smartphones | Paul Wallbank - Communications Professional

Microsoft’s not like everybody else

The first advert for Microsoft’s Nokia phones is a little mysterious and worrying

“Not like everybody else” proclaims Microsoft’s first ad for its newly acquired Nokia phone division.

In what way the Microsoft-Nokia product isn’t like its Apple and Android competitors isn’t clear from the ad, but hopefully they’ll tell us.

The real concern with the Microsoft ad is that it again appears the business is being left behind in a marketplace shift as Google, Samsung, Apple and all the other smartphone leaders move to integrate their phones with smarthomes, fridges and even football stadiums.

Sadly it might turn out that, once again, Microsoft isn’t like everybody else.

Disrupting the smartphone market

The Tizen and Firefox smartphone systems threaten to disrupt the entire industry and ruin the plans of both Apple and Google.

It’s been a long time since we’ve had a three or four way war in the technology industry, with most sectors settling down into a two way fight between alternatives.

Mozilla’s promised $25 smartphone project threatens to open the mobile industry into a three way battle just as it appeared the market had comfortably settled down into an Android and iOS duopoly.

Now we see a three way race and possibly four if Samsung can get traction with its Tizen operating system that it’s bundling into the latest version of the Gear smartwatch.

One positive aspect of the four way battle is that three of the participants – Firefox, Tizen and Android are relatively open so compatibility between them isn’t impossible.

For Google and Apple though, this four way tussle presents a problem to their business plans.

Apple’s iOS ambitions of putting the software in smarthomes, connected cars and, possibly most lucratively of all, into retailing with iBeacon are threatened by a fragmented market and a rapidly eroding market share.

For Google, both Firefox and Tizen threaten the dominant position of their Android operating system that forms a plank in the company’s ambition to control the planet’s data and become an ‘identity service’.

Worse still for Google’s information ambitions, Firefox is working with Deutsche Telekom on a security initiative that will lock away users’ data.

So the stakes are high in the smartphone operating systems wars.

It’s early days to forecast the demise of either Android or Apple iOS, which is unlikely in the short term, but if Firefox’s operating system does take hold it will mean the smartphone industry is about to become a lot more complex.

Avoiding the smartphone commodity trap

Can HTC avoid the looming commodity trap for smartphone manufacturers?

HTC’s announcement that the company going to focus on lower margin, mid market smartphones illustrates the maturing of the phone marketplace.

Smartphones have been a huge, and immensely profitable, business for cellphone manufacturers however the devices are now becoming a commodity as the high end western markets become saturated and cheaper devices start to enter the marketplace.

Having been comprehensively defeated in the high end marketplace by Samsung and Apple, Taiwanese manufacturer HTC hopes to make money in the lower end of the market.

For HTC it’s questionable how profitable these cheaper markets will be; rebates to telcos and distributor markups tend to eat up most the margin while pushing up retail costs.

The biggest factor of all though is the entry of newer Chinese businesses into the market, it’s going to be a tough for the Taiwanese manufacturer to compete with these suppliers.

Even Apple and Samsung are being affected by the slowing demand for high end smartphones.

HTC’s dilemma would be familiar to most electronic manufacturers; the high end of the market is a narrow niche – the premium smartphone market, like PCs, is dominated by Apple – while the other suppliers fight not to find themselves locked into the commodity end of the market.

For HTC the trap is not to fall into the commodity trap; although it’s hard to see how they’ll do this in a smartphone market that’s increasingly becoming a low margin, high volume game where, like the PC market, there is no middle ground.

Lowered expectations – What is the future for Apple?

Where to next for Apple in an era of lowered expectations?

Last Friday I had a story in Business Spectator on the future of Apple in light of the company’s warning of a 20% fall in revenue next quarter.

The clear message from Apple’s executives was that the company is facing a terminal decline in iPod sales and the iPhone – it’s most profitable and highest selling product – is facing slower sales.

So the search is on to find something that will replicate the iPhone’s success, with the biggest candidate being the iWatch.

The problem with that is the entire wearable technology market is only forecast to be $6bn which is a seventh of Apple’s $42 billion profit last year, so the iWatch can never replace falling iPhone sales.

It may well be for Apple that the period of massive profits and growth is drawing to an end, it doesn’t mean the company is dying – for a start they has nearly $200bn in cash reserves and a healthy $150 billion in sales each year.

Short of Tim Cook unveiling something similar to the iPhone, the future for Apple is probably going to be a bit modest than past few years of huge growth, that’s not a bad thing.

Rather than being the end of Apple, it’s more a revision to the role the company has held for most of it’s existence – a high profit, niche business that sells on quality and brand rather than fighting in the commodity markets.

The end of HTML 5?

Does Salesforce’s move to native smartphone apps mean the end of mobile application standards?

One of the big debates in web design since the rise of smartphone apps has been the question of ‘going native’ or following web standards.

In an ideal world, all apps would follow the HTML web standards so designers would only have to create one app that would run on any device — a smartphone, tablet or PC — regardless of what type of software it was running.

However the HTML 5 standard has proved problematic as developers have found applications written in the language are slow with limited features, so the attraction of writing ‘native’ apps that are designed for each system remains strong as users get a faster, better experience.

The problem with that approach is that it results in having to design for different operating systems and various devices which is costly and adds complexity.

For the last two years at Dreamforce, Salesforce CEO Marc Benioff has trumpeted the advantages of the company’s HTML5 Touch product.

This year Benioff unveiled the company’s Salesforce One product — a suite of Application Program Interfaces (APIs) that simplifies building smartphone and web apps. At the media conference after the launch, Benioff even went as far to describe the once lauded Touch product as a “mistake”.

So Salesforce has abandoned HTML5, which is a blow for standard applications.

If others follow Salesforce, and it appears that is the trend, then we’ll increasingly see the smartphone industry dominated by iOS and Android as most companies lack the resources or commitment to develop for more than two platforms and their form factors.

Open standards have been one of the driving factors of the web’s success, it would be a shame if we saw the mobile market split into two warring camps reminiscent of the VHS and Beta video tape days.

Building tomorrow’s markets

As technology evolves, it gets harder to predict what customers will want in the future.

“If I’d asked my customers we’d have built a faster horse,” is a quotation often attributed, probably incorrectly, to Henry Ford.

The point of the quote is that asking today’s customers about tomorrow’s market is pretty pointless when new products change consumer behaviour.

Just as the farmer of 1906 had no inkling of how the motor car, truck and tractor would change their business, the cellphone user of 2006 had no idea of how the iPhone would change the way they used a phone and communicated with the world.

Which brings us to Nokia.

The Sami Consulting blog discusses how Nokia lost their lead in the cellphone business as the market migrated the Apple and later Android smartphones.

Nokia’s problem was they spoke to their customers about their existing mobile phone use rather than considered how the technology might evolve.

When the inventors of the touchscreen approached Nokia, the company carefully evaluated the technology, consulted their customers and decided it wouldn’t work for their products.

What does this story tell about foresight? First, it shows that innovation creates futures that are fundamentally unpredictable. We do not have facts or data about things that do not exist yet. When a mobile phone becomes an internet device with sensors, touch screens, and broadband access, it becomes a new thing. If you ask your existing customers what they like, the answer will always be about incremental improvements. When you ask about the future, the answer will always be about history.

In many ways Nokia were the beneficiaries of a transition effect, they took advantage of a brief period of technological change and were caught flat footed when the technologies evolved further.

To be fair, it’s hard to see that change when you’re focused on incremental improvements.

The motor car turned out to define the Twentieth Century – even Henry Ford couldn’t have foreseen how the automobile would change society and the design of our communities.

Both the motor industry and smartphone industries are going through major change, particularly as the internet of everything sees the two technologies coming together.

One thing is for sure, how we use our phones and cars over the next fifty years will be very different to how we use them today.

Today marks a moment of reinvention

Regardless of what it means for the wider industry, Microsoft’s deal with Nokia means both companies have entered fundamentally different phases of their businesses.

In announcing the company will acquire Nokia’s mobile and devices business, Microsoft said “Today marks a moment of reinvention”.

This is certainly true, with the retirement of Steve Ballmer, Microsoft officially enters the post Bill Gates era and today’s announcement is an admission from Nokia that their moment as the world’s dominant mobile phone manufacturer is over.

What’s notable about the deal is what Microsoft doesn’t get — particularly Nokia’s maps service. While Microsoft gets a license to use Nokia’s mapping services, it leaves the Finnish company with a valuable asset and possibly leaves it as the only company capable of competing with Google in that market.

For Microsoft, acquiring the expertise of Nokia’s engineers shouldn’t be understated, although integrating 32,000 Nokia employees will test Microsoft’s management as this increases their workforce by a third.

Possibly the most fascinating part of Microsoft’s announcement though is the comment in the second paragraph of their media release.

Microsoft will draw upon its overseas cash resources to fund the transaction.

US technology companies have been struggling to deal with the massive profits they have accumulated offshore as part of their tax minimalisation strategy. What we may now be seeing is a wave of foreign takeovers as American companies start to reduce their offshore cash stashes without incurring domestic tax bills.

If that’s true, Microsoft’s agreement with Nokia may well indicate we’re about to see many more takeovers around the world .

Regardless of what it means for the wider industry, both Microsoft and Nokia have entered fundamentally different phases of their businesses.

Could advertising have saved Blackberry?

Would advertising have saved Blackberry

Could advertising have saved Blackberry wonders Joyce Yip on the Marketing Interactive site.

Yip cites Samsung’s blanket advertising as one of the reason’s for the Korean brand’s success while Blackberry could only afford a token presence for the new Z10 phone.

While there’s no doubt Samsung and Apple’s marketing muscle has helped them dominate the smartphone market, advertising alone doesn’t explain the dominant brands’ success.

Blackberry was doomed from the moment a business friendly smartphone was released, no-one expected it at the time but it turned out to be the iPhone.

Compared to the iPhone, the Blackberry was woefully underfeatured and once corporate users discovered email wasn’t the only use for a smartphone, the Canadian company’s fate was sealed.

While the Z10 and Q10 phones were well featured devices, they are way too late for a market where Apple and Samsung have most of the sales and take all the profit.

It’s tempting to think advertising and marketing may have saved Blackberry, but the company was overtaken by a fundamental market change which left it stranded.

For a while in the late 2000s Blackberry looked untouchable in the corporate market and no-one would have expected Samsung and Apple to disrupt their position. That’s the real lesson Blackberry teaches us.

Five years of the app store

The Apple App Store enters its fifth year of disrupting the smartphone and tablet computer industries.

It’s been five years that the Apple App Store has been open for business. in that time they’ve revolutionised the smartphone industry, reinvented the tablet computer and had fifty billion downloads.

While the App Store wasn’t an original idea, plenty of telcos and handset manufacturers, had them, Apple were the first to get the formula right for the iPhone.

Their success in changing the smartphone industry lead to their dominance of the tablet industry, another sector which had settled incumbents who were disrupted by Apple’s entry into the market.

It’s notable how in both the smartphone and tablet markets, the established incumbents were struggling with the same business model that Apple got right. This is something other industries should pay attention to.

Have the smartphone’s glory days come to an end?

Do declining margins at Apple, Samsung and HTC indicate the smartphone industry’s glory days have come to an end?

Today smartphone manufacturers Samsung and HTC released their quarterly results with both reporting falling margins, does this mean the boom days of the smartphone have come to an end?

As industry analyst Asymco reports, Apple are also suffering decline margins as component prices increase, ironically some of those parts come from Samsung.

The question posed by Reuters in reporting Samsung’s decline is ”has the smartphone business peaked?”

It may well be that the glory days of the smartphone industry have come to an end as cheaper Chinese phones enter the market.

Just as the PC industry is being disrupted after three decades of growth, could it be the smartphone sector is suffering a similar change after just seven years?

How form factors evolve as tech affects design

Technology often dictates design. As tech evolves, we can rethink the design of many things we take for granted.

While out helping a friend shop for computers this morning, it occurred to me how the keyboards of laptop PCs have changed.

For many years, notepad keyboards were restricted to roughly 80 characters as the 4 x 3 ratio of screens have dictated the dimensions of of the keys. Here’s an example.

In recent times though the wider screen dimensions of laptops has seen the resurrection of an older layout — the 102 key layout with an added numerical pad.

What’s interesting about this is how technology form factors evolve.

Not so long ago mobile phone manufacturers were competing to create the smallest handset. Cellphones like the Motorola Razr pushed the limit on how small phones could be.

With the arrival of the smartphone, the size and shape of mobile phones changed. Now the limiting factor was a screen big enough to read the internet on and display a thirty key keyboard.

Now reliable handwriting recognition software means that some phones can eliminate the use of keyboards at all, which means we may start to see the race to create smaller cellphones restarting.

The layout of all of the items we use, from cars to computers, is largely determined by technology limitations. As the tech evolves, we can start to rethink how a device is designed, just as the laptop and iPhone designers did.

With whole new display, input and sensing technologies being developed, there are many household items that may well look different in the near future.

Disrupting the incumbents

Industry incumbents like Nokia and Microsoft are finding their market positions disrupted as Apple, Hauwei and Samsung reinvent the marketplaces.

One of the truisms of modern business is that no incumbent is safe, Microsoft, Nokia and Hauwei are good examples of just how businesses that five years ago dominated their industries are now struggling with changed marketplaces.

In the last two days there’s been a number of stories on how the smartphone and computer markets are changing.

According to the Wall Street Journal’s tech blog, PC manufacturers are hoping Microsoft’s changes to Windows 8 reinvigorates the computer market.

Those hopes are desperate and somewhat touching in the face of a structural shift in the marketplace. These big vendors can wait for the Big White Hope to arrive but really they have only themselves to blame for their constant mis-steps in the tablet and smartphone markets.

Now they are left behind as more nimble competitors like Apple, Samsung and the rising wave of Chinese manufacturers deliver the products consumers want.

All is not lost for Microsoft though as Chinese telecoms giant Hauwei launches a Windows Phone for the US markets which will be available through Walmart.

Hauwei’s launch in the United States is not good news though for another failing incumbent – Nokia.

Nokia’s relationship with Microsoft seems increasingly troubled and the Finnish company is struggling to retain leadership even in the emerging markets which until recently had been the only bright spot in the organisation’s global decline.

Yesterday in India, Nokia launched a $99 smartphone to shore up its failing market position on the subcontinent.

For the three months to March, Nokia had a 23 percent share of mobile phone sales in India, the world’s second-biggest cellular market by customers, Strategy Analytics estimates. Three years ago it controlled more than half the Indian market.

India isn’t the only market where Nokia is threatened – in February Hauwei launched their 4Afrika Windows Phone aimed at phone users in Egypt, Nigeria, Kenya, Ivory Coast, Angola, Morocco and South Africa.

The smartphone market is instructive on how many industries are changing, almost overnight the iPhone changed the cell phone sector and three years later Apple repeated the trick with the iPad, in both cases incumbents like Motorola, Nokia and Microsoft found themselves flat footed.

As barriers are falling with cheaper manufacturing, faster prototyping and more accessible design tools, many other industries are facing the same disruption.

The question for every incumbent should be where the next disruption is coming from.

In fact, we all need to ask that question as those disruptions are changing our own jobs and communities.