Android, the growing force

Today, two significant events are happening. Samsung who has been carpet-bombing with ads all over the world on its new smartphone – the New Galaxy, is doing the big announcement in New York. I read that they have outspent everyone, even Apple, on marketing dollars (over $400 million in 2012). In the last month, during my visits to India, Germany, Czech Republic, and Turkey, I have noticed Samsung ads everywhere. Their market share on smartphones have grown dramatically during the last two years.

The second event is the stepping down of Andy Rubin, founder of Android at Google to a new role, as announced yesterday.

Android — which began life as an independent company Rubin co-founded in 2003 — is now a massive and growing force in mobile. Sure, some might grumble about the many forks and flavors, but the software powers more than 750 million devices from scores of different hardware makers. Android accounted for 70 percent of global smartphone shipments in the fourth quarter of 2012, according to IDC.

The overall criticism seems to be its multiple flavors and incompatibilities. Apple’s chief marketing guy said yesterday that Samsung’s Galaxy users will use an operating system that is at least one year old. Keeping various flavors of Android in sync has been an issue.

Google has been pushing two operating systems – Chrome OS and Android, the former for laptops and tablets and the later for smartphones. By consolidating the Android group under the Chrome division, headed by SVP Sundar Pichai, Google is attempting to bring the two together. This is what Apple has done well with its iOS – it feels the same whether you are using the iPhone or the iPad and even some aspects of Mac laptops.

Steve Jobs was quite upset with Android and made some disparaging remarks during 2011 before his death. However, Apple has a battle as newer devices (hardware seems very much alike – a big shiny glass screen on metal with touch UI) all preferring Android as their OS. It must continue to innovate, mostly in the software, to attract customers as Android becomes a real threat.

CES 2013, Las Vegas

I attended two full days of this year’s CES (Consumer Electronics Show) in Las Vegas. What a show that was! 150,000 people moving about the convention center and the Venetian hotel (venues for all the exhibits).

I used to attend Comdex many years back, but that was replaced by CES and it’s focus has broadened to all kinds of consumer products – TV, Tablets, cameras, audio, smart phones, etc. As expected, we are living in a connected world and smart devices are all over. Whereas the past years centered around the PC and Microsoft, this year’s CES did not even have Microsoft as a participant (remember how Bill Gates used to make major announcements at Comdex?). This year’s keynotes were delivered by Qualcomm, Panasonic, Samsung, and Verizon. Mobile devices were the big thing, as Android phones were on display by all major vendors. There were too many iPhone/iPad accessories on display, so much so that you get tired of it.

Walking the halls of the convention center requires lots of physical strength, as one could walk 10-15 miles in a day. The LG booth was very impressive with 3D Television on a giant curved screen, where objects come to hit your face. The big news was the giant 80 to 100 inch TVs going for $20,000 – all 4k HD technology with unprecedented clarity of pictures. LG even showed 50 inch curved TV (called flexible display). The OLED TV is extremely thin. The real big news is connectivity. From the tablet to the TV to the laptop screen, events can move wirelessly. Apple clearly has changed the landscape with its touch interface in iPhone and iPad and everyone now offers similar tablets coming in all sorts of sizes. Interestingly, Apple does not have a booth nor its executives ever speak at this event.

Marc Benioff was there at a keynote session and he spoke about how the convergence of consumers and business is happening. Several panels talked about cloud contents and regulatory challenges. The FCC chairman Julius Genachowski was there also talking of broadband, spectrum reform, and competition policy matters. I listened to an interesting presentation of the future UI – called NUI (Natural User Interface) based on multi-touch, vocal, gesture and neural modes. It is good to see HTML5′s Touch event spec V2 is being readied for standardization.

For an enterprise software guy like me, this show may look less relevant, but enterprises are impacted in a big way by the consumer devices and technology. Hence we have the phrase “consumerization of IT” and BYOD. The Cloud is blurring the difference between personal software and work software as they have to intermingle and mesh.

It was a worthwhile experience to see all the advancements happening in such a fast pace. I particularly enjoyed the new stuff in robotics and programmable 3-D manufacturing.

World’s most valuable company on August 20, 2012

As the day dawned and stock markets opened, Apple shares went up by $16 to $647 and made it the most valuable company worth $623 Billion. It beat its next rival Exxon Mobile. Towards the end of 1999, Microsoft was worth  $616B, but its value now is $257B, less than half of Apple’s value. Who could have imagined this ten years ago? Apple was derided as the company that paints PC’s (multiple color workstations) for a living.

I have written before on Apple’s rapid growth and success. After Steve Jobs returned to Apple the second time, he revived the sinking ship and then started new categories that became market leaders. The new MacBook Air started a new trend in light-weight, sleek design with its ultra-fast operating system. No longer one has to wait minutes for the system to boot up. Then came the iPod that turned the music business upside down. Then followed the new leader in smartphone – iPhone which saw huge success year after year, contributing almost half of the revenue. Then Jobs introduced the iPad, the first tablet with touch interface. In spite of critics who doubted its success, it defied gravity in terms of sales and profit.

Apple started its stores to sell its own products. When a board member objected saying, “Brick and Mortar stores are bad business”, Steve Jobs replied, “we are not talking of brick and mortar. It will be glass and steel”. The Apple stores became a runaway success. It’s all about user experience and aesthetics in design. Customers are willing to pay higher price to get that experience. Apple’s products stay high in price and yield big margins for the company. Also, Steve lead a sixth category in animation technology via Pixar. He bought the company from George Lucas for $10M and sold it years later to Disney for $7B.

Apple deserves to be the most valuable company, due to its innovation, design, and superior products. It also has a tremendous leadership team which was shaped by Steve Jobs before hos death. Today he would have been so proud to see his company become the number one in value.

Apple’s foray into Television

No one knows for sure what Apple is working on for a breakthrough into the Television business. But expectations are high that Apple would announce something quite dramatic this fall.

No, they are not going to introduce a new piece of TV hardware. Plenty of high-tech TV’s are available from the likes of Samsung, Sony, etc. What Apple will do is revolutionize the content business for the consumer, much like what it did with the music business via iPod and iTunes.

I just read this:

The television industry is based on cable and advertisers setting up assorted tollbooths between the viewer and what they want to watch. Getting to your show means paying a cable bill, running through a buggy user guide, and sitting through commercials.

What if you could just pay for whatever you wanted when you wanted it? That would change the entire industry. That’s most likely what Apple’s working on and the revolution could be led by ESPN.

ESPN is owned by Disney and Apple has a very close link with Disney (the CEO of Disney sits on Apple’s board and the late Steve Jobs sat on Disney’s board after selling Pixar for $7.4B). Apple could provide ESPN directly to viewers for a fee which should be cheaper than what cable companies charge. What about the same for HBO? The cable industry pays for contents and sells them to the viewer as various expensive packages. Apple may bring the “liberation” and easier choice to viewers. That would shake up the cable industry for sure.

Of course Disney would not like to alienate the cable companies because of the revenue stream it collects from them. So the deal with Apple would be tricky.

Even Apple’s simple device AppleTV enables wireless transmission between your computer and the TV set. It claims to sell 3 million units of that per year. A revamped iTune store with better contents such as ESPN, HBO and the like, would be welcome at last.

So let’s wait till the fall for Apple’s announcement!

Apple Market Value exceeds $500B

Wow Apple! The market value exceeded $500B and now everyone is speculating if it will reach One Trillion, which no company has ever aspired. As I look into the valuation this morning, Apple is at $505B. Microsoft is almost at half of that at $266B. Look at the other big ones in technology sector – Oracle ($146B), Amazon($82B), Cisco ($107B), IBM ($229B), Intel ($134B), Google ($201B), and HP($50B). Other stalwarts for comparison are – Wal-Mart($202B), GE($202B), and Exxon Mobile($408B).

Someone commented that if Apple was part of the Dow Jones, then the value would have exceeded 14000 few months back. Apple is an American pride institution that symbolizes great creativity, innovation, and visionary leadership in planning and execution. Once written off as a “has-been”, Apple came back with a vengeance largely due to the dynamic leadership and imagination of the late Steve Jobs. He married liberal arts and computer science into a blend of consumer products that reached the pinnacle of success. It puts the leadership at Microsoft and even Google to the back benches. Let us not even talk about HP.

Steve put together a great leadership team and Apple will continue on its growth for next couple of years. They will announce the new iPad 3 next week on March 7th. I am sure newer versions of iPhone and MacBooks are on the pipeline. Their foray into television should begin to shake up that sector, much like what they did to music, smartphones and tablets. For now, Tim Cook and team seem to charge forward with the same vigor as their departed leader.

At a personal level, I was a user of all Apple products except the laptop, then I bought my first MacBook Air around Thanksgiving time. Now I am in love with my MacBook Air with its SSD and lightning fast boot-up. Every time I go back to my old IBM ThinkPad running Windows, I am in a time-warp of some prehistoric technology.

Hats off to Apple with its great success!

Apple is defying gravity?

Yesterday’s announcement of Apple’s fourth quarter result for 2011 was astounding to say the least. Growth from a year-ago quarter was 118%. Sales for the quarter at $46.3 Billion yielded profit of $13.1B. Wow – that profit is more than 3 times what General Electric earned in its most recent quarter. These figures blew analysts’ projections. Apple’s cash hoard is $97.6B, more than the market capitalizations of all but 52 publicly traded companies.

Today Apple’s shares are up around $450, making its market capitalization surpass Exxon Mobile. So Apple is the most valued corporation in the US and the world. This is significant as the founder and visionary leader of Apple Steve Jobs died last October. The momentum of sales continued even stronger than before. The new iPhone 4S sold briskly contributing to the total sales of 37M iPhones. Even the iPad sold 15.4 Million units. The Amazon Kindle Fire made no dent to iPad as many pundits had speculated. Now the onus is on Apple to continue keeping up with sky-high expectations.

But what a remarkable journey! Tim Cook said yesterday that they could have sold even more if they had enough supplies. He also said new products are in the pipeline later this year including new releases of iPhone and iPad. The Apple TV box for wifi link to the TV has also sold better than expected.

Just see what is happening to RIM, makers of Blackberry with their rapid market erosion forcing the  change of CEO. Also Yahoo reported decline in sales and profit as the new CEO Scott Thompson takes over and Jerry Yang finally steps down. These former market leaders can look with envy at Apple’s tremendous success – a testament to excellent product design and world-class execution by its leadership team.

Apple seems safe for a while executing its product roadmap and plans. One never knows what will happen five years from now. But they have reasons to celebrate now.

Leadership at IBM – Sam Palmisano

Sam Palmisano took over IBM’s CEO role back in 2002 from Gerstner who was brought in to restore IBM from its historic decline during the early 1990s. I was an employee of IBM for 16 years until the year 1992. I left early in 1992 and by the end of the year people were asking me how did I know that such decline was coming. My answer was that I had no idea and I really agonized over the wisdom of leaving IBM, a great company by any measure.

Palmisano went into the second phase of “value creation” and changing IBM’s course in several ways. He said that the world is instrumented, interconnected, and intelligent and hence IBM’s new solutions have to address that. Here are some of the key decisions during his tenure:

• Acquisition of Price Waterhouse Coopers in 2002 for $3.5B, injecting business solutions services for large clients
• Selling of the PC business to Lenovo for $1.75B back in 2004-2005 to get out of the consumer hardware commodity business. Again to refocus on large enterprises.
• Selling of the storage business to Hitachi, which was not yielding great profits
• Increasing the R&D budget by 20% to a whopping $6B per year, to refocus on innovation. A new research lab came up in Brazil, the ninth such lab across the globe.
• Introduction of several initiatives like Smarter Planet in 2008, Watson supercomputer last year (answering questions posed in natural language for speed, accuracy, and confidence. It trumped in the Jeopardy game against two smart humans), Corporate Services Corps to address hard issues with clients across the globe, etc.
• Cutting $8B cost to make IBM operationally trim

What were the results of such moves? Well, during his tenure, IBM’s earnings quadrupled and the  market cap went up above Microsoft last September(first time since 1996) to $214B, just behind Apple’s. So shareholders are happy and even Warren Buffet (who never buys technology stocks) bought significant chunk of IBM stock late last year.

Like a true leader in IBM’s tradition, Palmisano celebrated the 100th. birthday of a great company and reminded everyone of the basic principles of its founder Thomas Watson Senior. In October, 2011, he named Virginia Rometty as his successor as the new CEO starting this month and him serving as chairman of the board.

IBM’s sustainability as a great company is exemplary in the world.  Many of today’s high-flying valley technology companies can learn from IBM’s leadership and value system.

The Next Web Architecture

I was listening to Roger McNamee’s predictions of technology investment trends and came across two new terms – Hypernet and Hyperweb. The first term is where the Internet is overlaid with smartphones. He says that smartphones are now 50% of the web devices and growing. The second term refers to the software infrastructure for the Hypernet. The current infrastructure of mostly “index search” (read Google) is not going to work for the Hypernet. We need HTML5. Here are his ten hypotheses for tech investing.

1. Next Web Architecture = Hypernet + Hyperweb

2. The decline and fall of Windows unlocks revenue. Software development on Windows is declining. The new focus is the Web, Apple OS, and open source. In 2011, Windows devices will be less that 50% of the Internet, down from 95% four years ago.

3. Index search is peaking. Google search on mobile and tablets is much lower than on PC and Android does not fix that. New search is content-focused, such as Twitter (real time search), Wikipedia (facts), Linked-In (business people), or Facebook (social, taste,..).

4.  Apple’s model threatens the Web. Web is more flexible, but Roger calls it Digital Detroit and one gets mugged easily. Apple’s iOS App model simplifies access to information on the Internet. HTML5 can be a threat to Apple when every content-provider starts using it.

5. HTML5 is game changer for publishers. Developers can embed audio and video easily replacing Adobe’s Flash. It will be disruptive. Content producers will redesign their sites to reduce power of Google and ad networks.

6. Tablets are hugely disruptive. iPad has replaced DVD as the most actively adapted tech product ever. So far, Apple dominates this market. The number 2 (Kindle Fire?) is yet to emerge.

7. First wave of “Social Web” is over. Facebook has won the platform war as the new Windows. But going forward, social will be a feature of every product.

8. Smartphones in the US = Apple + 7 Dwarfs. Android has more units but Apple gets almost all profits. Also Android has some serious security issues.

9. Wireless Infrastructure is competitive threat to the US. US has the least capable wireless infrastructure in the developed world. This will impact productivity and competitiveness  in a big way.

10. Integration of TV and Internet could be disruptive. The convergence of Web and Television has the potential to disrupt cable and satellite, but it may not happen.

These are interesting and thoughtful hypotheses and like any predictions they are unknown in terms of velocity (when would it all happen), but certainly we see several of these at play even now.

Good Bye, Steve Jobs

What a sad day! The news of Steve Jobs death came as a real shock. We all knew he was sick, but no one expected how fast the end would come. Tons have been written about his contribution to the tech world, the greatest innovator/designer that he was. His attention to design details and usability is legendary. Anything he touched became a category. The Apple digital products (iPhone, iPod, iPad, iMac) have so deeply permeated the mainstream, that everyone feels a personal connection to Steve. All across the world, people are pouring out their emotions.

Steve had a spiritual side that is less known to the public. During the early 1970s he made a trip to India looking for the inner meaning of life and visited places like Varanasi and an ashram in the Himalayas. He was a converted Buddhist and even his marriage was conducted by a Buddhist monk from Stanford University. The Beatles, Bob Dylan, and the hippie culture of the early 1970s had an impact on his way of looking at the world. He always went with his own convictions and was quite non-linear in his approach. He followed his own intuition and beliefs. Hence we see such brilliant Apple products plus  the incredible animation products from Pixar.

In his famous Stanford speech to the graduating class of 2005, he spoke eloquently about death and his direct experience of coming face to face with it when the first diagnosis of pancreatic cancer happened.  In spite of a liver transplant and subsequent best possible medical care, death happened. This humbles all of us on how fleeting this life is.  In a famous dialog from the Indian mythology, a question was asked as to what is the most surprising thing in this world. The answer was quite profound and goes like this – everyday so many people die. But the remaining ones think they are immortal. That is the most surprising thing.

Steve, we pray for your soul to rest in peace. You will be missed.