In October 2013 I made predictions for what would happen with mobile technology in 2014.   You can find them here.  How did they pan out you ask?  Let’s see.

(1) Blackberry spins off QNX.

Wrong.  QNX is a small cash cow and Blackberry is in the auto industry because of them.  Ford chose QNX and thus Blackberry over Microsoft for their in-car tech.  QNX powered the new and too late Blackberry OS 10.  QNX is an embedded operating system vendor and has good products for niche markets.  Blackberry needed their help to replace their archaic OS 7, but Blackberry’s subscribers peaked at 80 million in 2012 and has been in decline since.  Blackberry is inevitably headed towards divesting itself of making hardware and thus needing to build software operating systems.  That makes QNX irrelevant and expendable.  QNX will be sold to raise cash, but Blackberry still has $2.5 billion to burn through, so the need to sell QNX is not there yet.  The logic of spinning out QNX is clear, it just didn’t happen in 2014.

(2) Chinese tech firm buys wreckage of Blackberry.

Wrong.  Related to (1) I judged Blackberry’s cash position to be worse off than it has turned out to be.  Since Blackberry has a few bucks it’s not going to be sold off.  CEO John Chen will stay independent while he can.  Right now the strategy appears to be to use Blackberry’s device management capability, i.e. the ability of an IT department to configure your device on the fly, as a lever into businesses.

(3a) You’ll see an Android tablet at the supermarket checkout.

Right.  I did buy an Android tablet for my daughter off a Facebook ad for $59 and I have spotted Android tablets at checkout line shelves.   I didn’t buy it, but for about 50 bucks I could have added another cheap Android tablet to my pile-o-tech in my house.  With the holiday shopping season coming, more cheap tablets will be on sale everywhere.

(3b) Emerging cheap single purpose screens show up in stores.

Wrong.  The tablets are cheap now, cheaper than some series collections of DVDs, but no one has put two and two together to make one.  Not yet.

(4) WiFi-only phones emerge.

Wrong.  WiFi continues its unstoppable march to ubiquity, but we’re using apps and applications instead of dedicated devices for WiFi calling.  The new and interesting Amazon Echo may point the way for a dedicated WiFi-connected device we talk to and perhaps make voice calls with as well.

(5) nVidia exits mobile CPU market.

Wrong.  nVidia GPUs are still the bread, butter and table with CPUs being only a thin tablecloth.  Still Tegra CPUs are not winning in mobile, most of the gains are coming from the automotive market.  Despite the lack of mobile traction, the Tegra processor line looks like it’s here to stay.

(6) Intel beefing up on LTE will hurt Qualcomm.

Wrong.  QCOM has been treading water this year in a stock market up over 1500 points this year (Dow Jones industrials).  Qualcomm delivered revenue disappointment for 2014.  Analysts mention Apple making their own CPUs as hurting Qualcomm.  Samsung also makes their own CPUs, but uses Qualcomm ones for the US market, probably due to intellectual property issues here.  So while Qualcomm may have peaked as a company, it’s not due to Intel arriving in their mobile market.  The real culprit is more vertical integration by the smartphone makers themselves.

(7) Wearables will be worn by early adopters but shunned by consumers.

Right.  Wearables are still a technology in search of a mass market.  Anyone can buy Google Glass now, but at $1500 a pop, you probably won’t.

(8) Personal life-logging will start a new trend.

Right.  One place wearable tech has landed is in tracking your fitness or lack thereof.  Apple launched HealthKit at WWDC this year, Google launched Google Fit, Samsung launched the Gear Fit wearable.  This prediction has already come true and it has started with your health.

(9) States will start designating texting areas on roads (a la New York).

Wrong.  If New York traffic fatalities decline, then other states will adopt this, but inertia is keeping texting-while-driving going.

(10) Smartphones evolve towards always-on, always-recording (voice, photos, location).

Right.  The new paradigm is backing up all your photos, videos, texts and everything else to the cloud.

(11) HTC put on life support by market and Taiwanese government.

Right.  Last May HTC reported a 27% drop in revenue.  HTC revenue peaked in 2011 and has been declining since.  HTC is still on the razor’s edge of profitability.

(12) Debut of disposable feature phones introduces disposable tech that is coming.

Wrong.  You can sell your old smartphone on eBay and you’re still not throwing that tech away.  That means the price of phones is still too high for you to throw it away.

(13) Samsung does not have the top selling smartphone in 2014.

Right  The iPhone 6 and iPhone 6 Plus dethroned Samsung and its Galaxy S5 as the reigning king of smartphone sales.

To recap for my 2014 Mobile Predictions mid-year review that’s:

So 8 wrong, 6 right, not a good record except perhaps as a .429 baseball batting average.

Check back at PDXMobile for mobile predictions for 2015 soon.

In October 2013 I made 12 anti-predictions about what wouldn’t happen in 2014.  What did or did not happen?  Let’s see.

(1) No big mobile payments solution.

Right.  Apple has tried to solve this problem with Apple Pay, but this is still rolling out and has hit some bumps with Rite Aid and CVS disabling Apple Pay from working in their stores.  Whether these are minor setbacks or indications of a patchwork payment system emerging is unclear now.

(2) No carrier consolidation.

Right.  Sprint wanted to buy T-Mobile, and still would like to.  AT&T also wanted to take over T-Mobile, but the Obama Justice Department torpedoed that merger (a bad decision in my judgement).  Right now the landscape is frozen waiting for a Republican President in 2016 who will be hands off and therefore merger friendly.

(3) No iOS smartphone marketshare gain.

Right.  As the smartphone OS marketshare table at this link shows, Apple is now at about 12% smartphone marketshare.  The lack of a big screen really hurt the iPhone and let Samsung grow huge by filling that market gap.  The question now is whether iOS can hang on to even a 12% marketshare.  There is a school of thought that Windows Phone marketshare growth will come at Apple’s expense disproportionately and I tend to agree with this analysis.  Google’s cloud services are so seductive it’s hard to switch away from Android where you have the best Google experience, but you might ditch Apple since you’re only invested in an iPhone or iPad device.

(4) No big HTML5 adoption.

Right.  Mozilla is trying to pivot from making the most open web browser to making the most open smartphone operating system.  Considering the vast difference between those two tasks, Mozilla is actually making decent progress with its Flame smartphone for $170.  However there’s also a vast difference with creating something technically and getting a large segment of the market to adopt it.  Just ask Microsoft.

(5) No big new social network to rival Facebook, Twitter, LinkedIn or Google+.

Right.  The big boys have gotten bigger, Snapchat is still playing hard-to-get and may get a comeuppance if the text messaging bubble pops.  Text messaging apps have been dis-intermediating carriers, who charge for text messages while the apps generally don’t.  Facebook is solidifying its position as the text messaging leader with the $19 billion buyout of WhatsApp and its own Messenger app.  Facebook text messaging now reaches over A BILLION users.

Ello is the new social network to watch, seeing a niche in an ad-free version of Facebook.  Facebook is now very polluted with ads, but it is also polluted with all the status updates we want to see too.  How Ello will make money without ads IF it gets traction is still unanswered.

(6) No let-up in technology patent lawsuits.

Right.  Nothing but good news for lawyers and bad news here for you and me.

(7) No Amazon or Google bricks and mortar stores.

Right.  There are rumors of bricks and mortar stores for both tech giants, but none as of yet.

(8) No Yahoo big win.

Right.  The only thing approaching a big win was Yahoo buying out Tumblr for $1.1 billion, but that’s still shoring up the weaknesses Yahoo has more than winning in the market.  CEO Marissa Mayer has been taking a very Google-like approach of buying small fries for engineering talent and polishing up some existing assets like Flickr.  Investors want to know how she will spend the $9 billion in cash from the Alibaba IPO (which Yahoo had a big ownership stake in).   The word was to return $5 billion in either stock buybacks or outright dividends.  That still leaves a pile to spend.  I see Mayer swinging for the fences and wanting to try something big, but there was no big win in the 2014 acquisitions.  Yahoo is still treading water in the new mobile world.

(9) No 5G technology in sight.

Right.  The Artemis pWave antenna is interesting, but not available yet and the increasing ubiquity of WiFi begs for some innovation to speed up all our downloads.

(10) No smartphone from Amazon.

Wrong.  Amazon is still experimenting and its Fire smartphone was something I did not see.  It’s not faring well in the market now, but I expect Amazon will stick with it a few years so we’ll be checking in on new versions of it for some time to come.

(11) No buyout for Foursquare.

Right.  No one has really figured out how to handle the social aspect of location.  There has been Loopt and Gowalla, both bought out and engineering talent repurposed to other tasks, so the question is if Foursquare was heading down the same dead-end road.

Foursquare must know its just burning venture capital cash with that strategy and it spun out the check-in functionality to an app named Swarm.  Foursquare itself is trying to use its database to become another version of Yelp, to have user ratings on places of interest, presumably with ads.

Foursquare is looking like one company where venture capitalists will take it on the chin and lose the bulk of their investment.  I just don’t see a big player buying them out.  The feeling is that Foursquare and its game mechanics for location announcements (mayorships of venues) was just a fad.  There still some unsolved business out there for location smartphone use, but Foursquare like Loopt and Gowalla before them, isn’t finding it.

(12) No new chairman for Microsoft.

Wrong.  Bill Gates did step aside, at least a small step aside.  Microsoft got a new CEO which was widely predicted given their late migration to a mobile strategy and actually the mobile traction Microsoft does have is due to buying out the Nokia phone division which was the brainchild of former CEO Steve Ballmer.

Of course Chairmen of the Board don’t matter.  Their new CEO Satya Nadella came from Microsoft’s own cloud services which indicates the direction Microsoft sees things going and probably the emphasis for their company going forward.

So the total was 10 rights and 2 wrongs or an 83% correct anti-prediction score.  If only my own personal investing was so good.

Check in to PDXmobile soon for next year’s anti-predictions.

 

For the past six months there has been a public relations tug of war going on reflecting a serious business negotiation.

Hachette Book Group (HBG)  has been trying to negotiate a higher price for e-books on Amazon.  HBG is owned by Hachette Livre the largest French publisher and third largest in the world.  This is no small matter for the consumers of e-books everywhere.

Publishers have been grumbling about Amazon having a maximum $9.99 e-book price for some time.  In 2012 publishers worked with Apple to try to make the iPad a favored delivery vehicle for their premium e-books.  The U.S. Justice Department accused publishers and Apple of an illegal price fixing scheme.  My own opinion at the time (and still is) that the Justice Department action was premature.  E-books are still an infant industry, growing wildly yes, but I believe it would have been better to let the business world sort out pricing and distribution on its own.

The upshot of the 2012 Justice Department action was to make Amazon a defacto monopoly for e-books.  E-books make up about 30% of all book sales and Amazon has two-thirds of the e-book market.

About six months ago Hachette decided to publicize its disagreement with Amazon to generate market sympathy for its position of wanting to charge more for e-books on Amazon.  Certainly I don’t sympathize with Hachette wanting to charge a higher price for e-books and I support Amazon as a retailer seeking the best deal possible for its own customers.  Of course I believe the government should stay out of this business too and this is just classical buyer and supply chain haggling.

There have been a number of competing press releases between Hachette and Amazon on who’s right in this e-book pricing tug-of-war.  The New York Times has reported on this public relations war, in fact over-reported on it, but today there was an interesting tidbit in their article.

The disclosure was that 80% of Hachette e-book titles are already at the $9.99 price.

These are likely the backlist titles and that means that Hachette is seeking a premium price for 20% of its e-books, no doubt the recent and better selling titles.  Why fight so hard to push up price on 20% of your titles?  Especially when a higher e-book price means you will sell fewer e-books?

I believe Hachette is worried about e-books cannibalizing their paper printed book sales and so wants to ensure they get an equivalent amount of revenue from e-books.  While e-book sales have grown to 30% of overall book sales, printed book sales are in decline.

So for Hachette this is about the existence of their business model as customers switch to e-book purchases.  For Amazon this is about getting the best deal possible for their customers.  Amazon has stuck to its guns and held firm in the public relations battle.  I only see two possible outcomes here.

(1) Hachette caves and agrees to the $9.99 pricing for e-book versions of its hot sellers.  This will cause cannibalization and ultimately revenue decline for Hachette.  It’s not quite slow death, but Hachette Book Group will have to become a smaller organization.

(2) Hachette rejects Amazon and does not distribute its e-books with Amazon.  This will prevent e-books that cannibalize its print books, but will also lock Hachette out of two thirds of the only growing area in books.  This might be slow death.

What hasn’t been discussed very much is that publishers are becoming disintermediated in the new e-book model.  The distributors of e-readers (Amazon, Barnes & Noble, Apple) are very much in charge of what is available for potential readers and all of them let authors submit e-books directly to them.  We’re in a new age of independent author as publisher and old time publishers will find their businesses just plain difficult.

The iPhone has grown stale and old.  So how do you reinvigorate a product that lead a mobile revolution and is now the corporate cash cow?

If we look to Microsoft, their approach to this problem was to simply copy whatever innovator was getting market traction.  Not just Internet Explorer imitating Netscape, but even, maybe especially during MS-DOS days when  smartdrv replaced PC-Kwik as a disk cache and the Mace Utilities disk defragger was replaced by Microsoft’s own.  Imitating successful market leaders is virtually in Microsoft’s DNA.

We always expected Apple to be different.  We always wanted Apple’s definition of a new product, not a rehash of other companies successes.  However it’s pretty clear from today’s Apple event that Apple, for the time being, has run out of ideas.  So borrowing the oft-used strategy from Microsoft and other large companies, Apple has imitated the mobile tech innovators.

Today Apple introduced the 4.7 inch screen-sized iPhone 6 and the 5.5 inch screen-sized iPhone 6 Plus phablet.  Clearly these are aimed to be direct competitors to the Samsung Galaxy S5 and Samsung Galaxy Note phablet.  What was striking was how much of analyst predictions came true:

  1. Two new iPhone models. Check.
  2. Bigger screen sizes.  Check.
  3. One 4.7 inch screen and one 5.5 inch screen.  Check.
  4. NFC.  Check.
  5. New smartwatch.  Check.

Since Apple manufactures in Asia and really since Apple manufactures so many units, it’s pretty neigh impossible to keep a lid on what’s in the new products coming down the pike.  The only thing analysts flubbed was the inclusion of sapphire glass which is not on the new iPhone 6, but is on the new Apple Watch.

When I look over the new offerings from Apple I don’t see any reason an iPhone 5 user would upgrade or an Android user would switch.  You can get all of these features on your Samsung, LG or HTC phone or Galaxy Gear or Moto smartwatch.  So to me this looks like just treading water in the marketplace.  I don’t see any respite from the relentless increase in Android smartphone marketshare (now up to 85% as reported here).

The new Apple products will keep existing Apple users however, so I don’t see much downside either.  I guess we can’t get a revolution every year from Apple.   We’ve gotten spoiled by the four recent Apple revolutions:

  1. Macintosh computer in 1984 (okay not so recent).
  2. iPod in 2001.
  3. iPhone in 2007.
  4. iPad in 2010.

I just don’t see 2014 being remembered for the Apple Watch.  It MIGHT be remembered for the introduction of Near Field Communication mobile payments that really worked, but it’s too early to tell if that will work out.  The NFC payments in iPhone 6 will be the potential game changer to keep an eye on.  If it does take off then every marketeer will be sending coupons through Apple iTunes.

For a price.

Where O where art thou Microsoft?

On Thursday July 17, 2014 Microsoft CEO Satya Nadella announced layoffs of 18,000 workers or 14% of Microsoft’s 128,000 workforce.  Most of those layoffs, 12,500 of them, were in the recently acquired Nokia phone division.

Well mergers mean layoffs due to “synergy” which is management buzzspeak for layoffs.  However many are pouring over these numbers to try to understand where Microsoft is going.  Here are my thoughts on that subject.

(1) Microsoft is abandoning non-Windows devices.
Goodby Nokia Asha and Nokia X Android devices.  Another way to say this is that Microsoft is focusing more on Windows devices.

(2) Microsoft is shutting down manufacturing sites.
This means the acquired Nokia group can only make a few devices now.  This rules out a Samsung-like strategy of proliferating lots of different devices, say with different screen sizes, to see what sticks.

(3) Really this is a prune-the-deadwood layoff.
Outside of the Nokia group, the 5,500 person layoff was actually fewer than the former CEO Steve Ballmer layoff in 2009 of 5,800 workers.  So this looks like more trimming around the edges with a 5%-ish layoff for core Microsoft employees.

(4) Google is the enemy, so do what they’re doing.
Google has more market cap and less than half the employees of Microsoft.  Google is the enemy via a process of elimination: (a) Apple is big and will always command a 10% impossibly loyal fanbase, so no point in assailing that.  (b) Facebook is big, but not really an enterprise business.  (c) Amazon is mooning us locally in Seattle, but only interesting as far as AWS and S3 are concerned.

(5) Grow the cloud and let 1000 clients bloom.
Nadella was chosen from cloud services and I’m sure understands Microsoft’s strengths and weaknesses there.  From the cloud’s point-of-view everything’s a client and it almost doesn’t matter what the client is.  There’s a connection at a certain bandwidth and you serve up what you can given the throughput you have.  Clients don’t matter individually, only collectively so that they are sucking and supplying data from and to the cloud.

Actually I’m not sure there’s much difference with what former CEO Steve Ballmer would be doing either, despite the “devices and services” strategy he outlined.  Sure Ballmer acquired the Nokia phone division, but I’m sure he’d gut them too.  Microsoft is about devices, but it’s always been about someone ELSE building and selling them.

Nadella’s memo on the layoff has the line: “We will build tools to be more predictive, personal and helpful.”  Generic, throwaway, but pretty much an indication of making your data available to you (stored conveniently in the cloud) and some kind of logic on patterns in it.  Perhaps Ballmer would care more about the devices, but I’m not so sure.

The difference I see between Microsoft and Google is that Google always tries to do as much in the cloud as possible before relenting to client-side computing.  I kind of see Android as a last resort that the browser was just not capable enough and creating Chrome to grow the browser where needed.  Microsoft started with languages and then operating environment (DOS) before operating system (Windows).  Microsoft has a history of rich client computing.  Google seems to come to that grudgingly.

So where are we?

I think Microsoft is going to replay the Windows vs. OS/2 strategy.  Back in the day OS/2 was very advanced, but pretty much closely held by one vendor (IBM of course).  Microsoft got competing PC makers to adopt Windows and avoid OS/2.  From Microsoft’s playbook, 2014 is 1984 all over again.  What’s 30 years between tech friends?

Today I think Microsoft sees Google in the IBM role and wants to isolate Android as much as possible and compete with Google in seducing OEM manufacturers to adopt Windows Phone.  Well why didn’t they do that already, you ask?  Nokia was the only vendor to choose Windows Phone enthusiastically and that was because a former Microsoft executive became CEO of Nokia.  Windows Phone was waaaay behind Android technologically when Stephen Elop took over Nokia.  Today Windows Phone is much closer in capability to Android.  Yes there’s still an “app gap”, but it has closed sufficiently not to be a marketing problem to OEMs.

Why would an OEM choose Windows Phone when the market hasn’t?  Well it’s about beating up Google.  Yes you can get Android for free, the Android AOSP (Android Open Source Project) code, but you don’t get the Google goodies like the Play Store, Maps and the Chrome browser.  Those must be licensed from Google separately.  OEMs would like better terms from Google on licensing that code.  That’s where Microsoft comes in.

Microsoft can offer Windows Phone on more generous licensing terms than Google Android.  That accomplishes several things: (1) Microsoft gets a notch for Windows Phone, (2) Google loses one, (3) a Windows Phone device gets built.

The last point is key.  Microsoft can undercut Google with OEMs and get Windows Phone devices into the wild.  Then it’s all a matter of user adoption, will users choose Windows Phone?  If so, Microsoft is back in the OEM software business.

So look for the Microsoft full court press on Windows Phone and Windows devices.  First Microsoft must sell OEMs, but they will get devices built by them, especially now that they’ve reduced the Nokia division structurally.  I think the Nokia group in Microsoft will emulate the Nexus device strategy of Google and make some reference devices, but the OEMs will be allowed more experimentation than Windows PC makers were allowed in the past.

The good news for Microsoft is that users tend to replace their smartphones every two years when their contract is up.  Since there’s still high smartphone turnover, there’s a chance to get that consumer to pick you and Microsoft is still betting on that chance.

Last October I made my predictions for what would happen with mobile technology in 2014.   You can find them here.  How have those been panning out?  Let’s see.

(1) Blackberry spins off QNX.

In-play.  Hasn’t happened yet and there has been news about Blackberry remaining in the auto industry last February when Ford announced they were choosing Blackberry (really QNX) over Microsoft for their in-car tech.  Still when Blackberry needs to raise cash, they haven’t yet, expect QNX to go back into the business wilderness.

(2) Chinese tech firm buys wreckage of Blackberry.

In-play.  Kind of related to (1) Blackberry is still in its death spiral and needs a larger sugar daddy to recycle its technology.  There is some security play with email they can try for the enterprise with their BBN mail servers, but I don’t think that’s enough.  I think the Chinese would be interested in getting some western legal protection with Blackberry’s patent trove so we could still see this by year’s end.

(3a) You’ll see an Android tablet at the supermarket checkout.

In-play.  I haven’t yet, but I did buy an Android tablet for my daughter off a Facebook ad for $59.  For all its cheapness this tablet was great for playing YouTube videos, my daughter’s favorite app, and has let me pry my Nexus 7 out of her hands.  $59 is still too high for the supermarket checkout, but there’s the holiday shopping season coming and more cheaper tech should arrive then.

(3b) Emerging cheap single purpose screens show up in stores.

In-play.  Yes I had to buy House of Cards season two on DVDs, but I would of rather paid the same price for a knock-off Android tablet with a license key inside so I could stream death and politics to my couch.

(4) WiFi-only phones emerge.

Doubtful.  We’re seeing the growth of WiFi devices with Google’s Chromecast and other TV add-ons, but smartphones seem stuck in incremental software updateland.

(5) nVidia exits mobile CPU market.

Doubtful.  nVidia is doing well this year, but on the strength of its core competence graphics chips for gaming and surprisingly the mobile Tegra chip has found some traction in automotive electronics.  All this bodes for a longer lifespan for their processor line, even as non-gaming mobile devices shrink in their customer portfolio.  So it’s looking like their market exit from mobile will be delayed, but I still expect it.

(6) Intel beefing up on LTE will hurt Qualcomm.

In-play.  QCOM is up less than 10% for the year, but still up, so no real harm yet.  Intel expects to ship 40 million chips for tablets in 2014 for 15% to 20% of that market which would have certainly been mostly Qualcomm’s except for Intel.  INTC has gone up over 10% for the year thus far, reflecting some of this optimism that Intel is finally finding footing in mobile devices.

While Intel and Qualcomm duke it out for cellular customers, really Qualcomm just dominating and beating up Intel somewhat less, the next big thing coming down the pike is the Internet of Things.  The wireless secret of the Internet of Things is that things will be connected by WiFi, not cellular and WiFi is a much more open and competitive hardware landscape than the over-IPed and over-litigated bandwidths of cellular.

This means both Qualcomm and Intel will suffer from the migration away from cellular towards WiFi technologies.  As for this prediction, it is definitely in-play.  Frankly Intel had nowhere to go but up in mobile and Qualcomm being so dominant had no other place to go than down, considering a major competitor arrived in the space.

(7) Wearables will be worn by early adopters but shunned by consumers.

In-play.  You can now buy Google Glass $1500, but you won’t want to.  For that amount of cash get a real camera, like the Sony a6000, and use the rest of the loot to run off on vacation to take photos.  Wearables are still a technology in search of a mass market.

(8) Personal life-logging will start a new trend.

Yep.  One place wearable tech has landed is in tracking your fitness or lack thereof.  Apple launched HealthKit at WWDC this year, Google launched Google Fit, Samsung launched the Gear Fit wearable.  This prediction has already come true and it has started with your health.

(9) States will start designating texting areas on roads (a la New York).

Doubtful.  I thought other states would follow New York’s lead, prodded by the insurance industry, but I just misunderestimated how slow state governments move.

(10) Smartphones evolve towards always-on, always-recording (voice, photos, location).

Yep.  More and more Runkeeper-style apps are recording everything about us.  Google Photos is backing up all your photos, recording every photo and video you shoot, heck even making up stories about you using them.

(11) HTC put on life support by market and Taiwanese government.

In-play.  Last May HTC reported a 27% drop in revenue, still in the black, still treading water, still in trouble.  In the early days of Android HTC made Google’s first Android phones (G1 and G2) and things looked rosy, but Samsung’s ascendancy came at the price of crushing HTC.  LG too is now rising in Android and HTC is getting the brunt of this brutal competition.  Rumors are that HTC is making a new Google Nexus device.  This is sorely needed by a great tech company that is losing in the market now, but even if it does go into the red, I expect the government in Taipei to prop up this jewel of Taiwan technology.

(12) Debut of disposable feature phones introduces disposable tech that is coming.

Doubtful.  The trend has been to migrate older smartphone designs down to become the user uberfeaturephone.  So instead of a cheap and dumb, thus cost-reduced, featurephone, you’re getting a cheap, smart and subsidized featurephone.  Charging for data is just too lucrative and who really wants to talk to anyone anymore?  I still see more disposable tech coming, but not in featurephones this year.

(13) Samsung does not have the top selling smartphone in 2014.

In-play.  The Samsung Galaxy S5 is King of Smartphones today, but the iPhone 6 is yet to be heard from.

To recap for my 2014 Mobile Predictions mid-year review that’s:

In-play, In-play, In-play, In-play, Doubtful, Doubtful, In-play, In-play, Yep, Doubtful, Yep,  In-play, Doubtful, In-play.

So 2 Yep, 4 Doubtful and 8 In-Play.

Check back at year’s end when PDXmobile will have the final tally on how predictions for this year fared.

Last October I made 12 anti-predictions about what wouldn’t happen in 2014.  How have those panned out?  Let’s take them one at a time.

(1) No big mobile payments solution.

In-play.  So far, so broke.  There is no really big, one smartphone fits all, solution for the mobile payments problem.  I can’t buy at a bricks and mortar store with my phone, though I’m sure someday I will.

(2) No carrier consolidation.

In-play.  With Verizon and AT&T duking it out for number one, the question is would any of the other players, meaning Sprint and T-Mobile, consolidate to compete?  Well with the money of Japan’s Softbank, who now owns Sprint, there is an attempt to buy T-Mobile and consolidate the number 3 and 4 carriers.  This MIGHT happen, but only if the Obama administration FCC allows it and that is not a done deal.  This one could go either way.

(3) No iOS smartphone marketshare gain.

In-play.  As the smartphone OS marketshare table at this link shows, Apple was at 21% marketshare in 2012-Q4 and dropped to 18% marketshare in 2013-Q4.  iOS is sinking in worldwide marketshare, although treading water in the Apple-loyal US market.  The lack of a big screen has really hurt the iPhone and analysts are predicting Apple will provide one this year, but that’s just a prediction and not mine.  iOS is not going away, but it’s not winning either.

(4) No big HTML5 adoption.

In-play.  Mozilla is trying to push HTML5 into the mobile world with it’s new Firefox OS smartphone, but their organization got derailed this year by the Brendan Eich controversy.  The problem remains: will there be an open source winner in the mobile world?  HTML5 holds the most promise, but it’s still a promise not a reality as we all move from the browser to apps.

(5) No big new social network to rival Facebook, Twitter, LinkedIn or Google+.

In-play.  Snapchat was the darling of last year, spurning a big Facebook $2 billion buyout bid.  Snapchat is approaching 30 million users and is riding the text messaging wave that is dis-intermediating carriers.  Carriers charge for text messages, but apps do not and that has pushed Snapchat and WhatsApp to valuable heights.  Facebook bought WhatsApp, and it hopes the nearly half billion users of it, for $19 billion.  So outside of Snapchat we’re seeing consolidation.  Snapchat is holding out, but will it rival Facebook Messenger and WhatsApp or will it fold?   This prediction is still in-play.

(6) No let-up in technology patent lawsuits.

Yep, but Apple and Google agreed not to sue each other in an effort to fend off patent trolls, but the lawsuit follies continue.

(7) No Amazon or Google bricks and mortar stores.

In-play.  No stores for either yet.

(8) No Yahoo big win.

In-play.  Yahoo has been making the right small moves.  Flickr was updated and even blogging site Tumblr was acquired for $1.1 billion.  A recent partnership with Yelp, who spurned a Google buyout offer, may also help Yahoo, but there’s no big win yet.  Yahoo still awaits the fruits of the Alibaba IPO which will net Yahoo billions of dollars, perhaps tens of billions of dollars.  That will be a big win, depending on what they do with the money.  Will the billions be returned to shareholders as dividends?  Perhaps some, but I’m sensing CEO Marissa Mayer will hoard some cash to keep playing buyout bingo and that means an uncertain bet on acquisitions.

(9) No 5G technology in sight.

In-play.  The closest thing to poke up here was the Artemis pWave antenna, but there aren’t enough details on that yet to know if it’s serious.

(10) No smartphone from Amazon.

Doubtful.  My prediction here is doubtful because the New York Times ran a story on Sunday that Amazon will introduce a smartphone THIS WEEK.  I saw plenty of tablet, but no phone in Amazon so we’ll see if this one holds up or if Amazon does enter the smartphone fray.

(11) No buyout for Foursquare.

In-play.  None of the big players have stepped up to buy Foursquare yet.  Foursquare has taken nearly nine figures of venture capital making them an expensive purchase, one that only Google, Microsoft, Facebook or perhaps Yahoo could consider.  Foursquare itself is trying to figure out a way to earn money through advertising and has broken out the check-in aspect of its app to another app called Swarm.  I doubt Foursquare will transform itself into another version of Yelp successfully, but it is trying.

(12) No new chairman for Microsoft.

Doubtful.  This is a tricky one to call.  Microsoft did name a new CEO as expected, but both Steve Ballmer and Bill Gates remain on the board of directors.  Gates did step down as Chairman, but not off the board.  So on that level this prediction is wrong, but did Gates step down TEMPORARILY while he micromanages new CEO Satya Nadella or is he really putting one foot out the door?  I think I’ll have to cave on this prediction, but the year’s not over yet.

So there you have it, out of my dozen won’ts only two are suspected of becoming wills at this mid-year review.  10 out of 12 is not a bad batting average if that’s how this pans out.  Check in to PDXmobile at year’s end for another review and next year’s anti-predictions.

 

 


Brendan Eich is a middle-aged technologist who worked his way up at Silicon Graphics, Netscape and Mozilla along the way helping create the JavaScript language.  No one knows why he was selected to be CEO of Mozilla last month, but he was.  Brendan was CTO of Mozilla since 2005 so perhaps in a time of challenges, where browsers are losing out to apps for user’s eyeballs on mobile devices, the organization decided to turn to a technologist for a new direction.

Very shortly after his appointment it was disclosed that Eich made a $1,000 contribution in 2008 to the campaign for California Proposition 8 which was a state constitutional amendment to ban gay marriage.

Well things went south from there extremely quickly.  Two days ago OKCupid.com, a dating website, put code in their home page to detect Firefox browsers which redirected them to a page saying Mozilla’s new CEO is against equal rights for gay couples, so please use another browser to visit the site.

Naturally this got written up by the BBC and others.  Rarebit withdrew their app from Mozilla’s app store.  Today Rarebit called this “A Sad Victory”.

What do we make of this fast and furious reaction, both by the web community and by Mozilla?

First I think Americans generally believe in the freedom of expression.  There’s no denying Brendan Eich has the right to be politically active and I think no disagreement there.

Second I think Americans as consumers want full disclosure.  It’s hard to imagine keeping secrets in today’s pretty open world, but we did want to know whether a CEO believed in gay marriage or not.  We did not consider this an irrelevant detail.

Third I think Americans want to be free to choose, as Milton Friedman put it.  Free to choose whom to associate with and who to associate our dollars to.  That freedom can also extend to boycotting products of organizations that have leaders we disagree with.  This has been an organizing principle for civil rights activists for years.

In the end Eich had to step down.  The controversy about his views was becoming a controversy for Mozilla.  Does this mean we’ll only support corporate leaders who (1) aren’t politically active or (2) aren’t outed for being politically active in some cause?  I think the unfortunate answer is yes.  The late great Johnny Carson knew this and kept his politics out of the Tonight Show.  He believed if he put them into it he would alienate half his audience.

What impressed me the most about this was not that Eich had to resign, I suspected eventually he would have to.  It’s the speed with which it happened.  In a funny way it reminds me of John Thompson’s resignation as CEO of Yahoo in 2012 just four months after taking the job.  Thompson had lied on his resume about having a degree from a school.  This was uncovered and he was out.

Eich made no ethical lapse, none whatsoever.  However the judgement, by the board or by him or both, that the difficulty of defending himself would just be too much distraction.  Everything in the information age is faster, but although I think it’s a better thing for Mozilla that Eich goes, I also think it was a digital lynch flash mob that got him.

There’s a big trend brewing, no surprise but larger that I realized until I thought about it.

1. Nokia just put out their Nokia X line of Android phones.
While these will not be marketed in the United States — YET — there’s something very significant this product line shows us.  The Nokia X line uses Microsoft Outlook, Skype, OneDrive, HERE Maps and Bing search.  So the Microsoft cloud was pushed onto an Android device with a Windows Tile look and feel.  In fact what you can do on a Windows Phone Lumia device you can now do on a Nokia X ANDROID device.  What’s the difference?

2. What we see with these new Nokia X devices is that the client hardware is not so important.
Your data, your preferences, your content, heck even your identity is stored in the cloud.  Devices merely surface what’s stored in the cloud.  Yes devices also push data up to the cloud, but you’re no longer dependent on one specific type of device or operating system of device.  The cloud is what’s common and devices can and will vary in your usage.

3. Three cloud silos have emerged as the dominant players: Google, Apple and Microsoft.
These players staked out their territory on mobile devices, started by the Apple iPhone, now dominated by Android with Microsoft arriving late to the party.

Increasingly users are being siloed into one of these Big 3 cloud providers.

4. Amazon also its own cloud for its quite lovely and popular Kindle devices, BUT…
BUT their maps solution has lagged Android new map features and there is no contact database per se.  Amazon has its own Silk browser and app store to help you find content, but Amazon is clearly behind the Big 3 in number of users.

5. Yahoo has email, maps (from Mapquest), contacts in email, search obviously, but NO client devices.
The lack of owning a mobile experience has put the whole Yahoo franchise in question.  As our mobile devices now drive us to a specific cloud, one of the Big 3 generally, where does Yahoo fit?  Yahoo needs a total client experience badly or users will lock into other cloud silos and that is what is happening today.

6. As more of your data is siloed, it is harder to switch cloud services.
Google put its apps on iPhone to pull users into their cloud, but once you buy apps or content,  you can’t take it with you.

7. Siloed clouds can frustrate users with apps and content.
I want iTunes music, Google email, Amazon books, Yahoo search and Microsoft maps.  I’m screwed.  Apps are pretty much the domain of the Big 3 and to a lesser extent Amazon, though I doubt most Kindle owners use their wonder tablets for apps.  I certainly use mine as an excellent e-reader.

8. Cloud lock-in makes for sticky customers.
Now that I’m siloed in to a particular mobile provider I’m very reticent to move.  Would my email be accessible?  Would I get a notification when a new email arrives like I do now?  Would I have to really learn how to use a new maps app?

9. Smartphone market maturity means users will switch less.
Most people have a smartphone now and the smartphone featureset is not improving much.  There are marginal speed improvements, waterproofing, varying lifespans of battery, an assortment of screen sizes, but no new killer feature.  Technically we’re done.  That means we’re less likely to upgrade our smartphones and thus even less likely to switch clouds.

10. This is bad news for Microsoft who is late to mobile market.
As the mobile-come-lately and smallest marketshare player of the Big 3, Microsoft needs unsettled users who will consider switching.  While there is some loyalty to Apple and Samsung devices, most users will switch devices without much consideration, but most users won’t switch clouds without knowing there is unnecessary pain.  Pain where you can’t access all of your past data or bring all your apps with you or having to learn new user interfaces.

11. Facebook is cross-cutting and will grow to eclipse small cloud players.
Some app makers are big enough to provide a common experience across cloud platforms and Facebook is one of those Big Kahunas.

12. Yahoo needs a client experience badly or users will lock into other cloud silos.
Without a mobile device user interface to own and direct that user to their cloud, Yahoo still relies on manual app installation by users, which can drag some of their existing users along, but won’t get them any newbies.  Without the preference that comes by being the Default on a device, Yahoo is hurtling towards oblivion and while CEO Marissa Mayer has made all the right acquisitions and moves, the lack of presence on mobile devices still dooms her company.

13. Amazon has unique content and opportunity to be everyone’s second device.
Although the Kindle was reported to be the number two tablet used at work by employees, no doubt this is not a corporate device, but users bringing their home devices to work.  The Kindle as an e-reader and perhaps movie viewer isn’t going away, but it’s not the app platform most of us will be using.

14. Amazon rising will hurt rival eBay by limiting eBay’s growth.
Amazon is a player in the cloud and mobile and the King of Content Providers.  eBay has done well in transitioning to mobile, but it’s still a distant second fiddle.  There’s no eBay mobile devices and there won’t be.

15. Here comes the Internet of Things.
It’s getting harder to switch among clouds.  So the mature tech industry will move to more consumer products like Nest (smart thermostats), smart TVs, and automotive tie-ins.  Each of these will be their own silo of data, but out of necessity exportable to the Big 3 clouds to integrate with your smartphone apps.

16. The Internet of Things implies the all-knowing cloud.
As the Big 3 clouds collect all this data users will more and more locked-in.  The sensor-nature of most smart devices will store their output into the cloud.  If you switch among the Big 3 do you really want to lose all your data history and start over?  Do you want your house to relearn when you’re there and how to adjust the thermostat?  Do you want your car to relearn the routes you travel and not suggest alternatives to traffic until it’s too late?  Do you want to rebuy all the content you bought with one cloud provider?

It’s already too late.  We’re locked into the cloud and into one cloud provider.  You’ve made your choice.  Either erase and go forward or stay locked-in and enjoy the data you have.

The big news in not just the tech industry, but all of business was Facebook’s intention to buy the startup WhatsApp for $19 billion in cash and (mostly) stock.  Much of the press noted that given WhatsApp has only 55 employees, that the buyout totalled $345 million per employee.

It’s a very large sum and a very high price.  What is Facebook getting?  Well there are the 450 million users of WhatsApp and that’s no small number of users.  It is certainly credible to say that WhatsApp is on the way to a billion users, but is that enough?

WhatsApp has gotten popular by disintermediating text message operators, who are the mobile network operators.  It’s been estimated that users of WhatsApp have saved $33 billion on text messages, or to put it another way the mobile network operators have lost $33 billion of text message business to WhatsApp.

Of course users would not have sent so many text messages if WhatsApp hadn’t effectively made them free, still the mobile operators are now losing text message revenue and WhatsApp just made a bundle through a buyout.  What is the sustaining business proposition?  Ads with the text messages?  Maybe.

Facebook is trying to stay one step ahead of the next hot thing by co-opting when they can and buying it out when they must.  Growth through acquisition is the usual path for the market leader, so this is not unusual — think Microsoft buying Hotmail.  Facebook tried their own Messenger functionality, but did not achieve the market traction that WhatsApp got.

So Facebook is showing chutzpah, an aggressiveness to make sure it’s the most important business in the mobile application market.  Instagram was acquired for a now seemingly paltry $1 billion in 2012.  Facebook wrote a check 19 times bigger, but really only spending $4 billion of cash and the rest in stock.  Can this big fish eating little fish attitude work?  Certainly it will work until it doesn’t.  When it stops working is when there is a new paradigm shift.  No one will be outcompeting Facebook with an imitation, only by coming up with something completely different is there a chance of beating Facebook.

Last November Facebook offered $3 billion for Snapchat, but was turned down.  Snapchat represents the kind of threat Facebook is on the prowl for.  A service different than Facebook’s offerings, but also very popular.  There is kind of a circling of vultures around the death of expensive mobile operator-based text messaging right now.  Social networks like Twitter and Facebook address some of that same market, but many users want a more private conversation hence the popularity Snapchat and WhatsApp.

It’s doubtful that a single app or service will dominate all of text messaging and frankly if one did, then mobile operators would start to push back against that single point of revenue theft from their business.  With cellphones really becoming handheld computers with Internet ability, almost any application could become a text messenger today using XMPP standard for interoperability.  So if a mobile operator tries to stick a finger in one popular app, another one will spring up, like holes in a leaking dam and the mobile operators won’t have enough fingers to plug all the apps.

App stores aren’t even controlled by the mobile operators anymore, but by Google, Apple and Microsoft.  The decline of the carriers to dumb bit pipes was ensured by the iPhone in 2007 when Apple got unprecedented control over the mobile device and software.  That market explosion has lead to the rise of the power of mobile device software providers, think iOS, Android and Windows Phone.

That yanking of power from the mobile operators meant that apps will now circumvent all premium services the mobile operators provide, except basic connectivity.  So the carriers will continue to be commoditized and apps will continue to proliferate and the big fish like Facebook will continue to get bigger.

Bottom line: spending $19 billion for a company with 55 people and 450 million users was a good move.

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