Tag: apple

Can Microsoft beat the PC marketplace’s structural decline?

Windows 8 faces big challenges in replacing Microsoft’s cash cows

In New York on Thursday Microsoft will have a marathon launch of their Windows 8 system and the futures of many of their hardware partners lie on the success of the new system.

For Microsoft, Windows 8 could be the last throw of the dice for the desktop operating system that has sustained the company for thirty years.

The figures aren’t good for Windows as Microsoft’s 2012 profit and loss shows, here are the figures broken out by operating unit segment from the company’s annual report.

Year Ended June 30, 2012 2011 2010
Revenue  bn $  bn $  bn $
Windows & Windows Live Division 18,818 18,787 18,789
Operating Income (Loss)
Windows & Windows Live Division 11,908 11,971 12,193

The core Windows & Windows Live Division has stagnant revenues and a slowly declining profit margin. We’ll leave the huge losses in the online division for a future post.

Since the days of the first MS-DOS deal with IBM, Microsoft’s core business has been the licensing of operating systems to PC manufacturers and now that model is in trouble.

For instance Dell had an 8% drop in revenue resulting in a worrying 22% drop in operating profit, their PC dominated consumer division suffered a fat 22% drop in sales and recorded a miniscule .5% profit margin. Similarly Asus had 25% drop in sales to record a 2011 loss.

The pain being suffered by PC manufacturers’ sales and margins will almost certainly be shared by Microsoft as companies like Dell, HP and Asus simply can’t afford to pay the licensing fees which have sustained the Redmond business model for so long.

Microsoft and their partners hope – or pray – that the PC decline is a temporary hiccup in computer sales similar to the traditional lull seen before the release of a new system.

History’s not on their side with research company Asymco expecting sales of tablet computers to overtake PCs sometime in late 2013.

This is not a cyclical trend – the PC industry is in structural decline; the traditional Windows upgrade cycle is dead and Google are running interference with their Chromebook networked laptops.

Moving onto tablets and smartphones in this light makes sense for Microsoft and given the PC manufacturers have failed dismally to deliver decent tablet computers or phones over the last 15 years so it’s understandable the software giant wanted to develop their own hardware or team up with a struggling company like Nokia.

The declining margins in personal computers means we’re seeing the end of the Windows desktop ecosystem. With the rise of the web and cloud computing the type of operating system we use is like arguing between Toyota and BMW drivers; one might be more prestigious but both will get you where you want to go.

For Microsoft the challenge is to replace those Windows licensing rivers of gold with similar revenue streams through their phone and tablet products but with Apple and Google already dominating those fields, is it too late for the company that dominated personal computing? The next six months will tell us.

Apple’s 2am blues

Apple has a silly daylight savings bug.

Should a Sydneysider or Melbournite wanted to set their iPhone alarm to 2am or 2pm today they were plain out of luck.

It appears iOS6 no longer likes 2am or 2pm if your location is set to the parts of Australia that switched to summer daylight savings this morning.

iOS6 loses 2am in Eastern Australia going to daylight savings time

 

While it’s understandable you can’t set your clock to 2am Sydney, Melbourne or Hobart time as the clocks jumped an hour you also can’t set it to 2pm.

Although if you already have a timer set, it still appears as 2am, or 2.30am in the case of my phone.

It’s just a dumb bug and switching to Brisbane time, or any other part of the world that didn’t go over to Australian daylight savings time this morning, fixes the problem.

Had I known about this yesterday I’d have turned on that 2.30am wake up call just to see what would happen. Then again, maybe not.

While it will undoubtedly fix itself tomorrow as the transition day passes, it’s pretty clumsy and embarrassing. Moreover it doesn’t bode well for Apple’s attention to detail in the post-jobs era.

UPDATE: As expected the bug has passed the following day — we have our 2 o’clock back although that such a silly bug could have slipped past Apple’s quality control is still a worry.

Meeting the solid state Woz

The fast talking Steve Wozniak surfs into town on a wave of enthusiasm.

When the opportunity comes to meet co-founder of Apple computer Steve Wozniak you jump at it, despite being jet lagged from the previous day’s flight.

One of the tough things when writing about Steve Wozniak is that he is a fast talker. You have to be quick to keep up with his ideas and words.

Steve was in town to show off the range of solid state computer memory cards manufactured by Fusion-iO, a company based in Salt Lake City.

Wozniak liked the idea so much he became Fusion-iO’s chief scientist in 2009. “When I first saw the iO drive, it was so beautiful I had to buy one from the company and put it in a frame just to frame it at home.”

What enthused Woz were Fusion-iO‘s range of NAND flash memory cards that speed up servers while reducing their power and cooling requirements.

Those power savings are important for data centres when hundreds of thousands of servers might be in one building, Fusion-iO’s CEO and co-founder David Flynn estimates this could save up the industry a $250 billion a year in operating costs.

Probably the biggest benefits though are in the corporate space, one Flynn’s boasts is how one movie studio used Fusion-iO’s products to reduce transcoding between formats from two hours to 39 seconds.

Another case study they show off is how grocery chain Woolworths were able to reduce the 17 hours to run their weekly trading reports to three hours meaning they were able to capture weekend figures for their weekly Monday morning board meetings.

For smaller businesses, the biggest benefit is these products can turn fairly basic desktop computers into workstations with the $2,500 ioFX card promising some serious post production capabilities for a system although one would expect an entry level box wouldn’t have the data connection, hard drive or – most importantly – power supply to cope with the demands of such a device would put on the typical cheap components in a basic desktop system.

All of these changes though are heralding some pretty big changes for big and small businesses.

Where Steve Wozniak sees the greatest application of moving data faster is in Artificial Intelligence applications like voice recognition. Apple’s Siri is a good example of this.

The barrier to effective voice recognition is the sheer amount of data processing required to effectively understand voice commands. Doing this on cloud services is a far more efficient and effective way of doing this.

As we saw at Dreamforce last week, the sheer amount of data pouring into companies is changing how they manage information. Getting access quickly to relevant information is an important part of managing it.

“I’ve never gotten so excited about or fell in love with a technology like this since Apple.” Says Wozniak.

Having a chance to speak to Steve Wozniak up close shows that fast talking enthusiasm is for real. The Woz is a real geek.

Like all true geeks Wozniak is passionate about what he believes in – whether it’s about NAND flash cards or becoming an Australian resident he bubbles with enthusiasm. Just don’t try writing notes down while he’s in full flight.

They thought they didn’t have a problem

Apple’s mapping problem could indicate bigger problems at the company

As Apple fans howl about the about the new iOS6 Maps feature which replaces the old one driven by Google Maps, it’s useful to get a cartographer’s view of how Apple got things wrong.

Michael Dobson’s analyis deep dives into the complexities of mapping which can be summed up in one phrase;  “their problem is that they thought they did not have a problem.”

Those Rumsfeldian ‘unknown unknowns comes back to bite a company again.

Like many things in life, mapping is a lot more difficult than it looks and assuming that a drawing or an older map is correct or the features unchanged is risky.

This is not a job you just leave to machines sucking down data from various sources; details needs to be checked, validated and checked again before being added to a map.

What’s worrying about Apple’s map snafu is this probably wouldn’t have happened under Steve Jobs as he’d have used the app himself and yelled at people when it didn’t work.

Apple’s decision to run with a substandard service smells horribly of decision by committee and compromised products being release to suit managerial imperatives rather than delivering one perfectionist’s vision of what worked.

We may well be seeing the beginning of Apple’s evolution into an anonymous corporation.

One of the positives of that is we may also discover a less secretive or hubristic Apple.

How Apple fix their map application is going to be interesting, they certainly have the funds to hire the best brains in mapping along with the 7,000 other employees Google are estimated to have in their mapping division, the question is should they?

For Google, having a huge division building and improving their maps search as geolocation is a key part of their local services and search tools.

Apple on the other hand doesn’t need a stand alone mapping division and while they can afford one, it certainly isn’t an effective use of their capital or management time.

It may well be that Apple will have to swallow their pride and license the data feeds back from Google or even Nokia, or perhaps they could even put in a bid for Nokia just to mess with the minds of Microsoft’s management.

Regardless of which way Apple decide to go, they’ve got themselves in an expensive mess which is going to take some time or money to fix.

For now, I’m sticking with iOS5 on my phone as I like my mapping app too much, particularly the integrated public transit features. My guess is I’m not alone.

Salesforce’s place in the web’s walled gardens

Can Salesforce take a place alongside Apple, Facebook, Amazon and Google?

“Did he just say we’re at the half-way mark?” Whispered the ashen faced journalist beside me as Mark Benioff’s Dreamforce keynote reached the 90 minute mark.

Benioff did and the presentation did indeed go three hours because Salesforce.com had a lot to announce with launches of new mobile apps, customer service programs and HR services.

At the press conference later in the day, Benioff said “we are interested in collaboration and the customer. the reason we’re in marketing is because our customers want us to be in marketing.”

An interesting part of this is the Facebook relationship, with the Buddy Media acquisition 10% of Facebook’s advertising revenue comes through  Salesforce. This in itself makes Salesforce a key Facebook partner.

Facebook’s relationship goes deeper with Salesforce, at the media conference Marc Benioff mentioned that the company’s purchase of Rypple came about because of urging from Tim Capos, Facebook’s CIO.

That deep relationship was on show in the opening keynote where Facebook were one of the strategic partners showcased by Benioff.

Of the products showcased, one of the important points that kept being raised was Salesforce’s role as the enterprise social media identity service.

A partnership between Salesforce and Facebook to provide online identity validation would effectively kill  Eric Schmidt’s aim of Google being the Internet’s identity service although Benioff was at pains in the media conference to emphasise there was room for more than one player.

Google are also being challenged by Benioff’s announcement of Chatterbox, a secure online file storage and sharing service.

While the focus with the Chatterbox announcement was on the threat this presents to Dropbox and Box.net, the bigger targets are Google Drive, Apple iCloud and Microsoft’s SkyDrive.

Salesforce’s move into the various fields of HR, marketing, file storage and collaboration are part of the company staking its own position among the various web empires.

With a strong enterprise position, it’s quite possible Salesforce could establish itself as the fifth of the Internet’s great empires.

Every empire needs an army and a particularly strong claim Salesforce would have are the ranks of developers and supporters gathering around the service’s open APIs.

The move to establish an independent position on the web would also explain Benioff’s commitment to HTML5 as this avoids locking the company into an Apple, Google or Microsoft dominated app environment.

We’ll see over time how Salesforce establishes their position among the internet empires, right now though their range of services, customer base and partner ecosystem means they are well placed to compete with the big four currently dominating the web.

Paul travelled to the San Francisco Dreamforce conference courtesy of Salesforce.com

ABC Weekend Computers – should you buy an iPhone 5?

On ABC Sydney this weekend we look at whether the new iPhone is for you.

With the usual hooplah, Apple announced their new iPhone last week. Should consumers drop their existing phones and buy the new iPhone?

On ABC 702 Sydney Weekend computers this Sunday, September 16 from 10.15am Paul Wallbank and Simon Marnie will be looking at the choices in the smartphone market.

Some of the topics we’ll discuss include;

We love to hear from listeners so feel free call in with your questions or comments on 1300 222 702 or text on 19922702.

If you’re on Twitter you can tweet 702 Sydney on @702sydney and Paul at @paulwallbank.

Should you not be in the Sydney area, you can stream the broadcast through the 702 Sydney website and call in anyway. Everyone’s views are welcome.

Throwing down the gauntlet

The iPhone continues to disrupt once profitable markets

The interesting thing with Apple’s announcement of  the new iPhone and iPod was the emphasis on gaming with two demonstrations showing off the capabilities of the new devices.

While the iPod and iPhone can’t compete with gaming consoles in a straight out hardware comparison, customers like the idea of being able to play advanced games on their handheld devices.

More worryingly for the console manufacturers is the pricing in the App stores. The traditional gaming model of expensive games subsidising devices starts to fall over when 99 cent, or even $19.99 downloads kill the fat margins.

It’s not just games companies threatened by the iPhone and Android smartphones, probably the biggest threat from today’s launch is to Microsoft.

Last week’s botched Lumia 920 launch throws into stark relief how Windows Phone is struggling to meet its October release date.

The pressure is now right on Microsoft to deliver, the continued evolution of the iPhone is also leaving Blackberry and Motorola increasingly looking flat footed and vulnerable in a market that’s leaving them behind.

Goodbye to the electronics store

As the economy and society change, the era of the big box retail store is coming to an end.

“Can Electronics Stores Survive?” asks the Wall Street Journal.

The future doesn’t look good with the liquidation of Circuit City in the United States and the exit of Australian giant Harvey Norman from the electronics markets.

Yet Apple Stores are growing and while it’s tempting to dismiss their sales training as brainwashing the truth is their staff are among the most profitable retail employees on the planet.

The real problem is the Big Box category killer store featuring wide product lines but poorly trained staff motivated only by commissions is a business model whose time has passed.

Customers can now go online, research website that are far more informative and honest than the staff at the megastore then get the appliance delivered and often installed for less than the shelf price at the mall.

The earliest industry this has affected is the computer sector – long ago companies like Dell and Gateway changed how people shopped for PCs.

Given the economics, it’s surprising the low margin big box stores survived as long as they could and the main reason they did was because appliances were an ideal channel for pushing profitable finance plans and extended warranties.

Often the store and sales assistant made more money out of the “interest free 72 months” deal, the three year warranty and the connector cables than they did from selling a top end laptop or plasma TV.

Now the easy credit era is over, those add-ons aren’t so profitable and with Amazon leading an army of e-commerce retailers changing customer expectations, those businesses locked into Big Box, easy credit way of doing things have to rethink how and what they are selling.

Harvey Norman’s founder Gerry Harvey said recently that people would still buy big items from his store. The reality is they are moving across to sites like Winning Appliances where they can choose the items, have them delivered installed and the old appliance taken off, a godsend when you’re dealing with a 50Kg washing machine or fridge.

Apple’s success shows retail does have a future. It just doesn’t lie in the low service, Big Box model that grew out of the easy credit and cheap energy economy of the late twentieth Century.

Empathy and the genius salesman

Apple’s Genius training manual shows the importance of empathy and investing in staff.

One of Apple’s great successes has been in delivering services through its stores. Tech site Gizmodo managed to get a peak at Apple’s training manual for their in-store ‘Genius’ technicians.

A word that keeps popping up in the manual is ’empathy’ – as Gizmodo says;

The term “empathy” is repeated ad nauseum in the Genius manual. It is the salesman sine qua non at the Apple Store, encouraging Geniuses to “walk a mile in someone else’s shoes,”

While the Gizmodo writers and many of the site’s readers seem surprised or cynical about this, it’s not surprising for anyone who’s worked in sales or tech support, and the Apple Store Geniuses are doing both.

Empathizing with the customer or caller gives them confidence and builds trust. For someone in sales, listening and emphasizing is how one finds out what the customer really want. On the support desk, putting yourself in the customer’s position makes it easier to diagnose the problem.

That empathy a real return on investment – US Apple Stores earn 17 times more per square foot than the average retail store. The next most profitable retailer is Tiffany & Co who only boast have the revenue.

What Apple again show is that training matters. Every surly computer store assistant, every grumpy flight attendant or bored call centre worker can, with the right training and incentives, be just as effective as an Apple Store genius.

Sadly too many businesses, particularly retailers, see training as a cost and their employees as naughty children. Those businesses have a serious problem.

Without empathy – the ability to put yourself in your customers’ shoes – your business is working with a distinct disadvantage.

Being Steve Jobs

Imitating Steve Jobs is not a recipe for success

Wired Magazine asks is Steve Jobs’ story a cautionary or inspirational tale for entrepreneurs and managers.

It’s always worrying when any one individual is cited as being the role model for business leaders – over the years we’ve seen Jack Welsh, Warren Buffet, Bill Gates and dozens of others lauded as being the perfect CEO.

None has probably lauded more than Steve Jobs, in many ways rightly so given the way he way he steered his business back from disaster and by the time of his death had made Apple the leader in a range of technologies that barely existed a decade earlier.

Despite Steve Jobs’ successes there’s no doubt he was a very difficult man – the stories of his bullying and striking fear into Apple’s staff are legendary and no-one has chosen to contradict them. For many people, he was impossible to work with.

George Bernard Shaw once wrote “the reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.”

No-one would have ever claimed Steve Jobs was a reasonable man.

Steve Jobs was unique – as is Apple, Microsoft, IBM, News Limited, Nestle, Joe’s Pizza Bar and the local plumbing supply shop. Every business is unique and different in it’s own way

For some of those businesses, a manager being an unreasonable asshole like Steve Jobs could be a recipe for success although disaster is probably more likely.

Disaster was the result for most manager and businesses in the 1990s who blindly copied the then eulogized Jack Welsh’s Six Sigma strategies or “Chainsaw Al” Dunlap’s slash and burn philosophies without appreciating the subtle differences between their organisations and GE or Scott Paper.

In business – as in life – there’s no “right way” or “wrong way” and thinking in a “yes” or “no” mindset, doesn’t work in a nuanced, complex world.

The Wired article on Steve Jobs itself falls into this binary thinking in asking readers if they are an “acolyte” or “rejector” of Steve Jobs’ methods. In reality, few people would totally reject every aspect of Jobs’ behaviour but few of us would be capable of totally imitating his behaviour.

Perversely, aping Steve Jobs is probably a career limiting move for managers. As Adam Hartung writes in Forbes Magazine, Steve Jobs couldn’t find a job today and someone with his quest for perfection would struggle with the bureaucracy of a corporation or government agency.

Like our businesses, each of us is unique and here’s a bit of Steve Jobs in all of us – at the same time most of us would also be repelled by many of Steve Jobs’ characteristics.

Simply copying someone else is neglecting our own strengths and acquiring someone else’s weaknesses. Surely it makes more sense to work to our abilities.

Building an ecosphere

How customers, followers and developers make a business dominant in its field

One of the keys to success for a software platform is its ecosphere  – the community of developers, consultants and advocates that grow around a service.

By far the most successful company in building a community around its products is Microsoft, who over the years have attracted hundreds of thousands of developers and partners to support Windows.

Microsoft’s thousands of partners are the company’s greatest asset in beating back the threat posed by Google, cloud computing and Apple. The sheer size Microsoft’s supporter base gives it a natural buffer against competitors.

Apple too have that buffer, in the company’s darkest days during the late 1990s it was the true believers who kept the flame burning. The ecosphere that has developed around the iPhone and iPad has now cemented Apple’s iOS as being the dominant mobile platform.

The same thing happens around various industry software packages, as one company becomes identified as the leader in their sector they develop a following among users in that industry.

At the Xero conference last weekend, the cloud accounting software company showed how an ecosystem of developers, accountants and bookkeepers are developing around their software platform.

Companies as diverse as inventory management, point of sale system and document scanning services are plugging into Xero’s accounting data which adds functionality for customers.

In turn, those third party services makes Xero more attractive to the bookkeepers and accountants looking for ways to make their jobs, and those of their clients, easier.

Xero’s biggest competitor, MYOB, also has that strength with an army of certified consultants from long being the incumbent in their market.

The battle between Xero and MYOB for dominance in the business accounting software market will depend upon how well the incumbent can hold onto their existing markets and the effectiveness in the incumbent building a ecosphere that makes the newer product more attractive.

Disclaimer: Paul travelled to Melbourne and attended the Xero Partner conference courtesy of Xero.

Android’s corporate wins

Android is increasingly becoming the platform for business hardware.

Telstra’s launch of the second iteration of their T-Hub device and the Commonwealth Bank’s Albert tablet Point of Sale device are notable in their choice of operating system.

For the T-Hub, the first version was a bug plagued and slow proprietary system that which one of the reasons for the device’s market failure. Telstra’s second attempt runs on the Google Android system.

The Commonwealth Bank didn’t make Telstra’s mistake with the Albert device, instead choosing  the open source system from the beginning.

Choosing an open platform like Android makes it easier for the developers and company to support the device and develop new products. There’s also the advantage of thousands manufacturers supplying hardware that runs on Android.

If we compare the costs of developing a proprietary system and sourcing hardware for it to run on, the choice of an open system is almost irresistible.

For Microsoft, this adoption of Google Android by corporations is another blow to Windows’ dominance of the market, a few years ago all of these devices would have been running a version of Windows but Android is a cheaper, more flexible and better suited to most of the tasks required.

It could be worse for Microsoft – Apple could be dominating this market. Apple though have had their own victory on consumer devices and increasingly companies have to cater for their customers and staff wanting an iPhone or iPad app.

Like on smartphones, the battle is now between Android and Apple.