ways, the tablet and mobile market is an opportunity lost by Microsoft – for a decade the market had been desperate for decent tablet computers and smartphones. The Windows tablet and PDA product in the early 2000s ran on was expensive, heavy and clunky hardware that discouraged even the most determined user.

The failure of Microsoft and their partners cost the company dearly when the iPhone and then the iPad stole the market from them. Today Apple’s iPad owns the tablet computer market while the iPhone on its own makes more money than all of Microsoft’s products put together.

Microsoft’s response to this threat to their core business has been slow and wasn’t helped by the company Windows Vista disaster, a mis-step that broke the PC upgrade cycle.

Fortunately Windows 7 put Microsoft’s core business back on an even keel as they contemplated their customers’ move away from the personal computer.

The strategy now for Microsoft with Windows 8 is the “run anywhere” philosophy where a document created on your tablet computer can be accessed just as easily on your PC or on a smartphone. This relies on a cloud computing service and the same operating system running on all devices – interestingly this “hybrid cloud” idea underpins Apple’s iCloud as well.

Being able to run documents across all Windows devices was a key part of Microsoft’s launch today with a demonstration of how Office 2013 files can be accessed.

To get the full features of Windows Phone though you’ll have to be running Windows 8 AND Microsoft 2013 on your tablet and personal computer.

Vendor lock-in isn’t surprising as this strategy lies at the heart of Microsoft’s business model – the problem is the market is moving away from the Windows platform and many of the devices, and people, Windows Phone users will be communicating with are using Android or Apple systems so many of the gee-whiz functions are lost.

One of the functions displayed is Rooms, which allows like minded people to share various features. As the Microsoft media release says;

Sometimes you want to share and chat with one group, not your entire social network. Rooms allow you to create private groups of people who have Windows Phone 8 — like your family members best friends or fantasy football league — and easily connect with just them. Chat, share calendars, shopping lists or photos in an ongoing conversation where only those invited can join in. You can share some aspects of Rooms with friends and family on other smartphones as well.

The problem is that when your family members, best friends or fantasy football league competitors aren’t using Windows 8, the Rooms function becomes little more than a glorified shared calendar – Dropbox and Google Docs provide more features.

For the family user Windows Phone 8 does have unique feature in allowing a children friendly profile called Kids Corner, where parents can quarantine the little ones from the main address books and features while allowing only certain apps to run. Unfortunately there’s only one Kids Corner so the little darlings will have to fight it out over the Angry Birds account.

That Angry Birds app is the harbinger of where Microsoft’s multiple screen strategy will either succeed or die in the ditch as it will be the available applications which will determine whether customers will buy the device over the iPhone or Android competitors.

Looking at the Samsung, HTC and Nokia phones that will be released running Windows Phone next month, all seem to be decent pieces of hardware although the Nokia 920 seems to be a hefty unit compared to the competition. Overall though all three phones seem to be decent competitors with their own strengths compared to the Android and Apple opposition.

The success of Windows Phone will define Microsoft’s place in the post-PC world, now its up to the company and its partners to sell them.

Open Table and free mobile restaurant sites

Mobile websites are becoming essential to the hospitality industry.

One of the big challenges facing restaurants is how customers are moving to the mobile web, diners are using their smartphones to find establishments and expect to make bookings directly.

To help their customers deal with this move to smartphones, restaurant booking service Open Table is offering a free mobile website for their clients so establishments can have sites that are usable on smaller screens.

Whether this is worthwhile depends upon whether the restaurant is already using Open Table, the monthly fees are quite high at $200 per month plus a relatively low $1 commission per cover so it certainly isn’t worth subscribing to their service just to get a mobile optimised website.

For restaurants already using their service it’s best to check if your existing website already has a mobile feature as having two online addresses is only going to confuse customers.

Businesses using WordPress based sites just need to install a plug like WordPress Touch which detects when a smaller screen is viewing your site to change.

Open Table itself is somewhat of an internet old timer having been founded in 1998, making it one of the Tech Wreck survivors, and listed on the NASDAQ market eleven years later.

That a company like Open Table is recognising a mobile web presence is essential for hospitality businesses should be a further warning to restaurants, cafes and hotels that they need to take smartphones seriously.

Just as thirty years ago it was essential to have a Yellow Pages listing, today you’re missing out on customers if they can’t find you on their phones.

Regardless of whether you’re using Open Table or any other service, you need to have some form of mobile site working for you.