We all know that digital is massively invading and disrupting all industries. One indicator of this development is that part of the mainstream advertising industry finally seems to be embracing digital.
The “ad” industry is not just the creative part. It is also comprised of PR-firms, market researchers, insight, database marketers, and specialists in digital and lifestyle trends. The major players in the industry (WPP, Omnicom, Publicis Groupe, and IPG) are conglomerate holding companies with investments in all parts of the industry. It seems that these players are beginning to put the pieces together around digital.
They give away quite a lot of their research for free. Here are some free information sources that could be useful for us industry analysts and Zeitgeist watchers:
JWT Intelligence has quite a lot of free material, both trend forecasting and digital material. Some additional reports can be found on JWT Worldwide.
Trendwatching is an independent firm focusing on innovations, digital, and consumer trends. They have a global network of 3,000 freelance trendspotters. A competitor with a similar business model is Springwise, which focuses on innovation and discovering new business models in the B2C space. Another competitor is The Futures Company, though they are slightly less focused on digital.
Havas Media has reports about global media trends as well as material about digital marketing.
The largest conglomerate, WPP also provides free reports and articles from their portfolio companies. Some are about digital. The competing holding company InterPublic Group (IPG) has a compilation of free reports and blogs from their portfolio companies, though not much about digital.
One impression from quickly browsing through these sources is how digital has enabled and unleashed innovation all over the world. Here are a few examples (from Trendwatching’s service):
A Fiat car showroom in Brazil has equipped its staff with head-mounted video cameras. Customers can contact the showroom and the sales rep can walk around the car, open the hood, get in the car – all while talking to the customer and filming the car.
Pizza Hut in Panama has delivery scooters with small ovens built in. Their customers receive piping hot pizzas straight from the oven on the scooter.
Volvo has developed a Roam Delivery mobile app that makes it possible to use their cars as a delivery destination for couriers. Using the app, Volvo owners can give the courier the exact GPS position and temporary electronic key to the car.
The BFF Timeout app encourages Filipinos to focus on each other, rather than on their phones. Once all individuals in a group have opened the app together (sponsored by McDonalds and Coca Cola), the timeout begins and points are earned for every moment all phones are left alone.
Africa’s own startups have lofty continent-wide ambitions. Jovago is a hotel booking service from Nigeria, Oju from Mauritius launched African emojis for smartphones, the supermarket chain Choppies Enterprise is from Botswana, Nigerian Jumia is the Amazon of Africa, and Africa’s Netflix is the Nigerian startup iROKO. All of these companies are now expanding into neighbouring countries.
Dutch train operators Prorail and NS plan to roll out platform-length LED displays that provide real-time information to passengers. A 180 meter LED strip shows information on carriage crowdedness gathered from infrared sensors inside the carriages, as well as information on where carriage doors will open and the location of quiet carriages in the train.
French shopping center specialist Klépierre has developed an “Inspiration Corridor” equipped with large touchscreens on the walls. Sensors in the corridor analyse a shopper’s age, gender and apparel. The walls are then filled with personalized shopping suggestions. Tapping on the touchscreen sends directions to the customer’s mobile.
Some of all these digital innovations are of limited value, some are just silly, but some are brilliant. Tinkering, creating, and innovation takes place everywhere – not just in Silicon Valley, Manhattan, Tokyo, Shanghai, and London. The technology platforms and infrastructure are in place around the world and the barriers to further innovation are lower than ever.
Tomi Ahonen has just released his Rest of Decade forecast for the smartphone and PC market. His prediction is that all phones sold will be smartphones by 2018/2019 and that the low-end dumbphone market will cease to exist. Android will be the dominant platform and the PC market will remain almost flat, though within the PC segment, tablets will almost completely replace traditional PCs, holding a 77% market share by 2020. (Ahonen defines a tablet as an ultraportable PC, not a large smartphone. I agree. A tablet can’t be used with one hand while walking down the street. And you can’t put a tablet in your pocket.)
According to Ahonen, as the smartphone market rapidly expands into the price sensitive mass market, Apple/iOS will lose market share and be relegated to a very profitable high end niche player with an 8% market share by 2020. Looking at the entire computer market (PCs, tablets, smartphones) Apple/iOS will manage to keep an 11% market share by 2020, well ahead of Microsoft, which will hold a meagre 6% market share. The smaller platforms; Blackberry, Tizen, Firefox, Windows Phone, etc. will hover around 1% each if they are not almost completely wiped out.
It is hard to argue against Ahonen’s arguments and excellent track record as a forecaster. However, it is worth commenting on a few things.
In my opinion, the forecast for the decline of the traditional keyboard based laptop/desktop PC is overly pessimistic. Ahonen’s forecast is that PC sales will drop to just above a third of the 2013 sales volume (from 315 million units to 130 million). For trained knowledge workers, input via the mouse and a fully equipped keyboard is still much faster than a tablet for extended sessions of concentrated work. In addition, tablets have some significant ergonomic UX/UI problems if used for office work. A tablet placed horizontally on an office desk will catch glare from ceiling lights and give the user “iPad neck” from bending down. A vertically placed tablet in a stand will strain the arms every time the user touches the screen. No one wants to lift their arms and touch a vertical screen in front of them every 30 seconds for eight hours.
Another issue worth commenting on is the market share predictions for Google/Android and Apple/iOS. Even though Android is free and open source, the bundled Google Play is not. Google have moved most of the goodies (features and APIs) from Android into Google Play, where they exert tight control. Any device maker or operator that wants to use Android without Google’s presence will have to kick out Google Play and recreate all this functionality. Device makers are also prohibited from working on Android forks if they want access to Google’s closed source apps and APIs. They will be left with the “naked Android”. In addition, the app developer ecosystem is dependent on the APIs in Google Play.
This is of course in Android’s favour in the short run. However, as the Android platform matures and Google’s behemoth-ness increases, it is possible that another major player will fork Android and start a competing but very similar platform to get rid of Google’s tracking and analytics in their products. Perhaps by supplying a cross-platform tool that will make it possible for Android apps to easily be ported. The likelihood for such a fork has increased in the aftermath of the Snowden leak. Foreign governments will suspect that the NSA has demanded backdoor access to Google’s user tracking and/or Google Play.
Considering that entire populations will soon be smartphone users and that smartphones are an unprecedented spying device (cam, mic, location, call logs, surf patterns, banking, passwords, etc.), foreign governments will most likely find it unacceptable that the US government has backdoors into this data – and that they don’t. For example, from a Chinese perspective, government support of an Android fork will both be sound industrial policy and a way to replace US/Google control and possibly create a viable domestic player that can compete on the global market. (China has already done this but the existing Chinese Android fork is old and not compatible with the global ecosystem of Android apps.)
My point is that Ahonen’s prediction for Android dominance (89% market share in 2020) underestimates the effects of strategic countermoves from other players that view this development as a threat. When one player becomes too strong the entire industry will unite against it. Of course Android will be a dominant platform but the uncertainty is larger than what Ahonen seems to take into consideration.
I am also somewhat puzzled over the forecasts for Apple/iOS. Ahonen has a rather compelling argument for Apple as a niche player. If Apple introduces much cheaper low-end smartphones, they will reach new market segments but they will also hurt the sales of their own high-margin premium models. Apple will most likely prefer to keep stellar profit margins and remain a leader in the premium segment than compete on volume. This makes sense. The size of the global smartphone market is so large that even if you only have a 10% market share, that is enough to reap the economics of scale. And the developer ecosystem and app universe for iOS is already in place and is as strong as for Android.
But if and when the smartphone market really matures, it is possible that Apple will find itself embattled even in its core premium market in rich countries. If customers are unwilling to pay Apple’s premium prices and market shares fall, I think Apple will switch over to plan B. They can easily cut their prices and introduce low end models and go for volume instead of profit margins. In that case, Apple/iOS will end up with a significantly larger market share in 2020 than Ahonen’s forecast of 8% – perhaps 15%. The paradox is that this bad news for Apple will actually translate into a larger market share. Ahonen’s forecast is that it won’t happen before 2020. I think there is around a 40% probability that it might.
Few people in the tech sector care about landline voice these days but for landline operators it’s still a significant (though declining) cash cow, and will be for years to come. Mismanaging this service could provoke a customer stampede away from landline voice. If BT and the other UK landline service providers can’t stop the deluge of nuisance calls that have flooded British customers over the last few years, the scammers and spammers will effectively and swiftly kill this business area for BT et al. (This is the downside of English being a global language. There are no Swedish or Finnish speaking call centre operators in India.)
A survey by consumer watchdog Which? found that 70 percent of respondents had received unwanted calls. In their comments fields, many Which? members reported being bombarded by several calls every day, and sometimes even in the wee hours of the morning. There are silent calls, robocalls, calls to people’s work numbers, there are scams about a legal settlement of repaying credit card fees, calls selling shady PPIs, calls about selling protection against unwanted calls, fake market research calls that morph into sales calls, there are calls about double glass windows, fake calls from “Microsoft support” where they want to access your PC, and on and on and on. Asking to be removed from the call lists rarely helps, they continue to call regardless. Some spam callers hang up immediately if you deviate from the caller’s script. Based on the accent, many calls seem to originate from Far East call centers. Many users reported that adding their numbers to the TPS list that rejects telemarketing calls was of little help.
This deluge of nuisance calls is forcing people to change their usage patterns. The older generation is still stuck with the idea that the telephone has to be answered if it rings while the younger generation gladly ignores unknown callers. But even the older generation will be forced to change their habits due to this problem.
Users are also trying to defend themselves with countermeasures. There are answering machines and phones with integrated “Nuisance Call Blocking” functionality (CPR Callblocker, Trucall, BT6500). They use the caller ID and block known nuisance calls. Typically they block all international calls, “unavailable” and “withheld” calls in addition to a blacklist of numbers for known call centers.
The problem for BT & Co. is that these counter measures undermine the landline voice business. Blocking all unlisted and international calls will make it harder for friends and family to reach you on the landline and it also blocks SkypeOut calls. Asking your service provider for a new number that has never been used will leave your contacts stranded unless you manually provide them with the new number. Blocking your own caller ID for outgoing calls makes you a “suspicious caller” and your friends and family might not want to answer. Using an answering machine to screen calls is inconvenient. And once anonymous call blocking becomes widespread, the spammers and scammers will most likely find ways around this, for example by spoofing Caller IDs.
One of the angry Which? members had taken the drastic measure of paying extra to add a premium 0871 number to his landline which he always gave to companies and other untrusted parties. This stopped most of the spam callers and if anyone called they would have to pay for the privilege of talking to this user. He actually made some money on this. But for most users, cancelling their landline subscription probably makes more sense.
Spam has ruined email as the dominant form of e-communication. Nuisance and scam calls will most likely be the final nail in the coffin for traditional landline voice. BT (and the other landline operators) should make it a top priority to stop spam calls. BT should lobby for tougher laws with severe fines for companies that profit from nuisance calling. Fraud is a crime in India as well as in the UK, and British law enforcement should cooperate with its Indian counterparts to bring high profiles cases against Indian “telemarketers” that defraud British customers. The recent £90k fine against a company in Glasgow is a first step but BT should urge law enforcement to be more vigilant.
BT’s first step should be to stop selling wholesale termination minutes without a requirement that the buyers use caller ID and that they comply with some form of Terms of Service (are there any TOS for wholesale customers?). BT should also upgrade security in its technical infrastructure. Another flaw is that the British landline network can only display 11 digits in the caller ID, which means that most international numbers can not be displayed. (Mobile networks display international caller IDs without any problem.) BT should upgrade their network and enable longer caller IDs. They should also look into regular QoS issues such as sound volume. Calls on a regular UK landline vary widely in quality. Quite often, the volume is so low that it is almost impossible to hear the other party.
Few pundits and analysts in the telco sector bother to look at landline voice. It is viewed as a boring dinosaur legacy business. That is a mistake (even though it’s true that it’s a boring, declining cash cow). For the landline operators, the speed of the decline of landline voice is a matter of billions in cash flow over its remaining lifetime. Nonchalance about nuisance calls could swiftly put an end to these operators’ business. They should heed the warning.
Update: On 18 April, Ofcom fined TalkTalk £750,000 for making an excessive number of abandoned and silent telemarketing calls. Things are moving in the right direction.
Why force users to upgrade from XP or into Windows 8? They
might as well migrate away from Microsoft altogether.
While the mobile platform race garners the most attention these days, the fate of the legacy PC ecosystem is crucial for one company: Microsoft. How they play their cards will have repercussions for the entire tech sector.
Microsoft has long profited from being a de facto monopolist with a huge user base locked into their ecosystem. Their upgrade cycles with a new OS every few years have kept up their revenue streams. The inherent flaws and instabilities in the Windows platform have usually made upgrades worthwhile as each new OS (3.1, 95, 98, NT, ME, 2000, XP, Vista, 7) has been an improvement over an even worse performing predecessor.
To push the user base forward to the next platform, Microsoft has left the legacy user base stranded. Support for new hardware and APIs has not been added to a legacy OS. Support and security patch services have had an end date. The ever increasing hardware performances has provided additional incentives for users to upgrade with new machines. This strategy was a breeze from Windows 95 to Windows 7, but now the engine is about to break down.
Hardware performance of the aging PC platform is now adequate enough for most users. These days there is less of a compelling need to upgrade a four year old PC. But the major threat to Microsoft is the risk of pushing users away from the Windows ecosystem by forced upgrades. Microsoft may be about to make a serious blunder on both ends of their product pipeline.
On April 8, 2014 Microsoft will stop supporting Windows XP with updates and new security patches. XP’s market share is falling but it still has a 24 percent market share of the global market as of January 2013. Even if the user base is less than 10 percent next year when Microsoft terminates XP, we are talking about 50 to 100 million users. Microsoft’s reckless termination of Windows XP could wreak havoc and damage the company’s reputation. Malware hackers and criminals will keep newly discovered security holes to themselves and will wait to unleash them until April 9th next year, when they know that Microsoft will no longer provide patches. It would seem that Microsoft’s corporate DNA is still stuck in the mindset of the arrogant monopolist from the 1990s and that they take for granted that this abandoned user base will stay with the Windows platform no matter what.
To add insult to injury, Microsoft is not only planning to leave legacy XP users stranded but the upgrade from Windows 7 to Windows 8 is a discontinuity that will force users to rethink whether they should stay with the Windows platform at all. Win8 represents a radical departure from the traditional Windows UX/UI with a steep learning curve. Windows 8 is adapted for touch screens. Bravo. But the hybrid touch/traditional UI/UX is a step backward for users that want to work in the way they are used to. It will slow down productivity for the billion users who are accustomed to the mouse, cursor and keyboard paradigm. Users have accumulated a 15 year learning curve speeding up their mouse, eye, keyboard, screen and motor skills. Throwing this human investment away would be madness. Touch screens are a significant technological innovation with disruptive potential. But if you are an office worker that spends 8 hours a day manipulating the same corporate applications in front of a screen, a touch screen is hardly an improvement. With a touch screen, users have to constantly move their arms and if the display is vertical it means lifting your arms in a way that will be physically exhausting after less than an hour. The slowdown in office productivity due to bad ergonomics and forced relearning could be significant, though I think corporate IT-managers will be aware of these drawbacks and keep Win8 out.
Microsoft needs a strategy to defend their installed base at any cost
Microsoft seems to be oblivious to their weakened strategic position. Compared to 2003, users today have a plethora of alternatives (Apple/IOS, web/HTML5, cloud apps, SaaS, Android, Ubuntu, etc.). The lock in to Windows is not as strong as during the prime PC era. The huge legacy of corporate systems makes Windows sticky but the ease of developing new apps will eat away at this exit barrier. The cost and time of developing complex apps has fallen by a factor of magnitude over a decade.
Microsoft wants to push their entire user base to one platform (their latest). But considering the risk that Windows 8 might be a failure they need to rethink. By signaling that older platforms are to be phased out they are actually encouraging skeptical users to look elsewhere if they don’t like Microsoft’s upgrade cycle.
Here is what Microsoft should do:
Develop a major upgrade for Windows XP with some of the more modern security features included. Announce this upgrade (“Windows XP II”) in Sep 2013 and sell it for around $15 (upgrade only) with support until 2021. Extend the free security updates for the old XP for one year to give the user base time to migrate. Microsoft should also consider marketing XP II for new users at a higher price point.
For Win7 and Win8, Microsoft should announce that this represents a fork and that they are committed to the support and upgrades of the older platform (Win7) for users that don’t want the new touch based UI/UX.
Microsoft has to accept that their total market share is the sum of several platforms. Even with a 10 percent market share, each platform is large enough to be an attractive, cash flow positive business for any company. Milking a legacy platform such as XP is humiliating for Microsoft but beggars can’t be choosers. XP II would be a highly profitable business area and it would keep up the installed base. Whether this is enough to prevent or slow down the decline of Microsoft remains to be seen. (This is of course not a comprehensive strategy for Microsoft but only addresses the limited issue of OS upgrade cycles.)
I don’t usually pay much attention to Sony Ericsson’s products but last week I saw a billboard in the subway stating that the Xperia Arc sported a camera with excellentlow light capabilities. A quick google search revealed that SE is pushing the 8 Mpix low light camera as a major selling point. The low light capabilities come from Sony’s new sensor technology Exmor R.
It looks like SE’s marketing department has realized that most of their customers put a high value on the ability to take “natural” photos in low light conditions without a disturbing flash. Back in 2009 I wrote a highly critical review of their then flagship model Satio. The Satio was equipped with an oversized 12 Mpixel camera that was mediocre in low light due to the small sensor size. Two years later and it looks like they’ve finally fixed the problem.
It’s great that Sony has developed the Exmor R sensor for improved low light photography. But if they want to exploit this technology and use it to jump ahead of the competition they should push the low light threshold to the extreme in a sensor with larger pixel size but fewer megapixels. Instead Sony has developed a small silly 16 Mpix sensor while most of their competitors are concentrating on factors other than megapixel count.
The Mpixel count is only one design parameter. Pixel size is as important as the number of pixels. If each pixel is larger it will capture more photons.
And the sensor is only one component in the camera. Compare it with the highly touted Nokia N8 camera. Nokia’s sensor is one the largest in any camera phone, the Zeiss lens is made of glass not plastic, it has a mechanical shutter, a Xenon flash, and a built-in ND filter to handle extremely bright shooting conditions.
It’s a shame that Sony(Ericsson) and the new owners Sony don’t understand that they could use this new technology for an extreme low light camera phone that would sweep the competitors away. If they developed a 6 Mpix Exmor R sensor with a larger sensor size and used a Zeiss lens made of hardened glass they would really have a winner on their hands.
Sometimes I get the impression that the industry believes the iPhone and iPad represent the pinnacle of human technology. Even though the majority of the market attention is on these form factors, several new UI technologies are already out of the labs. These technologies have the potential to disrupt the traditional smartphone/tablet market and might pave the way for new types of products.
Here are a few examples that point toward a world after candybar multitouch. Exactly how they can be used and integrated in the UI/UX remains to be seen.
Demo of Microsoft Surface with PixelSense from Samsung
I have written about Microsoft Surface before, which is large horizontal multitouch screen built as a table. In the new slimmer version of Surface, Microsoft together with Samsung have developed PixelSense touch sensing technology. In PixelSense every pixel in the screen is also an infrared sensor that detects warm fingers on the surface. Just imagine what a future development of this technology could do if Samsung manages to fit the three RBG color sensors in every pixel. The surface could double as a copying machine. You put a paper, coupon or picture facing down on the surface, and when you lift it up, the copied object is displayed on the screen.
A technology for high performance multitouch screens has been developed by the Swedish startup Flatfrog. Their multitouch is based on an optical in-glass solution (Planar Scatter Detection) that also can be used to create multitouch on curved glass surfaces.
Another Swedish startup is Tobii, which has developed a technology for tracking eye movements. Using cameras that track the position of the pupil it is possible to calculate exactly what the user is focusing on. The company’s initial markets have been expensive high end systems for paralyzed people, market researchers, and academic researchers in cognitive psychology. Tobii has now begun to target the mainstream market together with Lenovo which are integrating eye tracking in a prototype laptop.
Kinect is a technology that Microsoft developed for their gaming console Xbox. It is an add-on gadget for your gaming console or flatscreen with facial recognition, voice recogniton and the ability to track gestures such as arm and hand movements. With Kinect you can control a game or PC by talking and waving your arms. It can be used for controlling an action figure or for moving between windows such as browsing your music collection, zooming in and out of a photo, etc. Up to six users can be tracked at the same time.
Even more futuristic UI/UX modalities are BCI technologies (Brain Computer Interface) where brain waves directly control an UI or some machinery. BCI has been used in research labs for a long time with electrodes implanted in the skull. Newer products based on less invasive methods with the electrodes attached to the scalp are now hitting the market, often in the form of a headset. The precision and bandwidth of these methods are still very primitive. One of the few things that can be reliably measured with BCI are emotive states such as relaxation vs. concentration.
Most of these new innovations are early in their life cycle and it is still too early to tell if anyone of them has a strong disruptive potential. New technologies drive development of new form factors. It remains to be seen if and how this will create future killer hardware. There is also a shortage of apps that can take advantage of the new features and turn them into compelling user experiences.
There are several hurdles to overcome. Products such as Kinect, Tobii and Surface put significant demands on processor capacity and there is a learning curve for any new UI technology. Prices have to come down for the large mainstream market to accept them.
I am slightly skeptical about a technology that requires you to wave your arms. What’s fine when gaming in your own living room, lifting and waving your arms for an extended period of time is tiresome. This has already been shown by users’ resistance to large vertical PC touchscreens.
It is possible that these new technologies will find their way into the candybar smartphone/tablet. But I think it is more likely that the future smartphone will integrate these new UI technologies without residing in the handset. If most tables, office desks, and bars are made of hard glass, with MS Surface technology perhaps the user could just place their smartphone on the glass and have all their apps, contacts and pictures displayed. The surface might even have built in eye tracking. Or maybe Corning’s vision of a world of glass will come true and the nearest wall will be able to display your smartphone home screen with built in eye tracking for navigation in the wall. Just make sure to control your eyeballs – you never know who might be looking over your shoulder.
Update: According to The Next Web’s internal sources, HP is NOT going to sell or shut webOS down, just the underperforming hardware device division. HP communicated this in a clumsy way which gave the erroneous impression that webOS was dead or for sale. HP’s plan seems to be to license webOS to hardware partners. But if HP is going to sell their PC division, they can’t force the buyer to promote webOS on the desktop platform. WebOS as a competitor to Windows 8 still seems quite unlikely.
My previous blog post about the potential for HP/webOS to expand webOS into the desktop and compete with Windows 8 was only two days old when HP announced their plans to abandon the tablet/smartphone market and their commitment to webOS. I got it wrong. This has been an interesting week in a frantically fast moving industry. Friday is not over so there is still time for another major announcement. How about Microsoft buying Nokia or Dell buying RIM?
I think HP made a rushed and unwise decision. Their Palm smartphones and HP Touchpad tablet didn’t sell, but that was due to clumsy design, weak hardware, and bugs. It was not caused by some inherent weakness in webOS.
If they had persevered, promoted an ecosystem, and licensed webOS I think they would have had a chance on the market. After the Google/Moto deal several of the Android licensees (LG, HTC, Sony Ericsson, Samsung, etc.) would probably have been interested in an alternative OS to reduce their dependence of Google.
And as I said in my previous blog post, if and when the HTML5/cloud paradigm becomes dominant, most existing HTML5 web apps will automatically become part of a huge virtual webOS app store inventory.
I haven’t really had time to consider potential webOS buyers. Here are some rough ideas: If HP includes the patent portfolio in the deal they can probably get a better price. Google and Samsung might be interested for hoarding more patents. Other usual suspects would be LG, HTC, Sony Ericsson, ZTE and Huawei. Or possibly China Mobile, Verizon or another large operator. Amazon might be interested in using webOS for a tablet/cloud service offer. Dell, Lenovo, Acer or Asus might want to develop cloud-PC solutions based on webOS to escape Windows 8 and Microsoft’s stranglehold. Perhaps next week’s events and mega deals will provide some answers.
The Google/Motorola deal suddenly makes it relevant to take a closer look at the other OS platforms on the market. Most industry observers in the mobile space have already written off HP/Palm’s webOS as a dead platform. From a smartphone perspective, this is obvious at first sight. With two percent of smartphone users in their only market (US), negligible global sales, and a thin app store, they don’t have much going for them. HP recently released a tablet powered by webOS but according to the reviewers the product is clumsy and behind the competition. There is talk about Samsung licensing webOS for a few handsets but no products have hit the shelves yet.
But there are a couple of scenarios where webOS can be viable. For example, if HTML5 becomes dominant and native apps fade into oblivion. In that case, the advantage of the market leaders’ huge app stores will become irrelevant and webOS will be able to compete on a level playing field. As webOS is optimized for HTML5 from the beginning, there is a good chance that apps will work better than on the competing platforms. If other OEMs become wary of using Android after Google’s Motorola purchase, webOS might be more attractive for licensing. An additional factor that could reinforce this scenario is the rise of cloud computing. If all this plays out, handset OEMs and mobile operators might consider webOS as a way of reducing the market power of Android, Microsoft, and Apple. But even if native apps are sidelined by HTML5, the smartphone market leaders will still have a huge advantage due to their brand, size, and market share.
However, if the game plan changes, webOS could reappear as a serious contender. If and when the cloud becomes the dominant computing paradigm, webOS will be a good fit for a range of devices. The drawback is that the mobile connection to the smartphone will always be unreliable and rather slow. If all your documents, contacts, messaging and apps are stored in the cloud this will be a problem. Enter the PC (and to some extent the tablet). For the PC one usually has a reliable broadband connection. That is where cloud computing (and hence webOS) would work best. And this is the direction HP is moving in with webOS. HP will install webOS on all their products (PCs, tablets, printers etc.) from 2012.
Industry observers predict that HP wants webOS so it can provide users with “experience roaming” across all devices, where webOS will ensure that users can keep their profile and contacts. The Synergy feature in webOS aggregates all the user’s contacts and supports that strategy. Enyo is webOS’s development framework and supports handling different screen sizes in a seamless way. This is probably part of HP’s plan.
But HP’s bolder move is to install webOS together with the upcoming Windows 8 on the traditional PC. I don’t know if this was part of HP’s original strategy when they bought Palm in April 2010 or added by the new CEO Léo Apotheker who joined HP in September 2010. If webOS boots faster than Windows 8, if HP gives the user a choice between webOS and Windows during boot, and if the user primarily uses the PC to access HTML5 web apps in the cloud – then perhaps users will choose to boot webOS instead of Windows and gradually stop using the legacy Windows platform. This would give HP huge leverage in future price negotiations with Microsoft. WebOS will be HP’s Trojan horse for breaking into Microsoft’s territory on the PC.
Windows 8 is a radical departure from the traditional desktop keyboard and mouse paradigm. Windows 8 comes with full touch screen support and their UI theme (“Metro”) has a look and feel with tiles that plagiarizes WP7 and most of the smartphone/tablets platforms. The traditional legacy desktop environment is hidden inside tiles. Windows 8 is built for app development in – surprise surprise – HTML5. The same as webOS. If we disregard the support for legacy desktop apps, Windows 8 and webOS will almost be head to head competitors. And while webOS is optimized for web apps, Windows 8 has to carry a huge legacy baggage to keep backward compatibility.
Will one of the most insignificant smartphone platforms rise from the ashes and conquer the giant of the PC era? Don’t rule it out just yet.
The Android vs. iOS vs. Windows Phone platform battle has been the talk of the industry for the last year. But the market share battle between handset platforms might not be as critical for the industry as many believe.
A popular view in the industry is that the market is inevitably moving towards an Apple-Google duopoly. Apple’s app store has more than 400,000 apps. Android is growing quickly from a base of more than 250,000 apps and is predicted to catch up with Apple later this year. Nearly 80 percent of all apps in app stores are controlled by these two market giants according to Distimo. Figures for Q1 2011 from Gartner show that the market share in the smartphone market for iOS and Android combined is 53 percent and rising.
But the duopoly may be challenged by the mobile web and cross-platform tools. HTML5 empowers all other platforms to offer apps through the browser. VisionMobile’s recent Developer Economics report shows that the mobile web (of which HTML5 is a subset) is already the third most popular platform in terms of developer mindshare after Android and iOS.
At the same time, HTML5 is overhyped and the belief that HTML5 will replace almost all native apps is in need of a reality check. Native apps will still offer richer functionality, better performance, and higher security compared to HTML5-based apps. A study by quirksmode.org has shown that every mobile WebKit implementation is slightly different, which could cause a problem for HTML5-based apps. In a recent whitepaper, Netbiscuits measured smartphone support for 18 features in HTML5 and showed that leading smartphones only offer partial (or no) support for a significant number of these features. Implementation is also fragmented. What works on iPhone will probably not work on RIM or Samsung handsets and vice versa. Or to quote Forrester’s take on the HTML5 vs. native debate: “The ‘Apps vs. Internet’ Debate Will Continue…to be irrelevant.”, “it’s not a question of ‘either/or’ when it comes to a choice between apps vs. the mobile Web, but both.”
The Landscape Of Cross-Platform Development Tools
The new types of cross-platform tools are more interesting than plain HTML5 because they can deliver higher performance and functionality than browser based HTML5. These tools produce apps as output and fall roughly into two categories:
2) Native apps. These apps are compiled into machine code and often written in C++ or similar languages.
Cross-platform tools are a nascent market with a flurry of startup activity over the last few years. The following diagram illustrates different trade-offs between complexity and performance in the cross-platform tools market.
Market segments for mobile cross-platform tools
Traditional websites: In the lower left corner is the traditional website, limited in performance but providing access to all platforms with no added complexity. Plain HTML5 could be included here once all browsers support the standard.
Other types of solutions which fall under the main heading of web/hybrid apps are based on Java, Lua, ActionScript or less common languages. The diagram shows how the heavily-fragmented Java ME offers inferior performance in spite of high complexity. The cross-platform tools Corona SDK and DragonRAD are based on Lua. Rhodes is based on HTML/Ruby while OpenPlug uses ActionScript (Flash) as source language. Kony uses drag-n-drop for building enterprise web apps. There is no reliable information about the performance/complexity trade-off for most of these solutions, so their exact position in the diagram above should be viewed as illustrative. In general, tools in which the resulting code is compiled or recompiled to native ARM machine code will have a higher performance.
Native apps: The second main category is native apps. In cross-platform tools for native apps, developers often work with a codebase in C/C++ or C# which is then semi-automatically ported to the target platform and device. Performance is significantly higher with native code, but so is the complexity. Players in this sector include Airplay, Qt and MoSync. The Airplay SDK (now Marmalade) originates in 3D gaming but can also be used as a general C++ cross-platform tool. Qt is a cross-platform UI framework that also can be used for native C++ porting. Qt primarily supports Nokia’s legacy platforms. MoSync is a cross-platform tool for general purpose C++ development, integrated with the Eclipse IDE and also available under an open source (GPL) license.
Cross-Platform Beyond Java – Native Extensions
The traditional approach to cross-platform development has been a lowest common denominator one – much like that taken by Java, Flash Lite and mobile HTML. This approach sacrifices performance, UI pizzazz and access to specific device features.
A workaround is to add native extensions. These can provide additional SDK/NDK libraries for the IDE and also give access to low level hardware functionality. Access to low-level hardware functionality can be managed by a device database that controls which conditional code will be executed on a given device.
Several of the cross-platform vendors have built such device databases with various levels of detail. A device database contains information on screen size, input modality and exact OS version, extending to detailed hardware configurations and known bugs with workarounds.
Using native extensions, it is possible to overcome the inherent limitations that plagued Java. Instead of “write once, run everywhere”, developers can spend 90 percent of their time developing a common codebase and 10 percent adding native tweaks and extensions for each platform and device. For software purists, the 90/10 solution might not seem very elegant, but it is a way forward that can handle the incredible complexity with thousands of devices running more than five OS platforms. In this way, app developers can manage one codebase and port it to target devices without losing functionality. In principle, using a (C++) cross-platform engine with extensions should be able to offer similar functionality with minimal performance penalty as compared to direct development for the target device. There will be significant economies of scale when the common codebase is tweaked for 100s of devices.
The Disruptive Potential Of Cross-Platform
There are few signs that platform fragmentation will disappear. It’s not just Android, iOS and Windows Phone 7, which are backed by corporate giants with deep pockets, but also smaller players like QNX (RIM), WebOS (HP), MeeGo (Intel, China Mobile) and Bada (Samsung). Add to that legacy platforms, which will be around for at least a few years: Windows Mobile, Blackberry OS, Symbian, BREW, Java ME and Flash. If we also include the main desktop platforms (Windows, Mac OS, Ubuntu), gaming consoles, set-top boxes, cars, and other gadgets, the number of platforms becomes unmanageable.
App developers whose clients need to reach the entire market, face the formidable task of supporting all platforms and devices. If they can use a cross-platform engine the productivity gains will be dramatic compared to paying for separate in-house dev teams for each platform.
Early adopters of cross-platform will most likely be large consumer businesses who need to target the mass market such as media companies, games houses, entertainment companies, banks, and any brand developing B2C apps. Similarly, government agencies are often required to provide non-discriminatory access to their services and cross-platform tools will enable them to do just that. Another group of early adopters of cross-platform tools is CIOs of larger corporations. They face increasing demand from senior staff who want to use their favorite smartphone for secure access of internal company data. Once these early adopters have driven down the prices and sorted out stability issues we should expect to see a fast uptake of cross-platform tools in the mainstream app development market.
Assuming more developers move to cross-platform tools, the power distribution in the mobile sector will be challenged. The difference in the number of available apps between dominant and up-n-coming platforms will be reduced. This will allow smaller platforms to compete on a level playing field.
Web apps and HTML5 should make the largest dent in the market power of traditional platforms. But the final nail in the coffin will come when C++ cross-platform engines can offer almost the same performance and functionality as coding directly on the target platform. This is possible if the cross-platform engines can fully integrate native platform and device extensions. In that case, developers of native apps might reconsider Android, iOS and WP7 and choose to code to a cross-platform IDE, not to the platform. In this scenario, the cross-platform IDEs would become players of equal or even greater importance than the native platforms. At the very least, today’s OS platform wars will move to a totally different level.
One of the major hurdles for further growth of mobile data services, and LBS in particular, is the exorbitant data traffic fees customers incur when using their phones abroad.
Corporate users can pretend that the service is free but their employers certainly notice if the mobile Net bill is larger than the hotel bill. In the private market segment, price sensitivity is much higher. Prices have to come down for this market to reach its potential.
As long as the price elasticity of demand is larger than one, lower traffic fees will lead to such high growth in traffic volume that the total revenue increases, despite the lower prices. The entire industry would benefit from an agreement to remove most of the roaming charges, but that is not even on the horizon.
A single operator could see the benefits of offering affordable data traffic abroad for its own customers. But as long as other operators don’t reciprocate, the industry will be stuck in a sub-optimal stalemate.
The problem is that the same operator who wants to offer an affordable rate to its own customers has no incentive to lower prices for other operator’s customers who travel into the operator’s coverage area.
It would not help much if two operators were to reach a bilateral agreement about lower roaming fees. In most countries there are three or more operators and as long as the handset connects to the strongest signal a bilateral agreement would just create a random patchwork of affordable and exorbitant fees. It would still be confusing, add uncertainty and deter usage.
Even if most major operators cooperated and formed a club with mutually lower prices, it would undermine the arrangement if only a few defectors refused to participate. The minority of defecting operators would be able to both reap exorbitant data rates from other operators’ customers as well as benefit from a larger total market and customers’ expectations of low prices.
For the operator market as a whole, the optimal end-state would be if all operators chose the strategy of cooperation, but the optimal individual rationality for one operator is to defect from any agreement. The result is that all operators are worse off in a sub-optimal state of mutual defection.
This can be modeled in game theory as an n-person Prisoner’s Dilemma. Here is a simplified numerical example with one operator (player A) playing against all the other operators (player B). Both the players can chose between two strategies: Cooperate (charge affordable data roaming fees) or Defect (charge exorbitant data roaming fees). Player A is the interesting active player in this game and Player B should more be viewed as a passive dummy.
If both players cooperate they will each receive a payoff of 10, denoted as (10, 10) for Player A and B respectively (where 10 for Player B is the payoff for each operator in the operator pool). If Player A chooses to defect while B cooperates the payoff will be (20, 9). The defecting player gains significantly and receives a payoff of 20 while Player B loses and only receive 9. If both Player A and B defect, the payoff will be (5, 5) which means that the total payoff to the players is significantly lower. One the other hand, if Player A is the only player that cooperates in an environment where Player B defects, the payoff will be (2, 6), and A only receives 2 (instead of 5). The figure below shows the game matrix described in normal form.
The payoff matrix shows the strategy of one operator (A) versus all other operators in the end states where either all chose to cooperate or all chose to defect. It is also possible to model the payoffs when the number of cooperating telcos moves from 0 –> 100 percent (described here). Regardless of the share of operators that chose to cooperate vs. defect the conclusion for Player A is the same. The dominant strategy for Player A is to defect, which makes it a classic Prisoner’s Dilemma for the active player. For Player B (all the other players) this is not a Prisoner’s Dilemma as the dominant strategy is to cooperate even if one Player (A) decides to defect. The problem is that for each individual operator it is a dominant strategy to defect even though the common good would be maximized if everybody cooperated.
I don’t have a clear answer for how to escape from this sub-optimal state. A few years ago, European voice roaming showed a similar pattern until the EU Commission mandated a price cap and forced down the prices. If the industry can’t solve this themselves the politicians may intervene again, at least in Europe.
The industry might be able to handle this on its own if the major operators form a club and then exert strong peer pressure on the remaining operators. One way is to punish defecting operators with very unfavorable roaming deals or refuse roaming. However, that will leave the club’s customers with inferior network coverage. It could possibly also be considered anticompetitive if a cartel of market dominants bullied smaller operators.
To be effective and protect the customers from accidentally connecting to a network with exorbitant prices, an operator club probably needs to have a technical software solution installed on their customers’ handsets. This software would ensure that the handset only connects automatically to networks that are members of the club, even if a renegade network has a higher signal strength. This should be manageable for operator branded handsets but if customers just have SIM cards it will be complicated to mandate that they install an app that can control low-level functionality on almost any device.
Now that the Blackberry Playbook has been released it is fairly obvious that RIM is putting the building blocks in place for a future positioning of the Playbook as a gaming platform, most likely in their next model. After sifting through the last few week’sindustrychatter and reviews of the Playbook it seems that this connection has gone unnoticed.
The Playbook tablet received rather mixed reviews when it was released on April 19. Most reviewers liked the fast dual-core processor, the sleek design, the excellent stereo sound, and the crisp HD video. However, the reviewers were dissatisfied with the buggy software and the lack of available apps. Another thing they disliked was the need to connect with a Blackberry phone for native email, calendar etc. The most extensive reviews can be found here, here, here, and here. The impression of the Playbook is of an unfinished product that was rushed to market, though RIM promises upcoming free software upgrades.
Fair enough. But RIM is clearly positioning the Playbook for the enterprise market in this first iteration. The Playbook only has WiFi connectivity and to access the mobile networks or access your email app you need to establish a Bluetooth bridge with your Blackberry smartphone. This might seem like a clumsy solution but is actually a “CIO-friendly” move. Most corporate users in the target market already own a Blackberry smartphone. The corporate email will still reside inside the smartphone, with its very high security. If the connection is lost, no sensitive information remains on the Playbook. This would enable RIM to avoid the complexity of making the Playbook as secure a platform as the traditional Blackberry handsets right now. From a marketing perspective, it is also the right tactical move for RIM to get the tablet accepted as a dull product in the enterprise market before embarking on a gaming strategy.
There are a number of indications that the Playbook is designed to be a gaming platform. The new operating system QNX that RIM bought last year is a fast and very stable real-time OS. In embedded systems where stability is absolutely critical such as in cars, satellites, the military, medtech, and industrial equipment QNX is an established market leader. QNX will easily compete with Android, iOS, and WP7 in terms of raw performance. And at the Blackberry developer conference last fall, the QNX founder Dan Dodge said: “The Playbook will be an incredible gaming platform for game designers”. One of RIM’s top exceutives called it a “party machine“.
The design choice by RIM to equip the Playbook with high quality sound, HD-video, and a fast dual core processor also fits with this strategy. Another strong sign of RIM’s commitment is the recently announced alliance with the two cross-platform game engine firms Ideaworks and Unity. Support for QNX is currently being developed. This will make it easy to quickly port the 100s of gaming apps using Ideaworks SDK to enter the Playbook ecosystem.
Once Ideaworks has added QNX to their C++ cross-platform tool (Airplay SDK), I expect intense activity behind the scenes followed by a splash launch of 100s of fast games running native code on the Playbook when RIM releases the next model of the tablet. And I don’t think it is a coincidence that RIM chose the name Playbook.
For some time, bashing RIM and Blackberry has been popular among industry pundits. Their sagging market share is viewed as proof that it’s only a matter of time before Blackberry will be a dead platform. But don’t underestimate RIM.
Another of RIM’s strengths is a strong foothold in two attractive market segments: corporate users and the 16-25 youth market, though RIM is not present in all geographical markets.
RIM’s stronghold in the corporate market is based on their seamless integration of secure email while the youth market is driven by network effects from the instant messaging app BBM (Blackberry Messenger). In markets such as the UK and Indonesia where the BBM has reached a critical mass it has become a must have in the youth market segment. BBM has even superseded the popularity of SMS in this market segment. You need a Blackberry to be part of the BBM messaging network.
Making gaming apps a high priority is a logical move for RIM, enabling them to attract the needed critical mass in the youth market segments in countries where Blackberry’s position is currently weak. It might even be the case that the smaller form factor of the Playbook (lower weight; 7 inch screen vs. 10 for the competitors) is a way of making it easier for teens to carry it around. Even though the gaming platform strategy is viable on its own it might just be a means to promote the real killer app for Blackberry – BBM.
The hype created by the promise of HTML5 has almost reached fever pitch during the last quarter. With HTML5/CSS3 it will be possible to run most types of applications directly in the “browser” and the need to install apps that execute native code will be a thing of the past. HTML5 can run from a cache in your smartphone/tablet/PC even if you are offline and the app can access the phone’s GPS, compass, accelerometer, touch recognition and native video/audio control. App developers will no longer need to develop separate native versions for iPhone, Android, WP, Blackberry, Samsung/Bada, and WebOS. Just write once in HTML5 and run everywhere.
There is truth in all this and HTML5 is a great technology. But as usual during the peak of inflated expectations people tend to forget the limitations. HTML5 is still an immature technology. The final draft will be finished in mid-2011 and the W3C recently stated that the formal standard decision will be delayed until 2014. When people actually start using HTML5 the experience will most likely be underwhelming as developers are faced with the limitations of the technology. (This view is supported by comments from industryconferences.) Older handsets will most likely not be able to run full HTML5 web apps, which kind of defeats the vision of universal access, at least for the near future.
Native apps will always offer better performance, better UI/UX, and better integration with the device hardware. For example, HTML5 does not support augmented reality. HTML5 will, over time, be able to close the gap but if we assume that the native app platforms continue to develop, the goalpost will be moving as well. Ecosystem owners (Apple, Google, etc.) will of course work to make their native development environment as pleasant as possible to work with. In addition, cross-platform tools in the native environment will reduce the effort of porting from one platform to the other.
What the market tends to forget is that the fundamental trade-off between standardization and flexibility will not go away. By complying with the HTML5 standard, handset makers and web app developers will be unable to differentiate outside the limits set by the standard. It is inevitable that one global standard will not be fully capable of adapting to a highly heterogeneous base of various screen sizes, handsets, tablets, etc. Once a committee-based standard is finalized, innovations and new product features that are introduced after that point will not be included until the next upgrade of the standard. Apps will be better at taking full advantage of device variation and new functionality.
I doubt vendors will be able to resist the siren song of differentiation. When they give in to this temptation, the evil twin of differentiation – fragmentation – will rear its ugly head. This fragmentation will either undermine HTML5 as a universal standard (which will make it less attractive in the same way as Java ME), or be expressed in the form of more native apps.
In many cases it will be better to have a HTML5 web app than no app at all. But if high performance is critical, native apps will be the obvious choice. Performance is not just relevant in obvious areas such as games. If users expect touch-based smartphone apps that don’t freeze when browsing or scrolling it might be a critical competitive differentiator for all apps.
As pointed out by Forrester, this entire “either/or” scenario with HTML5 vs. apps is driven by vendor politics. Although I think that another strong driver is the large community of web developers who find C programming too hard. These web developers will gladly embrace HTML5 as a way to enter the mobile marketspace.
HTML5 is pushed by Google, Microsoft, Facebook and Apple. Continued browser dominance is critical for Google’s ad business. Microsoft and Apple want to kill Flash. Facebook wants universal access. But actions speak louder than words; Google is actively recruiting app developers and releasing more of their own services as apps. For example, Google Voice, Google Places, and now also Google Translate. (Google Earth is the most widely known example despite it having been around for years.) Today large players that quickly want to reach the market with their services are developing native apps when the functionality demands it, in spite of the pro-HTML5 rhetoric.