Moving on to The Next Billion

I have made the decision to move to Nokia, effective December 19.

While I fully support Meg’s announcement to make webOS an open source project, and am tremendously excited for the future of webOS, I was given an opportunity at Nokia that I couldn’t turn down where I think I can have a significant impact.

Nokia sells more phones to more people than any company on Earth, and their corporate mission of connecting the Next Billion resonates with me personally. When I spent 2 years working in India I witnessed firsthand the power of mobile technology to transform how people from all parts of the socioeconomic spectrum worked, played, and lived–on Nokia devices more than any other. This is what gave my professional life direction, what inspired me to move to Silicon Valley and dedicate myself to mobile technology in the first place, and the opportunity to be a part of the company that started it all for me is simply too exciting to pass up. I am honored and excited that Nokia has invited me to join in their journey of connecting the world’s billions.

2011 was a year of challenges for those of us at HP, and I worked with some that taught me a lot about overcoming adversity and working under pressure. I want to thank all of them for taking me under their wing and teaching me and making my time there so memorable. The webOS community of developers, hackers, and superfans is truly like nothing else. Even though I am trading my Pre3 for a Lumia 800, webOS will always have a special place in my heart.

Now if you’ll excuse me, I have a billion people to connect…

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Reading between the lines

Present Google intern (and future Windows Phone intern) Andrew Munn did us lay people a favor today when he revealed some insights into why Android phones are laggy (spoiler alert: bad engineering decisions).

But what’s interesting is that it also gives (still) more confirmation that Android was a copycat effort:

Work on Android started before the release of the iPhone, and at the time Android was designed to be a competitor to the Blackberry.

Translation: we started by aiming to copy BlackBerry.

The original Android prototype wasn’t a touch screen device. Android’s rendering trade-offs make sense for a keyboard and trackball device. When the iPhone came out, the Android team rushed to release a competitor product, but unfortunately it was too late to rewrite the UI framework.

Translation: we pivoted from copying the BlackBerry to copying the iPhone.

Microsoft vs Microsoft

It’s weird being an “Apple guy” and attempting to write objectively about Microsoft.

For as long as I can remember in the software world (being 26, that would be from the early 1990s onward), Microsoft was The Dark Side, the Evil Empire…in other words, the Bad Guy. Microsoft was always threatening to condemn my beloved Macintosh to the digital dust heap of history as Amiga and leave us stranded in a Windows World.

Then, by the mid-2000s, when Apple began its growth streak, Microsoft somehow went from being seen as a malignant force of evil to simply being manifestly incompetent. Apple was cranking out hit after hit, while Microsoft seemed to careen from one bad move to another–be it stillborn initiatives (remember Mira?),  market failures (remember PlaysForSure, or the Zune?) to simply bad software (remember when the Windows XP security crisis was followed on by…Vista?).

The worst part of all this was that Microsoft’s leadership didn’t seem to get it. The PR statements coming from the company sounded completely detached from the reality of the world changing and Microsoft’s empire unraveling from below. Microsoft, as one prominent blogger suggested, was fast-becoming the Soviet Union of software companies.

Green shoots / The Reformists

And then, somewhere along the way, some good things started coming out of Microsoft: The Xbox ecosystem blossomed (sales are at an all-time high) while Sony’s PlayStation empire got bogged down in an unwinnable war with hackers. Windows 7 was a well-done OS that helped wash the bad taste from Vista and had some great UI features that I ultimately found myself duplicating with 3rd-party add-ons on my Mac. Kinect was an innovative hit that leapfrogged the Wii’s motion-controllers, and will soon make its way to products beyond Xbox. Microsoft even had the courage to start from scratch in the smartphone space, throwing out the hopeless Windows Mobile and creating Windows Phone, with its unique and beautiful Metro interface that will now be making its way to Xbox and even the next version of Windows itself. As someone who still uses and loves Apple products, I can for the first time say that Microsoft is making some innovative and well-designed things. And I’m not the only “Apple guy” who has nice things to say about Windows Phone–even Mossberg’s AllThingsD and David Pogue say Windows Phone is “a mix of elegance and whimsy that’s a treat to use,” and  “gorgeous, classy, satisfying, fast and coherent.”

Nothing illustrates the divide between the two Microsofts like Windows Mobile vs Windows Phone

These products show that somewhere at Microsoft, there are some people who have seen that Microsoft has a problem, who have identified that problem as one of their products–they weren’t good enough. These “Young Turks” of Redmond concluded that products need to be redone, along with the processes that created them. Perhaps most impressively of all, they actually managed to push these changes through. Most of the people I’ve met personally who work at Microsoft fall into this category.

The Sultans of the Status Quo

Of course, these green shoots still exist in a company that is more known for its cringe-worthiness than for its creativity. For every sign that Microsoft finally “gets it,” there is another to suggest they still don’t. For every promising demo of a Win8 Metro tablet, there is a boisterous official claim that Microsoft’s middling Tablet PCs are the same type of product as an iPad. For every Courier concept, there is…well, a cancelled Courier project. For every move Microsoft makes towards a “post-PC era”, Steve Ballmer vaingloriously proclaims “Windows Forever” in a matter that would make Nikita Khrushchev blush.

These are the people who think the problem (to the extent they acknowledge there is one) is not one of the products, but just the business around them. They just need more advertising. These are the people who brought us the Mojave Experiment, the “I’m a PC” campaign, astroturfing, the Seinfeld ads, the “buy PCs because they’re way cheaper” campaign, and other manifestations of the idea that Microsoft’s pigs just needed a bit more lipstick. This video, asking “what would happen if Microsoft designed the iPod packaging” sums it up nicely (interestingly, the video was made internally within Microsoft, likely by one of the Reformers trying to illustrate just how screwed up Microsoft was becoming):


Right now both of these factions exist within Microsoft, and I don’t think it’s easy to pinpoint who exists where. I would guess this is something that would cut across Microsoft divisions, rather than neatly between them and affording us the luxury of saying “well the Office division has the ‘old’ thinking and the Xbox division has the ‘new’ thinking.” No, these divisions run through departments and perhaps even through the minds individual people within them.

The most recent example of this painful contrast between Old-and-Busted Microsoft and New-Hotness Microsoft was a Microsoft exec saying the difference between WP7’s TellMe and Apple’s Siri was primarily one of marketing and not the actual differences in the abilities of the products:

People are infatuated with Apple announcing it. It’s good marketing, but at least as the technological capability you could argue that Microsoft has had a similar capability in Windows Phones for more than a year, since Windows Phone 7 was introduced.

Microsoft, why do you do things like this when it just ensures that videos ridiculing your boastful claims become one of the top tech stories of the day? How can the same company that made such a brilliant mobile OS say such decidedly non-brilliant things about it?

Microsoft, why couldn’t you say something like this:

“Apple has done great work in raising the public’s awareness of the power of voice recognition technology to make our lives better. We have a great voice recognition technology of our own called TellMe. Right now Siri is ahead of TellMe in some areas of functionality, while TellMe is ahead of Siri in others. We are devoting enormous resources to rapidly improving TellMe functionality–and every other aspect of Windows Phone.”

One of Microsoft’s greatest assets is its staying power. Even if their first attempt is usually a bust, Microsoft will keep at it relentlessly, patiently iterating, improving, and spending money until they succeed (just look at the Xbox, which took a decade to be profitable, and their online services division, which still doesn’t make Microsoft any money). But to what end will this power be used?

Who will win the battle for Microsoft’s soul–Soviet Microsoft, or Metro Microsoft?

For the sake of giving the Apple and Google duopoly a real third-party challenger, I certainly hope the Metro-ification of Microsoft continues–and that it goes more than skin-deep.

HTC slowly finding out: The only winning move is not to play

image courtesy of unwiredview.com

HTC has brilliantly ridden the Android freight train up from being an obscure ODM to one of the largest and most prominent handset makers in the world. However, there are warnings that the business seems to have peaked–warnings coming not from sensationalist analyst firms looking to make headlines, but from HTC itself. As GigaOm’s Kevin C. Tofel put it in a post titled “HTC’s star continues to fall; outlook slashed again” (emphases mine):

In what sounds like a repeat newsbit from three weeks ago, HTC lowered its outlook for the fourth quarter Wednesday, reports Forbes. On Oct. 31, when the company released third quarter earnings data, it already said the fourth quarter would be flat at best. But now, the near future looks much worse with lowered expectations from the already lowered expectations.

What’s going wrong for HTC? Again, I find it hard to improve upon Kevin’s succinct analysis:

HTC is essentially just another Android phone maker in a growing sea of other Android phone makers…while HTC reaped the rewards of jumping on the Android bandwagon early, Samsung, ZTE, Huawei, LG, Motorola and others are now riding along too. It’s harder to stand out from the growing crowd…

Congratulations HTC, you have transformed yourself from an ODM commodity maker to…an OEM commodity maker. Oops. Your margins have no where to go but down–and heaven help you when the Chinese ODMs start making the same move you Taiwanese ones did.

Having a huge commodity business can be a great strategic tool–if you are wielding it strategically. In deciding to retain the Personal Systems Group (PSG), HP cited among its justifications the fact that having the world’s largest PC manufacturing business means HP gets the best volume prices on hardware components that are also used to build its higher-margin enterprise products, and having the world’s largest PC distribution channels give HP ink-cartridge receptacles printers a tremendous advantage over their competitors in getting noticed by consumers.

But what is HTC doing to leverage the position in mindshare and shelf-space that its success in pumping out commodity handsets gives it, other than attempt to pump out more commodity handsets? What can it do? Hint: spending $300 million on Beats Audio probably isn’t the best move.

In the long term, the only companies that make any money in this business are the ones who own the whole widget.* Apple is the shining example of this as it captures the lion’s share of profits in both the PC and smartphone industries by refusing to play the commodity game, but even struggling RIM still makes money on its whole-widget sales. HTC doesn’t own the widget, and has no privileges with the Android code unless it is the one selected to make the next flagship devices (which, once Google completes its acquisition of Motorola, becomes significantly less likely).

If I were HTC (which, judging by the lack of billions of dollars in my bank account, I am not), I’d see the only path out of here to be getting itself a widget of its own. I’d follow Samsung’s move and develop an indigenous OS (or, you know, buy one), and find a way to leverage my strength in the commodity Android business to get my OS spread far and wide. Dual-boot? A new version of HTC Sense that is much more an OS in its own right (perhaps some sort of “web-OS”)?

$300 million could have bought HTC something a lot more strategic than some EQ presets…

In Android Commodity Wars, the only winning move is not to play. (or get bought by Google)

With apologies to the producers of "War Games"

*OR, at least have exclusive privileges with the part of the widget they don’t own. I think Nokia is onto something with its Windows Phone relationship, but it will take at least a year to tell.

Android is Open-Season

Ahhh, tech media, your ability to finesse the most simple facts never fails to impress. From this Bloomberg gem:

Google Inc. (GOOG)’s Android operating system for mobile devices has had an almost sixfold increase in threats such as spyware and viruses since July, according to Juniper Networks Inc. (JNPR) That may increase the perception that Apple devices are safer than smartphones and tablets that run on Android, said Juniper.”

There is some point where something ceases go be a “perception” and moves into the “fact” column…

…Such as the very next paragraph of the article, to name one example:

“You’re not going to see nearly the number of infections on Apple as you see on Android,” said Dan Hoffman, who leads a team tracking mobile threats for Sunnyvale, California-based Juniper, the second-largest maker of networking equipment.

Yeah, so I think this one might be more than just a perception. It’s Open Season on the Open* OS

*disclaimer: not actually entirely open.

Where Apple’s iPhone Pricing Strategy (and the iPhone) Falls Apart

With the latest change to the iPhone lineup, Apple’s current iPhone segmentation strategy has come into focus:

The 2011 iPhone lineup

Rather than design a new phone specifically target the middle and lower segment, Apple simply keeps manufacturing and supporting previous years’ iPhones, which can be made at a lower cost as Apple squeezes down their component and assembly costs over time. To wit, Apple now sells the 2010-vintage iPhone 4 and the 2009-vintage 3GS alongside its brand new iPhone 4S.

There are many advantages to this strategy. Apple saves itself from the considerable engineering cost and effort of designing dozens of phones (and issuing specific software updates for them), and greatly simplifies its logistics with a smaller number of SKUs (Samsung has an astonishing 136 phones currently for sale, and that’s just in the United States).

If price were the only factor in making a phone suitable for the proverbial “next billion” or “bottom of the pyramid,” or whatever you want to call the vast majority of people who don’t live in the developed world, Apple’s strategy would be fantastically clever. Unfortunately, reality intervenes: Apple’s iPhones simply aren’t developing-world-friendly.

This isn’t mere conjecture; I spent 2 years working in India. The heat, humidity, dirt and dust, shocks and jostles, and the occasional monsoon make quick work of iPhones, whether you have them in a case or not. Of my class of half a dozen recruits, 3 of us arrived in India with iPhones, and all 3 of us had them break somewhere along the way. When my 3G bought the farm, I replaced it with a 3GS, which still managed to have its headphone jack fail, its dock connector warp, and its volume rocker mysteriously fall off in my remaining months in India–to say nothing of the white plastic housing that developed cracks and began to separate from the phone’s front. And even before it broke, my iPhone’s speaker was simply too small to really be heard in India’s crowded streets.

The developing world is where Apple’s iPhone pricing strategy–and the iPhone itself–falls apart.

Normally when one is looking to counter criticism of a particular Apple product or strategy, we can point to a chart of Apple’s gangbusters sales growth and profits as a rather effective counterpoint (“you may think not having flash in iOS is a dealbreaker, but evidently a hundred million iPhone customers disagree”). Alas, the naysayers have the upper hand when it comes to Apple’s strategy in India, where Apple sold a whopping 62,000 iPhones–fewer than it sold in such demographic giants as Belgium, Norway, and Israel.

The phone itself needs to be designed for the developing world with improved resistance to dust and moisture, louder speakers, and other features more appropriate to the wants and needs of the market beyond merely having the right price. Selling last year’s phone at a lower price is only addressing half the problem, which is why Apple continues to lose out to Android, Nokia, and RIM (RIM!!!) in India.

I have no doubt that Apple knows this. They are smart and forward-thinking. They know what they’re doing, and I’m sure they have a lower-cost, more durable iPhone in their labs. But I wish they would pull the trigger before India and the developing world–the hotbed of future mobile tech innovations–throw their weight behind Android and Nokia

So Meg Whitman Walks In…

Meg Whitman, the new CEO of HP, came to the Palm campus this week to give us an update on where we stand.

Unlike many others I won’t talk about what was said, but I will say that I was impressed by Meg’s candor, and the fair amount of boldness it takes to not only come to Palm in person, but to subject herself to a Q&A session and take questions that, as you can imagine, were not exactly softballs (including 2 from yours truly). Whatever decision she ultimately makes for the webOS team, I am confident (or at least more confident than I was) that it will be the right one.

Our Hero and Meg Whitman

Take your time, Meg. But not too much time…