Technology analysis of the latest gadgets, consoles, and computer architectures.

Thursday, October 07, 2010

Computing Titans of Today (Part 1)

There are many computer technology companies that can be considered innovators and market drivers both in the past and even into the present, but there are only a notable few who really stand out and simultaneously frighten and inspire both their counterparts and their customers. It is interesting to note that these companies overlap so much that for all intensive purposes they are competitors, yet they all find themselves developing for one-another's platform to remain relevant to all of their customers.

If you are a 2010 computer user, you likely know which four companies I am about to talk about. But first I would like to break these companies into their respective financial markets to try and account for the driving forces of these companies.

Hardware - The original primary driver of the computing industry. When there is a need to create and compute, the first thing required is good hardware. What began as a calculator evolved into a general purpose computer, handling any task from accounting to communications, graphic design to writing, and launching a rocket to feeding a person's lungs and heart. Regardless of whether a company wants to sell a mainframe, a desktop, or an embedded device, software is required to unleash the true potential of the device. The greater the profit margin desired, the more value that must be extracted from the hardware in the form of higher quality parts and design, better firmware and software design and implementation, and mechanical and industrial design. But ultimately the goal is to sell more hardware.

Software - The next big driver of the computing industry. When the hardware was readily available but the hardware companies could not keep up with the demand for more applications, the software development had to be incentivized independent from hardware sales. This was and continues to be a difficult item to sell as there is no physical object being sold; instead, a license is sold with no guarantee on usability for a large period of time. The value of software is dependent upon what currently exists that can also accomplish a similar task compared to what time efficiency, usability, and flashiness its derivative or replacement can provide. And finally, the value of the product and/or continued development and features depend on how much work is required to develop that software, all of which is driven by the hardware and the engineers or developers. On the other hand, the profit margin can be higher than hardware by increasing sales and with exposure to parallel functions and applications. So the goal is to sell more of the same software without requiring too much free support and updates (or to give out software but charge lots for support and updates).

Direct Sales - The dotcom boom led to another big driver of the computing industry. In order to increase profit, a store needs to sell large quantities of stuff with low overhead. Selling certain types of physical goods can garner a decent margin, but increasing variety encourages larger orders and repeat customers, and selling virtual goods, especially when these virtual goods are homegrown, provide the greatest revenue potential. Focus is on ease of purchase in all manners possible, anywhere the customer happens to be.

Advertising - The main driver of radio and television is also the latest big driver of the computing industry. More eyeballs equate to greater revenue, and the more technology a company owns that attracts attention, the larger the profit margin. Rapid adaptation is required to retain and increase mindshare, which certainly makes it the most difficult avenue to pursue, but with the potential for greater exposure and reward.

The positive aspect of having four driving forces in the computing industry is that the technology must adapt rapidly, which in turn leads to convergence as, in the end, all computers have similar hardware and software but different system implementations that produce similar results.

The negative aspect is that small technology innovators will struggle to survive in this landscape unless they manage to find a niche slightly outside these four domains, are acquired by a company with strengths in one of these four domains, or steal enough mindshare away from a weakened technology player to gain enough wealth to compete with a dominant player in of these four domains.

This leads me to formally introduce the four dominant leaders of the technology industry in 2010. Once again, this is likely to change in future years, but all these companies have either acquired enough wealth, mindshare, or both to continue to innovate, dominate, and compete effectively. If it wasn't for the existence of these four driving forces, there would be a technology monopoly (think Microsoft in the '90s). Despite the antitrust rulings against Microsoft being fairly weak and too late, the resurgance of Apple and the arrival of and Google have led to enough competition to provide some sort of balance to the consumer computing industry.

To be continued...

Monday, April 12, 2010

Palm Revenue Possibilities

A lot has changed since I last posted about a possible Palm and Nokia Union. Nokia has partnered with Intel and merged Moblin with Maemo to create Meego. Palm launched the Pre Plus and Pixi Plus on Verizon but flopped with the launch, thus resulting in an awesome deal for Verizon subscribers (free Mobile Hot Spot!). Apple released the iPad and iPhone OS 4.0, addressing multitasking in a not-so-elegant way and completely overlooking notification reform. Finally, HTC announced the Evo on Sprint, surpassing Palm in the launch of the first 4G phone on their preferred network.

Even though Palm should still have ~$400 million in the bank (which really should be able to keep Palm alive longer than a year if they are focusing on R&D engineering and considering they finally dropped their failure of an advertising partner), there are strong rumors that HTC, Cisco, and Lenevo are in the second round of bidding for Palm, so it's about time I throw in my $0.02 and take another stab at it. Enjoy!

Cisco - Strong Internet-centric company with more than $30 billion in the bank. Powerful media-rich product line including the Flip Mini HD, Telepresence (see the two videos below for a sample), Digital Whiteboard, and of course Linksys. They were also one of the first companies to support Wimax/4G, but despite being the backbone of the Internet and being a fairly open company (WRT54G and specification-wise), they are lacking in one key area and that is smartphones. With Apple, Google, Microsoft, and Nokia growing in significance with mobile platforms and the Internet, Cisco may desire to branch out even further in consumer devices and adopt Palm WebOS as their mobile platform and help bring a better multimedia and connected experience. I would certainly stick with WebOS and Palm devices if Cisco purchased and invested in Palm.

HTC - Produces popular smartphones that currently run Windows Mobile and Android. Hardware revisions seem to hit the market very rapidly in recent months (Touch Pro 2, HD2, Nexus One, Evo). Palm WebOS would benefit from solid hardware with frequent revisions and modern features that compete with Nokia. Palm's patent portfolio in the PDA and smartphone market could help HTC ward off Apple in their present quarrel.

Lenevo - Owner of IBM's laptop and desktop division and demonstrated a cool laptop with a detachable screen tablet called the IdeaPad U1 (see below for video). They are currently using a Linux-based operating system for the detached screen. Lenevo also introduced an Android-based smartphone at CES, but in a quickly fragmented Android marketplace WebOS could prove to be a unique differentiator for Palm. WebOS would also be a great OS for a tablet / iPad competitor (maybe the IdeaPad U2?). The OS could also be licensed to Lenevo as a tablet OS; either way, I would probably buy one.

Don't forget to take a look at Engadget's take on this. Long live Palm and WebOS!

Wednesday, February 17, 2010

U.S. Smartphone Adoption is Being Held Back by Wireless Carriers...YEAH I SAID IT!

It is amazing how much smartphones have grown in popularity in the last few years. The mobile market took much longer to mature than the general computing market. It took a licensable advanced and continually evolving computer architecture (ARM), shrinking process technology, dense memory capacities (both in solid-state and RAM), and optimization of open-source operating systems (Darwin and Linux) and software (Webkit) for mobile platforms to bring about an enjoyable media and internet-rich experience to mobile phones. The PC market was able to thrive with a proprietary computer architecture (x86), closed-source operating system (Windows), and inefficient software, but Moore's law and form factor made up for the loss of performance and capability caused by this approach.

Thanks to the steps (whether intentional or not) made in the computing market to share technological innovations and reduce cost, size, and power consumption, all while increasing performance and storage capacity, products such as the Apple iPhone, Windows Mobile 6.x, Palm WebOS, and the Blackberry have made it possible to not only schedule but also accomplish tasks and consume live on-demand content while in transit. Apple introduced the MessagePad, a 7" x 4" device running Newton that provided one of the first stylus-based implementations with PIM and sync technology. Palm brought about PIM and sync functionality and mobile applications with the Palm Pilot 1000, a 4.72" x 3" device running a 16MHz 68000 processor with only 128KB of RAM. The Nokia 9000 was one of the first mobile phones with web and PIM capabilities. By the time Windows CE evolved into PocketPC devices, ARM (pushed via Intel's XScale) clocked at 133MHz+ made it possible for software to play music (without needing an expansion Handspring module) and video. Once Direct3D support arrived on the Microsoft platform and 400MHz processors became commonplace, mobile gaming on general purpose devices took off. Returning to smartphones, the Symbian OS (now open-source) combined with an Ericsson R380 touch-screen phone brought about the first modern PDA phone, followed by the Handspring (now Palm) Treo. The RIM Blackberry smartphone was the first mobile email solution that was fast and robust, thanks to the enterprise server software developed by RIM.

Up until email and web services were made available on smartphones, the barrier of entry was cost of the device; aside from exclusivity and handset tied to a specific carrier, one could still opt for a standard voice plan and still take advantage of using Hot-or-Active sync'd and preinstalled applications. Admittedly, having 2 different wireless standards (CDMA vs. GSM) and locking people into multi-year contracts with a phone that was locked to that specific carrier did not help the industry as a whole, but the low cost of entry was beneficial to the explosion of mobile phone usage in the U.S.

Then came the Blackberry email plan, adding $15 a month to a voice plan. The wireless web plans were not compatible with all phones (in my case, the Kyocera 7135 on U.S. Cellular), and they were costly ($15 a month for each desired "service" or $1.50+ per access, $0.50/MB). Add on top of that text messaging fees (up to $20 a month for unlimited, $5 for 250 messages, $0.25 per message) and you're easily paying up to $70 a month per person for wireless service! No wonder text messages had such a delayed start in the states compared to Europe and Asia. And with slow adoption of text messages, there was a limited driving force to use MMS; U.S. phones are just starting to come standard with 2-5 megapixel cameras, but Nokia and Samsung were selling 5 megapixel feature phones over 2 years ago!

Then Apple came along with the iPhone. By incorporating innovations Apple and other mobile device companies have been developing for over 15 years, they released a device that could handle the multimedia, PDA, and mobile web needs of the populace. Adapting Safari and using a capacitive touch screen was certainly innovative, but arguably Apple's negotiation with a wireless carrier was the move to help spur mass adoption. Apple's iPod really took off once they released a Windows version and added a music store to iTunes, working with the labels on a solution they were comfortable with. Unfortunately, in the case of mobile data, the trend went in the opposite direction. Shortly after music within the iTunes store lost its DRM and maintained a relatively low cost that Apple dictated, the iPhone monthly plan went from unlimited data (using Edge) and 200 text messages for $60 a month (~$15-20 a month premium) to just unlimited data (using 3G or Edge) for $70 a month ($30 a month premium). For the equivalent plan to the original iPhone, an average iPhone user would be paying $75 + tax and fees. In other words, as much as Apple tried to redefine mobile usage and spur mass adoption, AT&T changes the terms once again and we're back to square one.

These days, buying a smartphone through a carrier typically involves signing a 2 year contract for a plan costing $70 a month or more. The Blackberry is still selling a large number phones due to being free or nearly free with contract, but I suspect that the majority of cell phone users are still hesitant to adopt a smartphone due to monthly plan costs. When the decision lies between choosing a feature phone with the option of basic web capabilities for $10 extra and a smartphone that requires the customer to pay $30 extra per month, most people will choose the feature phone unless they can really justify the expense. Let's not forget that modern smartphones have wifi, thus nullifying the need for the extra expense, yet it is forced upon the customer at purchase.

Interesting enough, PC can be built or purchased for under the cost of a smartphone at retail, yet the modern smartphone is more personal than a personal computer. Yes, people may argue that they do not need a smartphone, but at one point one may have made the same argument about the personal computer. As smartphones are becoming more advanced and PCs cheaper, it would be natural for them to appeal to a larger audience. But I know people personally who will not buy a smartphone because of how much it adds to the cost of a plan. Sprint is heading in the right direction with their Simply Everything plan (which includes unlimited data and texting), but Sprint (just like every other U.S. carrier except for T-Mobile) requires you to pay $70 a month for a plan. T-Mobile is also heading in the right direction by encouraging people to purchase a smartphone (like the Nexus One via Google) out-right and then opt to pay for the plan desired. As much as the U.S. audience loves free phones, I think that ultimately people will have to accept the full cost of the phone so that we can finally start to have a real mobile computer revolution, free from carrier intervention.

Finally though, I think that we are moments away from being able to purchase data-only as the base plan for all the services we desire. We shouldn't be required to pay for voice minutes or text messages; instead, we'll pay for data through a utility company and subscribe to voice and data services through independent providers. Yes, this means wireless data will be metered, but this way you will pay for exactly what you use. By reducing the base plan cost of a mobile device to a modest fee, people will be more willing to pay for smartphones and the data access that powers them, and we'll be able to change the way we look at mobile forever.

See also:
Smartphone Device & Chip Market Opportunities 2010
Editorial: Voice rate cuts, data rate hikes, and the case for metered billing