The Big Consumer Tech Questions for 2012

When it gets to be early January, pundits like to prognosticate.  it doesn't matter whether the subject is technology, politics, or the love lives of celebrities, the news sites, blogs, and TV airwaves are filled with predictions.  This blog is no exception.

Since I am not a celebrity and abandoned my political ambitions in 10th grade, here are my tech predictions for 2012:

• Apple's slow product refresh cycle finally causes headwinds for the world's best run tech company.

There's no doubt about it.  In the last ten years, Apple has more "hit record" products than the Beatles had hit songs in their prime.  Or at least it seems that way.  However, in key areas, Apple is now way behind or at parity.  Beginning next week at CES, the market will be flooded with Ultrabooks, the Intel-based PC architecture that aims to take on the iconic MacBook Air.  The thing is, the first ultrabooks from Lenovo and Thoshiba are very promising.  They match the Macbook Air spec for spec and are very competitive on price.  Windows 7 performs well, and boot up times are much shorter than on traditional laptops.  This morning, Ina Freed of AllThingsD noted that Ultrabook prices are expected to drop by a third in the next 12 months.  Plus, Windows 8, which doubles as a tablet OS, will debut at the end of the year.  Expect Ultrabook/tablet combo devices by this time next year.  Personally, I think there's pent up demand for a Windows tablet that runs all those Windows desktop apps.

Innovation in the Mac hardware area seems to have stopped for an extended nap?  I read rumors of a 15-inch MacBook Air, updates for the Pro and iMac lines, and maybe even an update to the behemoth MacPro desktop, but the roll-out is very slow.  

The 4G revolution is in full swing.  All of the major handset manufacturers have credible 4G devices running on multiple carriers, and, with the broad roll-out of Google's Android 4.0 "Ice Cream Sandwich" OS, Android phones may finally come close to matching the "simple and elegant" look and feel of Apple iOS.  Plus, Google, not Apple, is leading the charge into mobile payments.  I love my iPhone, but I am part of the 10 percent of the US population that is Mac-centric.  The Mac ecosystem is the best solution for me.  Google's cloud apps, social network, integrated mapping and payments, and 400,000 app store get more credible and compelling every day.

Apple faces additional challenges expanding iCloud, broadening its media offerings, inventing its mythical TV that has been coming for years, and getting the next-gen iPhone 5 and iPad 3 out the door.

The bottom line is, Apple needs to step up its game - delivering more products faster with typical Apple quality.  My prediction is that Apple will live up to the challenge.

• Microsoft makes a comeback and becomes a player in digital media in the living room and over connected devices like tablets and smartphones.

Microsoft's biggest problem isn't weak products or poor customer satisfaction; it's snooty members of the tech press that call them a corporate dinosaur or discount innovations in areas like media streaming or mobile phone OSes.  If you look at Microsoft's product history over the last 3 or 4 years, you'll see a bunch of winners:

• Excellent new versions of Office for Windows and the Mac. 

• Windows 7, which largely erased all of the annoying features of Vista and made things faster, too.

• Superior media streaming built into the XBox 360, which is the largest streaming platform in the world.

• Excellent online games.

• Significant upgrades to its enterprise apps and development tools.

• The purchase and relaunch of Skype, which is expanding dramatically.

• A mobile phone OS in Windows Phone 7.5 that many reviewers grudgingly admit is just as easy to use as Apple's iOS.  Maybe the Microsoft-Nokia alliance will see some traction this year.  

Eventually, reporters and analysts will notice.  Microsoft is still insanely profitable with massive amounts of cash in the bank.  It is still a market leader in the most of the segments where it elects to compete aggressively.  Plus, it's a major investor in Facebook, which will go public this year and create even more available cash.  I wonder what they will buy with it.

The tech pundits talk about the Big Four Platform companies - Facebook, Google, Apple, and Amazon - like they will decide the future of the consumer cloud.  Well, 90 percent of consumers use PCs and software from Microsoft and don't seem inclined to change.  The Xbox is the number one selling game console in the US.  None of the Big Four has these advantages. 

My prediction is that, when the battle for the living room reaches maturity 3 or 4 years from now, Microsoft will be a serious challenger.  Eventually, even tech reviewers can recognize quality.

• Cord Cutting is coming, but slower than the pundits predicted and with higher margins for cable and telecom companies.

For several years now, the digerati have predicted that consumers will begin to cut cable/satellite TV connections in an effort to save money and gain access to programming on an ad hoc basis.  I have a client that sells subscriptions to digital services, and the number two top questions in their call center are:

1. "Can I get Netflix with that?"
2. "Can I get rid of some of those stinkin' channels that I don't want and pay less?" 

The answer to both questions is yes.  Someone will do a better job of streaming on-demand TV, although the jury is out on Netflix as the eventual winner.  And your cable/telco provider will be happy sell you TV a la carte by delivering to you through your connected TV over an even faster and more profitable Internet connection.  With the escalating cost of content - particularly ESPN and a few other network bundles - pay TV has become a low profit business, and it's not like the cost of content will decline any time soon.   

Broadband is another story.  It's hugely profitable, and consumers can't live without it in the way they can - say - ditch their home phone line or the Food Network with impunity.  For digital service providers, speed upgrades are a minor cost when compared to putting the lines in the ground to begin with. TV shows look just fine over the Internet, and then there are all of those tablet apps and websites, like Watch ESPN and the Verizon and Comcast programming apps.  It turns out that consumers will watch TV just about anywhere, including on much smaller tablet and smartphone screens.  In fact, yesterday, Comcast and Disney inked a ten year agreement to facilitate content delivery of the most popular pay TV properties on every platform imaginable.  Plus, broadband is the gateway to new services like home security and monitoring, which is hard to turn off once it's installed and is much less expensive to deliver than pay TV.

So, yes, you'll be able to cut the TV cord, but it's likely to be replaced over the next few years with a much more profitable cord or two and more expensive and faster broadband service.

Happy iPhone Day

October 5, 2011


9:39 AM ET:
Today is the day.  By Noon Pacific Time, the world will know just what the new iPhone 5 will bring to mobile computing and communications.  There are plenty of rumors:

• A bigger screen with glass all the way to the edge.  Developers will have to update their apps to take advantage of it - gasp.  Somehow, I think they'll get right on that.
• The Home button might move or get smaller or something.  As long as finger can easily find and press it, I think I can handle that one.
• More storage, which would be welcome for music lovers like me and app users.  Apps seem to be getting bigger in size and needing more processing power.
• It's a good thing there's supposed to be a faster, dual-core chip in there, too.
• Then there's the hope for 4g Internet speeds, which would make surfing the Net through an iPhone faster than most home broadband connections - provided that every 4g smartphone user didn't decide to all "4g surf" at the same time.
• There's also hope that you'll be able to talk to your iPhone and get it to do almost anything.  You can talk to it now, but only to dial contacts and phone numbers and maybe play songs.  Apparently, Apple wants you to be able to text, search, and generally control almost any aspect of the phone verbally.  Sounds cool.
• Some people want Near Field Communications, which would allow you to use your smartphone as a credit card in stores that support that.  There aren't very many of those yet, but PayPal, Google, and many others are working hard to fix that problem.
• It's supposed to look like a mini iPad now, too.  Is it me, or did the iPhone become like an annoying little brother when it is sitting next to an iPad?  "Pick me! Pick me!"  "No, sorry, son. The apps are much bigger and better on this one."

Then there's the pressure that's supposed to be a heavy burden on Tim Cook, the new Apple CEO.  He has to "perform" in his first solo appearance on the big stage.  Sorry, but Tim Cook has the best job in the world.  He has a great team, the world loves his products, his revenues and profits are going through the roof, and, apparently, Apple has a really deep product pipeline that's sure to produce hits for years to come.  I'd like some of that pressure.  In fact, I'll take two.

The Wall Street Journal is reporting this morning that Sprint has bet the farm on Apple iPhones - agreeing to spend $20 billion on iPhones and other Apple products over the next four years.  Hmmm.... $5 billion per year in guaranteed revenues, and, by the way, the iPhone is now available on 228 carriers worldwide, but not T-Mobile in the US.  WTF?

By mid next year, you're likely to see:

• New Macbook Pros that look and feel a lot like Macbook Airs.
• A 4g iPad 3.
• A fully functioning iCloud, which will sync just about anything to anything else, including music libraries across devices.
• Possibly big updates to Apple TV.

11:40 AM ET
It seems that every large technology news source, including CNet, AllThingsD, Mashable, San Jose Mercury News, and Engadget, will be live blogging the show.  Other reporters will be writing finished stories that will debut online only minutes after Mr. Cook wraps things up, and I guarantee that CNet will have a "First Look" at the new phones online by tonight. it's just the way it is.

12:20
I am on the subway now on my way to a meeting in Alexandria, which is about an hour and 20 minutes away.  I'll be underground for most of it, so I won't be following one or more of the Live Blogs, which is kind of disappointing.

14:00
My meeting is about to start.  Tim Cook is probably about halfway through the show now; however, business is business.  Gadget lust will have to wait. They have lemon-flavored sparkling water here. Excellent.

15:30
I am at Starbucks now - re-caffeinating for the long ride home.  Beautiful day outside and an underwhelming announcement from Apple - at least according to the Wall Street Journal.  Most of the changes to the iPhone 4S are under the hood, not on the outside:

• Faster processor - check.
• Faster data speeds - yes, if you're on AT&T or another GSM carrier, but no 4G.
• More storage - check.
• Better camera - big check.
• Bigger screen + slimmer - no check.  It's the same size and shape as the last model, and, yes, it still comes in white.  It most definitely doesn't look like a mini iPad.
• Moved home button - obviously not.
• Talk to your iPhone features - yes, called Siri.  It looks promising.
• Near Field Communications - nope.
• Global phone - the article doesn't say.
• Sprint did get the iPhone, but that won't make me switch to them.

Steve Jobs did not participate.  Apparently, Tim Cook did a bang up job the ringmaster, and the members of the cast were equally good.

18:10
I just read the CNet first look article. It's a global phone. That's very good since we'll be going to Italy in a few weeks for our 25th anniversary trip. It's time for dinner now.  I'll be watching the keynote later.  And, yes, I know that I already know everything I need to know to buy the product or not, but I've watched every keynote since Keynotes came online.  Why would I stop now?  Is this obsessive?  Yes, and I don't care.  This morning, someone posted the Keynote for the iPod from ten years ago.  Jobs was thicker, younger, and just as passionate as he was this past June.

20:01
The Keynote begins.  Tim Cook does an excellent Steve Jobs - more laid back maybe and with a slight Southern accent.  It turns out there are many things to learn about today:

• Mac sales continue to go through the roof.  They now represent 23 percent of all computers sold in the US retail channel.
• Consumers have now downloaded 16 billion songs.
• Apple has paid over $3 billion in sales to application developers.
• There are now over 225 million iOS devices in circulation.

By any measure, the metrics are impressive.  So are the product updates leading up to the anticipated iPhone launch:

• The features in the iPod Touch continue to advance, which is great for music lovers.  It isn't great, however, that there will no longer be a high capacity iPod Classic.  Carrying around 160 gigabytes of music is simply tremendous for a music guy like me.  Now I'm just hoping that mine lasts forever.
• iCloud promises to be a worthy replacement for MobileMe.  Let's hope it works well out of the gate.  I am particularly happy about the MusicMatch service, which will sync tunes across all of my iOS devices.
• iOS 5 has a lot of important enhancements.  The best is Siri, the intelligent speech recognition application that lets you ask your iOS device almost anything and get an answer or perform a task.  The Scott Forrestal demo was very impressive. I really want to try it out.  I also will probably use the Messenger service heavily.  It's the equivalent of Blackberry Messenger but with more features.

The crowd of press, pundits, and fanboys didn't react well to the new iPhone 4S. People are complaining about the lack for 4g networking and NFC and a big screen and other niggling things, but wait a minute:  The iPhone 4S supports HSPDA+, the GSM data standard, which can transmit data at up to 14.4 megabits per second. Most of Apple's 228 carriers are GSM-based, and, even with congestion, for carriers that support this standard, data speeds will increase 3-5x over current levels with minimal investment when compared to investing in a whole new LTE infrastructure in short-term. That's a big jump, and it buys carriers time to upgrade their infrastructure to LTE while providing a better data experience in the meantime.  It makes me wonder whether it's wise to switch to Verizon right now - my current plan - or stick with AT&T to gain access to those higher speeds immediately. I guess it depends on how much I want great service while I am riding the Metro here in Washington, DC.

The market did not react well to Apple's iPhone announcement.  Apple stock was down 5 percent before rallying at the close of the market, and some key pundits piled on.  This tells me that many analysts are missing the key points:

1. It's all about the ecosystem, not just the phone.  Think app stores, iCloud, MusicMatch, iTunes, Macs, iPad, and iPhone all working together.  Once you're committed, it's very hard to escape.
2. Context-based voice recognition will change the fame.  I bet Siri improves dramatically over the next 12 to 24 months.  Right now, it's in Beta.  She'll probably be pretty rock solid by next summer.
3. With so many people buying tablets, a bigger screen on a phone isn't as necessary, and the current Apple screen is fabulous.
4. Apple believes that battery life trumps network speed, and the iPhone continues to improve - 9 hours of talk time, 6 hours of surfing time, 10 hours of video watching, and 40 hours of music listening.

Apple changes the form factor of its devices every 3 to 5 releases.  This is only the second release of the current iPhone form factor.  It actually would have been unusual for them to switch now.

October 6, 2011


12:05

Today is like Boxing Day.  That's the holiday that comes one day after Christmas in many parts of the world.  It's a good holiday, but not as good as Christmas.  For Apple, sentiment is swinging back their way.  Columnists and other pundits have had time to think through Apple's announcements, and sentiment is swinging in their favor.  The importance of that ecosystem thing is becoming apparent.  AllThings D has about 5 articles on subject, and so does CNet's News.com.

I am an Apple guy.  I am getting more excited about it.  I'll probably pre-order on Friday. Now it's time to get back to work.