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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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 Ubuntu. These 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?

Can Microsoft scratch the "Surface"?

I have been reading and hearing extreme reactions to Surface, Microsoft's new tablet(s). At one extreme, people have said that Microsoft is finally ready to kill Apple! At the other extreme, people have said that this is going to die as soon as they launch it because of lack of apps ecosystem. Has Microsoft confused people by announcing two devices in one shot? One is a pure tablet (Surface RT) and another is a tablet that can become an ultrabook (Surface Pro). Most of the reviews on the internet are not talking about these two products in isolation. Most people start talking about the tablet (Surface RT) and then add the features from Surface Pro (full desktop apps, ability to become laptop etc) and it all becomes a little fuzzy and seems to sound as if this tablet from Microsoft is ready to not only "kill" iPad but also laptops! Can it really do that? Let us find out!

There are two Surface products - you should know which one you want & why!

So, for clarity sake, first let us list down features of both products separately and then understand where each of them stand. I have taken these details from CNET.com.

The table here shows the features of the two products. Surface RT is the pure tablet which will compete with the iPad and Android tablets, not to mention other Win8 RT tablets as well! The parts where it really scores are the external ports to allow greater connectivity to other devices and its compatibility with Office – so you can be more productive and actually create some content (using the new keyboard cover!) rather than just consuming it as we mostly do on our touch devices. Flexible storage options also help. But it can only run Metro apps and not your regular desktop apps, so that is a big point to consider. Microsoft has not really been able to get too many apps on its Windows Phone also. However, as I have tried to prove earlier, it does have a lot of the basic apps that people need, so number one priority for Microsoft should be to bust the (half-true) myth that it does not have apps. Yes, it does not have as many apps as Apple and Android but its working towards it and it seems to have enough apps for the average user. So, Microsoft, please please please can you showcase a lot of apps in your advertisements of the Surface because you have done a miserable job with Windows Phone?

Is Surface Pro the "ultimate" device?

Moving to Surface Pro, this is the product that has the full power of a laptop and can serve as a new product that is both a tablet and a laptop. This will run the full Win8 and support both Metro apps and the desktop apps. There are lots of people who have raised doubts about Windows8 as Microsoft seems to always run into troubles with a new product (remember Vista?) – they fix it later and then come up with a better product (Windows7) but that image needs to be worked on. If they don't deliver well on the OS this time around, it is going to be an uphill ride from the word go! But it looks good and MS did a good job with the Windows Phone 7 also, so fingers crossed.

Now, a lot has been said about the Surface Pro being the ultimate device given its ability to work as a tablet and as a laptop. I agree that it does meet my idea of the ultimate device as well. However, I have some doubts in my mind. While these may or may not matter in your situation, my motivation behind listing out these points is to bring this point that mixing all in one may not be the only thing in the world for some people.

Can you use the Surface Pro on your bed or on your lap?

Can you put this on TOP of your LAP?

If I have to use the Surface as a laptop, I need to get the kickstand out and open up the magnetically attached cover/keyboard. While all those gorgeous pics in shining colours do impress, my doubt pertains to the actual target segment of such devices. A lot of these people will be the high flying category who will need to use their devices to work productively while in transit, at the airport, in the car, on the bed in the hotel room etc. However, the Surface seems to be useful as a laptop only when it is placed on a flat surface (forgive the pun). I can't imagine it being useful when I want to use it on "top" of my "lap" because of the wafer thin keyboard which may not be able to respond properly in the absence of a flat surface beneath it. The screen also needs a flat surface to allow the kickstand to do its magic. Having said that, not all buyers would probably face this issue 'cos some may be more than willing to use it as a computer on the table but I wanted to put that point out for consideration. If you look at the Surface from the side, you can see how much flat surface it needs to work as a pure laptop with keyboard.

Laptop and tablet in one is fine but some times two is better than one!

Next doubt is with respect to the fact that the ultimate device is a tablet and a laptop and makes me happy that I own two items when I paid for only one. But someone like my daughter may not be that happy! My daughter likes to play kids games and lots of other stuff on touch devices. So, in today's world, I could give the tablet to her so that she can play on it while I want to do some productive work on the laptop. When she is fed up of the touch games and wants to play some real games with her Barbie, I can use the tablet for my own use. But if the tablet and the computer are one and the same - how do we do that? Point is that most families will need to buy two devices anyway because of such dynamics. It is not a point against the Surface but a point to consider. Now, you could go ahead and buy two Surfaces - RT  as a real tablet and Pro as a "laptop" but then you may really go and buy a laptop as well. Food for thought!

Do you use your tablet sitting on a table or lying on your bed?

The last point is something again related to how people generally use their iPads (and other tablets). It is clearly more of a consuming device rather than a productive device. A lot of people use it for going through Facebook updates of their friends, "liking" pics etc and occasionally commenting on those pics etc or reading books or news or watching videos etc - all while lying in their bed or sofa, basically, in a relaxing position and not sitting in their table and chair!

Is the keyboard radical enough to "kill" iPad?

The points above just want to highlight that just by having a keyboard as a standard accessory, the Surface may not become the ultimate device. In any case, if this experiment with the keyboard does work out well, there is nothing stopping the iPad users from buying one and using the iPad as a laptop too - even though it may never sit on the top of their laps!

Microsoft Surface Pro can run both the Metro apps as well as the regular desktop version. So, it has best of both worlds but the Surface Pro is fighting with the ultrabooks and laptops. Based on my thoughts outlined above, I believe Surface Pro is more than a tablet but lesser than a laptop. So, pricing the Pro somewhere between the tablet and ultrabooks may help otherwise it is going to be a real tough ride for Surface Pro. 

It seems to me that Microsoft has addressed some pain points of iPad users by providing external ports and compatibility with Office in the Surface RT tablet. It will probably not get the Apple lovers to move to Microsoft. But there are so many others who want more from their devices - especially the business people where looks and brand appeal matter but practicality matters too. This is classical marketing - you find the gaps in your rivals' products and serve those. However, when it comes to Surface Pro, if its price is anywhere near the price tag of ultrabooks, it may not really work as most would not want to compromise  about usability at that price.

In my opinion, Microsoft should not confuse itself as the new Apple. Apple's products have been game changers for a variety of reasons. It delivers discontinuous innovations. Microsoft has tried to deliver what could be called continuous innovation - improving upon an existing product. Microsoft should play to its strengths of providing a practical, more productive solution that is compatible with the world's most popular OS. It should work on its weaknesses in marketing so that consumers actually realize the worth of its product. If that happens, Surface will be a winner even though the iPad will not be killed.