The Death of ‘Open’

2020-02-09T12:15:56-07:00July 27th, 2012|

When this century’s platform war first flared up, it had all the trappings of a sequel to the epic battle between Macs and PCs.

But don’t get sucked in. The current struggle between Apple, Google and Microsoft is nothing like the quaint conflict between an open and a closed system. On the contrary. In this war between the smartphone and tablet platforms, it appears that all comers agree on that issue: it is better to have a closed platform.

That plops a lot of power into just a few hands. On a closed system, the platform provider takes on the role of middleman, lodged between us and the content we consume and the stuff we buy. At a time when internet usage is shifting rapidly to smartphones and tablets – combined, they’ve already overtaken the PC in the US, according to a recent survey – this has wide-sweeping ramifications. For consumers, it might mean fewer choices and higher prices. For internet shopping outlets, it could translate into lost sales as the hardware hinders the direct line of communication you have with your customers. For Intel, Nvidia, QualComm, TI and other mobile silicon providers, it means you will need to offer an entire platform solution to compete.

Amazon, are you listening? Obviously, you are. That’s why you have your own line of tablets. And why you’re expected to come out with your own branded smartphones. It’s not a stretch to think that Amazon is developing its own OS. If I was Amazon CEO Jeff Bezos, I’d already have signed the check for that investment.

The titanic platform battle now underway more closely resembles the early days of consumer Internet connectivity than the decades-old conflict between Mac and PC. Indeed, the playing field looks more like the arena that hosted the battle for our eyeballs – that’s what they called page views in those days –between companies like AOL, Yahoo and Prodigy.

They sold proprietary, pre-packaged Internet experiences. And it worked for a little while. But as the Internet matured – and consumers along with it – they got left behind. In a sense, the old guard was peddling peepholes through a three-foot-high wall. Consumers quickly learned that they could just look over the wall without them. So they did. In retrospect, it’s astounding that they remained relevant for as long as they did.

This century’s combatants have a far better chance of succeeding because they have much more control over your portal to the internet. You couldn’t buy an AOL computer. Now, though, you can buy an iPad, with a crafted internet experience that includes a direct line to the music Apple sells, for example.

Indeed, Apple isn’t really a hardware supplier any more. Today, Apple is a content distributor. And the hardware is just a means of delivering the content.

In that sense, Apple has leapfrogged the level of power and control that record labels once enjoyed. Imagine what Columbia Records, EMI or Elektra could have accomplished if they also designed and sold us our stereo equipment.

So the issue of open versus closed has been settled. ‘Open’ lost.

Increasingly, the big players are adapting to this new world order. It helps explain why Microsoft isn’t allowing competing browsers on Windows RT tablets. And why the company is developing Surface, its own line of branded RT tablets. And why it’s only allowing a few system vendors into the fold.

It also lends credence to the speculation that Google may begin to focus future Android development on Motorola Mobility now that that acquisition is consummated.

For all their newfound power, though, there are limits to how much Apple, Google, Microsoft and – one day, maybe – Amazon can exploit it. They are still operating on the worldwide web, after all, the same wide-open connected platform that proved to be AOL’s undoing.

Consumers will pay a premium for convenience, and that’s the opportunity that smartphones and tablets afford the platform gods. It’s why 7-Eleven thrives.

There are limits to that, as 7-Eleven knows all too well. We’ll only pay so much more for a carton of milk at a convenience store. Price it too high and we’ll just put the carton back and head off to the supermarket.

Today, our browser functions as the equalizer, the great supermarket in the sky that keeps the convenience store operators honest.  But that leverage fizzles once the platform provider closes off and controls everything from your hand to your head. Apple is already there. Microsoft and Google are close behind.  And Amazon looks like it may join the pack.

We still have an open Web.  But when it comes to mobile, it’s so far looking like any countervailing open alternatives are DOA.  Without them, consumers and companies alike are facing a dim prospect — paying far more and settling for far fewer choices.

2Q12 PC Shipments Tell Us Nothing

2020-02-09T12:17:05-07:00July 12th, 2012|

There’s a lot riding on Intel’s UltraBook initiative. The iPad juggernaut has been convincing consumers to buy tablets instead of laptops, and the computer industry is betting on UltraBooks to reverse the trend.

And now we hear from the computer counters that PC shipments dipped in the second quarter. If the blogosphere is to be believed, the data tells us that the UltraBook push is failing.

The second-quarter reports don’t bring happy news, to be sure. But there’s not one shred of insight to be had here as to success or failure of the UltraBook. It’s flat out too early to tell.

Consumers are waiting for the new generation of UltraBooks, many of which were unveiled last month and are slated to be available between now and October. Consumers are also waiting until Windows 8 is released, so they can buy the latest hardware with the latest OS.

If we’re still seeing lackluster sales data out of Gartner and IDC in two quarters, then the PC industry will have some serious trouble on its hands. Because it will have put its best foot forward. And it will have been skunked.

But a lackluster performance report for the second quarter? It doesn’t tell us a damn thing.

The Battle for Everything

2020-02-09T12:17:58-07:00July 6th, 2012|

Technology titans are waging an all-out war to control everything we do. And many of them spent the month of June trying to convince you to choose them.First, we saw a spate of exciting new Ultrabook announcements, along with some x86- and ARM-based Windows 8 tablets at Computex. Then Apple introduced new spins of iOS and OS X for tablets and PCs, respectively, at its developer gathering. Microsoft unveiled Windows Phone 8 at the Windows Phone Summit — and let’s not forget the Surface tablet. And as the month drew to a close, Google rolled out new products and concepts buckshot-style at Google I/O, showcasing its first branded tablet, the Nexus 7, and Android 4.1, just to name a few

Get Your Finances in Shape

If your eyes aren’t bugged out by now, then I’m afraid we’re going to have to pull your Geek Card, my friend. Taken together, these are the ingredients for a perfect storm that will pound store shelves this holiday season. Indeed, there may never be a more exciting time to possess a credit card. So many platform advancements on so many fronts. Not like last Christmas, when your choice boiled down to an iPad, a Kindle or a new laptop that looked like the one you already had. So start preparing now. You’ve got the summer to get your finances in shape so you don’t sprain your wallet this fall.

That said, the coming retail nirvana is only the tip of the iceberg, the most visible piece of a war between industry titans. And the stakes in this war are gargantuan. The winners will influence — and maybe control — the distribution of just about everything for years to come. From the news we read and watch to the entertainment we pay for and enjoy. From the brands and models we decide to buy to the places we buy them. And from the routes we take to the places we visit and the restaurants in which we eat.

To be sure, ours is an era of hyperbole, an era of extremes. It is an era in which journalistic oversight and balance has given way to unsubstantiated ranting on the blogosphere. It is the era of Fox News and MSNBC. Even in these times, though, it is nearly impossible to overstate what this war means to the players. Or to us.

It’s Coke or Pepsi

There have been battles for control of distribution channels before. Like Coke and Pepsi’s war for control over restaurant soda machines. (And Dr. Pepper, for you Windows Phone fanboys.) Or like Wal-Mart and downtown America. Or, more recently, like Apple’s iTunes and the record labels.

But there has never been a battle like this before. It’s an opportunity afforded by the Internet as well as an increasingly concentrated set of options for tapping the Internet. The cable TV folks, the phone companies and the wireless carriers are trying valiantly to maintain relevance. But as video-on-demand gives way to streaming services like NetFlix, as home phone lines are supplanted by VOIP, and as wireless services like AT&T Navigator are cannibalized by free stuff from Google, the role for those players is being relegated to conduit. Increasingly, we find ourselves selecting the platform and device we want.

The choice of carrier is becoming an afterthought, sort of like snatching a package of plugs and wires when we buy a home theater. We’re not there yet. But that’s where we’re headed.

So it should come as no surprise that the war pits Apple, Google and, increasingly, Microsoft. But there are others in the mix, as well. And each of them is trying to protect and extend its turf. Like Amazon, which controls a growing number of distribution channels. And like Facebook, which has helped expand and solidify our social networks to include long-lost classmates we might otherwise have the opportunity to chat with only once a decade. And hardware giants like Intel, Nvidia, QualComm, Samsung and TI, which have the power to tip the balance in the platform wars with superior solutions.

Playing to Win

With so much at stake, it’s easy to understand why the players are suing each other in courts across the globe and spending billions on intellectual property assets. But that’s not all they’re doing. Here are a few other tactics:

Acquisitions. They’re buying technologies and companies that buttress their platform packages. Microsoft’s acquisition of Skype last fall is a good example.

Proprietary Features. They are implementing proprietary features, which is a double-edged sword. It does tend to create brand loyalty. But it can also isolate your customers. FaceTime is a good example. The downside for Apple is limited in this case, however, provided it also makes competing apps like Skype and Google Voice available to its customers. Apple’s halfway there…

Partnerships. As the old adage goes, the enemy of my enemy is my friend. That explains why Apple joined forces with Tom Tom. And why it sidled up to Microsoft’s Skype.

Pretty heady stuff, I know. So keep an eye out. The longer the war goes on, the better it will be for our businesses and for our wallets. And we can play a role in maintaining the balance of power.

One thing’s for sure. No one is going to get knocked out this year. So rest easy for the time being. And when you dream, dream about all the stuff you’re going to buy yourself for the holidays.