What the Apple-IBM Deal Means to The Rest of Us

For most, the announcement a few weeks ago of a historic strategic partnership between Apple and IBM was probably a curious aside to their daily lives. If an average person heard about the announcement at all, they probably thought that it was an interesting bit of news, but nothing worth really paying attention to. Other than those who find the Apple-IBM partnership a strange combination of companies given their history, I doubt many people gave it a second thought. While this new turn of events truly does not directly affect either the consumer or small business markets at this time, the announcement is worth taking a look at to understand the big picture.
apple_and_ibm
The strategic partnership between Apple and IBM will likely solidify Apple’s position in the large enterprise market. Whereas Apple is dominating the consumer market, IBM is still probably the most respected name in corporate technology. For IBM to “bless” Apple is a big deal. While Apple has been pushing its way into large corporations through the choices of employees as consumers, to partner with IBM will only acceleate a somewhat begrudging acceptance by IT directors and their staffs. However, this is really of no direct importance to small businesses or consumers. So why does this announcement matter to the rest of us?

Truly it is a sign of the times. Fifteen years ago Apple was hardly a blip on the radar in the technology market. Now, Apple has so thoroughly dominated the consumer and small business markets that even IBM wants to partner with them in the enterprise space. For Apple to become an “accepted” vendor in the large corporate market only means that Apple’s position as a major player in the technology market will be entrenched for the long term. And it may finally push them into markets that have been historically very slow to adopt new technology such as financial and healthcare. But perhaps more importantly, this means that others in the technology market may be significantly impacted by this announcement.

For one, this may squash any of the tiny advancements that the Android platform was making into the corporate space. With the fragmentation of the Android platform, corporations were already squeamish about supporting Android. Samsung was the only company that truly has any unified marketshare and they are not a big name in corporate IT. Now IT departments can lean on the trust that executives have in the IBM name to support Apple iPhones and iPads.

The bigger impact, however, may be on Microsoft. Given that Microsoft’s mobile platform has virtually no presence in the consumer market and their small business influence is quickly fading each day, the large enterprise market is their stronghold. If IBM’s influence can push Apple into companies that would have otherwise looked at Microsoft, this could be a significant blow to Microsoft. Where Android isn’t really a significant money-maker for Google, any hit that Microsoft takes in the enterprise market could mean big drops in revenue.

The bottom line is that Apple is in an extremely strong position now. If anyone had any perceptions left over from the 1990′s of Apple being  a second-class citizen in the technology market, it is now time to wipe those thoughts clean. Similarly, perceptions of Microsoft being the dominant name in technology should be strongly reconsidered. While Microsoft is still making a lot of money today, the rapid pace of technology change has left them very vulnerable.

The Decline of BlackBerry and Windows in the Smartphone Market

State of the Tech Guest post by Lucy Price

nokia-blackberryOperating system giant Microsoft may have moved ahead of BlackBerry (BB) with their Windows Phone (WP) devices in terms of market share but we can’t set aside the reality that both platforms are struggling in third and fourth place. Android and Apple now command the Smartphone market once controlled by BlackBerry and Microsoft. Can these two once dominant players survive? What are the main reasons for their fall?

The Current Market Situation

According to International Data Corporation (IDC)’s latest statistics:

  • Android has almost 73% global market share with 187 million handsets sold in Q2 2013;
  • Apple’s iOS has 13.2% market share with 31.2 million handsets sold;
  • Windows Phone has 3.7% share with 8.7 million units shipped
  • and BlackBerry OS, in spite of releasing their new BB10 operating system earlier this year, dropped to fourth place with only 2.9% share or 6.8 million units sold last quarter.

However, the smartphone market is tricky to get a handle on due to several factors:

  • Global marketshare is very different from United States marketshare. (Android 52%, iOS 40%, BlackBerry 3%, Windows 2%) The influence of the United States market on the rest of the world is significant and can not be excluded from global marketshare analysis.
  • Market share can be calculated by operating system or manufacturer. Apple is the only manufacturer of the iPhone and therefore profits from all iPhones sold, whereas there are several manufacturers of Android, Windows, and BlackBerry phones. In the Android market, only Samsung can be considered successful by measure of profitability. Profitability is ultimately why companies manufacture products and unprofitable manufacturers will not likely have longevity in the market. This could skew market share numbers in the near future.
  • Market share can be calculated by sales into the channel or sales to end-users. Not all manufacturers calculate sales in the same way.
  • In regards to platform viability, he smartphone market is tied to the tablet market. Apple’s iPad holds a stronger position in the tablet market, and Windows and BlackBerry’s shares are minuscule.
  • The smartphone market is still growing, with all major manufacturers showing growth, even as marketshare fluctuates.
  • Market share statistics are generally quoted from the most recent quarter, ignoring the entire installed base of devices currently in use.
  • Market share is only one measure of a platform’s viability. Other statistics show that iOS is actually used by more people and developers are making more money on the iOS platform. This final measurement is very important as will be shown later in this article.

Not Necessarily Inferior Hardware

If we observe the smartphones running the WP and BB platforms, we’ll notice that their specifications are at least on par with the latest innovations in mobile technology. For example the Nokia Lumia 1020 packs the most advanced camera for a mobile device so far. It boasts a 41-megapixel capacity which is far more megapixels than most other smartphones, such as the iPhone’s 8-megapixel camera.

A Lack of Applications

One major factor behind the fall of the the WP and BB platforms are their lack of applications. The WP marketplace only has 100,000 available apps according to Appcelerator’s 2013 Q2 developer survey. And many of which are mere copycats and third-grade clones of the other apps that are available in the leading platforms. For example, in lieu of the Instagram photo sharing app, they have Instacam, which offers a similar experience but with limited features and functions. Even the YouTube application is just a simple app linking the user to the web version through the device’s browser.

BlackBerry claims that their new BB 10 OS has 100,000 applications based on CRN’s latest report. But we have to take into account that 20% of that number are actually Android apps that were ported to the system with the use of an emulation engine. Moreover, these apps are actually optimized for older versions of Android, meaning, they are now outdated based on current standards and specifications.

Microsoft plus Nokia equals “Mokia”

Users need apps to maximize their smartphones’ capabilities and, so far, mobile manufacturers like Nokia are aware of this reality. Recently, the company’s VP for app development aired his disappointment towards Microsoft for the decline of Nokia sales. According to Bryan Biniak, “people rely on applications for their day-to-day life and if you don’t have something which I use in my day-to-day life I’m not going to switch [operating systems] because I don’t want to compromise the way I live my life just to switch to a phone.” Biniak also stressed that, “we are releasing new devices frequently and for every new device, if there is an app that somebody cares about that’s not there that’s a missed opportunity of a sale.”

His statements would prove prescient as exactly a week later, Nokia agreed to a $7.2B acquisition of its devices and services unit by Microsoft. Nokia is the largest manufacturer of Windows Phones through the Lumia series but sales were down 24% in spite of its record sales. Once the deal is finalized and the companies operations merged, all future smartphones will become Microsoft-branded. Building on their previous history, an acquisition like this could mean greater synergy between the two manufacturers and result in a more focused and competitive end product. But given Microsoft’s failure with their self-branded Surface tablets, Microsoft has yet to prove they can compete in the mobile device market.

Microsoft Isn’t After the Top Spot

With the emergence of Mokia, BB’s potential as a relevant competitor in smartphone market share becomes even bleaker. Peter Garnry, equity strategist at Saxo Bank, suggested that the company focus on its security and data network capabilities instead of trying to compete directly against Google, Apple, and Windows with a fourth operating system.

In an interview with Microsoft Business manager Larry Liebman, they consider their current position as a “victory.” Liebman added, “We think we’re solidly the third ecosystem right now.  That’s a huge announcement in some respects.  [WP] growing faster than anyone else right now.” While it seems a stretch to consider 3rd place a victory over the falling BlackBerry platform, Microsoft has the luxury of a significant cashflow from other markets. Windows on the PC and Microsoft Office keep Microsoft in a strong cash position for now, so they have time to develop their market share.

Creating a strong following of app developers for either Microsoft of BlackBerry is now a chicken-and-egg problem. Without a strong market share (or other platform viability measurements) developers have little incentive to create for those platforms. But without a strong app marketplace, those platforms are not likely to grow stronger. BlackBerry almost certainly does not have the cash reserves to reverse their fall. However, Microsoft with their recent purchase of Nokia and a strong cash position may just be able to weather the storm and become a strong third-place player.

About The Author

Lucy Price is a specialist in web design, branding, pop music and the latest gadgets. Her love of classical music takes up most of his spare time and she also maintains a passion for action movies. You can follow her on Twitter @lucyyyprice

 

Apple Event Scheduled for September 10th

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This was the invitation that Apple sent out today

In case you missed it, Apple sent out invites to selected people today announcing an event for Septmeber 10th. It is widely expected that Apple will introduce new iPhones along with iOS 7. Rumors strongly point to two iPhones being released: an expected upgrade to the iPhone 5 being called the “iPhone 5S” plus a lower cost “iPhone 5C.” The “C” may potentially stand for “color”, as in that iPhone may offer various color choices. The invitation sent out shows a variety of colors, which seems to support the idea of color choices, but to me also seems to hint at iOS 7′s new color scheme. I guess we’ll all see in one week.

Microsoft Buys Nokia’s Phone Business; Follows Apple’s Model

Nokia CEO Stephen Elop and Microsoft CEO Steve Ballmer announce plans for a broad strategic partnership to build a new global mobile ecosystem at a press conference in London, UK February 11, 2011. Nokia and Microsoft plan to form a broad strategic partneThe big news in the tech industry today is that Microsoft is buying Nokia’s cellphone business in a $7 billion deal. Only a little more than a week after announcing CEO Steve Ballmer will retire within the next twelve months, this is apparently another step in the massive reorganization of Microsoft and their business model announced in July. In order to better compete in the New World of Technology, Microsoft hopes to emulate Apple’s model of designing and manufacturing both the hardware and software in their products.

What does this mean for the technology industry? Does it change Microsoft’s position in the market significantly? For the short-term the answer is definitely no. The deal isn’t expected to complete until the first quarter of 2014 and will be subject to approval by the shareholders of both companies. Likely too, US and EU regulators will want to investigate the merger and give it their approval. Assuming that the deal is completed by first quarter 2014, the actual work of merging both companies will take a significant amount of time. If any notable changes occur before the holiday shopping period of 2014, I’ll be very surprised. So if the holiday season of 2015 is the first opportunity Microsoft has to truly capitalize on a purchase of Nokia, we must wonder if Microsoft will have any chance of making waves in the smartphone market by that time.

Given the tight relationship between Microsoft and Nokia over the last couple of years – Nokia-brand smartphones account for 85% of Windows phones sold – this deal isn’t really surprising. Nor does it give much reason to believe that anything different will ensue now that Microsoft will officially absorb Nokia’s cellphone business operations. Windows phones did overtake BlackBerry as the #3 smartphone platform recently, but that isn’t saying much as BlackBerry is in a death spiral. Simply purchasing a cellphone manufacturing business doesn’t ensure Microsoft will do any better than they have so far.

What this deal does give Microsoft is complete control over their smartphone platform, which should give them the ability to quickly incorporate new features into Windows phone since they do no longer need to coordinate with their hardware partners. This sounds good, except the fact that Microsoft just wrote off nearly $1 billion of unsold Surface tablets. This debacle shows that Microsoft hasn’t executed well even when they did produce a product of their own hardware design. Do we expect they will do any better now that they will be able to manufacture their own smartphones as well? Or does this simply give Microsoft more rope to hang themselves with?

The only bright spot Microsoft has is their strong cashflow position. Microsoft has the money to throw at their problems and therefore has time to reinvent themselves, even if this takes several years. The only question is will the company that comes out of this be anything like the Microsoft of old? Also if Microsoft isn’t careful, they could blow their cash cows in the next couple of years if they risk everything on Windows, risking the entire company along the way.

So the bottom line is that while Microsoft seems to have figured out that in order to compete in the New World of Technology that Apple is dominating they must follow the rules that Apple has set, this is no guarantee of success. If Microsoft will have any success with their massive reorganization, it will take years to see it bear fruit. This is far too long for any business to wait for Microsoft to get their act together, so business should continue to migrate away from Old World Microsoft technologies without hesitation. If Microsoft ever does create compelling New World technologies in the next few years, business can evaluate those as they would any new technology from any other company.

It Seems Everyone is Writing Off the Surface

Besides Microsoft’s commercials, it seems few people are talking about the Surface. Microsoft recently announced a $900 million write-down related to unsold Surface RT inventory. Yes, you read that right. Microsoft lost almost $1 billion due to unsold inventory of their much-hyped iPad competitor. The quote in the following article I think sums it up: “the company misread the consumer market by a comical degree.”

Microsoft's Struggles Grow: 9 Key Points

Microsoft’s Struggles Grow: 9 Key PointsRedmond, we have a problem. Microsoft’s $900 million Surface RT write-down was not the only troubling sign in the company’s rough earnings report.

It should be obvious by now that virtually no one is interested in Microsoft’s Surface devices, even with Microsoft’s trumpeting that they are the only tablet devices that run Microsoft Office (only because Microsoft won’t release Office for any other tablet platform). Can we read into this that no one really cares about running Microsoft Office on a tablet? Going further can we read into this that no one really cares about Microsoft Office?

The take-away for small business and consumers here is to not tie your fortunes to Microsoft technology any longer. If you haven’t already begun mitigating your reliance on Microsoft technology, you must do so now – or risk emulating the company’s poor performance.

Move Over New Coke and Make Some Room for Windows 8

 

Shattered Windows

Is Windows Officially Shattered?

According to various news stories published this week, Microsoft will reverse course on their Windows 8 strategy during the next major update to the operating system. User backlash has been so strong against the changes introduced in Windows 8 (as record-low sales figures seem to support) that analysts expect that the codename “Blue” update due by the end of the year may include a return of the “Start Menu” as well as a way for users to completely bypass the “tiled” interface that is the defining characteristic of the Windows 8 interface.

Many are calling this the biggest commercial failure since New Coke. As I have described in my previous articles about Windows 8, Microsoft needed to hit a home run with Windows 8. Unfortunately, it seems they have struck out and Windows 8 now has a nasty stigma associated with it, just like Windows Vista. The difference is that Microsoft had time to recover from their previous debacles. The mobile device market dominated by Apple and Google is moving much too fast for Microsoft. I don’t believe Windows 8 will be able to shake the “New Coke” label in time to seriously compete in The New World of Technology.

As before, this is simply another sign for small business owners, professionals, and technology-concerned individuals to plan their migration away from a Microsoft-dependent environment. The writing is all over the wall here. There’s no use in crying over the new “New Coke”.

The Biggest Decline in PC Shipments in History

PC Flatline

The PC Market is Flatlining

This news was so big that it was even being covered by the mainstream media yesterday: for the first quarter of 2013, PC shipments fell by 13.9% according to research firm IDC. This is the largest drop in PC sales since 1994, which is when IDC began tracking this information. Competing company Gartner, which uses a different methodology to track shipments and sales, reported that PC shipments fell by 11.2%, also one of the biggest declines in history.

It’s no secret PC sales have been declining over the last several years. PC industry pundits have been contorting themselves in all sorts of different ways to try to explain why this is, but most are simply avoiding the stark reality: the PC era is over. It’s time to come to grips that we are in The New World of Technology.

The underlying theme to this story is the fact that Windows 8 has done nothing to help PC sales. The real question, given the lackluster response to the operating system, is Windows 8 actually hurting PC sales? As I’ve said before, unless Microsoft hits a home run with Windows 8, the future of the company is seriously in doubt. At this point, it not only seems they’ve struck out, but to continue the baseball analogy, it seems they’ve let the runner get doubled up as well.

What does this mean for you? If it hasn’t been clear to you before now, hopefully news like this makes it glaringly obvious that you must get on board with New World Technologies NOW. The time to wait has long passed. Those who have waited to this point are already at a big disadvantage to those that have already begun benefiting from all that new technology has to offer. Anyone who continues to wait, especially from a business perspective, does so at their own peril. Specifically, if you thought Windows 8 was going to be Microsoft’s resurgence, all evidence points otherwise.

Do not invest further into Microsoft-based technologies without consulting with experts who have experience with both Old World and New World technologies. All too often, those who were experts in Old World technologies have little to no experience with New World technologies in a real-world environment. They show a bias towards Old World implementations because that is all they know and are comfortable with. Make sure you are getting advice from those who have actual experience with both New and Old World technologies and can make unbiased recommendations based on your needs, not their own.

New World Trends

370478-the-five-biggest-trends-at-ces-2013This article highlights some of the trends the author observed at this year’s Consumer Electronics Show. It’s a good read, if not a little overly-geeky.

The 8 Biggest Trends at CES 2013 - Slideshow from PCMag.com

The 8 Biggest Trends at CES 2013 – Slideshow from PCMag.comPundits were decrying this year’s CES from the get-go, thanks to Microsoft pulling out of the show for the first time since the mid-1990s.

I wanted to respond to a couple of things the author said.

There’s also a general sense out there that devices really aren’t the story anymore. Hardware manufacturers don’t want to hear that, necessarily, but it’s true that it’s no longer about specs for the majority of consumers. It’s more about what apps you can run and what services you can use—especially now that, as a rule, hardware has become powerful enough to do what people want.

I couldn’t agree more! But I’m surprised it’s taken this long for others to realize.

Hardware design will always be important, and in fact, it’s more important than ever. But the days of shopping for a PC based on how much RAM it comes with or how fast the processor is are pretty much gone, and that’s beginning to hold true for phones and tablets too.

Beginning to hold true for phones and tablets? It’s been true since the first day the iPhone came out! Welcome to The New World of Technology, buddy! Better late by 5 years than never, I guess :)

Samsung Playing Wait-and-See with Windows RT

mssurface-200x120Never a company to pass by an opportunity to make a quick buck, Samsung is putting its plans on hold to see how well Windows RT shakes out in the marketplace. A less-than-stellar performance by Microsoft’s Surface tablet and other Windows RT-based tablets over the 2012 holiday season is probably what gave Samsung pause. Any way you slice it, this doesn’t bode well for Microsoft’s plans in the mobile device market.

Samsung cancels plans for Windows RT tablet in the US | ZDNet

Samsung cancels plans for Windows RT tablet in the US | ZDNetWith the Surface Pro coming out soon, I think the educational effort would be even more difficult as consumers, and retail sales associates, still seem to be confused about…

 

Suffering the Surface

Microsoft SurfaceYes, I’m enough of a geek that on first weekend the Microsoft Surface was introduced, I found out which local mall had the Surface on display and spent some time testing it. At the time, my impression was that the interface was far too complicated for a tablet and that while Microsoft trumpets the keyboard as an optional accessory, the reality is that it is all about the keyboard. The Surface without a keyboard is like owning a laptop, well, without a keyboard. The Windows RT operating system feels like it assumes you’ll be using the keyboard and the actual shape of the Surface is too long to hold comfortably in portrait mode. To add insult to injury, the first Surface model I was playing with had a problem bringing up the touchscreen keyboard when I disconnected the keyboard cover. The Microsoft representative was baffled why it wouldn’t work and claimed “somebody must have uninstalled the keyboard driver”. Wow. If anyone still doesn’t understand why the iPad is enormously popular, the fact that the iPad will never have a problem like “uninstalling a keyboard driver” should be all the proof required.

Early reviews seemed to back up my own testing. The Windows RT (and Windows 8) operating system felt like Microsoft had created a Frankenstein-ed mess, clumsily throwing together concepts from traditional Windows with a brand-new tablet interface. The Surface all together just did not feel like a final, polished product, awkward to use and rough around the edges. It’s been a few months now and unfortunately for Microsoft, the reviews haven’t changed much. I read an article, Sorry Microsoft, I am breaking up with the Surface, that highlighted many of the issues I uncovered.

After too many hours trying to make the Surface fit into my daily work routine, I have placed it on a shelf while I use other devices to go about my business.

This is exactly what many of my clients did with older tablet PCs running Windows that were available years before the iPad. They were all excited to get them, and then the reality of the the devices were underwhelming at best. Many of them went unused or relegated to use as a heavy laptop. It looks like Microsoft hasn’t learned their lesson.

It’s because I require the gear I use to do everything I need and without fuss. The Surface fails me in this regard despite a big effort on my part to make it work.

“Without fuss”. That is exactly what most people expect from their technology devices. Which is exactly what Apple delivers so much better than any other company. Which is exactly why Apple catapulted past Microsoft and everybody else to become the most valuable technology company in the world.

Whatever the reason, I am tired of constantly trying to get stuff done with my Surface, only to put it away after a few hours in sheer frustration. I can pick up any other gadget in my possession, and that’s quite a few, and easily get things done with little effort.

Do I need to go on?

I am sure some will think I’m too sensitive or that I haven’t given the Surface with Windows 8 enough time. That may be but I’ve given it far more time and effort than I’ve given any other platform and device I’ve used. It’s left me in a continual state of frustration every time I’ve used the Surface to work and I just can’t take it anymore.

I think this statement can easily apply to the Old World of Technology in general. Years of suffering with hard-to-use technology left people frustrated. As soon as a viable alternative showed up, people flocked to Apple and haven’t looked back. Microsoft’s Surface is a throwback to those long days of suffering, and I don’t think anyone wants to go back to that.