smartphones | Paul Wallbank - Communications Professional

Microsoft’s cloudy future

Microsoft is making the shift to the cloud and devices, but those markets are turning out not to be profitable.

This morning Microsoft announced its quarterly results and, once again, they confirmed the company’s move into the cloud, a transition that means the company has to deal with reduced margins in once immensely profitable markets.

While Microsoft’s earnings beat analyst estimates, the stock still dropped on out of hours trading on the US markets. The reason being margins showed a slight decline and the impending release of Windows 10, which will be free for customers upgrading, portends a further fall in income.

The fading of Windows is best shown in the results for the company’s Devices and Consumer licensing division which covers licensing of the operating system and is the second biggest contributor to Microsoft’s revenues and profits. The segment’s takings are slowly declining although surprisingly the division’s margins are standing up.

Windows’ decline shows the post XP recovery Microsoft was hoping for the division has failed to materialise beyond a bump last quarter, as the company explained in its media release;

Windows OEM Pro revenue declined 13%; revenue was impacted by the business PC market and Pro mix returning to pre-Windows XP end of support levels and by new lower-priced licenses for devices sold to academic customers

With company making various versions of Windows 8 and 10 free, it’s hard to see the division doing anything but accelerating its decline as fewer people actually pay for the operating system.

Fading margins

Also illustrating Windows’ falling fortunes is how the Computer and Gaming Hardware division’s revenue threatens to overtake the Devices and Consumer Licensing group’s contribution. The problem for Microsoft with this that the manufacture of Xboxes and Surface tablets only boasts a profit margin of 12% against consumer licensing’s 93%.

Last week at its preview of Windows 10 Microsoft showcased its HoloLens virtual reality technology, while impressive it’s unlikely to boast margins any better than Xbox consoles or Surface tablets. At best it will be a trivial contribution to the company’s bottom line.

Microsoft Margins by operating segment

Percentage margins	Q1-14	Q2-14	Q3-14	Q4-14	Q1-15	Q2-15
Devices and Consumer Licensing	87%	90%	87%	92%	93%	93%
Computing and Gaming Hardware	15%	9%	14%	1%	20%	12%
Phone Hardware	n/a	n/a	n/a	3%	18%	14%
Devices and Consumer Other	21%	21%	21%	17%	17%	23%
Commercial Licensing	92%	92%	91%	92%	92%	93%
Commercial Other	17%	23%	25%	31%	33%	35%

Dwarfing both divisions in both revenue and profit is the Commercial Licensing segment which also boasts fat margins of 93% and accounts for nearly half the money coming into the organisation. Commercial Licensing remains static and provides the bedrock for the company’s cashflow.

The big growth area remains the cloud with the Other Commercial division, which includes most of the online and professional services growing steadily. While showing growth, this part of the business boasts a relatively low margin of 33% so any market moves from Enterprise licensing to the cloud will have a sharp effect on the company’s bottom line.

Mobile black holes

Of all Microsoft’s divisions, the problem remains the Phone Hardware segment with low margins, declining sales and a shrinking market share. Reports released overnight indicate that over a third of Lumia devices sold are not being activated which may indicate distribution channels are having to deal with unsold stock.

Compounding Microsoft’s poor position in the phone marketplace is the resurgence of Apple’s iPhone, particularly in the Chinese market where Microsoft is failing dismally. Global market share figures are indicating Apple may soon overtake Samsung as the world’s largest smartphone vendor while Android systems are coming to dominate the global marketplace.

Tomorrow Apple will announce their results and we’ll see how the two companies are travelling, the contrasts will almost certainly be striking. For Microsoft, even if they do manage a shift to mobility and the cloud, they are unlikely to repeat Apple’s success in reinventing themselves.

Daily links – Chinese tourists, mars landers, Zappos management

Links of the day include how jaywalking became a crime, where Chinese tourists go and a lost Mars lander found on Mars.

Where do Chinese tourist like to travel to? One of today’s links looks at where the modern PRC tourist likes to go. Other links include how jaywalking became a crime, Samsung’s attack on the low end Indian smartphone and how disguised Starbucks may be popping up in your suburb.

Kicking off today’s links is an examination of how Zappos’ CEO and founder Tony Hsieh is carrying out a daring experiment on the management structures of his company.

Zappos’ strange management experiment

No-one can accuse Zappos’ founder Tony Hsieh of thinking inside the box, his experiment with new form of management called holacracy is another example of how he tries to do things differently. Whether it will be successful or not remains to be seen.

How Jaywalking became a crime

Vox tells of how cars took over our cities’ streets during the early Twentieth Century. It’s an interesting description of the political, social and economic forces at work as the effects of the automobile started to be felt by our communities.

Lost spacecraft found on Mars

“It was a heroic failure.” Britain’s Beagle space mission to Mars ended in mystery when the lander vanished just before Christmas 2002. Now it’s been found. I find this story quite touching.

Your local cafe might be a stealth Starbucks

Like McDonalds, Starbucks is facing structural changes in its market. One of the ways both companies are responding by launching experimental new stores. Some of which might be near you without you knowing.

Samsung launches a sub $100 Tizen phone in India

Just as the car changed the Twentieth Century the smartphone may well be one of the critical technologies that shapes this era. Cheap phones in emerging markets are the equivalent of the Ford Model T a hundred years ago.

Samsung’s move is a response to the Chinese manufacturers who are dominating that market. That Samsung is using their own Tizen operating system rather than Android which most of the Chinese companies use is something worth watching.

Where are Chinese tourists going

As Chinese manufacturers look to emerging markets as their economic future, the country’s tourists are exploring the world. This article laments how those PRC travellers are ignoring London and the UK but also has some interesting observations about the destinations they prefer.

Daily links: The IoT goes to sea, building the innovation state and Boko Haram

The IoT goes to sea, building the innovation state and Boko Haram’s murderous rampage

The scale of the carnage Boko Haram has inflicted on remote parts of Nigeria is becoming more apparent every day and satellite imagery shows just how much damage the insurgent group is doing to communities in its territories.

Closer to home, Google’s Project ARA gets another outing, we look at how economies can deal with the jobless future, what a terrible aunt Ayn Rand was and how the IoT is going to sea.

The IoT goes to sea

At the CES show two weeks ago Ericsson launched their new maritime cloud service that promises to connect ocean going ships to the same services available on land

Google unveils more about Project Ara

Project Ara is Google’s attempt to reinvent the smartphone, the project came a little closer to completion with the company showing off some of its progress

Creating the innovation state

What do we do in a world where most people’s jobs have gone? Create an innovation state rather than a welfare state could be an answer suggests one economist.

The extent of Boko Haram’s massacres

Words fail to describe the horrors being visited on the people of Nigeria.

Ayn Rand was a terrible Aunty

What happened when one of Ayn Rand’s nieces asked aunty for a $25 loan?

Links of the day – redesigning the car and South China Mall.

Interesting links include Mercedes’ vision of a driverless car, an analysis of the ill fated South China Mall’s flaws and how Amazon is reorganising its R&D efforts after the failure of the Amazon Fire.

The CES extravaganza continues in Las Vegas with a wave of announcement, most of which I’m ignoring, however the motor industry continues to show off new developments with Mercedes displaying their vision of how a driverless car will look.

Other interesting links today include an analysis of the ill fated South China Mall’s flaws and how Amazon is reorganising its R&D efforts after the failure of the Amazon Fire.

Mercedes redesigns the car

A little while back I suggested that we could do better in redesigning the driverless car – Mercedes have gone ahead and done it.

Mercedes’ redesign of the driverless car indicates just what can be done when we rethink what passengers will need in the vehicles of the future.

Ford recalls a vehicle for a UI upgrade

Ford has recalled its Lincoln MKC SUV models for a software upgrade after discovering drivers were shutting down the cars by accident.

What’s notable with this story is how software changes are now one of the main reasons for recalling vehicles and how design flaws in an automobile’s computer programs are relatively quickly discovered and resolved.

We will probably find in the near future car manufacturers will carry out the upgrades remotely rather than ask owners to bring their vehicles into dealerships.

A long running security flaw is exposed

In August 2013 a security researcher warned UK online greeting card vendor Moonpig that its system exposed up to six million users’ account and financial details. Until Monday the company had ignored him. This is a tale of classic management disregard for customer security and one area where business culture needs to dramatically change.

Rumours of an AOL – Verizon merger

It’s a speculative story but if a merger between US telco Verizon and former internet giant AOL goes ahead it may mark another wave of telcos moving into content services, although it’s hard not to think that Verizon could spend its money more wisely.

After a flop, Amazon restructures its R&D

The Amazon Fire was by all measures a miserable flop as a smartphone however it seems the company learned some important lessons from the device’s market failures. Instead of abandoning its research efforts, the online behemoth is increasing it’s R&D budget and reorganising its development division.

Design fails of the South China Mall

South China Mall just south of Guangzhou has been the poster child of Chinese malinvestment during the nation’s current boom. In a blog post from 2011, a shopping mall expert visits the development and points out the major design faults in the complex which may well have doomed the project from the beginning.

BlackBerry’s classic struggle

BlackBerry’s classic struggle – is the new device enough to attract existing users

Earlier this week BlackBerry released its Classic handset – the device the company hopes will rekindle its fortunes in the smartphone market in appealing to the thousands of loyal corporate users still wedded to their old devices.

For BlackBerry the stakes are high with the handset business still being worth over half the company’s earnings last financial year, although hardware revenue dropped 43% to $3.8 billion over that period.

“Handsets are still an important part of our business in terms of revenues,” BlackBerry’s President of Global Enterprise Services, John Sims told Decoding the New Economy in an interview last month.

The main market for the Classic are the corporate users still sitting on their old handsets, “there are tens of millions of BlackBerry users who are still sitting on their old handsets.” Sims said. “The classic, when it comes along is targeted at that market. We know people are waiting.”

“When you get on a plane people start taking out their devices I can guarantee you’ll see BlackBerry Bolds with almost every person in business and first class. They may have another device too – a Samsung or something as well.”

Sims’ belief was that bringing back the shortcuts and keyboard of the older devices would encourage users wedded to their old devices to buy the new smartphone.

The first response to the new BlackBerry Classic hasn’t been enthusiastic with Larry Dignan in the Canadian Globe and Mail describing it as “a curmudgeonly phone” – a worrying description coming from the home team. Dignan goes further in questioning BlackBerry’s hope the Classic will attract the users it needs.

BlackBerry remains convinced that its hardcore enterprise users are crying out for the unique set of features only it can offer. But after using it for several days I don’t think the Classic is old fashioned enough to please traditionalists, and its callbacks to a dead era of smartphone mobility are more than enough to cripple the device for new users.

For BlackBerry, the success or otherwise of its handsets is going to be critical in the company’s transition to a security, software and internet of things business. The early indications are that the company has a struggle ahead.

Painting a target on the competition

Blackberry Enterprise President John Sims has a strong message for his competition

“We’re coming for our competitors” is the warning BlackBerry’s President of Global Enterprise Services, John Sims has for the marketplace in an interview last month.

Sims laid out how BlackBerry’s future lies in managing big data, providing collaboration tools and securing the internet of things. In the short term however, the company needs emerging markets to keep its mobile handset market going.

In an interview last month on Australia’s Gold Coast at the Gartner Symposium, Sims laid out some of BlackBerry’s vision of the company’s future.

Securing the endpoints

The key product is the BlackBerry Enterprise Services which Sims sees as providing the endpoint security for corporate mobile devices and for the internet of things, something that ties into the company’s QNX investment.

For the moment though its handsets are a key part of the company’s immediate future and Sims sees the latent demand from lapsed BlackBerry as essential to success, “there are tens of millions of BlackBerry users who are still sitting on their old handsets.”

“The classic, when it comes along is targeted at that market. We know people are waiting.”

“When we went from the Gold to the Q10, too much changed. You had to go from the BBOS to the BlackBerry 10 and that’s a big change, we changed the keyboard, we took away shortcuts and we changed too much at the same time. With the Classic we’re almost doing a retrofit.”

With the recently released Passport smartphone, Sims says the company is struggling to keep up with demand, “The Passport has done well,” he said. “The problem with it is us, not demand. It’s a supply issue not a demand issue.”

A week after that interview, BlackBerry announced the company would give Canadian buyers of the Passport subsidies of $600. How that ties into the narrative of a popular device isn’t quite clear.

Sims hopes the release of the Classic won’t suffer from supply problems, “we think is going to be more popular so we can be sure when it comes out we’ll be able to get that into the market in sufficient quantities to meet demand.

Discovering emerging markets

The other hope for BlackBerry’s handset business lies in developing markets, “Latin America is very important,” Sims says. “India’s very important and then there are number of important South East Asian markets.”

Part of that emerging market strategy is tied into selling mid priced smartphones into the market, Sims says. “People will say ‘the Z3 is a low end device’, if you go visit Indonesia the Z3 is not a low end device. It’s a middle market device.”

“Xiaomi is doing the low end devices at less than a hundred bucks and we’re doing a device at around $170. So we’re focused on the middle market, people who are professionals or aspiring professionals.”

“With those people in those markets we want to establish the BlackBerry brand as something they are comfortable with,” says Sims in outlining how he sees getting the handsets into business people as being the driver for the company’s other services and products.

Struggling with China

China remains an enigma for BlackBerry however, “in the last couple of years we haven’t focused on China, it’s a huge market and it’s hard for external parties to be successful on their own. Local partnerships are important.”

“John Chen (BlackBerry’s CEO) was recently in China and met with some of the local partners to talk about the possibilities of the future. It’s very preliminary and there’s nothing of any substance there yet but it is on our horizon that we’ve got to have something in the China Market.”

We’re coming for you

Despite the struggles BlackBerry has with its handset business, Sims is defiant about the company’s position in the endpoint security market.

“Ultimately it becomes a question of scale, we’ve got scale because we have a global network. None of the other EMM vendors – Good, Mobile Iron or Airwatch – none of them have the Big Data requirements that we have.”

“A year ago BlackBerry was defensive. We’re not defensive any more. People like Airwatch, Mobile Iron or Good should thank us that we were asleep at the wheel a few years ago and that allowed them to build their companies. That party’s over.”

“We’re coming after them. We have targets painted on each of those companies and as we execute our enterprise strategy we’re coming after them. If I was them I’d be feeling the breathing on the back of the neck.”

For BlackBerry the future lies in security services and the internet of things, though for the short term the company’s cash flow and market position depends upon sales of its handsets.

As the interview with John Sims shows, the company’s success depends upon a few key assumptions coming true; that’s a high risk market.

Paul travelled to the 2014 Australian Gartner Symposium on the Gold Coast as a guest of BlackBerry.

Maintaining the BlackBerry ecosystem: A review of the Passport smartphone

The BlackBerry Passport is a good smartphone but may not be enough to lock existing corporate customers into the company’s ecosystem

“Man, it’s a BlackBerry!” Exclaimed the assistant at the T-Mobile store on San Francisco’s Financial District, “I haven’t seen one of those in years.”

Generally that was the reaction in taking a BlackBerry around; a lot of bemused comments along with the the odd wistful reminiscence, usually from a forty something lawyer or banker, about how they used to love their BlackBerry back in the day.

So is the Passport is enough to rekindle Blackberry’s fortunes, or at least keep the company going until CEO John Chen can execute his Internet of Things strategy around QNX?

The BlackBerry Passport is an unusual device; with a square screen it’s a very different mobile phone that takes a little getting used to.

An irony for this reviewer is the tactile keyboard, with soft keyboards now the norm for smartphones, going back to a ‘real’ keyboard takes some getting used to and the Passport suffers from the real estate taken up by the keys.

A return to two thumb typing

The layout of the keyboard also takes some getting used to with the three row tactile QWERTY layout requiring two thumbs to use, compared to the one fingered swipe or typing options available on Android or Apple phones.

Only having three rows also presents a problem for inexperienced users — where are all the punctuation keys? The answer is they appear on the screen above while typing. While a bit clunky, the predictive software which determines which punctuation you’ll need works well.

Adding to the predictive typing features is a suggested word box that appears as you type, as one becomes more experienced in using the device this becomes a very efficient way to get messages out quickly. Overall BlackBerry has done a good job on designing the phone’s typing functions to get the most out of the form factor.

Another learning curve for users are the swipe functions, where an up gesture brings up the home screen and swipes to the the left and right let you navigate between screens and apps.

The main app on the phone is the BlackBerry Hub, a centralised repository for all information. The aim of the hub is bring together email, social media and text messages into one fixed location.

Bringing together information like this is always problematic as many of us are receiving dozens, if not hundreds, of emails, texts and social media messages a day. Overall though the Hub handles them well and integrates nicely with the major social media services including Twtitter, Facebook and LinkedIn.

The Appstore weakness

Where the software falls down is when venturing outside the pre-packaged apps — while things are better than they were, BlackBerry’s devices still suffer from a sparse app store.

The lack of a suitable WordPress app prevented this reviewer from testing out the device’s blogging potential which is a shame as the 1:1 aspect screen may well have proved to be better than the Apple and Samsung equivalents.

In the case of social media Instagram is a good example with the only free app, iGram, only offering Facebook and Twitter integration; a limitation that betrays the device’s excellent 13 Megapixel camera.

On the other important hardware matters, the phone’s battery gives well over a days life on heavy use, the company claims 24 hours talk time, and recharges through a standard Micro USB connector.

The decent battery life is reflected in the weight of the device with it tipping the scales at 196g, compared to the Samsung Galaxy 5’s 145g and the Apple iPhone 6 plus’ 172g. It’s not heavy by any means which shows some of the engineering BlackBerry has applied to the phone.

Inside the device is 32Mb of storage with the capacity to add up to 128Mb Micro SD memory, alongside the memory slot is the Nano SIM holder which worked well on both the US T-Mobile and Australian Optus 4G networks.

Maintaining the ecosystem

Unfortunately we were unable to review how well the device and its software integrated with the Black Enterprise Service as this is going to be the main selling point for the Passport.

Overall the BlackBerry Passport is a good corporate phone that’s going to appeal to organisations that wants to give their staff secure communications with smartphone capabilities.

However the handset itself is unlikely to appeal to the broader smartphone market. At best the BlackBerry Passport is an attempt to keep the company’s core market locked into the ecosystem while John Chen executes his pivot into new markets. It may not be enough.

In San Francisco’s Financial District, the guys at the T-Mobile shop are probably not going to see many more BlackBerry phones.

Chinese businesses take on the world

Xiaomi and Lenovo’s appearance in the global smartphone rankings show the increasing confidence of Chinese businesses

We’ve looked previously at how Chinese manufacturers are moving up the value chain, proof of how PRC based companies are beginning to make their mark on markets are the latest smartphone IDC rankings.

Two Chinese companies, Lenovo and Xiaomi, entered the rankings with the latter recording a threefold increase on the previous year’s sales.

Remarkably, Xiaomi only had a few hours as number three in IDC’s global ranking as Lenovo closed its Motorola acquisition shortly after the release which pushed the combined company into third position.

Top Five Smartphone Vendors, Shipments, Market Share and Year-Over-Year Growth, Q3 2014 Preliminary Data (Units in Millions)

Vendor	2014Q3 Shipment Volumes	2014Q3 Market Share	2013Q3 Shipment Volumes	2013Q3 Market Share	3Q14/3Q13 Change
1. Samsung	78.1	23.8%	85.0	32.5%	-8.2%
2. Apple	39.3	12.0%	33.8	12.9%	16.1%
3. Xiaomi	17.3	5.3%	5.6	2.1%	211.3%
4. Lenovo*	16.9	5.2%	12.3	4.7%	38.0%
4. LG*	16.8	5.1%	12.0	4.6%	39.8%
Others	159.2	48.6%	113.0	43.2%	40.8%
Total	327.6	100.0%	261.7	100.0%	25.2%

Source: IDC Worldwide Quarterly Mobile Phone Tracker, October 29, 2014

The two companies illustrate the different strategies Chinese companies are making in taking on the world; while Lenovo is growing through acquiring ‘cast off’ operations like Motorola Mobility from Google and the various hardware arms of IBM, Xiaomi is growing through selling lower budget devices into East Asian markets.

Both approaches have their strengths and benefits and illustrate as much the diversity of the markets the two companies are chasing as much as the differing management philosophies of the business.

The other message from the respective successes of Lenovo and Xiaomi is that Chinese companies, particularly manufacturers, are increasingly confident in competing in the global marketplace.

Just as Japanese manufacturers found their feet in the 1970s with many becoming global brands and market leaders, we are seeing the same thing happening with the Chinese businesses today.

Where next for the telco industry?

The telecommunications industry is facing a cultural shift as the market moves against the sector

The last thirty years have been good for the telecommunications industry; a wave of privatisations, regulatory reforms and technological change drove the sector and company profits.

As populations around the world adopted mobile phones users started enthusiastically calling and texting, Telco profits exploded.

Twenty years later the massive growth to the industry has peaked as customers have moved to using their cellphones for less lucrative data services.

So where do the telecommunications companies go next for growth and profit? Today and tomorrow I’m attending the Ovum 2020 Telecoms Summit where they’re looking at the future for the industry.

Salvation from the internet of things

The great white hope for the telco industry is the internet of things and the machine to machine (M2M) technologies; the hope being that putting SIM cards into every car, kettle and shipping container that this will be another lucrative revenue stream.

Martin Creighan, Managing Director for Australia and New Zealand at AT&T, points out that by the end of the decade there will be seven times as many connected devices as live mobile phones. This is where the opportunity lies.

The problem with the M2M vision is annual revenues per user (ARPU) for connected devices are a fraction of those from voice and messaging over the last twenty years and telcos will need more than that to maintain their revenues, let alone grow.

Moving into the cloud

One of the other revenue streams is adding cloud services, again this is a low margin business and involves competing with global giants like Amazon and Google along with the myriad of specialist companies.

Another possibility is in providing professional services as Jennifer Douglas, Director of Fixed voice and platinum for Telstra, described in the company’s home support product.

The problem with both the cloud and professional services model this requires a change in culture for the telcos, the traditional contempt telecommunications executives have for the end user doesn’t cut it in the professional services and cloud computing industries.

For the telcos, this major change is something that’s been experienced by many other industries. That a comparatively protected industry like telecommunications companies are subject to these disruptions illustrates just how no sector is safe from being uprnded.

Connecting people to spaces

Smartphones, beacons and smart software are the key to future retail success believes Proximity Insight’s Steve Orell

Beacon technologies are one of the hottest items in the Internet of Things with retailers, sports stadiums and hotels looking at how they can use these devices to improve their operations and customer experiences.

At Dreamforce 2014 Proximity Insight’s Steve Orell spoke on the event’s wearable panel about how their service plugs into beacon technology and customer service.

Proximity Insight was born out of the 2013 Dreamforce Hackathon where Orell and his team were finalists. From that, the company set up operations in New York with a focus on customer relationship management in the retail industry.

Retail isn’t the only the field that Orell sees for Proximity Insight with the hotel and casino industries as being other targets.

“With the hotel, why check-in? Why not walk in and let your smartphone do it for you?” Orell asks.

“It’s all about making live so much more seamless and slick,” Orell adds. “There’s opportunities in every sector.”

For businesses looking at rolling out beacon technologies the key is to be adding value to enhance the customer experience, Orell believes.

“You have to be delivering something to the customer beyond tracking them, it’s about making the whole retail or hospitality experience better. It has to benefit the customer.”

With beacon technologies now becoming common and the supporting hardware being built into all smartphones, we can expect to see more applications coming onto the market. It’s worth considering how your business can use them to enhance the customer experience.

Paul travelled to Dreamforce 2014 as a guest of Salesforce

Apple and the long game

Apple’s real game is in controlling a large part of the payments industry and the internet of things. The iPhone6 and watch are key steps in that strategy.

As expected, Apple announced their new range of iPhones and a smart watch today with many digital trees being felled as the tech media falls over to describe all the shiny features of the new devices.

Buried in Apple’s announcements though are the company’s real long game in payments and the Internet of Things.

For the IoT, the various ‘kits’ Apple have announced in the last year — HomeKit, HealthKit and now CloudKit — are the serious plays in this space as they bundle together programs, devices and data streams across health and smarthome applications.

CloudKit moves Apple onto another level as it makes it easier for developers to build back end applications that tie into smart devices; even if someone isn’t using Apple equipment they still may find themselves firmly in the walled garden of Cuptertino.

The long awaiting release of Apple Pay leverages iTunes’ strength as a payment platform, bundling a secure chip into the new iPhone adds to the company’s pitch of being a trusted partner to merchants and payments processors.

What today’s announcements of new hardware, software and APIs indicate is Apple’s shoring up the perimeters of its walled garden.

For it’s competitors, this raises the ante; Google Wallet has nothing like the market penetration or customer acceptance that iTunes has and earlier this week Amazon effectively admitted the Fire smartphone has been a failure by slashing prices. Facebook has made promising noises about payments but still remains locked in an advertising driven business model.

While there’s no doubt the new iPhone will be a success, although the jury is out on the smart watch, Apple’s real game is in controlling a large part of the payments industry and the internet of things. Today’s announcements are a key step in that strategy.

How Apple will have to think differently about the smartwatch

How Apple will have to think different about the smartwatch

Unsurprisingly the hype ahead of Tuesday’s media announcement by Apple is reaching a crescendo, with the consensus being that a smart watch will be the day’s main announcement.

The constant stream of targeted leaks by Apple to friendly outlets is quite tiring, however one thing that will be fascinating if all the stories are true is the software the device will run.

As Microsoft have discovered, the idea of running the same operating system across all devices just doesn’t work.

While how users interact with the devices will be the main factor, the most immediate problem will be power. If Apple Insider’s report that prototypes need to be recharged twice a day is true, then the limitations of smaller batteries are going to be considerable and software is going to have to be much more stingy with power usage.

The other big challenge for the iWatch, if that’s what it’s called, is the entire global watch market is a tiny fraction of the smartphone industry so expectations Apple’s new product will replace smartphones and tablets as a huge growth driver for the company are probably misguided.

So it’s good for Apple and its acolytes that the iPhone6 will probably be announced as well. If this has the features expected, then its likely to give the company’s slowing smartphone sales a boost.

Regardless of what’s announced on Wednesday, Apple does have the luxury of being one of the most profitable and richest companies on the planet. if a smartwatch is the major new product they have the resources and time to finesse the product and its software.