I decided it was time to update the website with a new look. Most importantly, The Mayo615 site now supports Google’s AMP (Accelerated Mobile Pages), an open source initiative, enabling pages to display quickly and optimally on mobile devices. Have a browse and leave me a comment on what you think.
NOTE: My original post, originally published in January 2013, continues to be one of the most viewed on the site. Android and Apple have enjoyed an estimated 98% market share between the two, and many of my earlier projections regarding this market appear to have been borne out. However, the smartphone market has now matured to the point that it is at a strategic inflection point which has major implications for the future of this market and the major competitors. The rapid maturation of the smartphone market should have been foreseen: the rise of domestic Chinese competition combined with the predictable end of the Western consumer fascination with “the next smartphone”
NOTE: My original post, originally published in January 2013, continues to be one of the most viewed on the site. Android and Apple have enjoyed an estimated 98% market share between the two, and many of my earlier projections regarding this market appear to have been borne out. However, the smartphone market has now matured to the point that it is at a strategic inflection point which has major implications for the future of this market and the major competitors.
The signs of a dangerous strategic inflection point in the global smartphone market have been evident for some time: the rapid rise of domestic Chinese competition combined with the predictable end of the Western consumer fascination with “the next smartphone.” Five years ago, Samsung Electronics, the South Korean technology giant sat atop the Chinese market, selling nearly one of every five devices there. Today, Samsung is an also-ran, controlling less than 1% of the world’s largest smartphone market. Samsung has trimmed local staff and last month closed one of its two Chinese smartphone factories. Surely, Apple must have been aware of this and the growing number of much lower cost domestic Chinese competitors that were already hammering Samsung. Apple’s release of a lower cost iPhone, the XR, in Asia in October 2018 appears to have been a case of too little too late. Sales of the device have been disappointing in both Japan and China, and Apple has been relegated to offering “trade-ins” to camouflage slashing the price of the XR. Apple had ample warning over at least a five year period.
Meanwhile, I sensed a very different kind of maturation of the smartphone market in North America and Europe. In what I like to call the smartphone market “Star Wars” phenomenon, each new generation of smartphones was greeted with a hysteria that was only paralleled by the Star Wars craze. This simply could not continue indefinitely. Beginning in 2017 it was apparent the smartphone market as a whole was already shrinking, and there was significant anecdotal information in the media that smartphone hysteria was waning, if not publicly available hard data. I began having discussions about this with Tim Bajarin, one of the top Apple analysts. As Apple moved to launch the iPhone X and broke the $1000 price point barrier it encountered clear if perhaps not overwhelming evidence that the smartphone market was softening: more people chose not to upgrade their phones. I like to say that the last major feature consumers seemed to want/need was water resistance, as so many had already experienced the disastrous “toilet drop.” I view the Bluetooth earbud phenomenon as a distraction and perhaps a hint of the coming change. Samsung flirted with water resistance as early as the Samsung Galaxy S5, perhaps because water resistance had become a standard feature in the Japanese market. By 2018, water resistance was standardized, and the market began experimenting with “the next big thing” for phones, folding screens. WTF? It was clear to me that the smartphone market had run out of gas, and was undergoing rapid maturation, as phones were no longer fascinating and novel, but just simply commodity devices.
To my mind, and IMHO, this has been a case study in a classic “strategic inflection point” that was missed by both Samsung and Apple. Samsung might be forgiven for being the first to cross into the inflection point, while the media was still promoting “the next smartphone” hysteria, and not yet recognizing the sense of the market. Apple has no such excuse. The rapid maturation of the smartphone market should have been foreseen by Apple. Apple’s most disturbing move was the decision to increase pricing rather than delivering greater value, at exactly the wrong time. The crucial rhetorical question is what are the larger implications for Apple’s future business?
READ MORE: Apple Beware: Samsung’s Fall in China Was Swift
READ MORE: Samsung Profit Outlook Surprisingly Weak
| Quarter | 2017Q1 | 2017Q2 | 2017Q3 | 2017Q4 | 2018Q1 | 2018Q2 | 2018Q3 |
|---|---|---|---|---|---|---|---|
| Samsung | 23,2% | 22,9% | 22,1% | 18,9% | 23,5% | 21,0% | 20,3% |
| Huawei | 10,0% | 11,0% | 10,4% | 10,7% | 11,8% | 15,9% | 14,6% |
| Apple | 14,7% | 11,8% | 12,4% | 19,6% | 15,7% | 12,1% | 13,2% |
| Xiaomi | 4,3% | 6,2% | 7,5% | 7,1% | 8,4% | 9,5% | 9,5% |
| OPPO | 7,5% | 8,0% | 8,1% | 6,9% | 7,4% | 8,6% | 8,4% |
| Others | 40,2% | 40,1% | 39,6% | 36,8% | 33,2% | 32,9% | 33,9% |
| TOTAL | 100,0% | 100,0% | 100,0% | 100,0% | 100,0% | 100,0% | 100,0% |
In one of the most interesting high tech scenarios in years, the “smart mobile” OS (operating system) market is shaping up to be a classic Battle of the Titans. Key strategic issues, theories, speculation, and money, lots of it, are making this a great real-time strategy and marketing case study for management students of all ages (smile). So as Dell prepares to fade into the sunset, get yourself a drink of your choice, and some popcorn, sit back and watch it all unfold.
The best metaphor I can apply to this might be a “destruction derby” featuring at least two players, or perhaps a bizarre multidimensional Super Bowl or Rugby World Cup match, with four teams on one playing field with four goal posts at each cardinal point of the compass.. At the moment all four teams are tackling, passing, and running at each other in a confused pile. There are scrums, rucks and mauls in multiple locations. Two competitors, Google and Apple appear to be winning. The other two, Microsoft and Research in Motion, are pretty banged up, but still playing.
The two currently dominant competitors, Google Android with its acquisition of Motorola Mobility, and Apple IOS are rapidly consolidating and expanding their global market positions, via partnerships, vertical integration, and application development ecosystems. Microsoft has publicly committed to spending massively to make Windows 8 the third OS option, but a recent IDC mobile OS market forecast projects Microsoft with only a miniscule share in 2015. Something tells me that Steve Ballmer will go on a rampage if that happens, rather like the video of him screaming and dancing on stage in my post “Extrovert or Introvert, Authentic Presentations Take Practice,” November 30th. http://mayo615.com/2012/11/30/introvert-or-extrovert-authentic-presentations-take-practice/
The key question is whether Microsoft or RIM, will be able to establish a third mobile OS to a survivable market position. It is not at all clear that either can do so at this point. The market is also speculating that mobile hardware market leader Samsung, is possibly considering making its own play by creating its own mobile OS ecosystem. While this may seem far fetched, this kind of vertical integration seems to be making a resurgence as a strategic move, after having been discredited. Then there is the perennial Nokia, who has seemed to be on death’s door, but may be coming back. As a strategic partner for Microsoft, Nokia’s fate may have a huge bearing on Microsoft’s strategy to reinvent itself as the PC goes into atrial fibrillation. Will Amazon enter the fray with its own smart phone entrant, and if so, with whose OS? Will Research in Motion and the Blackberry be able to achieve a survivable market share, or is RIM already a walking zombie?
Finally, in a kind of death dance patent dispute reminiscent of the film, Gladiator, Nokia and RIM are now locked in new lawsuits and counter-lawsuits, as if to say, “If neither of us are going to survive, we might as well kill each other for the entertainment value.”
Here’s a more concise overview of the race to be the third mobile platform:
For Management students, this real time case study offers the opportunity to apply and ponder:
1. The time tested 1976 Boston Consulting Group (Bruce Henderson) “rule of three and four.” In a stable mature market there can be no more than three surviving competitors, the largest of which can have no more than four times the share of the smallest of the three. Here, the question is whether a third competitor can successfully emerge at all?
2. Barriers to market entry. Former Intel Marketing VP, Bill Davidow‘s book, Marketing High Technology, An Insider’s View, still considered the standard on the topic, suggested his own metric for a barrier to a new market entrant, or even a competitor just struggling to survive the market shakeout. The market entry barrier rule of thumb in dollars is three-quarters the most recent annual revenue of the market leader. In this case, that is a very big B number… Microsoft has the bucks, but is it just too late?
3. Vertical integration. Rumors of Samsung introducing its own mobile OS seem implausible, but hey Nvidia just announced its own gaming console to compete with Microsoft, Nintendo, and Sony.
4. Resources and capabilities. It is necessary to consider the respective resources and capabilities of each of the many direct players, and those playing in related markets that bear on the mobile OS market.
5. Related markets, new markets, peripherally involved competitors and products which all could play a role in the eventual outcome of this. The integrated Internet HDTV market is only one example. Featuring Apple, Microsoft, Google, and Samsung, and the HDTV manufacturers, it could influence things. What if Amazon were to vertically integrate and introduce its own smart phone?
This is the hairball of this Century so far. Are you all still with me, here?
Amidst news of LinkedIn being bought by Microsoft, one mystery remains: Where have all of the “Super Connectors” gone? It appears that the website built on making connections might frown upon having too many.
Most users on LinkedIn have under 500 connections. There is a subsection of LinkedInusers who are connected to hundreds of thousands of people. Individually Steven Burda and Zura Kakushadze have accumulated more connections than the majority of people in your office combined. Their accounts, along with a slew of others have vanished.
It’s impossible to determine exactly how many of their accounts were deactivated, mostly because outside of LinkedIn messages nobody knows how to reach each other. Their voices have been lost. While they wait in limbo for an answer as to when their accounts will be reinstated, we can only make assumptions as to what the real reason for their disappearance is.
Kakushadze earned his Ph.D in Theoretical Physics, has over 11 years of experience in quantitative finance, and has published over 100 scientific papers. Burda has a background in finance, IT, and accounting but feels at home as a social media consultant. To say that their loyal followers are missing out on their teachings is an understatement.
Curiosity may have killed the cat, but I wanted to know why they were deleted. Did they violate the terms of service? Did they somehow game the system, lie, cheat, or steal? I was able to contact the top two most connected users to get their side of the story.
LinkedIn is built on the expectation that you can build your professional identity and discover opportunities online. Mutual friends on LinkedIn introduced me to these two Super Connectors who felt as though they had grown too large of a following, and were banned because of it.
When I was a child I cared for a friend’s pet hamster while she was away. I knew I had to feed him, but I didn’t know how often. One day, I emptied the whole box of food into the cage and let the hamster eat as it pleased. I came back to check in on little Hammie, and to my dismay he had passed away.
I later learned that he had eaten himself to death. He didn’t know any better, food was good, it helped him to survive.
The same goes for LinkedIn users whose businesses thrive on the platform. Why were they given the ability to make connections only to be slapped on the wrist when they had too many?
The top ten Super Connectors have all been denied access to their accounts. In fact, when you go to their pages it simply says, “Sorry, this profile couldn’t be displayed.” Most claim that their emails asking for help from LinkedIn have gone ignored.
L.I.O.N: LinkedIn Open Networker. These people usually have the most connections, and currently it’s not known why some people are capped at thirty thousand while others aren’t.
I have nearly 30k connections and 8k open requests that I cannot accept. I use LinkedIn to advertise my business, Bikini Luxe, and to connect with like minded people. These days it’s all about who you know, not what you know.
When asked how they amassed such a following, Kakushadze said, “Painstakingly. You either receive a connection request or you send one. One at a time.”
We can only speculate as to what the motives are, but the vague wording of the LinkedIn Terms of Service leaves a lot to the imagination. According to Kakushadze he doesn’t market, advertise, or make any money from LinkedIn. His main purpose on the website is to popularize his research and spread knowledge.
His papers on quantum finance, cancer research, and theoretical physics make my head spin. Why anyone (or any Social Platform) would want to halt someone like him from educating others entirely for free is beyond me.
Steven Burda spent ten years carefully cultivating his LinkedIn connections and growing his business. Will people still be interested in attending his LinkedIn Workshops if he isn’t actually on the platform any longer?
What I have found is that this could happen to anyone, for any reason. What we are led to believe to be our virtual property is not really ours at all, and it can be taken away at any time.
In a world where who you are on Social Media is all that matters, when your popularity online grants you access to more clientele and deems you as valid, having that stripped away when you’ve worked hard to achieve it must be devastating.
Talk on the street suggests that Hootsuite’s problems are not all related to the downturn in the larger venture capital and private investment markets. There has been criticism of HootSuite’s newest Dashboard iteration, the Hootsuite software design and development process in general, and rumors of stagnant revenue growth as competition has entered the market. In addition, there has been criticism of Holme’s personal leadership at Hootsuite, suggesting that he has been spending too much time on “cardboard desktops” and land deals, as the company’s problems have mounted.
In a related development which may suggest the further contraction of investor interest in startups with very large valuations, The Wall Street Journal today reported that many Wall Street mutual funds were reducing their exposure to startup investments. Historically, mutual funds have invested in high-risk startups only via well-known, reputable venture capital firms, who solict the mutual funds managers. However, recently, and in the cases of some startups like Uber and Hootsuite, the mutual funds have taken direct investment positions. This appears to be ending, and venture capital firms may be hard pressed to attract to their own VC funds:
READ MORE: Mutual funds sour on startup investments
Reblogged From Bloomberg News
Published Wednesday, Mar. 02, 2016 5:31PM EST
Last updated Wednesday, Mar. 02, 2016 5:40PM ES
Ryan Holmes, Founder & CEO of Hootsuite
Fidelity Investments cut the value of its stake in Hootsuite Media Inc., one of Canada’s most highly valued technology startups, in a sign that lowered U.S. investor expectations are making their way north of the border. The Boston asset manager wrote down its investment in Hootsuite, maker of social media marketing software, by 18 per cent.
Fidelity was the lead investor when Hootsuite raised $60-million in 2014. That financing round valued the Vancouver company at $1-billion, according to research firm CB Insights. Hootsuite is one of only two Canadian unicorns, the researcher said. The other is messaging app developer Kik Interactive Inc.
As startup financing begins to slow, investors have been reevaluating some of their portfolios. Like other fund managers, Fidelity periodically readjusts the value of its private stock holdings, based on a variety of factors, and is required to disclose the data publicly. The 18 per cent writedown of Hootsuite, from June to December, was disclosed in public filings.
Fidelity marked down its stakes in several corporate software startups in January, but it maintained high expectations for some social networking companies, including Pinterest Inc. and Snapchat Inc. With the writedown of Hootsuite, Fidelity values its holding below what it originally paid. Hootsuite didn’t immediately have a comment.
Last year, Hootsuite Chief Executive Officer Ryan Holmes said that an initial public offering was eventually in the cards but that he was focused at the time on increasing the company’s cash flow. Hootsuite hired a chief financial officer in October. Then it cut some employees in December.
Hootsuite said in October that more than 10 million people use its social media platform to help organize advertising campaigns, interact with customers or streamline their social media presence. The company also provides tools for businesses to produce content for their employees to share on their personal accounts. Hootsuite has said it’s raised at least $250-million since it was founded in 2008.
Hopefully this comes as no surprise to many, but for some, alas, I am afraid they have yet to get the email. It’s yet another case of the 1% versus the 99%. Only one percent of Web app developers have made any real money, the other ninety-nine percent are SOL. Forty-seven percent of those, make absolutely no money or less than $100 on their app. Not surprisingly there are now over a million apps on the Apple store, and when you add all of the other sources for apps, you can see that the problem is coming to a head. I saw this coming over two years ago and wrote about the problem on this blog, citing a New York Times story published about that time, describing the dark underbelly of the Web app development culture. In a satire of the problem, last year The Onion published a gag story about a new app called “Squander” that enabled users to “geolocate others nearby who had also wasted $2 on the same app.”
Hopefully this comes as no surprise to many, but for some, alas, I am afraid they have yet to get the email. It’s yet another case of the 1% versus the 99%. Only one percent of Web app developers have made any real money, the other ninety-nine percent are SOL. Forty-seven percent of those, make absolutely no money or less than $100 on their app. Not surprisingly there are now over a million apps on the Apple store, and when you add all of the other sources for apps, you can see that the problem is coming to a head. I saw this coming nearly two years ago and wrote about the problem on this blog, citing a New York Times story published about that time, describing the dark underbelly of the Web app development culture. In a satire of the problem, last year The Onion published a gag story about a new app called “Squander” that enabled users to “geolocate others nearby who had also wasted $2 on the same app.”
Read more: App development boom’s depressing underbelly, November 18, 2012
Read more: Silicon Valley’s misguided love affair with an app for everything, March 4, 2013
Reblogged from ValleyWag, July 25th, 2014
The new American Dream was going so well: drop out, make an app for sending emojis that disappear after 5 seconds, and collect your check. But it turns out the app gold rush is brokenfor almost everyone.
A new, giant survey of 10,000 app developers from around the world reveals a hugely depressing reality: your app will almost certainly not succeed. Maybe it’s a given that in such a crowded market, standing out is a tough feat. But the numbers are terribly dismal: 2 percent ofall app developers pull in over 50 percent of all app revenue—”The revenue distribution is so heavily skewed towards the top that just 1.6% of developers make multiples of the other 98.4% combined.” A staggering 47% of app developers either make literally no money, or less than $100 per month, per app. Hardly Instagram money, or even decent-Instagram-knockoff money.
It’s easy to understand why. There are well over a million apps in Apple’s App Store alone, and unless you’re in the tippy-top of tippiest-top, odds are nobody will even notice you exist. Of course, the fact that it’s considered gauche to even try to make money as a software business doesn’t help:
VisionMobile, which conducted the study, concludes that “It seems extremely unlikely the market can sustain anything like the current level of developers for many more years.”
Good. The fewer people chase dreams of becoming the next Yo (a sentence that makes me want to sever my fingers, one by one), the more young talent can dedicate itself to building the next Washboard.
It appears the creators of Candy Crush Saga are ready to cash in on the success of the simple three-of-a-kind matching game.
King, the British company behind the Candy Crush Saga as well as a slew of other social games, has submitted paperwork for an initial public offering to the US Securities and Exchange Commission (SEC), according to the Telegraph. The UK-based technology company is expected to trade on the US’s Nasdaq exchange, and garner a value of more than $5 billion.
Candy Crush Saga
It appears the creators of Candy Crush Saga are ready to cash in on the success of the simple three-of-a-kind matching game.
King, the British company behind the Candy Crush Saga as well as a slew of other social games, has submitted paperwork for an initial public offering to the US Securities and Exchange Commission (SEC), according to the Telegraph. The UK-based technology company is expected to trade on the US’s Nasdaq exchange, and garner a value of more than $5 billion.
Besides being “the biggest IPO by a UK technology company for years,” in the Telegraph’s words, what makes King’s IPO notable is that like Twitter, which filed its paperwork to the SEC two weeks ago, King has kept its filing confidential. The Jumpstart Our Business Startups (JOBS) Act allows “emerging growth companies” with less than $1 billion in annual revenue to keep their IPO filings under wraps for a period. For that reason, financial details about King’s filing are hard to come by.
The game developer, however, has enjoyed almost meteoric success. Its games are now played billions of times a month; its Candy Crush Saga game alone logs over 10 million active users a day on Facebook. While users can play the games like Candy Crush for free, upgrades and other accessories can be had for a price. King’s annual revenues are believed to be in the hundreds of millions.
Many will watch King’s IPO with Zynga, the last big mobile game creator to launch an IPO, on their mind. Zynga, valued at just under $3 billion, nose-dived shortly after going public, thanks in large part to a falling out with Facebook. King, which has almost twice as many users, is believed by many to be Zynga’s heir apparent. A successful IPO will mean convincing investors that King is not fated to follow the same course as Zynga.
The Wall Street Journal reported back in July that King had spoken with several banks, including JP Morgan, Credit Suisse and Bank of America about leading the potential IPO. Separately, the firm also offered hints of its intentions when it hired Hope Cochran as its chief financial officer, who previously led tech firm Clearwire during its IPO.
King has risen to fame on the heels of the success of the Candy Crush Saga, but the company is hardly a toddler in the tech world. King was founded in 2003, and already had roughly 10 million users before it launched Candy Crush.
One would think that this should have happened sooner….but, well, there is a human tradition here…Wikipedia currently lists 342 social media apps, emphasizing up front that their list is not exhaustive. I can think of at least two more local social media startups, one of which has just announced significant new investments. Extraordinary Popular Delusions and The Madness of Crowds, the now legendary book by Charles Mackay, first published in 1841, remains a classic text revered for its insights into social psychology and economic bubbles.
One would think that this should have happened sooner….but, well, there is a human tradition here…Wikipedia currently lists 342 social media apps, emphasizing up front that their list is not exhaustive. I can think of at least two more local social media startups, one of which has just announced significant new investments. Extraordinary Popular Delusions and The Madness of Crowds, the now legendary book by Charles Mackay, first published in 1841, remains a classic text revered for its insights into social psychology and economic bubbles.
Investors of all stripes are so-called “birds of feather,” meaning that they tend to flock together. The risk averse nature of investing makes this inevitable… Like flocks of birds, the slightest unexpected and unwanted sound can set them off into flight. This is even more true of much higher risk early venture investors.. The very term “due diligence,” meaning thoroughly investigating everything and anything related to a potential investment, implies “covering your ass,” (CYA). No high risk investor wants to commit to any investment without partners. Not being able to recruit other investment partners, suggests that you may be making a poor investment decision, and leaving yourself open to questions about the wisdom of your investment decision, or worse.
Over the years, there have been a number of “hot” venture investment industries, that attracted hundreds of millions of dollars, only to see the investment funds go up in flames, from over enthusiasm.. After these financial disasters, investors, like the birds, were unlikely to return to the same area again, no matter how attractive it may have seemed. Only one of many examples, would be the “traffic shaping” networking equipment opportunity just before the 2002 Internet bubble. After being burned in this debacle, venture capitalists could not be enticed to invest in new opportunities in this area, no matter how promising.. A local Okanagan company here suffered from this phenomenon and eventually faded away. It appears that the now very crowded and maturing social media industry may finally have joined other such oversubscribed areas of investment.
REBLOGGED FROM PANDODAILY
BY CARMEL DEAMICIS
ON AUGUST 14, 2013
VCs are cooling off their social media fervor. A new study out today surveyed hundreds of investors around the globe. VC’s in 11 out of 13 countries had less confidence in the social networking/new media sectors than last year. That dip was even more dramatic for the US, with VC’s ten percent less sure about social then they were in 2012.
The National Venture Capital Association conducts the “Global Venture Capital Confidence Survey” every year with Deloitte. They ask general partners at different sized firms from the Americas, Europe, the Middle East, and Asia Pacific how confident they feel about a ton of sectors — clean energy, mobile, cloud computing — and geographies — domestic economy, global economy, emerging markets. This year’s survey took place in May and June 2013 and 35 percent of the responses came from investors in the States.
There’s a lot of interesting factoids to be found in the flood of numbers, but the stat about VCs losing confidence in social jumped out at me. It mirrors a trend others have noted: the social media bubbleis quietly, slowly, timidly deflating. This latest NVCA report shows that confidence is still high in social media compared to other sectors — it’s just less high than it was last year.
Social is not going out in a big pop, and it’s not disappearing anytime soon, but it’s also not what VC’s look to invest in first. CBInsights, a research company that studies VC investment trends, foundthat in the second quarter of 2013, social media companies got only two percent of VC Internet funding. They’re getting a much smaller piece of the puzzle now than they’ve seen in past years.
So why isn’t social the hot kid on the block anymore? I have a few theories: Facebook’s IPO was a bust, the market has gotten saturated, and there’s perpetual questions over mobile monetization of social platforms.
Facebook’s face flop of a public offering made people question whether its valuation was founded on real earning potential. Investors got nervous about social’s money-making potential. And given that Facebook is the biggest social beast of them all, investor anxiety may very well have informed decisions about funding smaller start-ups focused on social.
The market has gotten saturated, some people are tired of social, and there’s a cultural pushback ranging from mocking social media job titles to compiling lists of how social is ruining your life. How many networks can a person possibly join?
And as always, there’s the struggle to monetize social networks on mobile. Facebook and Twitter have gotten small pieces of the mobile ad pie, and Instagram has no mobile monetization plan. Granted, Facebook showed a possible turnaround with its recent earnings report, but it’s by no means out of the woods.
As always looking forward, time will tell whether VC interest in social media picks back up again, or whether they’ve moved on to a new sector love. Last I heard, VCs were the Romeo to cloud computing and big data startups’ Juliet.
[Image courtesy Wikimedia]
New Penguin 2.0 Google Search Engine Results Page is a boon for small local businesses. Find out how to exploit this new SEO local search engine results (SERP) feature.
New Penguin 2.0 Google Search Engine Results Page is a boon for small local businesses. Find out how to exploit this new SEO local search engine results (SERP) feature.
Creating open industry standards always wins, by creating a larger market for all competitors and platforms. This story has been repeated endlessly in technology markets. You would think after so many proprietary failures, it wouldn’t keep repeating itself. HTML5 appears to be another case where an open industry standard has again created a win-win for all involved, including consumers.
Creating open industry standards always wins, by creating a larger market for all competitors and platforms. This story has been repeated endlessly in technology markets. You would think after so many proprietary failures, it wouldn’t keep repeating itself. HTML5 appears to be another case where an open industry standard has again created a win-win for all involved, including consumers.
In this, my third post on the dramatic and fascinating developments, shifts, and impacts of the Multidimensional Mobile Market War, the precipitous decline of the leading personal computer industry competitors, has become even more pronounced than anyone suspected. Last week, IDC and Gartner were in more or less violent agreement that the bottom had very suddenly dropped out of the PC market.
Winners and Losers: Tech’s Hot or Not List
Read more in the Wall Street Journal: http://online.wsj.com/article/SB10001424127887323809304578431211400776432.html?KEYWORDS=Tech%27s+Rust+belt
In this, my third post on the dramatic and fascinating developments, shifts, and impacts of the Multidimensional Mobile Market War, the precipitous decline of the leading personal computer industry competitors, has become even more pronounced than anyone suspected. Last week, IDC and Gartner were in more or less violent agreement that the bottom had very suddenly dropped out of the PC market.
In my previous post I speculated that Michael Dell‘s attempt to take Dell Computer private was in major trouble. Carl Icahn and the Blackstone Group had already thrown a monkey wrench in Dell’s effort to buy back personal control of Dell. Then came the SEC disclosure statement that showed that Dell’s situation was more dire than previously known. This week the Blackstone Group announced that they no longer had an interest in Dell and were pulling out. The final chapter of this may be that Dell Computer will run out of cash and simply be forced to shutter its doors. Please keep in mind that Microsoft is a key strategic investor in Michael Dell’s privatization plan.
Then we turn to Microsoft itself and its problems. Microsoft has been grappling with major strategic problems as it attempts to transition away from personal computers into smart mobile. Windows 8 has been a disappointment. I gave my wife a Windows 8 laptop, and she immediately complained that the “Start” button was gone, and nothing was intuitive. Microsoft has just announced that Windows 8.1 will include the return of the “Start” button. You can’t make up stuff this dumb. Nokia is struggling to re-establish a survivable market share in mobile using Windows 8 as its OS… IDC has been forecasting that Microsoft is unlikely to establish more than a 8% mobile OS market share by 2015. This is catastrophic for Microsoft. Facebook‘s decision to implement an HTC Android device is yet another nail in Microsoft’s attempts to reinvent itself.
Some articles and blogs have argued that Intel is also at a “strategic inflection point,” as Andy Grove would have said, with its legendary reputation grounded in the PC business, as with Microsoft. While this is true, Intel’s short term results belie the historically volatile and cyclical nature of the semiconductor market. What is clear, is that Intel saw the future some time ago, and that it has a coherent long term strategy. Intel has been diligently plowing its profits back into research and new market development programs. Most important in these new markets is the Atom low power chip for mobile, and perceptivity computing. The Intel Hillsboro facility we used to call “Jones Farm,” the Intel Labs, is famous for leading the industry efforts on the Universal Serial Bus (USB), Universal Asynchronus Digital Subscriber Line (UADSL), PCI bus, Bluetooth, and now a host of new market efforts, including energy harvesting technology.
I speculated last week that Lenovo must be rethinking the wisdom of it’s decision to buy IBM‘s PC business. This appears not to be the case. It has been reported this week that IBM is now in talks to sell its server business to Lenovo. This revelation is also important in understanding IBM’s strategy. IBM appears to be completely disconnecting from its legendary past in computing hardware, and exclusively embracing “The Cloud” and software as a service (SAAS).
Then we must consider the case of Hewlett Packard. Over the last two years, HP has engaged in a schizophrenic death dance with the PC business, that has damaged the credibility of the HP brand, something many of us could never have imagined. HP’s bizarre decisions to purchase the Palm OS for over $2 Billion, and British software company Autonomy, for over $11 Billion, which some have described as the greatest business blunder in history, surpassing Time Warner‘s blunder in purchasing AOL, leave observers shell shocked. But even more bizarre in my humble opinion (IMHO) is HP’s repeated blunders and reversals in the PC and tablet businesses. HP has been in and out of the PC and tablet businesses so often that the HP brand credibility has been completely trashed. With IBM now apparently getting completely out of hardware and concentrating entirely on The Cloud and SAAS, via IBM Global Services, it forces HP to yet again rethink its PC business, if it is to compete successfully with IBM.
Finally we must consider the situation of Oracle, a perennial big player in enterprise software and services. It’s CEO and America’s Cup sailor, Larry Ellison, recently acquired Sun Microsystems, its traditional hardware partner. The logic of Ellison’s decision to acquire Sun escapes me. Based on the fringe SPARC proprietary semiconductor architecture, Sun was never able to achieve the cost/volume advantages of Intel. Oracle should have focused on becoming hardware independent, as IBM seems to doing. Instead, Oracle’s financial performance is under pressure, and they are lumbered with Sun hardware.
The spectre of a Silicon Valley Rust Belt seems to be one likely outcome of the Multidimensional Mobile Market War. Who will be a victim and who will be a survivor is not yet clear. If only from a historical point of view, I would put my bet on IBM and Intel, who both have decades long reputations for reinventing themselves. I would also be looking at the strategic directions both IBM and Intel are taking, as potentially good indicators of the future.
mayo615 