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 …

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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.

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In a move that was as surprising as it is rife with possibilities, Google announced today they will purchase Motorola’s Mobility division for a staggering $12.5 billion. It is clear that this move is a game-changer for the smartphone industry. But the real question is who’s game does it change?

Is this move simply a patent portfolio purchase? Perhaps Google is trying to shore itself up against future litigation like the lawsuits their hardware partners are encountering now. But it isn’t evident that Motorola Mobility had any patents worth gobbling up. If so, likely the other players who have been purchasing patent portfolios would have been bidding. And from early reports, it appears that Google will keep Motorola Mobility running as a wholly owned and independent subsidiary. So it doesn’t appear to just be a patent grab – especially considering what Google paid. $12.5 billion is about one-third of their cash reserves.

So if Google is interested in making both the hardware and software (a la the Apple iPhone and iPad), where does this leave Google’s current Android partners? Does Google actually intend to allow other companies to continue to make Android-based phones and tablets while competing against them with their own devices? Does Google think that their partners are excited about this?

If it is true that Google wants to move to an Apple-style production model, it only reinforces the idea that Apple’s top-to-bottom control model is the only viable blueprint for the New World of smartphones. The Old World of smartphones was characterized by one company creating the software, other companies creating the hardware, and the carriers enforcing their whims on both. I’ve written many times how Google was following the footsteps of the Old World smartphone market with potentially disastrous results. Perhaps they’ve figured this out now?

Then the question becomes can Google compete against Apple in the game Apple invented? Apple has been in the hardware manufacturing business for over 35 years, has a minimum 4 year head-start on smartphone manufacturing, and has ample experience with all the business infrastructure required to run a company that makes physical products for their customers (support staff, fabrication contacts, supply chains, etc.). Google has never competed in this market before, and when they tip-toed into it with their Nexus One phone, most agree it was a disaster across the board for Google. Has Google learned from their mistakes or are they hoping that Motorola’s experience will fill in the gaps? Either way, it seems like a long shot for Google to take Apple head-on. But, after a couple of years of doing things the Old World way, perhaps Google has come to the realization it is their only viable strategy?

If so, can Google rollout this new model quickly enough to avoid a potential disaster? If Google chooses this new path, it goes against almost everything Google has said to this point regarding their strategy for the smartphone market. Not only could this destroy some of their credibility in the industry, but it could also devastate their relationships with their current hardware partners. What would happen if their partners suddenly stopped making new phones (say after the holidays this year)? Could Google’s Android platform survive such a blow? Could Google have a full-blown operation running to counter this potential so soon?

The bottom line is that this move won’t have any effect on the market until at least the beginning of next year. However, it is not too early for those considering device purchases to ponder the ramifications that this move will have. Primarily, if Google’s move destroys their relationships with their current hardware partners, what will happen to their options for support and upgradability over the next couple of years? If one buys an Android-based Samsung phone today, for example, and expects to keep it for 2 years, will they be orphaned in 6 – 9 months?

Already, Apple iOS devices have an overall ease-of-use and reliability advantage over the various Android-based devices. Now a cloud of uncertainty exists over the future of the current line-up of Android devices. At least until it is clear what Google’s plans are with this purchase and what effect it will have on their current hardware partners, I must recommend extreme prudence to those considering a purchase of an Android device.

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To those that follow the industry, it’s no secret that the company that makes the Blackberry, RIM, is in trouble. From a sales perspective, they still sell a lot of devices, but from a consumer perspective, they are nearly forgotten outside of the “old” smartphone market (i.e. corporations and tech-savvy people that have had Blackberries for a long time). Industry experts have been warning that RIM has fallen way behind to Apple’s iOS (iPhone and iPad) and Google’s Android platforms for some time now. But it doesn’t take an expert to see that the operating system of the Blackberry is still rooted in it’s original design that was created in the late 90′s. It was great back then, but certainly seems dated today.

An open letter to RIM’s executive management from an anonymous RIM senior manager was recently published on the Internet. The letter portrays a company internally dysfunctional and lost on what it needs to do to successfully compete. This is the major takeaway for anyone who has any interest in the Blackberry platform.

However, while the letter is focused on RIM’s issues, it brings up many topics about the smartphone industry that I have talked about before, both in this blog and to my clients directly. It is those points that I’d like to emphasize, taking quotes from the letter.

We often make product decisions based on strategic alignment, partner requests or even legal advice — the end user doesn’t care. We simply have to admit that Apple is nailing this and it is one of the reasons they have people lining up overnight at stores around the world, and products sold out for months. These people aren’t hypnotized zombies, they simply love beautifully designed products that are user centric and work how they are supposed to work.

I’ve made reference many times to how most smartphone vendors market their products as if they are “made by geeks for geeks”. They talk about specs, speed, capacity, and how “kick-ass” they are. Yet the reality is that most other smartphones simply don’t work as well as the iPhone. What this letter points out, and I can substantiate, is regardless of all the marketing done, if a product simply doesn’t work how it is supposed to (and the common expectation is that it will work as well as the iPhone), then the end-users will not like it. For all the “cool” technology behind a product, users just want something that works and works well. The iPhone should have made this abundantly clear to all tech companies. Obviously, it hasn’t sunk in yet for most.

Until companies embrace user-focused product development AND then figure out how to successfully implement it, they won’t touch Apple. And therein lies the rub. Companies must first embrace this thinking, which is extraordinarily difficult for most tech companies to come to grips with. It won’t happen overnight. There’s a lot of corporate culture to change and that takes time. And then once that long process is over, the company actually has to figure out how to make great, user-friendly products. That of course takes vision and talent, but it also takes experience. That is experience Apple has learned over 35 years. RIM, and most tech companies, have very little of it.

There is no polite way to say this, but it’s true — BlackBerry smartphone apps suck. Even PlayBook, with all its glorious power, looks like a Fisher Price toy with its Adobe AIR/Flash apps.

The original iPhone was successful. It made people stand up and take notice. Looking back, however, it really didn’t make that much of a dent in the smartphone market. It was the next year that Apple changed the world by introducing the App Store. Since that time, the tremendous success of the App Store has catapulted iOS devices into every aspect of society. Overnight it was no longer enough to make a nice smartphone. That smartphone had to run apps – and lots of them. It took a year or two for competitors to even get into the game. Now it seems that Apple’s experience working with third-party developers as well as the polished and mature software development environment provided for the iOS (both honed for years on the Macintosh platform) have put Apple into a position where the quality of their Apps is head-and-shoulders above everyone else. No other tech company (besides Microsoft) has the wealth of experience working with developers and development tools, so it would seem that this puts RIM at a distinct disadvantage.

25 million iPad users don’t care that it doesn’t have Flash or true multitasking, so why make that a focus in our campaigns? I’ll answer that for you: it’s because that’s all that differentiates our products and its lazy marketing … My mother wants an iPad and iPhone because it is simple and appeals to her. Powerful multitasking doesn’t.

Earlier I mentioned how most smartphone companies market their products as if they were “made by geeks for geeks”. Compare this to Apple’s marketing where they highlight the simplicity and ease-of-use of their products. In many cases, Apple’s marketing is inconsequential as the real secret to their growth is word-of-mouth. Apple owners tend to become evangelistic about their devices, proudly showing them off to their friends and family who quickly purchase their own Apple products and continue to spread the word. Again, most tech companies simply don’t understand that “old world” marketing only appeals to tech-savvy people. When the smartphone market was small and made up of mostly geeks, that worked well. Now that Apple has kicked open the doors of the smartphone market to the mainstream, that type of marketing is no longer effective. But again, it will take a complete corporate culture change for a company to embrace this type of thinking, then they must create the products that are user-focused, AND then they must understand how to market it. Again, none of this will happen overnight.

The bottom line is this letter highlights the trouble with RIM, but it basically shows the fundamental weaknesses of most tech companies which Apple is currently exploiting. The secret to Apple’s success is that they are the ONLY company in the market with so much experience in user-focused computing. That experience has been gained over 35 years, starting in the dawn of the personal computer market. No other company can touch that level of expertise and it is showing now. Only the companies that are strong enough to stick around, gain the necessary experience, and change their corporate culture will have any chance of competing with Apple. Unfortunately for RIM, time is a luxury it does not seem they have. Unless RIM can pull off a miracle, dramatically change their company, and introduce products that can feasibly compete in the new world of technology, it seems their days are numbered.

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It has been reported that Microsoft is killing their ill-fated Zune player, allowing the company to focus on other devices. For those of you that didn’t know about the Zune (I’m not surprised), it was Microsoft’s attempt at an iPod. First released in 2006, it never was as easy to use or had the integration with a service like iTunes that made the iPod such a success. It could also be argued that younger demographics see Microsoft as a brand their parents used, not a brand they identify with.

The Zune is just another in a long line of digital media players from a variety of well-known and not-so-well-known companies to fall by the wayside in the last 10 years since the iPod was introduced. The question to ask is if Microsoft couldn’t crack the iPod market, can anybody? And the follow up question is what about the iPhone and iPad markets?

For what it’s worth, the fact that Microsoft couldn’t make inroads against the iPod may be as much of an indictment against Microsoft as it is an indication of Apple’s strength in the market. But the demise of the iPod has been predicted nearly every year by so-called experts in the field and it has yet to happen. So the failure of the Zune isn’t just due to any incompetence on Microsoft’s part, especially when companies like Sony with their Walkman brand had no better results.

Let this be a wake-up call to anyone who is sitting on the sidelines, hedging their bets on the iPhone and iPad. If this story teaches us anything it is that Apple certainly is not a flash in the pan. Those who are waiting (hoping?) for the market to catch up with Apple are letting their competitors who are already leveraging these technologies gain the upper hand.

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One of the great folklores of the technology industry is the story of the Osborne Computer Corporation and their demise due to an ill-timed product announcement. According to the tale (of which the details may or may not be accurate), Osborne pre-announced an upcoming new computer in an effort to stave off competition. But instead of wooing customers from their competitors, this announcement led to the sudden cancellation of orders for their current computer model. They could not ship their new model for several months, inventory piled up even with drastic price cuts, and in the mean time, the lack of cash flow killed the company and they filed bankruptcy. Regardless if it is completely accurate, the story is so well-known that the term “Osborning” or “pulling an Osborne” is understood to mean when a company’s announcement of a future product kills the sales of its current products.

I bring up this bit of tech lore because perhaps Nokia has Osborned its current line of Symbian smartphones, or at least it seems they are very afraid they have. By publicly aligning themselves with Microsoft’s Windows Phone 7 operating system, many questions arose over the future of the Symbian line of phones. Nokia didn’t do themselves any favors by not clearly defining their intention for Symbian. They only gave a very confusing statement by calling Symbian their “franchise platform”, virtually ensuring that anyone who has any vested interest in the platform was left in limbo. I myself questioned how Nokia would be able to successfully split focus among Symbian and Windows Phone 7.

Now a Microsoft executive is publicly urging Symbian developers not to abandon that platform. This is highly unusual that an executive of a company tries to bolster a platform with which they virtually compete. Of course, now that Microsoft and Nokia have partnered it is somewhat understandable, but it is still very strange that Microsoft would make this announcement instead of Nokia. It appears to me Nokia fears that the Symbian development community doesn’t believe what Nokia is saying so they figured they might believe Microsoft.

Yet, even Microsoft’s statement is confusing as in virtually the same breath they encourage Symbian developers to stick with it, they also encourage them to get familiar with Windows Phone 7. The entire situation reminds me greatly of politicians spinning damage control. The common perception is that Nokia is abandoning Symbian and so developers are hesitant to continue to support that platform, and I’m sure certain large corporate buyers are questioning the platform as well. Nokia is trying to manage the situation so that they don’t get Osborned, because if the bottom falls out of the Symbian market before they get rolling with Windows Phone 7, it could greatly hurt Nokia’s chances to remain a significant player in the smartphone market – which ironically is exactly what they are trying to achieve by partnering with Microsoft. As I mentioned in my previous article, this is the risk they felt they had to take, but perhaps they didn’t anticipate the Osborne Effect.

Which just goes to show that those who don’t study their tech history are doomed to repeat it!

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A few days ago, Nokia CEO Stephen Elop sent a memo to his company admitting what was clear to most in the industry: Nokia has fallen way behind in the smartphone market. He used an analogy of a man standing on a burning oil platform in the North Atlantic. The man could either stand on the platform and die for certain, or he could jump into the frigid waters and risk freezing to death. While the man would never have jumped into the water under any other circumstances, it was his only chance at survival. So he leaped. He relates this story to Nokia. The current situation dictates they must make a drastic decision or face certain doom.

Today, Nokia and Microsoft announced a strategic alliance where Windows Phone 7 will become the primary smartphone platform for Nokia. Also significant, at least within the organizational structure of Nokia, is that they will split their mobile business into two units: Smart Devices and Mobile Phones.

My first thought was that this alliance would be beneficial for both companies. Nokia gets a modern smartphone platform and Microsoft gets the support of the largest cellphone manufacturer in world. However, on further inspection, this isn’t necessarily a slam dunk.

It is interesting that Nokia has chosen to split their operations between “smart” devices and “non-smart”. It speaks to their view that the two markets are so distinct that they should completely separate the two. Is this the right decision? Time will tell, but can a company sustain two separate focuses like this? It may be that they must to have any chance of success. If one fails, the other may survive.

Also interesting is that Nokia will retain their previous flagship platform, the Symbian OS. They are now calling it their “franchise platform”. This very vague description makes it difficult to understand what Nokia’s intention is. Yet, it is clear to me that they are still following the same path that the “old guard” of the smartphone industry have followed: place their bets across various different platforms and various different form factors and carriers. Nokia’s CEO acknowledges that Apple changed the game, in fact using that very phrase. Yet he apparently fails to grasp how they did it: by focusing. Apple didn’t create multiple form factors and didn’t attempt to spread their phone around every carrier they could. And they definitely didn’t create multiple operating systems.

And I don’t know about you, but comparing your new business partner to jumping in the the North Atlantic doesn’t exactly make it sound like a trusting relationship. But then when you’re getting into bed with Microsoft, I guess it doesn’t hurt to sleep with one eye open.

So looking at the deal, while it could be a powerhouse arrangement, I don’t believe either company has the marketing prowess to make it highly successful. This is primarily because both companies don’t have the necessary focus. Microsoft is still courting other phone vendors, and Nokia has other platforms they are still clinging to. So unless both companies are willing to completely commit to each other, like any marriage, it just isn’t going to end up well.

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I am lucky enough to know someone who received their Verizon iPhone today. I took a picture of it, which you can click to zoom in if you wish. She mentioned she had a lot of trouble getting it activated, primarily due to the incompetence of the first Verizon support representative she talked to. The second one got her up and running right away.

That “Verizon” in the upper left corner sure looks weird!

I also perceived that the Verizon iPhone 4 seems rather weighty! I don’t recall the AT&T iPhone 4 being so hefty feeling. Does the CDMA radio weigh more? Can anyone else confirm this?

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A recent survey found that of current Verizon smartphone users, 66% of BlackBerry and 44% of Android owners plan to switch to the iPhone. Given that Verizon has the largest subscriber base in the US, that’s a LOT of smartphone defections. Is this a devastating body blow or a knockout punch to those respective smartphone platforms? Only time will tell, but I must say I was shocked when I read the article reporting the survey.

Almost as impressive (at least for Verizon) is that the same research firm also concluded that 26% of current AT&T iPhone users will switch to Verizon. That’s a non-trivial number of subscribers jumping ship for Verizon. I expect that percentage to be higher in the areas most notorious for poor AT&T iPhone service, such as New York and San Francisco. I myself don’t plan on switching because I’m happy with AT&T’s service in my area and the ability to talk and use the data features of the phone at the same time is important to me. I wonder how many AT&T users realize that Verizon’s network does not support this ability? AT&T sure is trying to make sure people are aware of this with their latest series of commercials.

Regarding the respective wireless networks, the article does touch upon the question of whether Verizon’s network will be able to handle the crushing load all those shiny new iPhones will place upon it. Either Verizon will be able to boast about its superior network, or AT&T will be vindicated for its perceived service issues. Also interesting to watch will be if AT&T’s network will improve if a quarter of iPhone users switch to Verizon.

A thought just came to my mind. I wonder which provider Apple executives will use for their iPhones? Does anyone have any insight to Apple’s corporate cell phone policies?

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According to early news reports, the Verizon iPhone has already sold out pre-orders in less than a day. Verizon is crediting the iPhone with the “most successful first day sales in the history of the company”, stating that it broke all previous records in the first two hours. “…when you consider these initial orders were placed between the hours of 3 a.m. and 5 a.m., it is an incredible success story,” said Verizon Wireless CEO Dan Mead. Another point to note is that these sales were only made to existing Verizon customers. Customers new to Verizon have yet to be able to purchase a Verizon iPhone.

So the questions of how well the Verizon iPhone would sell seem to have been answered. And it does not appear many people are holding off buying an iPhone until the summer.

The next important question will be how many people defect from AT&T (and other providers) when the general public is able to purchase Verizon iPhones on the 10th (with pre-orders on the 9th).

Another question that has been brought up is what Verizon will do with their customers who are not eligible for upgrade or promotional pricing for the iPhone. For many customers, it will be cheaper to switch to AT&T than to pay full price for a Verizon iPhone. Verizon may have a customer satisfaction crisis on their hands if they don’t tread carefully. It will be interesting to see how they deal with that.

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