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”.

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?

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.

When in Rome …

A well-known security expert that works for the anti-virus company Sophos has stated that he uses Macs at home. While the fact that many high-profile technology experts own Macs for their personal use should really come as no shock to people who follow technology news, it could be quite surprising to the masses who still use Windows on their home computers.

Graham Cluley, a senior technology consultant at Sophos who also writes a well-read security blog for the company, was interviewed for a story on their new anti-virus software for Mac. In that article, the author was trying to determine if the software was really necessary, given that Macs are known for being resistant to viruses. Cluley stated that, “I use Macs myself at home. There’s no doubt that they are exposed to less of a threat than Windows PCs.”

Again, this shouldn’t be shocking news, but by Apple’s own study, Windows still has 80% of consumer marketshare. A lot of those 80% likely do not know the advantages of Macs in the security area. As I’ve written before, the virus problem on Windows is the “elephant in the room” for Microsoft and one of major reasons that Apple’s share of the consumer market has risen to 20%. If more people hear that high-profile technology experts are using Macs, especially those that work for anti-virus companies, that 20% will grow at a faster rate. As the saying goes, “When in Rome …”

The Cure is Worse than the Disease

Nobody wants anti-virus software. It is an unfortunate necessary evil for Windows users. To that end, anti-virus software should be as transparent to the user as possible. It should simply do its job with a minimum of interruptions to the user and have as little impact to the computer’s performance as possible. It should NEVER cause problems – because that is exactly what anti-virus software is trying to prevent!

Introducing problems is the ultimate failure of anti-virus software but unfortunately it happens all too often. I’m not surprised. The very nature of anti-virus software is to place itself deep in the guts of the operating system and monitor every bit of data passing through it. Additionally, besides dealing with extraordinarily complex software, anti-virus developers are in a race to stay ahead of malware authors. Speed kills, especially when dealing with complex systems, and anti-virus programmers are moving at breakneck speed.

The recent, well-publicized, colossal blunder on the part of McAfee that rendered many users’ computers inoperable is a testament to this fact. It is entirely feasible that for many, McAfee’s software caused more pain and suffering than any virus or spyware would have! It is also a testament that the malware issue on Windows operating systems continues to escalate. As mentioned before, the desire to stop dealing with malware is one of the top reasons users are switching away from Windows. Situations like this only shine a much brighter light on the already glaring problem.

That elephant in the room continues to get larger. Pretty soon it may crowd everyone out.

Really!?

Microsoft, really!? A security hole in Windows XP allows malicious hackers a way to compromise a computer when a user simply presses the F1 key. I mean, really – who was in charge of quality assurance at Microsoft? Dennis Nedry? Really? Really!

Look for this to become chain e-mail hoax material for the next 20 years – really.

Anti-Virus: EPIC FAIL

A few of years ago, by using a good anti-virus software, keeping it up to date, and avoiding “risky” behaviors online, I could confidently state to my clients that they would likely be virus-free. But in the last couple of years, I have perceived an increase in the number of malware infections. It has not mattered what brand of anti-malware software was being used. It seems none are completely effective all of the time. I couldn’t put my finger on it, but it just seemed like anti-malware software just wasn’t what it used to be.

Then I read this article, “Encryption and Anti-Virus are Failing,” and my suspicions were confirmed. A panel of experts at a security conference recently stated that current successful detection rates for popular anti-virus softwares are only between 70 and 90 percent. I remember when a detection rate below the high 90′s percentile was considered low! To me, detection rates like these are completely unacceptable. No wonder I’m seeing so many more malware cases. If anti-malware software leaves a 10 – 30% chance of letting an infection through, that’s a huge window of opportunity!

I’ve written before that the “elephant in the room” for Windows is its vulnerability to viruses and other malicious software. As much as Microsoft touts improved security in Windows 7, studies have shown that Windows 7 is just as susceptible to viruses as previous versions of Windows. If anti-virus software is only 70% effective, can you really call Windows secure at all? I’ve talked with a few people about this topic, stating that if this virus situation does not improve for Windows, at some point in the near future there will be a critical mass of users leaving Windows for operating systems that do not have a virus epidemic. News like this makes me think that this mass exodus may come a lot sooner than I first thought.