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With Tablets and Smartphones Eating the PC, What Can Microsoft Do?

2013-04-11T21:48:24Z

These are very dark days for people who work for many divisions of Microsoft as tablets and smartphones have absolutely decimated the PC market as evidenced by a decline of 14% in sales of PCs last quarter. This news comes on the heels of the Windows 8 launch, the new OS which fuses the best of the tablet and Windows experience in one platform. The only problem is the new OS with all its marketing and slick new form factors isn’t cutting it, as consumers gravitate towards smaller screen devices.

Expect many calls for Steve Ballmer to be fired and when you consider how many markets Redmond has squandered since 2000 you could make a solid case for pushing him out. Tablets, music, cloud and smartphones are just a few. 11 months ago, one reporter had the foresight to say he should have been fired already.

It’s worth noting that Samsung has been one of the few companies besides Apple to capitalize on tablets and smartphones and other companies in this space which enjoyed leadership positions such as Blackberry, Nokia and HTC are also struggling.

Redmond will definitely see sales from corporate customers who upgrade PCs from XP and other operating systems to Windows 8 and of course its developer, server and Exchange lines of business are in no jeopardy at the moment.

Still, you have to wonder why the company isn’t leading the market in app sales on Android and iOS. It is common knowledge that users want Office on their iPads for example… What is the delay? The latest rumors say the market needs to wait a full 18 months from now to see its debut! The company makes games as well so why not try to dominate mobile devices with your game development?

The additional challenge here is Microsoft already tried to fight Apple with the unveiling of Windows 8 and it seems this isn’t a successful strategy. In fact, this polarizing OS seems to be pushing people to tablets and smartphones.

This strategic shift in the market requires Microsoft to refocus like it did when it missed the internet in the nineties – but this time, Google and Apple have precious few vulnerabilities to go after.

When Borland owned the desktop database market and could charge $650 for its software some decades ago, Microsoft stunned the world by rolling out its Access competitor for only $99. When Netscape owned the desktop browser market and charged for its software, Microsoft rolled out Internet Explorer for free.

This time, pricing isn’t going to help the world’s still-dominant OS provider attract massive amounts of new customers. Innovation is about the only thing left to try and they are losing the innovation battle to Android and iOS. The scary thing is Adobe Flash for the moment is still a major reason to us PC products but once HTML5 gets established, PC sales could slow even more.

Microsoft needs to do something to change this momentum and it needs to do it fast as not only are customers signaling discontent but financial analysts and investors are joining in.

Learn more about HTML5 at the ultimate HTML5 developer conference DevCon5, July 24-25, 2013 in NYC.

IPgallery Helps Carriers Become Social Hub and More

2013-03-01T19:57:11Z

Communications service providers once the center of the customer's world have awoken to the new reality - social and apps are the new hub. In fact, Facebook, Twitter and a wave of other social networks have fully overtaken the telephone number as the primary method of communicating among many - especially younger users. Then there are the the OTT VoIP and video vendors such as Skype. The telephone number has gone from being a protected client relationship to an afterthought. Even the bright spot related to phone numbers - massive texting revenue has recently been eroded by OTT apps like WhatsApp and even iOS messaging which seamlessly takes text messages off the operator network.

Enter IPgallery, a company playing in the IP communications carrier space for over a decade who wants to help service providers become the focal point of this brave new world of social and apps. Their suggestion is to provide customers with a social communications and hosted-PBX solution which integrates so seamlessly with popular web-based servies that users will rarely need to leave the comfort of the environment. An HTML5 interface allows a cloud-based service to tap into APIs of a slew of other companies to provide social, mapping and just about anything else a user can think of.

Just like a person might use HootSuite as a central hub to interface with numerous social networks, IPgallery helps carriers provide customized user interfaces which they believe are captivating enough to keep consumers living inside them.

Consumers for their part have shown a willingness to spend huge amounts off time interfacing with specific services such as Facebook. In fact, companies are tripping over themselves to have users interact with them on the world's most-popular social network. Carriers have a shot to get control back by providing customers with a user interface worth "living in."

In addition, they can add services such as shopping and entertainment and even combine location information to provide compelling applications which rival those of the OTT world. As carrier information is even richer than what is available to typical smart phone applications, they can actually provide better services than consumers can get elsewhere.

At Mobile World Congress in 2013 the Israeli company showed me an app they wrote which accesses Facebook and Maps and provides the photos of friends on their actual locations on a map. A user can select one or more friends and start a group communication, complete with file sharing and collaboration.

There is a great deal more - such as integrated e-learning, a hosted PBX with separate skins and functionality broken out by department such as accounting or sales. Finally, operators can add functionality by providing cloud-storage which could be used to hold content which is shared between users on the system.

IPgallery functions as part software/integration vendor and part systems-integrator, working with carriers the world-over to develop solutions which they need in their particular markets. This allows carriers to focus on their core competency while taking advantage of best-practices being developed by other service providers.

We often hear of discussion revolving around whether carriers are ok just being "dumb pipe" providers and regardless of the answer, there is definite value in owning the home page of the customer's world. Amazon has used this prime real estate to successfully push Kindle devices and Google uses it to push its Chrome OS, tablets and other devices.

Perhaps the better question is - what are the benefits from being the gateway to your customer's online activities including social, commerce and shopping? The answer of course is increased revenue and flexibility. And as service providers grapple with stagnant to lower ARPU and increasing network costs as they upgrade to 4G and beyond, exploring new revenue opportunities which could also reduce churn seems to make a lot of sense.

WebRTC Advisory Board Announced

2013-02-20T20:02:08Z

One of the more exciting bits of news this week has to do with TMC and partners choosing the Inaugural WebRTC advisory board. After the huge success of the first WebRTC World show in Santa Clara, California, we wanted to make sure we worked with the absolute top minds in the communications, technology and WebRTC fields to ensure our conferences have the best content possible.

The next show takes place June 25-27, 2013 in Atlanta, GA. Here is a list of the new board members with Twitter handles for easy-following purposes.

Update: Jim Donovan's correct Twitter handle is now listed below.

Name/Company	Member Handle	Company Handle
Jim Donovan Acme Packet	@jdrtc	@Acme_Packet
Tsahi Levent-Levi Amdocs	@tsahil	@Amdocs
Alan Johnston Avaya	@alanbjohnston	@Avaya
Chris McGugan Avaya	@cmcgugan	@Avaya
Arnaud Budkiewicz Bistri	@arnaudbud	@Bistri
Cullen Jennings Cisco	@cfluffy	@CiscoSystems
Steven Sokol Digium	@ssokol	@digium
David Duffett Asterisk	@dduffett	‏ @asteriskpbx
Dean Bubley Distruptive Analysis	@disruptivedean	@DApremium
Geoff Hollingworth Ericsson	@geoffworth	@ericsson
Craig Walker Fierspotter Labs	@cwalker123	N/A
Jan Linden Google	@jtlinden	@google
Justin Uberti Google	@juberti	@google
Stephen Brown Mitel	@mitelcloudchief	@mitel
Boris Selitser Oracle	N/A	@Oracle
Joe Burton Plantronics	@JoeBurtonCTO	@Plantronics
Goncalo Morais Siemens	@gnclmorais	@SiemensEnt
Mohan Palat Sonus	@mpalat	@sonusnet
Mark Weidick TenHands	@markweidick	@TenHandsInc
David Jodoin ThruPoint	@david_jodoin	@Thrupoint
Dan Burnett Voxeo	@voxeodanburnett	@voxeo
Alexey Aylarov Zingaya	@aylarov	@Zingaya_Service

7 Things The Atari Bankruptcy Teaches us

2013-01-21T22:46:57Z

Research tells us a positive outlook is linked to a healthier life. With this in mind, Atari's bankruptcy has so many positive takeaways worth focusing on. Before we go any further, it may be worth informing you of an excellent article on this sad situation from contributing TMCnet writer Steve Anderson. One point I’ll make for those of you who may not be aware – Atari is one of the companies that got me into technology – I played the company’s Pong when I was a kid and instantly fell in love. Space Invaders a few months later sealed the deal.

When I wrote my first video game on a Commodore 64 it was a Centipede clone – I basically borrowed the game idea from Atari. Here is a company that had it all – content – coolness, great video game designers and more. What does their demise teach us? Plenty. Let’s go through the lessons which apply to tech companies in general.

Stay paranoid: you are never untouchable. Even if you think you are the king, you can be dethroned in the blink of an eye. In technology you have to be paranoid – being best means being a target.

Stay hungry: I’m still an Asteroids fan and countless others are as well. Could this video game have spawned a licensing boom? Even today? Probably. What about a book? Movies? A cartoon series. If your company doesn’t explore the limits of its success with new products which tap into your successful brands, you are doomed.

Pay attention: Where was Atari when social gaming took off? How did they benefit from the app explosion? Obviously they didn’t do as much as they should have. The amazing thing however is they tried – just unsuccessfully. In October of 2011 for example they partnered with Zynga. The company even tried an ad-supported HTML5 game strategy which makes sense but obviously wasn’t the blockbuster needed to pay the bills and past debt.

Content is still king: The brands this company has can be very valuable if they are effectively unleashed.

Management matters: This morning CNBC re-ran a special where John Sculley mentioned that in Fortune 500 companies, CEOs are ousted all the time but in the case of Apple – losing Steve Jobs was a mistake. Point being, don’t think your company can run well with any team in charge of it.

Don’t lose focus: Atari produced the first home gaming systems most people used – yet this market didn’t disappear… In fact Microsoft showed you could enter this space very late and still develop a leadership position. It is incredible that Atari let this lead slip away.

Technology matters: Microsoft Kinect revolutionized Xbox – one wonders what sort of amazing technology we would be gaming with at home if Atari capitalized on its lead in the space which dated back to the early eighties.

If you want to see Apple CEO John Sculley live – be at ITEXPO next week in Miami, FL to hear his keynote.

HTML5 Finally Eating Apple's Profit

2013-01-18T12:01:53Z

I have discussed for some time how HTML5 will loosen Apple’s grip and decrease the amount of revenue the company makes from apps. Case in point, Amazon recently started touting the Cloud Player app which runs on iOS but allows you to purchase songs via HTML5 using the web browser Safari. The point is by using the web, Amazon sidesteps the 30% cut Apple usually takes from sales which take place via apps on their platform.

How painful will this be for Apple? Well at $0.99 a song Apple will lose $1M for every 3.333M songs Amazon users download via the web. Not a huge amount unless this service ramps for Amazon. Still, any revenue loss for Apple is not good – especially when the stock has been struggling the way it has these past few months.

Come to DevCon5 sponsored by TMC to learn more about the wonders of HTML5 development.

Acme Packet Getting Ready for WebRTC's Second Wave

2012-11-28T23:12:01Z

At the inaugural WebRTC Conference & Expo in San Francisco, much of the crowd was focused on demos of WebRTC working in a production environment. In one example at a luncheon keynote Mozilla showed how WebRTC communications could take place between two browsers on the same laptop. This one of the first demonstrations of the technology much of the audience had ever seen.

The event has brought together a wide swath of technology companies like Google, Plantronics, Oracle, Sangoma and Ericsson who are all very optimistic about the potential for WebRTC to be as some describe it, “A once in a lifetime opportunity in telecom.”

One speaker at a standards panel today mentioned perhaps the biggest challenge to WebRTC is overhyping. And he is partially correct. A bigger challenge to this emerging new space may be security.

Patrick McNeil and Chad Hart of Acme Packet

This is where a player like session border control maker Acme Packet comes in. I spoke at length with Chad Hart, Director of Product Marketing and Patrick McNeil, Senior Security Engineer, CISP from the company earlier today at the show and the takeaway is they are getting ready for the second wave of WebRTC… When it gets deployed in the real-world, across network borders.

The point is that past technologies like VoIP and SIP had to deal with major regulatory issues once the technologies reached critical mass. The FCC for example put onerous 911 regulations on the VoIP market as a result of a death related to a VoIP line which didn’t support E911.

Hart says you need to get ahead of these situations as we leave phase one of adoption and head to phase 2.

Moreover, he pointed out that call centers will be some of the earliest adopters of WebRTC and will benefit from the technology a great deal and as a result they need to be ready to deal with recording and compliance issues which will have to now apply to WebRTC customer interactions.

This is where an SBC company shines and explains why the company was here and moreover, why there was so much interest in their booth.

As you might imagine, the company is evangelizing WebRTC as they stand to benefit greatly if the technology fulfills its role as a major enabler of the communications of the future. A simple way to think of WebRTC is basically open Skype which lives in the browser and doesn’t require a plugin. In other words, WebRTC could easily eliminate the need for Skype over time. I am not saying it will – after all, Skype provides many useful services such as acting an address book but you get the idea.

Acme showed an interesting demo called a “happy button” which allows a user on a website to click an icon to immediately connect with an agent while in context. Coincidentally, I recently was in the market for an SUV and none of the automobile websites allowed me to calculate my precise lease payments online. In each case I had to wait for the dealer to reach out to me. It seems they wanted me to speak with someone directly before I got a quote. As it turns out, I made a purchase before half of the dealers responded.

The “happy button” in contrast allows a user to click a button on a website during a transaction in order to be connected with an agent who is aware of the issue at hand based upon user’s browsing information. The alternative says Hart is to leave the screen, do a search for the company’s contact information, traverse an IVR tree, find an agent and potentially have to re-authenticate a second time.

All of this adds cost to the company providing the call center service when you consider the cost of the IVR, programming the IVR, the 800 number minutes and the time the agent needs to authenticate users.

Moreover, in my case at least – half the companies contacted, lost the opportunity for me to purchase from them because of spam filters or they called me back while I was busy. Keeping a buyer waiting to get a price is never a smart thing to do.

At this event Acme Packet also announced the first WebRTC to multivendor IMS interworking capability where they enabled a major tier one network operator to deploy what amounts to a WebRTC to IMS SIP gateway.

On a separate but related note, the company also discussed the release of their 6300 SBC which can scale to 200k sessions and 1M subscribers in a 3U chassis. They explain that as VoLTE rolls out and VoIP providers mature, the demand for higher capacity systems has grown. Moreover, this new platform can be 70% cheaper than purchasing multiple 4500s and supports simultaneous transcoding of 64k sessions and 32k sessions of simultaneous encryption.

McNeil will speak tomorrow on security in the world of WebRTC and it seems fairly obvious that corporations and carriers will need to be paying close attention to what he and others in the SBC space have to say about security. These companies have learned a great deal in the VoIP and SIP space and as WebRTC gets ready for its second wave, it will have to deal with some of these same issues as well.

WebRTC: The Phone meets the Web

2012-10-19T17:40:22Z

We have seen the multi-billion dollar communications market get disrupted as the phone met the IP network. In the video below Phil Edholm describes how with WebRTC, the phone meets the web. As he describes, even though IP communications has been around for more than a decade, there hasn’t been a fundamental change in how we communicate. We still hang our phones off servers which allow communications to take place. Now, every web browser will become a multimedia communications engine, allowing browsers to communicate to other browsers directly. This is a totally new way of working – I like to refer to it as putting the power of an open-Skype into every browser.

Phil believes WebRTC will change communications the way the web changed the way information is shared. In other words – you can communicate very easily with others – without the need for continuous and central command and control.

As you may know, Edholm was Vice President of Technology Strategy and Innovation for Avaya GCS and previously the CTO/CSO for Nortel Enterprise Solutions. He knows the industry well and has been a past keynoter at ITEXPO. TMC has partnered with him and Crossfire Media to launch a new conference called WebRTC EXPO in order to educate the world on the power of this new technology.

Here is a partial list of people who should attend the event and why, according to Phil. The last one is my addition:

Enterprise IT: How will WebRTC integrate or even potentially replace your unified communications systems? Will you need to integrate WebRTC into your contact center to more fluidly communicate with current and potential customers?

Carriers: The implications of every browser allowing for rich communications to impact your business model can’t be overstated. In short, the pace of communications disruption continues. The simple question is, “Will you be driving or under the steamroller?”

Website owners: Does the addition of communications to the browser change your business model? How do you benefit from WebRTC? Can you use it to add value or generate more revenue for example?

Developers: This is a ground floor opportunity to change the world by writing new and innovative applications which weren’t possible before.

Investors: The entire phone network has just come under increasing pressure as a result of WebRTC. Moreover, Facebook, Twitter, Zynga and other companies with large reach have the ability to become their own phone network overnight.

WebRTC Expo takes place in South San Francisco, Nov 27-29, 2012 with keynotes from Plantronics and Thrupoint. We hope to see you there.

Major Flaws in Ballmer's Apple-Fighting Strategy?

2012-10-11T16:33:06Z

It really is shocking that Apple has pulled so far ahead of every other device maker with designs that are more art than technology focused. For those of you familiar with Bang & Olufsen products (BeoSound 8 pictured above) you know in some ways Apple’s designs are a copy of this iconic audio manufacturer meaning Apple didn’t entirely invent cool looking consumer electronics devices and others should be able to compete effectively in the space.

I am sure Microsoft agrees but as they’ve watched Apple become the cool and fast growing computer company they used to be, they determined they need to be more like Cupertino. This of course is the reason the company decided it was more important to design new hardware than keep their partners churning out directly competitive products happy.

With the Microsoft Surface Tablet introduction they told the entire ecosystem at once – you suck.

Steve Ballmer’s recent shareholder letter spells it out further. In it he says:

There will be times when we build specific devices for specific purposes, as we have chosen to do with Xbox and the recently announced Microsoft Surface. In all our work with partners and on our own devices, we will focus relentlessly on delivering delightful, seamless experiences across hardware, software and services. This means as we, with our partners, develop new Windows devices we'll build in services people want.

The key word above is “delightful.” Whether buyers consider this upcoming tablet to be accurately described by this term remains to be seen but the comment reinforces the “you suck” comment to partners as it suggests they can’t build such products.

Continuing, Ballmer says:

A great example of this shift is Windows 8. Windows 8 will come to market Oct. 26, 2012, with beautiful hardware that will light up with our consumer cloud services. Windows 8 unites the light, thin and fun aspects of a tablet with the power of a PC. It's beautiful, it's functional, and it's perfect for both personal and professional use. Xbox Music, Video, Games and SmartGlass apps make it possible to select a movie from a PC, start playing it on the TV, and finish watching it on a phone. SkyDrive, our cloud storage solution, effortlessly connects content across a user's devices. Bing's powerful search technologies in Windows 8 will help customers get more done. Skype has a beautiful new Windows 8 app and connects directly into the new Office.

The idea here is to use Skype and Bing as differentiators against Apple. The problem is how is Microsoft better able to integrate search and Skype than Apple? To keep its value, Skype has to run on Apple hardware and if its inferior on Apple’s platform, users may just switch to FaceTime which can easily be augmented to compete with “Skype Out” and other features.

Moreover, I have used SkyDrive and the product needs work. It seems to have been designed by sadistic engineers. Moreover the duplication between LiveMesh and SkyDrive was beyond confusing and multiple URLS made the experience really painful for me as I tested the service. If Microsoft is serious about the cloud they need to make life easier for users.

Here is another salient comment from the Microsoft head:

Fantastic devices and services for end users will drive our enterprise businesses forward given the increasing influence employees have in the technology they use at work — a trend commonly referred to as the Consumerization of IT. It's one more reason Microsoft is committed to delivering devices and services that people love and businesses need.

Yet another statement of the inferiority of the current hardware on the market.

If we are to assume that Surface is a hit and Microsoft starts to regain traction – two big ifs, the job will only be partly done by Redmond. You see the company needs to regenerate excitement around its brand. Xbox Kinect is a spectacular product but doesn’t create the excitement of Apple. Ballmer needs a cult-like following for Surface and they will likely have to create a Surface phone which needs a similar following. And from there the company is going to have to make sure they push the Ultrabook market which has no identity despite many of them – especially those from Asus being incredible machines.

Ballmer sums up the opportunities which lie ahead for Microsoft as follows:

Developing new form factors that have increasingly natural ways to use them including touch, gestures and speech.
Making technology more intuitive and able to act on our behalf instead of at our command with machine learning.
Building and running cloud services in ways that unleash incredible new experiences and opportunities for businesses and individuals.
Firmly establishing one platform, Windows, across the PC, tablet, phone, server and cloud to drive a thriving ecosystem of developers, unify the cross-device user experience, and increase agility when bringing new advancements to market.
Delivering new scenarios with life-changing improvements in how people learn, work, play and interact with one another.

The challenge here is just how generic these talking points are. They can apply to Google, Apple and Samsung as well. The monopoly position which Microsoft enjoyed is quickly eroding because there are hundreds of thousands of Android and iOS apps on the market. To make matters worse, as the world moves to the cloud, HTML5 browsers will allow cloud-based apps to be nearly as or as powerful as native OS apps.

Then there is WebRTC which will allow every browser to become the equivalent of a Skype client meaning any web user can communicate using voice and video with any other web user and no specific software will be required.

In short, this annual report letter from Microsoft is excessively generic and doesn’t explain the risks to Microsoft’s client business if they aren’t able to execute a successful tablet and mobile strategy. Moreover, as the cloud grows in importance they risk losing even more of their lock on the end-user client market.

Then there is the store strategy. It is apparent Microsoft needs bustling stores to compete with Apple and this means Surface has to be a hit and be followed up by killer phones and Ultrabooks people stand in line for.

Ballmer infers the future will be "delightful" but there is no telling if consumers will buy into this strategy. We should know more after the Surface Tablet becomes available. If it is a flop, it may not be a bad idea to start acquisition discussions with Bang & Olufsen - at least this way Redmond can't be accused of copying Apple's designs.

ITEXPO Austin 2012 Show Guide and More

2012-09-26T22:09:06Z

ITEXPO is taking place next week with a record number of collocated
events in areas such as cloud computing, video, SIP trunking, M2M, wireless and mobility, white spaces also known as Super WiFi, HTML5, MSP solutions, Latin America Communications, Tech patent protection, cloud computing and cloud communications.

This is the most comprehensive technology event I know of with educational sessions on the crucial areas you need to know about to succeed in your career in every economic environment.

Some of the most important aspects of the conference are located in the Show Guide (PDF, Hi Res PDF). For more, here is a link to the fabulous keynoters from IBM, Sonus, Cisco, etc. and the latest Show Daily.

Hope to see you in Austin next week!

Can Discounted Hardware Compete with Apple?

2012-07-10T15:39:19Z

Microsoft Store in Danbury, CT

Global Apple stores are brimming with traffic with municipalities tripping over each other to get Apple to open stores in their areas. At the same time, the Microsoft Store in the Danbury Fair Mall in Connecticut had a fraction of the foot traffic of the nearby Apple Store this past weekend according to fellow TMC blogger Tom Keating. The good news for Steve Ballmer is Tom likes the layout of the Microsoft store better. These are his exact thoughts:

My next thought was, "It's better." The Apple Store has this clean simplistic design with lots of white and clear plastic, but it lacks the fun factor and has this almost cold, hospital, sterile-like atmosphere. I found the Microsoft Store to be warm, fun, and futuristic. The store has huge flat screen displays lining the walls that are perfectly recessed into the wall so they don't stick out even one inch. In front of some of these displays are Xboxes and Kinects to allow visitors to play video games. While I saw some kids jumping and laughing playing a Kinect game I couldn't help but wonder if they were loud in the Apple Store. I imagined the Apple Store employees and indeed the Apple customers themselves would turn to the laughing kids and shush them like a librarian would do in a library and thinking to themselves, "Hush children. This is hollowed Apple ground. Would you be rowdy in a church?" While I may exaggerate the serious "feel" of the Apple Store compared to the Microsoft Store, there definitely is a more of a business-type atmosphere in the Apple Store while the Microsoft Store was more fun.

See the Microsoft Store 360 degree view

Tom thinks that the introduction of Microsoft’s tablets will turn the tide and fill the Microsoft stores. I am sure Redmond hopes so. But if retail is the future of consumer electronics and computing then doesn’t Google need stores – and fast? And what about Samsung and HTC?

The point is these stores are more than retail for Apple, they are marketing. You could make the same argument about the Samsung Experience store in Manhattan but in this case you would be 100% accurate as can’t buy anything – it is a product showcase.

But while we are getting giddy about how consumer electronics companies need retail to be successful, we should stop for a moment and realize that Best Buy is about to lay off 2,400 workers consisting of 600 Geek Squad tech support specialists and 1,800 store employees. We all know the problem but may not be familiar with the term showrooming which as the name implies means you shop in a brick and mortar location and then buy online.

So I got to thinking about author Robert Fulghum who wrote Everything I Really Needed to Know I Learned in Kindergarten. I remember when I was in my mid-single digits Sesame Street taught me a song called “One of these things is not like the other.” In this case Apple stands out.

Obviously we know about the company’s superior products, the Steve Jobs legacy of attention to detail combined with an innate understanding of consumer desires.

But it is more than that. You see, Apple products are sold without discounting for the most part so if you visit in the store, you have little to gain by shopping online – except perhaps sales tax savings in some cases. The situation is far different in most of the rest of consumer electronics except for other premium brands like Bose and Bang and Olufsen.

If the PC market and the rest of the industry thinks they can successfully change to such a pricing model overnight they will be sorely disappointed. In the publishing world one of the biggest challenges is to get an audience to pay for something they once got for free. In retail the corollary is going from discounting to charging full retail price.

The most recent attempt at this strategy shift took place at J.C. Penny where less than 1% of the merchandise sold at full price. CEO Ron Johnson who is the former Apple retail head tried to abruptly change the way the store did business and got walloped by Wall Street when earnings were missed as a result of rapidly replacing discounted prices with more “reasonable” everyday pricing. The strategy by the way has already been tweaked with the addition of discounting.

6 Month J.C. Penney stock performance

To summarize:

It seems the CE market is waking up to the fact they need to rely more on retail.
Consumer electronics retail is having trouble as evidenced by Best Buy.
One way to increase retail sales and more importantly add value to your brand is to stop discounting.
But Best Buy sells Apple products at retail and is struggling.
Best Buy for its part has finally realized there is a larger problem and is testing new stores which look like those from Cupertino.
JC Penney is trying to evolve its sales strategy with non-discounted pricing and the transformation takes time if it is even doable.
The circular nightmare for Apple competitors? If you compete with Apple and don’t have a profitable retail strategy then you can’t compete with Apple.

All of this is taking place at a time when more people are so comfortable with products from Cupertino that they are OK with switching to Mac products when their PCs need replacing. And the younger generation doesn’t have the same connection to Microsoft which most of my readers do.

This really leaves the consumer electronics, gadgets and PC market in a major conundrum. Google, Microsoft, RIM, HP and others really need solutions which are better than those from Apple or at least good enough that consumers won’t mind paying retail prices to purchase them.

Why Facebook Needs a Phone

2012-05-29T13:48:01Z

Facebook as the dominant social network is becoming the replacement for the phone. Nowadays in fact it is fairly common to use Facebook as the primary way to stay in touch with others – especially among those under 30. The point here is that the phone is becoming the Facebook communicator.

And with mobile adoption continuing ta a blistering pace – many people have multiple mobile devices in fact, Facebook should be sitting pretty, right?

Well, yes and no. Facebook is benefiting from more user time on its network but it is having trouble monetizing mobile sessions because you can’t show as many ads on a small screen. Sure, you can charge more for geotargeted ads on a mobile but that market hasn’t evolved to the point where it is a huge money maker and moreover it is unknown if the amount of money received for one geotargeted mobile ad will be more than the aggregate amount made from all the ads shown on a 20 inch monitor.

But there are threats seemingly from everywhere.

Apple: Twitter is tightly integrated into iOS and the company has Ping, a music-sharing social network which isn’t talked about much but shows Apple isn’t giving up on becoming the hub for social interactions.

Google: There is no bigger threat to Facebook than Google Plus and Google owns Android – the fastest-growing mobile OS. Obviously this isn’t a great situation for Facebook.

One of the reasons that Google got into the operating system and browser business was because they wanted to be sure there were choices in the market – they had to ensure consumers always had access to their services and that a company like Apple couldn’t lock them out.

Likewise, Facebook has to be worried about the same things.

This weekend Nick Bilton of the New York Times wrote about Facebook’s latest attempt at building a mobile phone – citing the complexities the social networking company has to overcome.

Interestingly the reactions from others have been very blunt. Henry Blodget says investors should run away screaming if Facebook gets into the hardware business. Adrian Kingsley-Hughes from ZDnet argues that a Facebook phone doesn’t stand a chance.

And some of the arguments are logical – hardware is a virtually impossible business – just look at the constant stream of layoff and high level departure announcements from the likes of Nokia and RIM.

And they are correct – Facebook knows nothing at all about hardware.

But the flipside to this argument is consumers will resonate with a phone provided by the app they associate most with their mobile device. In other words, if you spend most of your time in Facebook, while on your mobile device, why not get the phone from the same company?

There are countless ways the social hub can go about making this dream a reality.

They can work with HTC or another hardware vendor. They can strike retail deals with Radio Shack and Best Buy, Wal-Mart and others.

The carriers are looking for ways to minimize their dependence on Apple so they would likely be happy to assist as well.

The challenge of course is how can they make money from such a relationship? It seems the only way may be for Facebook to eventually make the hardware themselves or at least design it and have it manufactured by Foxconn or another similar company.

Let’s look at the situation from Google’s perspective. The company sells an intangible product – online ads which have no physical cost associated with them and their business is doing well. And still, they are being beaten in terms of growth and market capitalization by a company with an expanding brick and mortar footprint and one who sells physical products.

In other words the world’s leading online advertising company – one who has a virtual monopoly in search isn’t doing as well as a hardware company – one who relies on malls for much of its revenue. Malls? Really? Its 2012 for heaven sakes.

This probably puts the Motorola mobility acquisition news in a different light doesn’t it?

And as explained so well by GM, Facebook is better for consumer engagement than it is as an advertising vehicle. At least today. That doesn’t mean of course the company isn't going to do well offering other services such as streaming audio and video… But for it to be worth the sky-high valuation which has been assigned to it – it is going to have to grow like crazy for many years.

And if they can sell hundreds of millions of phones, they can not only make additional revenue but protect their crown jewel - allowing consumers access to their social network on their mobile devices.

HTML5 Continues to Be Big Tech News

2012-05-22T21:28:22Z

HTML5 is being embraced by virtually every company as it a cross-platform solution to getting your content in front of users without the need for app stores or developing customized solutions for each device and OS you would like to have your content displayed upon. The good news is companies like Adobe have jumped on the bandwagon – ColdFusion 10 will support HTML5 based on news released this week in fact.

Then there is the “dark side” of HTML5 – basically some believe mobile devices and browsers aren’t ready for this new development language. This problem becomes an issue for video where 30-60 frame per second viewing is needed for optimal viewing quality.

It seems every company has decided that HTML5 is in their future. For example recent news about 3D-based modeling in your browser is possible thanks to a new company called Sunglass and LG showed off a new secure HTML5 viewer cable operators can use with their TVs this week at the Cable show in Boston, Mass.

In short, the future of development on the web looks like it will center on HTML5 and while it may seem logical that HTML – something which all sites employ will still be in use, this newest iteration is far more sophisticated and powerful than previous versions. There are new security, programming and design implications and for that reason it is worth taking a course or attending a conference on the topic to be sure you maximize your programming and design results.

As a disclosure TMC where I am CEO is a partner in DevCon5 perhaps the most well-established HTML5 design and development show in the world. Our sixth event takes place in New York July 23-24^th, 2012 and the conference program is now available for your viewing pleasure.

I hope to see you there.

Brightcove Sales Reflects well on Video, Cloud, HTML5

2012-05-04T09:54:33Z

What happens when you sit at the intersection of cloud, HTML5 and video - especially when tablets and high-resolution smartphones are being sold by the hundreds of millions? The answer is - if you are Brightcove, that your sales grow rapidly. In fact the company just announced earnings of $19.9 million which is up 53% YoY. Sure, this isn't a huge number but the percentage is obviously intriguing.

Moreover, gross profit for the first quarter was up 56% at $13.6 million. Still, the company reported an operating loss for the quarter of $3.2 million compared to a loss of $4.4 million for the same quarter, last year.

In the video below Jeff Whatcott of Brightcove discusses Brightcove 4, an iPhone SDK and other new offerings with TMC's Erik Linask

New customers added this quarter include Allianz France, Pfizer International Operations, Toyota and Starwood Hotels & Resorts and NBC.

Over my career I have seen many companies look at video as a growing market but few have been able to monetize this space beyond content producers and perhaps YouTube. It remains to be seen if Brightcove will be able to generate large profits in video but their list of top customers, earnings momentum and reinvestment in their business shows they could become a solidly profitable business video company in the next few years.

Comments on Last Week's DevCon5 HTML5 Conference

2012-05-01T20:07:53Z

HTML5 is an important topic as cross-platform development without the need to work with app store guardians means developers are generally free to write apps the way they want without the need to conform to standards or really any rules set by an app store overlord.

This isn't to say that app stores don't have advantages to them - they do... Consider their ability to promote your apps, host the files for you and deal with billing are a few of these. But still, for many, the write-once, run-everywhere nature of HTML5 makes it an important resource in their development.

Last week's HTML5 event DevCon5 (disclosure, TMC is a co-producer of the event and I am CEO of TMC) was well-attended (pictures) and although I wasn't at the conference I felt like I got a great taste of all that happened by reading the 8bitrocketblog by Jeff Fulton.

My favorite part of the post is the page where the HTML5 iOS demos live - I like Brickbasher Mobile but Retro Blaster Touch is my favorite. A coworker saw me using the game in a meeting earlier today and try as I did, I am not sure I convinced her I was actually absorbing the finer points of HTML5, not ignoring her presentation.

NQ Mobile Protects Android Phones from Malware and Viruses

2012-03-20T16:21:45Z

Last year Roger McNamee mentioned that he doesn’t think Android has a bright future because of the malicious apps proliferating on the platform and to his point Android malware is up over 400% with no signs of slowing down. This is where NQ Mobile’s NQ Mobile Security app comes in. I recently met with Kim Titus who described the threat as being greatest over SMS as well as in parts of the world where apps are sideloaded. He believes 10% of Android devices in fact are infected and SQL injection as well as HTML5 are further challenges to securing this mobile OS.

The company’s software available in the Android app store is being downloaded 200,000 times per day and as part of the solution, users get access to the company’s 250 security experts who break down malware and protect customers from it. I mentioned the freemium model and you do get security for free but the advanced features are paid.

Some of these features are financial security information and ensuring specially encrypted data only goes point-to-point ensuring no outside party gets access to it. In addition, paid users get privacy protection and advanced antitheft features like remote wipe, lock and alarm sounding.

The software has a novel way of providing antitheft services and the free model allows you to enter a phone number which is texted in the event of the SIM card being changed. At this point this second device can track and lock the stolen phone.

I am told big features are coming soon in version 6.2 and 7.0 including family services.

Perhaps the most important part of the discussion was when the company explained that users aren’t the customers of the software they download [for free], advertisers are.

In other words the developers making the services users are consuming are first loyal to the people paying them who are the ones advertising. This means there will always be the temptation to cross the privacy line.

None of this is news to the mobile community as software has been found to invade privacy not only on Android but iOS as well. The question is in this mobile war on privacy and security, can users ever be protected enough. NQ Mobile likes to think their software is the answer to this challenge.