Sunday, July 22, 2012

Is Apple following in Microsoft's footsteps for once?

Yes, you read the heading right. It's not the other way round. A lot of people would consider this headline as blasphemous! I plead guilty to this sin but allow me to take you through the line of thinking that lead me to this conclusion!
I recently wrote about how Mint, a business newspaper in India, is using its iPhone/iPad app to connote associations with the luxury segment in India. The basic logic is that iPhone and iPad are almost double the price of their Android (or other OS) counterparts in India. Hence iPad is looked at as a luxury purchase. Now, I wonder how this will change after the iPad mini is introduced (expected to be priced around the current Android tabs)! Will Mint lose its premium positioning or will it try to disallow its app from working on iPad's cheaper cousin? Will Apple allow apps to do that? Does it make sense to do that?

Interesting questions! But I don't want to speculate on the answers! Let us wait and watch for there is an even more interesting turn to my line of thought!

Steve Jobs felt the original iPad was always the right size!

Staying with the iPad Mini, if the pricing is not totally out of sync with the market reality, this should really give a big challenge to all Android tablets. While we were earlier talking of whether Surface can be an iPad killer or whether Nexus7 will dominate, Apple's iPad mini is by far the most serious and most convincing attempts of all to kill other tablets. I imagine it would even cannibalize the regular iPad but I am sure that Apple, being the smart marketer that they are, will create enough differentiation between the devices in terms of the hardware specs that book lovers, casual gaming enthusiasts etc go to the iPad mini while the people looking for serious fun with raw processing power (and love for screen real estate) go to the bigger iPad. 

Now, the changes that the bigger iPad may require due to the introduction of the iPad mini is where Apple appears to be following Microsoft's two tablet strategy in some ways! This might appear as a slight exaggeration as Microsoft has two different OS on its devices and screen sizes are same etc. But I can't help but smile at that probability as the bigger iPad's hardware specs will probably tend to overlap with those of the Macbook. I had concluded in an earlier post that the Surface Pro may not work well in the market if the pricing is too close to the ultrabooks. Could this happen to the original iPad as well, post introduction of the iPad Mini? Will two iPads confuse Apple's potential customers who are used to simplicity in all aspects of Apple products including the choices available? Is this why that great visionary, Steve Jobs, never wanted to introduce a smaller iPad?

What do you say? Is Apple really following Microsoft or are my grey cells just working overtime for nothing? :)

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Sunday, July 15, 2012

An iPad app can communicate more than just your content!

So, from a place where I didn't think tablets could do anything (useful) to a place when the apps on a tablet can convey your positioning in the market! The world has certainly moved on.

ET has an app for each platform, even Nokia's Symbian!
I recently noticed that Mint, one of the leading business news papers in India, has been emphasizing the availability of its iPad and iPhone app quite a lot - so much so they tend to devote a lot of adspace every day for communicating that; even full page spreads on some days! The point to note here is that while these apps have been around for a lot of time, Mint has not come up with an app on any other OS, including Android, the fastest growing mobile OS in India. In contrast, Economic Times, the market leader, has apps on all mobile platforms. 

With this approach, Mint appears to be trying to become the preferred biz news medium of the premium income segment. Apple iPhone and iPad, in India, are priced close to double that of their counterparts in Android or any other OS. So, the iPad and iPhone app positions Mint differently from Economic Times. The only other platform where they seem to have an app is for Kindle which is again a slightly niche product in terms of the Indian context. Whether that differentiation pays up or not, only time will tell but this seems to be a good strategy in line with the content of Mint and its focus on explaining the economics behind the news. The association with Rolex (as seen in the pic above) is also in sync with the image of the premium segment who would appreciate Mint's attempts to understand the underlying reasons for what is happening with the economy worldwide rather than just a focus on the stock prices of various companies.

I am sure this is not the first time such a linkage is being used to connote premium-ness but this is the first time I have noticed this being used in the tech world. Do let me know if you have seen other associations like this.

Should you have apps for all platforms? If not, how to chose the ones to go for?

But the difference in strategies by ET and Mint leads one to the question as to whether it is justified to have an app for all platforms or focus on some (remember, app development means costs)? I guess the answer would to be go for the platforms that seem to define your target segment. ET is an entrenched player with a humongous lead over Mint, not to mention it belongs to one of the biggest media houses in India, so it probably makes sense for it to have apps on all platforms as its users are probably spread across various  income segments. Mint, on the other hand, is a relatively newer player that has done very well to break the clutter in the Indian business newspaper market, so it probably wants to spend that additional dollar on only the most lucrative customers initially who would tend to appreciate its content more.

Oh, the charms of technology today! Never cease to amaze!

Wednesday, July 4, 2012

Hardware Manufacturers On A Slippery Surface - Or Do They Know Better?

Last month, Microsoft announced the launch of its own Windows8 tablet, the Surface. Everyone and their uncle was expecting a Windows 8 tablet to come out soon but what moved the ground from under one’s feet was that Microsoft will make it themselves! I mean, not just the software, they will make the hardware as well. It was actually a bit funny to read how Steve Ballmer felt that software and hardware together always made sense. Microsoft has become one of the largest companies in the world by licensing its software to independent hardware manufacturers and now he says this! 

Is there more beneath the Surface? 

Anyway, for once, it seems, Microsoft has aroused the curiosity of the entire tech world. A lot of questions are up in the air as Microsoft is not ready yet to give out the full details. But the biggest question of them all is that whether it is the beginning of the end of the OEM model wherein Microsoft supplied the software while manufacturers like Dell, HP, Acer, Lenovo, Sony etc created the hardware. Hardware manufacturing has been a low margin business ever since Wintel (Windows + Intel) became more important. If you had Windows and Intel, it didn’t really matter whether your laptop was a Dell, HP, or Vaio or even an "assembled" non branded one except perhaps in looks and some other non-critical features. Since the critical parts were always owned by Microsoft and Intel, they got majority of the profit.

On the other hand, Apple, with its own proprietary software and hardware solution, seemed to be creating a better product and thus some people have been attributing Apple’s success to its ownership of both aspects. However, I believe, in case of Apple also, it is the software that wins; not to say their hardware is ordinary but I guess if Apple were to license its OS today, the Dells and HPs of the world would happily be able to create Apple laptops but would they be able to charge a nice premium like Apple? Especially as Acer, Lenovo, Sony, Samsung and every other manufacturer also gets ready to sell its own Apple laptop? Probably no, because the differentiation that an Apple device has today tends to diminish. Today, Samsung, HTC, Asus seem to be set for such a future because people are not really able to differentiate between a Samsung Galaxy S III and a HTC One.

So, point is that creating software is getting margins in the industry but hardware is becoming a commodity as there seems to be little scope for differentiation. Also, could it also be that tight margins on hardware would limit the R&D expense for future innovations? Did that realization drive Microsoft into creating its own hardware?

What should the hardware manufacturers do?

I guess no one knows the answer for sure. However, I would like to point to a few trends in the industry via some news items I picked up recently. Those seem to indicate that a number of hardware manufacturers are looking towards focusing on some aspect / segment of the industry and create differentiation. Here are some of them.

From "Dell recommends Windows" to "Dell recommends Dell"?

Dell, for one, seems to be sure that it needs to move away from the low margin PC business, including making tablets with other's software. It has been making strides towards enterprise and has been enhancing its own software portfolio to differentiate its enterprise servers from the commodity category. It is also ramping up on its software services business. Latest in these efforts is its bid to buy Quest software
Dell has also recently decided to sell laptops based on UbuntuThese are targeted at developers at web companies because a lot of these people have indicated Ubuntu Linux as their OS of choice. There is no other manufacturer catering to this segment but only time can tell whether it will succeed or not – but again, the point is, Dell is trying things beyond Windows now!

Samsung: Everyone's Invited! (except Motorola?)

Samsung has recently reiterated that it will focus more on software. With its strength in hardware, it seems to be on the right path. Samsung's Bada is not a huge success, yet, but it has already started putting money into another Linux based mobile OS, Tizen, by becoming a platinum member of the Linux foundation, which carries a $500,000 fee. Is it preparing for the day when Google finally uses Motorola for manufacturing devices?
We already know that Apple is pushing Google out of the iPhone, slowly but surely. I read on a website that about half of Google Maps' traffic is from Apple devices. So, this move will definitely hit Google. Google recently launched its own Nexus7 tablet, which is not really its own as it is manufactured by Asus in some sort of partnership. The big point was that Google seemed to be targeting Amazon's Kindle Fire rather than the iPad. And Amazon seems to be on top of its game as well - it has now bought a map startup company, UpNext - another exit for Google Maps? So it appears that Amazon also is looking for its own product rather than just be a hardware manufacturer using Google’s software (it does use Android still though).

Sony has been beaten by Samsung at its own game of TVs. It has even taken away the innovative positioning of Sony with its alliances with Google and focus on smart TVs and tablets. Sony has been suffering losses in TVs for some years and is now seeing growing competition in the video games market. Sony, thus, seems to be enhancing focus on its gaming to get back from red.

Past performance is no guarantee of future performance? 

It is interesting to see how companies are moving away from the strategies that made them successful. Dell’s original path to the top, direct selling, was innovative and helped it in this low margin business. That was its differentiation back then. Today, it is no longer differentiated as everyone does that. Samsung has sold so many smart phones because of Google’s OS underneath. But how does it compete with HTC and Asus then? All the companies I mentioned above seem to want to move from the low margin commodity business of hardware manufacturing to higher margin differentiated businesses. It seems to be a step in the right direction, especially in today's options-flooded market where the consumer will buy your product not because it is as good as the other’s but only if your product is better than the other’s.
What do you think? Is it just a fad or a better way to compete in the market?