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.

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.

Eight is Not Great

Windows Metro InterfaceA recent article, Microsoft’s big bet: Windows 8′s ‘too many cooks’ problem, highlights one of the more common concerns technology experts have about the upcoming Windows 8: that it is trying to be everything to everyone and in doing so, will please no one. This isn’t the only article that brings up this concern, but it does do a very good job of explaining the reasons why Microsoft is trying to make Windows 8 all things to all people.

The first part of article’s title, “Microsoft’s big bet,” says a lot. For a company that still commands the largest marketshare in the PC industry, they are virtually betting the company on Windows 8. How could this be? The reason is pretty simple: Microsoft is attempting to navigate a technology transition unlike any it has ever attempted before. And as I referenced in a previous article, transitions are where tech companies go to die. From the mainframe era, to the PC era, to the Internet era, and so on, history is littered with the remains of companies that failed during times of transition. We are in the middle of the transition to The New World of Technology and Microsoft has missed the boat up to this point. They realize that they can no longer afford to rest on their laurels, but Microsoft has very little experience playing from behind. Given the incredibly rapid pace the technology industry is transitioning, Microsoft is scrambling to do something – anything. But without a clear vision of how to make Windows fit into The New World of Technology, Microsoft appears to be trying to change Windows for change’s sake.

A quote from the article sums up Microsoft’s predicament nicely,

Windows 8 has become a “Franken-system” of mish-mashed ideas, thoughts and concepts. Microsoft is desperately trying to make the forthcoming operating system a one-size-fits-all solution to everyone’s troubles.

With Microsoft betting the company, going “all in” with a Franken-system Windows 8 seems like a highly risky play. But Microsoft seems desperate and given how far they are behind, it may be their only move. Windows 8 can’t be just “good enough”. It has to be game changing if it is to preserve the current user base of Windows while transitioning to the new world of tablet devices. Microsoft needs a home run and they are definitely swinging for the fences – but in this case they only have one strike left and they aren’t very good at hitting curveballs.

iPads Outsell HP PCs in Q4 2011

15.4 Million iPadsDuring the keynote address introducing the New iPad, Apple announced that they sold 15.4 million iPads in the fourth quarter of 2011. Certainly, that’s a lot of iPads, but the more significant revelation is that Apple sold more iPads than HP sold PCs in that quarter. Compared to HP’s 15.1 million PCs, Apple’s 15.4 iPads meant that Apple outsold the world’s largest PC vendor during the holiday 2011 season. As more experts begin to acknowledge that the iPad is for all practical purposes a “PC”, this is a very significant development.

Of course, HP responded to Apple’s claim by saying, predictably, that traditional PCs aren’t dead and that a lot of people and companies still rely on them. Way to be stuck in the past, HP. But then they also stated that “… if you’re sending Junior off to college, the first computing product needed for homework is a PC.” Really? What exactly do you mean by that HP? Are college students actually required to purchase PCs? Or have they been increasingly choosing Apple’s Macintosh over the last 5 – 10 years? And could it just be possible that students are discovering that they can actually do most of their homework on an iPad? This isn’t even considering that in a year or two, students could be reading all of their textbooks from their iPads.

But seriously, what else would you expect to hear from a company that killed their tablet product and has nothing to sell but traditional PCs? HP’s former CEO specifically said that the “tablet effect is real“. Now there are some hard numbers to back that up. The Old World of Technology is ending right before our very eyes. If you haven’t already noticed, perhaps this is your wake-up call?

Steve Jobs: Leadership vs. Management

Late today, the technology industry was rocked by yet another major announcement: Steve Jobs officially stepped down as Apple CEO after a 7 month medical leave of absence. A quick search on the Internet should provide as much coverage as you care to read, but I think many are missing a simple fact. Since January, when Jobs went on medical leave, he wasn’t acting as CEO anyway. So this really doesn’t change anything except make permanent the situation that has existed for 7 months.

It is also important to note that Jobs has been elected Apple’s chairman of the board and director. While this is being reported as fact, it seems that many are also missing the significance of this development. Steve Jobs is still going to exert his influence on Apple. While he may have officially given up CEO duties, his real value to Apple is not lost.

As Steven Covey, author of The Seven Habits of Highly Effective People, made famous, there is a crucial difference between leadership and management.

Management is efficiency in climbing the ladder of success; leadership determines whether the ladder is leaning against the right wall.

Leaders provide the vision and set the direction of their organization. Managers carry out the mission that the leaders have defined. Steve Jobs has clearly brought back the vision to Apple that it was lacking in the late 80′s and 90′s. With that vision, Apple has become the largest company in the world and has completely changed the technology industry and the world in general. Luckily for Apple (and perhaps all of us), Steve Jobs’ visionary mind is still around and he will continue to put his mark on the new world of technology he helped kickstart.

iPhone on Sprint: For Real This Time?

The Wall Street Journal is reporting that Apple will release an iPhone for Sprint in October. It’s been rumored before, but this article is pretty firm on its assertion. If this ends up being true, then the WSJ has just gotten a huge scoop. Otherwise, they’ll be eating a lot of crow soon. Stay tuned …

HP: “The Tablet Effect is Real”

In the second shocking technology announcement of the week (after the Google announcement that they are going to buy Motorola Mobility), HP revealed that they are killing the TouchPad product after only 6 weeks, as well as their WebOS-based phone line. Additionally, HP stated they are considering leaving the PC business, possibly spinning-off the division that made the mobile devices and makes their PCs.

Let’s get clear just how important these announcements are.

1) The biggest PC company in the world threw in the towel after just 6 weeks in the “tablet” market. Why did I put the word tablet in quotes? More on that in a bit.

2) The biggest PC company in the world wants to get out of the PC business. The same business that brings in one-third of its revenue.

For a company to throw in the towel after 6 weeks is almost unprecedented (only Microsoft has done this with their Kin phones of last year). Sales of the Touchpad must have been utterly abysmal. This just shows how much of a lock on the market Apple has with their iPad. This is why I put the world “tablet” in quotes. As I’ve said before, along with a growing number of others, there really is no such thing as a tablet market. There is only an iPad market. People do not seem to want anything except the iPad. Most people probably aren’t even aware that the other tablets compete with the iPad. I wouldn’t be surprised if they think that the iPad is the only product of its kind – which in many respects, it is. Just look at the recent report that 97% of all web traffic by tablets is from the iPad.

This utter domination of the tablet market by Apple’s iPad explains why HP bailed out on their TouchPad so quickly. But it doesn’t explain why HP wants to get out of the PC business. Or does it?

Just look to one comment by HP’s CEO, who said “the tablet effect is real.” What he is referring to is the thought that tablet (i.e. iPad) sales are eating into PC sales. Up until now, the “tablet effect” has been sort of a hush-hush topic among the PC makers. Sure, PC sales were shrinking for the first time in history, but other factors such as the economy were surely to blame. Certainly the iPad could not be a significant factor, right? Well, now the cat’s out of the bag – big time. There’s no denying it anymore. The iPad is not only dominating the tablet market, but it is eating away at the PC market as well. HP sees the writing on the wall. The PC market has become stagnated with price being the only real differentiator. Competition is fierce and profits are slim. The PC Era is ending, the market is moving towards mobile devices, and the rats are leaving the sinking ship. Well … except for one company.

The only “PC” company that is growing sales, revenue, and profit is … you guessed it … Apple. The Macintosh personal computer, seemingly long forgotten until recently, is seeing tremendous growth while the rest of the PC industry is shrinking. So not only is Apple poised to dominate the “tablet” market, the Macintosh may be the “PC of choice” of the “Post-PC Era”.

Imagine a world where Apple completely dominates the “personal device” market – tablets, smartphones, iPods, laptops, and desktops. Does it seem like fantasy? Perhaps 10 years ago, even 5. But ever since the iPhone was introduced 4 years ago and the iPad just a year and-a-half ago, nothing seems out of reach for Apple. And perhaps companies like HP are waking up to that realization now.

Where Tech Companies Go To Die

The now-famous open letter to RIM executives references a quote that one of RIM’s CEOs recently made in regards to RIM’s so-far-not-yet-successful technology transition, “No other technology company other than Apple has successfully transitioned their platform. It’s almost never done, and it’s way harder than you realize. This transition is where tech companies go to die.”

In fact, Apple has done it by my count, 4 times (Apple II to Macintosh, Motorola 68000 processors to PowerPC processors, Classic Mac OS to Mac OS X, PowerPC processors to Intel processors). And now it is possible to argue that Apple is doing it for a 5th time, transitioning from Mac OS to iOS. How does a company like Apple manage to pull off these transitions, during both good times and bad? It stems from their deeply held beliefs that technology must be user-focused. Great technology is born from this and it requires great technology (along with proper execution) to pull off major technology transitions.

As RIM’s CEO said, most companies that try it fail. It’s an incredibly risky time, as RIM is experiencing right now. Poorly executed transitions are opportunities for customers to jump ship. It’s why Microsoft has never done it. They know their continued success is contingent on the inertia that the Windows platform has built up in the industry. But more importantly, Microsoft realizes that this inertia is maintained by all the software that runs on Windows. In order for Microsoft to develop a truly next-generation operating system, they must give up the shaky foundations that Windows is built up. But they know that if they do this, they cut the ties that binds users to Microsoft, as software that runs on Windows would likely need to be modified or completely re-written to run on a next generation of Windows. Only an exceptionally executed transition across all phases would ensure that Microsoft keeps most of their customers. There’s not yet been a need for Microsoft to take that chance. But it is becoming increasingly clear that standing still is also becoming risky. At some point Microsoft, and many other tech companies, will realize that they must make a transition to survive. And that’s when things will become very interesting.

If one pays attention to the market, it is coming into focus that Microsoft is entering (or already has entered) a transitional state. As I alluded to before, the “PC” market is transitioning into mobile devices such as tablets (i.e. the iPad) and smartphones (i.e. the iPhone). Microsoft’s announcements of Windows 8 and their attempts at re-creating their mobile strategy with Windows Phone 7 is evidence that Microsoft has realized the changing state of the market. But a lot hinges on what Microsoft does over the next two years. If Microsoft doesn’t pull off this transition well, the entire future of the company is in doubt. If one doesn’t believe that a company like Microsoft could fall, just a little study of history can show what happened to tech giants like IBM.