At the risk of turning this weblog into the "BlackBerry channel," I wanted to add a couple of additional thoughts to my post on Research in Motion's recent earnings and strategy announcement (link). There was an interesting divergence in the press and analyst comments about Thorsten Heins' statement that RIM would refocus on enterprise customers. Commentators in the US and Canada generally responded to it fairly well, while those in Europe and other parts of the world were a lot more negative.
I think that's because there are really two BlackBerry customer bases, one in North America, and one in the rest of the world. I wrote about this a year and a half ago (link), but I didn't think about how it related to RIM's earnings situation, and neither did a lot of other people.
To summarize, in North America, where RIM first came to prominence, its products tend to be seen as business tools. They were first adopted by businesspeople who had a strong need for up-to-the-minute communication, including Wall Street traders and government officials. As a result, RIM's image and core customer base in North America has always focused on business professionals. The reality was more mixed; RIM did reach some non-professional users in North America, aided by operator marketing campaigns that included a memorable T-Mobile TV ad that praised the benefits of a BlackBerry flip phone designed to prevent "butt-dialing" (link). But the most popular smartphones for non-business consumers in North America tended to be the Sidekick, and later iPhone and various Android models.
The situation was different in the rest of the world. BlackBerry came to market there later, and people in many countries were not as enamored of real-time e-mail as they were in the US and Canada. In those countries, BlackBerry generally caught on as a low-cost youth messaging phone, aided by RIM's BlackBerry Instant Messenger service, which lets consumers see when their texts have been read. The relatively low parts cost of a BlackBerry compared to other smartphones also helped RIM reach consumer-friendly price points. In some countries, BlackBerry established a strong network effect among young people. If everyone else in your social group has BlackBerry Messenger, you'll be completely left out if you don't use it as well.
As in North America, there are exceptions. You can find business users of the BlackBerry anywhere in the world. But I think it's fair to say that the average person in North America tends to see BlackBerry as a professional business product, while the average person in the rest of the world tends to see BlackBerry as a youth consumer product.
This explains the differing reactions to RIM's announcement. Observers in North America (including me) tended to view it as a long overdue refocusing on RIM's first and most loyal customers. Observers in other parts of the world tended to view it as a thick-headed betrayal of RIM's fastest-growing customer group.
Some of the reactions outside North America were very acerbic. My favorite came from Andrew Orlowski of the Register (link), who noted the irony that RIM had made its announcement "with the English rioting season fast approaching." Yes, he was that upset.
So which group is right? I think they both are; it just depends on which face of RIM you see around you. Both sides of RIM have a core of loyal customers, but both sides also have risks. In North America, I think business users are largely saturated with smartphones, and this is where RIM's business has been losing the most share. On the other hand, these customers produce the highest gross margins when happy, and they are not being targeted heavily by other smartphone companies. In the rest of the world, RIM's base is younger and growing faster than its North American business base, but it's hard to picture BB Messenger competing successfully in the long term against social messaging through sites like Facebook. RIM might be able to maintain BBM as a standard by licensing it to other phone companies, but that would destroy the differentiation of the company's hardware, leaving it to compete on raw price against Android licensees like Samsung and China, Inc. I'd rather walk on razor blades.
So I can easily make a case for focusing on either one market or the other, with the idea being that if you work very hard you can at least hang onto part of your current base, giving you a foundation to grow from in the future. But it's not clear that RIM is ready to make that sort of apocalyptic choice. Instead, it sounds a lot like a company that wants to ride two horses at once.
A small group of observers said Heins' comments about enterprise had been taken out of context, and that it was important to listen to all of RIM's conference call, something that many people apparently didn't do at the time (including me, I am ashamed to say). So I went back and reviewed the full transcript of RIM's call (link), and here's what I think I read:
"We plan to refocus on the enterprise business and capitalize on our leading position in this segment."
RIM did definitely say that it's re-dedicating itself to serving enterprise customers. But I am not clear on whether that means serving IT managers or individual business users (or both). As I mentioned in my previous post, that is a big difference. Individual business-oriented users are a segment; they will not go away. And anyone who thinks those users all want to play games and listen to music on their smartphones is out of touch with reality. But IT as a major channel for smartphone sales is waning. Although focusing on IT might be a good tactic to preserve some short-term revenue, it's not a long-term strategy for the whole company.
"Other products competing in the bring-your-own-device segment is to create a compelling consumer offering. We believe that BlackBerry cannot succeed if we try to be everybody's darling and all things to all people. Therefore, we plan to build on our strengths to go after targeted consumer segments, and we will seek strong partnerships to deliver those consumer features and content that are not central to the BlackBerry valuable position, for example, media consumption applications."
So RIM did say that it's backing away from some investments on the consumer side. But that does not mean it is abandoning its young users. I think Heins is hinting that RIM will focus on messaging phones and use software licensing to give those phones media playback and gaming features. Outsourcing is a typical tactic that tech companies use when in financial trouble. Sometimes outsourcing actually does save you money, and sometimes you find that licensing and integrating the third party software costs you about the same as building it yourself. So I don't know how well that will work out for RIM, but it doesn't necessarily mean they are dumping the consumer market.
"Another key area where we will be making significant change is in our services business. Here, I'm referring specifically to the consumer-oriented, value-added services business that we have attempted to build over the past 2.5 years through numerous various acquisitions....The heavy ongoing investment required to continue this initiative does not make sense given RIM's current market position and our relative strength. As a result, we will be looking at ways to scale back these activities and refocus resources on developing an integrated services offering that leverages RIM's strength, such as BBM, security and manageability."
This is the place where Heins definitely signaled cuts. It sounds ominous for Gist and Tungle and the other mobile web startups RIM bought in the last couple of years. I hope they're not all being thrown out, since I believe they could help to differentiate RIM's products, but recent acquisitions are often at risk in corporate restructurings because they are not viewed as part of the "core product offering." (Just look at what happened to Palm.) Besides, they do not usually have big revenue forecasts attached to them, so they can be cut without forcing a drop in the corporate earnings forecast.
Reading RIM's comments closely, it sounds like they're saying they want to preserve both their business user base in North America and their youth messaging base in the rest of the world. That's sensible from a revenue preservation standpoint, but it means that RIM will continue to be serving two masters with very different needs. Compare that to Apple, which basically makes one smartphone at a time. It will be hard to cut a lot of engineering cost at RIM, and it will be very difficult to create products that please both North America and the rest of the world, especially if RIM tries to add some significant new differentiators. Features that please its North American core are not likely to also please the international market, and price points that would be acceptable in North America will likely be too high for the rest of the world. The danger is that RIM will be like an army fighting on two fronts, with its forces below critical mass on both sides.
For RIM, this is yet another layer of challenge and uncertainty on top of what was already a very challenging situation. Although customers may be glad to hear that RIM's not abandoning either group, to me the two faces of RIM make its situation even more daunting.
Tuesday, 17 April 2012
Monday, 2 April 2012
Rebuilding RIM
There's something sick about our love of disaster movies. We take pleasure in seeing great works of ego laid low -- that unsinkable ship is going down, the fireproof skyscraper is going to burn all the way to the top. I think many observers are now watching Research in Motion like a disaster movie: It's too big to ignore, too sick to survive, every quarter is a new plot twist of devastation. Some of the press coverage is taking on a mournful air of inevitability:
"RIM weighs bleak options," says the Wall Street journal (link). The article quotes a customer as saying a recent meeting with RIM officials was "like going to a wake."
But the reality is that RIM's future is not yet decided. Definitely the odds are against it. But well-known brands have an amazing ability to come back; people are almost always willing to give them another chance. (Check the history of Packard Bell, a 1920s radio brand that came back as a 1980s computer brand. Heck, you could probably revive Palm if HP took its cold dead hands off the thing.) RIM's fate depends on a huge number of unpredictable details, some of which haven't even happened yet, and others that we don't know because we're not company insiders.
So we can't predict what will happen to RIM, but we can talk about what the company needs to do to survive. If nothing else it's an interesting case study for anyone who needs to turn around a tech company.
Step one: Acknowledge the problem in public
One of the smartest marketing people I ever worked with is Christopher Escher. He was at Apple for a long time, and then served in the early days at Google. Chris said that the process of rehabilitating a company's image was like moving the hands of a clock. Having a great image was at 12:00. A company's image could stay in that position for a long time as long as it didn't have too much bad news. But if bad news built up, the hands eventually slipped over to the 3:00 position, which meant you were perceived to be a troubled company.
Chris said companies always want to force the hands to go backwards to 12, because they want to get past the pain. But his insight was that you can never do that. First you have to acknowledge the problem (3 pm), articulate your plan (6 pm), and then show that you're making progress at fixing it (9 pm). I think Chris had some other stages in there, but you get the general idea. Only after you had taken all of the intermediate steps, and posted improved financials as a result, would people believe that you had actually earned your redemption and returned to stability at 12.
The business redemption clock, a concept by Christopher Escher.
A good example of this process in action was Stephen Elop's moves at Nokia after he became CEO. The notorious "burning platform" memo, which I believe was deliberately leaked, acknowledged the problems at Nokia and made its later moves much more credible to the press and analysts. That doesn't mean Elop made the right moves, or that they will work, but if he had denied there was a problem, people would not have even paid attention to his later moves.
Until its earnings announcement last week, RIM was still trying to make the clock hands go back to 12, and it wasn't working. All it did was convince people that management was out of touch. When RIM acknowledged the depth of the problem, suddenly the tone changed in some of the coverage. "RIM finally seems to get it," CNET declared (link).
There is a downside to acknowledging the problem: you make it worse. Remember the despair and disbelief that "burning platform" created among Nokia fans (link). You frighten any customers who aren't already worried, and partners may delay or cancel their work with you. As you'll see, this is a problem with many of the steps you have to take to fix a broken tech company -- the medicine makes you even sicker at first.
Step two: Focus
Almost by definition, a troubled tech company will be trying to create too many products and funding too many business initiatives, the leftovers from more optimistic times. There isn't enough revenue to pay for all of them, so you have to eliminate some. This is an agonizing process. Usually there is current or forecasted revenue tied to every project (not enough revenue, but some). So when you cut them, you don't just lower your expenses, you also reduce further your expected revenue. That forces you to cut even more.
Companies often default to keeping their most profitable product lines, because that requires the smallest cuts. "We're focusing on the core," the executives say. But usually the most profitable product lines are the oldest ones with the worst growth prospects. Focus on them and you'll lock the company into an irreversible decline.
The right way to focus is to plan from the bottom up. Decide what you want the company to be, who the target customers are, and what special value you'll deliver to them. Fund the projects that support that goal. Everything else, no matter how valuable or emotionally important, is a candidate to be cut. If those cuts don't reduce your expenses enough, revisit the goal and make it even more tightly focused, allowing you to kill more things.
This process forces you to slaughter sacred cows. Steve Jobs returns to Apple, and decides the company will focus on making Macs for creative people. Out goes Newton, out goes twenty years of painfully-assembled enterprise sales infrastructure, out goes the printer business. Lou Gerstner decides IBM will be a services company; he kills OS/2, pulls its PCs out of retail, and preps that business for sale.
RIM's focus is questionable at this point. Thorsten Heins appeared to be very focused when said that RIM would "refocus on the enterprise business" because "BlackBerry cannot succeed if we tried to be everybody’s darling and all things to all people." But the next day two RIM executives denied that the company was exiting the consumer market (link).
One of three things happened. Either:
--Heins' remarks were remarkably badly scripted, and the company really doesn't plan to back away from the consumer market. This would be a bad sign for the company's ability to execute. How in the world could you botch a critical message like that in an important earnings call? Get your act together. Or:
--Heins really does plan to back away from the consumer market, but some others in the company are in denial about it and are trying to spin-doctor him. This is unlikely since two executives delivered the same correction. But I've seen weirder things happen. Or:
--RIM plans to exit the consumer market but doesn't want to say so yet because it needs to sell all of its current products that are still in inventory. I suspect that's the reality. Shamefully sloppy marketing by RIM if tghey raised this issue without understanding the impact it would have on sales. RIM needs to be crisper if it is to survive.
Messaging aside, the impact of a RIM focus on enterprise depends on your definition of "enterprise." If RIM is planning to focus on top-down corporate sales through IT managers, good luck and goodbye. The long-term trend is that IT has less and less control over the mobile device choices of users in the company, so RIM would be tying itself to a dying sales channel. But if by "enterprise" RIM means it will focus on the needs of individual businesspeople rather than entertainment-hungry teenagers, that is RIM's best prospect for getting reasonable margins, and probably its best chance to survive.
Some of the diversity of reactions to Heins' remarks has been driven by commentators making different assumptions about the definition of "enterprise." Roger Cheng at CNET assumed it meant business end-users, and praised the change. On the other hand, Horace Dediu assumed it meant selling through IT managers, and was utterly dismissive (link).
The important question is what Thorsten Heins meant, and we don't know the answer to that.
Step three: Get a win
The next step is to hold onto your installed base. This is important for any device company, because your loyal customers are the nucleus from which you'll grow in the future. No one else is going to hang out with you right now because you're damaged goods. The base is especially important for RIM because they're paying monthly service fees to the company. That high-margin revenue stream is critical to RIM's recovery, and must be maintained. I was encouraged that even amidst all the bad news RIM still grew its subscriber base slightly last quarter. I doubt that will continue, but if RIM can keep the base close to even, it'll help a lot with the future transitions.
This may be why the company was so sensitive to the idea that it would "abandon" consumers. It's not the right time to send that message to the public, even if it is true.
Instead, you need to lavish love on the installed base. That means giving them special discounts for buying a new BlackBerry, telling them how important they are, and getting them excited about the product's future. They have heard those promises before, though, so to make it credible RIM needs some nice, solid new products.
I'm not saying killer products. Those would be great, but since RIM was dysfunctional, I doubt there are killers in the pipeline. At this point, it would be enough to ship a couple of very solid, well executed devices that deliver on RIM's expected value and don't crash. Think of the role that the iMac played in Apple's recovery. The device itself wasn't all that spectacular, but it was iconically Apple, and proved that the company was reconnecting with its values. It engaged loyal Mac users emotionally, gave them a reason to believe, and put Apple back in the game.
So Heins should look at the devices in RIM's pipeline for the next six months, and focus everyone on implementing the few that look most promising on the core BlackBerry values of reliability, convenience, and great messaging. Stop work on everything else. It's better to have one or two wins than four mediocre products. And stop producing a slightly different model for every mobile operator. You can't execute well on that complexity; it's part of what got you in trouble.
Will this lose you some operators? Yes it will, but it's better to have a smaller channel that is enthusiastic about your products than an overstocked channel that doesn't care. (Again, look at the way Apple trimmed dealerships when it was working on its comeback.)
Step four: Create differentiation
Now you've focused the company and momentarily stabilized the installed base, or at least slowed its bleeding. Next you need to add a few differentiators -- unique features that do things your customers will love and will drive them to come into stores and demand your products. Create no more than three of these features. You can't effectively advertise more than three anyway, so it's better to do three really well than to have six that kind of mostly work.
If you get these features right, your target customers will forgive dozens of other flaws in order to obtain the value of your differentiators. This is what gets you off the hook for copying every feature of the iPhone, which you can't afford to do and won't implement well anyway (case in point, RIM's product history for the last several years).
What are those features? I have some ideas, but a lot depends on which technologies RIM has in house and how talented its engineers and product managers are. There are plenty of important unsolved problems RIM can tackle for businesspeople on the go. Things like meeting planning, managing e-mails and text messages while you're driving, and finding parking in a crowded city might all benefit from RIM's integrated client-server architecture. There are also plenty of opportunities to integrate BlackBerry uniquely with business infrastructure. BlackBerry was first successful because it integrated so reliably with Microsoft Outlook and Exchange. What could RIM accomplish if it applied that same sort of focus to Salesforce.com or Dropbox or LinkedIn?
RIM has the pieces to build some of these solutions -- it has bought a number of startups like contact manager Gist and calendar manager Tungle. I hope those are being viewed as part of the solution rather than random acquisitions that now need to be tossed out.
You'll notice that I'm not saying anything about BlackBerry OS 10. That's because it almost certainly can't be a differentiator, for several reasons:
--The first release of an OS is almost always focused on just making the basics work properly. If BlackBerry 10 is stable and doesn't crash, that is probably the most you can expect from it. Maybe OS 10 will let RIM announce that its phones now suck less, but that's not a differentiator, that's table stakes.
--Until very recently, RIM's main explanation for why it needed BlackBerry 10 was so it could match the multimedia and entertainment features of iOS. If that has been the development focus, it's very unlikely that the OS has a lot to offer to businesspeople in its first version.
--The average customer does not buy an operating system. In the tech industry, we pay a lot of attention to operating systems because we know they are important enabling technologies. But what customers respond to is the features they enable. When is the last time you heard someone say they bought a mobile phone because its OS did a better job of paging memory or scheduling symmetric multiprocessing?
What about the idea of RIM licensing out its operating system? Forget about it. First of all, I doubt there are any customers. But even if they are, the distraction of serving the different demands of various licensees would tear the OS team apart. RIM just doesn't have the money and staff to make this work. Its best play is to deeply integrate its OS, devices, and services to create unique systems. That sort of stuff is hard for Android to copy, and challenging even to Apple.
So those are the four steps: Acknowledge the problem, focus (and cut brutally), find a quick win, and create differentiation. Each step sounds fairly straightforward, but the hard part is that you have to get them all right, and you have to do them fast. It's like doing brain surgery on yourself while driving your car down the freeway at 60 miles a hour. Any mistake can be fatal.
The most difficult steps are the third and fourth, finding a quick product win and creating differentiation. Typically a major new product or differentiator takes 18 months to implement, even if you're moving fast. I think RIM probably has six months to roll out a product win, and at most 12 months to show some major new differentiators. Go beyond that, and the installed base may be draining away faster than you can refill it. When Steve Jobs returned to Apple, he was lucky that the industrial design team that created the iMac was already in place. We'd better hope there are some great half-completed projects in the labs at RIM that Heins can focus the team on.
What to watch. It's because of uncertainties like this that no one can predict if RIM will survive. But there is a metric we can watch to assess the company's chances: cash. Cash to a device company is like altitude to an airplane. When a device company fails, it's usually because it runs out of the cash it needs to build inventory and advertise a new product release. RIM currently has about $1.8 billion in easily-available cash, down about $300 million from a year ago. Net income was $1.1 billion. For comparison, in 1997 Apple lost $1 billion and had $1.5 billion in cash left. Eighteen more months and it would have been dead.
So RIM is not as acutely sick today as Apple was in 1997. But the BlackBerry base is not as loyal as the Mac base was, and Thorsten Heins isn't Steve Jobs. The danger to RIM isn't an instant collapse, it's an accelerating decline into irrelevance. That decline may already be irreversible. If it isn't, RIM needs to act urgently to turn it around. Acknowledging the problem is a good (if belated) start, but the hard work is still to be done.
"RIM weighs bleak options," says the Wall Street journal (link). The article quotes a customer as saying a recent meeting with RIM officials was "like going to a wake."
But the reality is that RIM's future is not yet decided. Definitely the odds are against it. But well-known brands have an amazing ability to come back; people are almost always willing to give them another chance. (Check the history of Packard Bell, a 1920s radio brand that came back as a 1980s computer brand. Heck, you could probably revive Palm if HP took its cold dead hands off the thing.) RIM's fate depends on a huge number of unpredictable details, some of which haven't even happened yet, and others that we don't know because we're not company insiders.
So we can't predict what will happen to RIM, but we can talk about what the company needs to do to survive. If nothing else it's an interesting case study for anyone who needs to turn around a tech company.
Step one: Acknowledge the problem in public
One of the smartest marketing people I ever worked with is Christopher Escher. He was at Apple for a long time, and then served in the early days at Google. Chris said that the process of rehabilitating a company's image was like moving the hands of a clock. Having a great image was at 12:00. A company's image could stay in that position for a long time as long as it didn't have too much bad news. But if bad news built up, the hands eventually slipped over to the 3:00 position, which meant you were perceived to be a troubled company.
Chris said companies always want to force the hands to go backwards to 12, because they want to get past the pain. But his insight was that you can never do that. First you have to acknowledge the problem (3 pm), articulate your plan (6 pm), and then show that you're making progress at fixing it (9 pm). I think Chris had some other stages in there, but you get the general idea. Only after you had taken all of the intermediate steps, and posted improved financials as a result, would people believe that you had actually earned your redemption and returned to stability at 12.
A good example of this process in action was Stephen Elop's moves at Nokia after he became CEO. The notorious "burning platform" memo, which I believe was deliberately leaked, acknowledged the problems at Nokia and made its later moves much more credible to the press and analysts. That doesn't mean Elop made the right moves, or that they will work, but if he had denied there was a problem, people would not have even paid attention to his later moves.
Until its earnings announcement last week, RIM was still trying to make the clock hands go back to 12, and it wasn't working. All it did was convince people that management was out of touch. When RIM acknowledged the depth of the problem, suddenly the tone changed in some of the coverage. "RIM finally seems to get it," CNET declared (link).
There is a downside to acknowledging the problem: you make it worse. Remember the despair and disbelief that "burning platform" created among Nokia fans (link). You frighten any customers who aren't already worried, and partners may delay or cancel their work with you. As you'll see, this is a problem with many of the steps you have to take to fix a broken tech company -- the medicine makes you even sicker at first.
Step two: Focus
Almost by definition, a troubled tech company will be trying to create too many products and funding too many business initiatives, the leftovers from more optimistic times. There isn't enough revenue to pay for all of them, so you have to eliminate some. This is an agonizing process. Usually there is current or forecasted revenue tied to every project (not enough revenue, but some). So when you cut them, you don't just lower your expenses, you also reduce further your expected revenue. That forces you to cut even more.
Companies often default to keeping their most profitable product lines, because that requires the smallest cuts. "We're focusing on the core," the executives say. But usually the most profitable product lines are the oldest ones with the worst growth prospects. Focus on them and you'll lock the company into an irreversible decline.
The right way to focus is to plan from the bottom up. Decide what you want the company to be, who the target customers are, and what special value you'll deliver to them. Fund the projects that support that goal. Everything else, no matter how valuable or emotionally important, is a candidate to be cut. If those cuts don't reduce your expenses enough, revisit the goal and make it even more tightly focused, allowing you to kill more things.
This process forces you to slaughter sacred cows. Steve Jobs returns to Apple, and decides the company will focus on making Macs for creative people. Out goes Newton, out goes twenty years of painfully-assembled enterprise sales infrastructure, out goes the printer business. Lou Gerstner decides IBM will be a services company; he kills OS/2, pulls its PCs out of retail, and preps that business for sale.
RIM's focus is questionable at this point. Thorsten Heins appeared to be very focused when said that RIM would "refocus on the enterprise business" because "BlackBerry cannot succeed if we tried to be everybody’s darling and all things to all people." But the next day two RIM executives denied that the company was exiting the consumer market (link).
One of three things happened. Either:
--Heins' remarks were remarkably badly scripted, and the company really doesn't plan to back away from the consumer market. This would be a bad sign for the company's ability to execute. How in the world could you botch a critical message like that in an important earnings call? Get your act together. Or:
--Heins really does plan to back away from the consumer market, but some others in the company are in denial about it and are trying to spin-doctor him. This is unlikely since two executives delivered the same correction. But I've seen weirder things happen. Or:
--RIM plans to exit the consumer market but doesn't want to say so yet because it needs to sell all of its current products that are still in inventory. I suspect that's the reality. Shamefully sloppy marketing by RIM if tghey raised this issue without understanding the impact it would have on sales. RIM needs to be crisper if it is to survive.
Messaging aside, the impact of a RIM focus on enterprise depends on your definition of "enterprise." If RIM is planning to focus on top-down corporate sales through IT managers, good luck and goodbye. The long-term trend is that IT has less and less control over the mobile device choices of users in the company, so RIM would be tying itself to a dying sales channel. But if by "enterprise" RIM means it will focus on the needs of individual businesspeople rather than entertainment-hungry teenagers, that is RIM's best prospect for getting reasonable margins, and probably its best chance to survive.
Some of the diversity of reactions to Heins' remarks has been driven by commentators making different assumptions about the definition of "enterprise." Roger Cheng at CNET assumed it meant business end-users, and praised the change. On the other hand, Horace Dediu assumed it meant selling through IT managers, and was utterly dismissive (link).
The important question is what Thorsten Heins meant, and we don't know the answer to that.
Step three: Get a win
The next step is to hold onto your installed base. This is important for any device company, because your loyal customers are the nucleus from which you'll grow in the future. No one else is going to hang out with you right now because you're damaged goods. The base is especially important for RIM because they're paying monthly service fees to the company. That high-margin revenue stream is critical to RIM's recovery, and must be maintained. I was encouraged that even amidst all the bad news RIM still grew its subscriber base slightly last quarter. I doubt that will continue, but if RIM can keep the base close to even, it'll help a lot with the future transitions.
This may be why the company was so sensitive to the idea that it would "abandon" consumers. It's not the right time to send that message to the public, even if it is true.
Instead, you need to lavish love on the installed base. That means giving them special discounts for buying a new BlackBerry, telling them how important they are, and getting them excited about the product's future. They have heard those promises before, though, so to make it credible RIM needs some nice, solid new products.
I'm not saying killer products. Those would be great, but since RIM was dysfunctional, I doubt there are killers in the pipeline. At this point, it would be enough to ship a couple of very solid, well executed devices that deliver on RIM's expected value and don't crash. Think of the role that the iMac played in Apple's recovery. The device itself wasn't all that spectacular, but it was iconically Apple, and proved that the company was reconnecting with its values. It engaged loyal Mac users emotionally, gave them a reason to believe, and put Apple back in the game.
So Heins should look at the devices in RIM's pipeline for the next six months, and focus everyone on implementing the few that look most promising on the core BlackBerry values of reliability, convenience, and great messaging. Stop work on everything else. It's better to have one or two wins than four mediocre products. And stop producing a slightly different model for every mobile operator. You can't execute well on that complexity; it's part of what got you in trouble.
Will this lose you some operators? Yes it will, but it's better to have a smaller channel that is enthusiastic about your products than an overstocked channel that doesn't care. (Again, look at the way Apple trimmed dealerships when it was working on its comeback.)
Step four: Create differentiation
Now you've focused the company and momentarily stabilized the installed base, or at least slowed its bleeding. Next you need to add a few differentiators -- unique features that do things your customers will love and will drive them to come into stores and demand your products. Create no more than three of these features. You can't effectively advertise more than three anyway, so it's better to do three really well than to have six that kind of mostly work.
If you get these features right, your target customers will forgive dozens of other flaws in order to obtain the value of your differentiators. This is what gets you off the hook for copying every feature of the iPhone, which you can't afford to do and won't implement well anyway (case in point, RIM's product history for the last several years).
What are those features? I have some ideas, but a lot depends on which technologies RIM has in house and how talented its engineers and product managers are. There are plenty of important unsolved problems RIM can tackle for businesspeople on the go. Things like meeting planning, managing e-mails and text messages while you're driving, and finding parking in a crowded city might all benefit from RIM's integrated client-server architecture. There are also plenty of opportunities to integrate BlackBerry uniquely with business infrastructure. BlackBerry was first successful because it integrated so reliably with Microsoft Outlook and Exchange. What could RIM accomplish if it applied that same sort of focus to Salesforce.com or Dropbox or LinkedIn?
RIM has the pieces to build some of these solutions -- it has bought a number of startups like contact manager Gist and calendar manager Tungle. I hope those are being viewed as part of the solution rather than random acquisitions that now need to be tossed out.
You'll notice that I'm not saying anything about BlackBerry OS 10. That's because it almost certainly can't be a differentiator, for several reasons:
--The first release of an OS is almost always focused on just making the basics work properly. If BlackBerry 10 is stable and doesn't crash, that is probably the most you can expect from it. Maybe OS 10 will let RIM announce that its phones now suck less, but that's not a differentiator, that's table stakes.
--Until very recently, RIM's main explanation for why it needed BlackBerry 10 was so it could match the multimedia and entertainment features of iOS. If that has been the development focus, it's very unlikely that the OS has a lot to offer to businesspeople in its first version.
--The average customer does not buy an operating system. In the tech industry, we pay a lot of attention to operating systems because we know they are important enabling technologies. But what customers respond to is the features they enable. When is the last time you heard someone say they bought a mobile phone because its OS did a better job of paging memory or scheduling symmetric multiprocessing?
What about the idea of RIM licensing out its operating system? Forget about it. First of all, I doubt there are any customers. But even if they are, the distraction of serving the different demands of various licensees would tear the OS team apart. RIM just doesn't have the money and staff to make this work. Its best play is to deeply integrate its OS, devices, and services to create unique systems. That sort of stuff is hard for Android to copy, and challenging even to Apple.
So those are the four steps: Acknowledge the problem, focus (and cut brutally), find a quick win, and create differentiation. Each step sounds fairly straightforward, but the hard part is that you have to get them all right, and you have to do them fast. It's like doing brain surgery on yourself while driving your car down the freeway at 60 miles a hour. Any mistake can be fatal.
The most difficult steps are the third and fourth, finding a quick product win and creating differentiation. Typically a major new product or differentiator takes 18 months to implement, even if you're moving fast. I think RIM probably has six months to roll out a product win, and at most 12 months to show some major new differentiators. Go beyond that, and the installed base may be draining away faster than you can refill it. When Steve Jobs returned to Apple, he was lucky that the industrial design team that created the iMac was already in place. We'd better hope there are some great half-completed projects in the labs at RIM that Heins can focus the team on.
What to watch. It's because of uncertainties like this that no one can predict if RIM will survive. But there is a metric we can watch to assess the company's chances: cash. Cash to a device company is like altitude to an airplane. When a device company fails, it's usually because it runs out of the cash it needs to build inventory and advertise a new product release. RIM currently has about $1.8 billion in easily-available cash, down about $300 million from a year ago. Net income was $1.1 billion. For comparison, in 1997 Apple lost $1 billion and had $1.5 billion in cash left. Eighteen more months and it would have been dead.
So RIM is not as acutely sick today as Apple was in 1997. But the BlackBerry base is not as loyal as the Mac base was, and Thorsten Heins isn't Steve Jobs. The danger to RIM isn't an instant collapse, it's an accelerating decline into irrelevance. That decline may already be irreversible. If it isn't, RIM needs to act urgently to turn it around. Acknowledging the problem is a good (if belated) start, but the hard work is still to be done.
Saturday, 31 March 2012
Twitter at Gettysburg
With our obsession for newness, those of us who work in the tech industry often fail to understand the historical roots of our technologies. Case in point: telegraph operators more than 150 years ago were sending short messages called "graphs" that were surprisingly similar in form and content to Twitter tweets.
One remarkable example was recently discovered in the Museum of Telegraphy in Harrisburg, Pennsylvania. It is the transcript of a telegraph operator's comments during Abraham Lincoln's famed Gettysburg Address in 1863. The transcript was shared with me by a friend on the museum staff, and I'm pleased to reproduce it here:
=====
Still waiting for the Pres. to commence his speech. #gettysburg
Good heavens, I should have foresworn that fifth corn dodger for lunch. #gas #dontask #gettysburg
Starting now. Pres. waves to crowd. #gettysburg
Four score and... WTF is a score? 25? #pleasespeakenglish #gettysburg
Okay, it's twenty. So "87 years ago the country was founded." Why not just say that? Duh. #gettysburg
Heh-heh-heh. He said "conceived." Heh-heh. #gettysburg
"Now we are in a great civil war." More duh. #gettysburg
@zebekiah1134 I know, it's my own fault for buying lunch from a wagon. #gas #gettysburg
Hoping to get in two miles this afternoon. Depends on how long this speech goes. #gettysburg
"It is altogether fitting and proper that we should dedicate this cemetery." Ooookay. #gettysburg
Saw @matthewbrady this morning, taking pictures of guys with big beards. #muttonchopsrule #gettysburg
"The world will little note, nor long remember, what we say here." #nokidding #gettysburg
Hey you in the hat. Yes, you. Take it off, you're blocking my view. #gettysburg
"This nation shall have a new birth of freedom." Great, finally we'll get some details. #gettysburg
"Government shall not perish from the earth." Good to know. #gettysburg
Where's he going? #gettysburg
What, that's IT? I waited five hours in the sun for THAT?? #ripoff #votedemocrat #gettysburg
Maybe I'll make it four miles. #outahere #gettysburg
=====
Posted April 1, 2012
2011: The microwave hairdryer, and four other colossal tech failures you've never heard of
2010: The Yahoo-New York Times merger
2009: The US government's tech industry bailout
2008: Survey: 27% of early iPhone adopters wear it attached to a body piercing
2007: Twitter + telepathy = Spitr, the ultimate social network
2006: Google buys Sprint
One remarkable example was recently discovered in the Museum of Telegraphy in Harrisburg, Pennsylvania. It is the transcript of a telegraph operator's comments during Abraham Lincoln's famed Gettysburg Address in 1863. The transcript was shared with me by a friend on the museum staff, and I'm pleased to reproduce it here:
=====
Still waiting for the Pres. to commence his speech. #gettysburg
Good heavens, I should have foresworn that fifth corn dodger for lunch. #gas #dontask #gettysburg
Starting now. Pres. waves to crowd. #gettysburg
Four score and... WTF is a score? 25? #pleasespeakenglish #gettysburg
Okay, it's twenty. So "87 years ago the country was founded." Why not just say that? Duh. #gettysburg
Heh-heh-heh. He said "conceived." Heh-heh. #gettysburg
"Now we are in a great civil war." More duh. #gettysburg
@zebekiah1134 I know, it's my own fault for buying lunch from a wagon. #gas #gettysburg
Hoping to get in two miles this afternoon. Depends on how long this speech goes. #gettysburg
"It is altogether fitting and proper that we should dedicate this cemetery." Ooookay. #gettysburg
Saw @matthewbrady this morning, taking pictures of guys with big beards. #muttonchopsrule #gettysburg
"The world will little note, nor long remember, what we say here." #nokidding #gettysburg
Hey you in the hat. Yes, you. Take it off, you're blocking my view. #gettysburg
"This nation shall have a new birth of freedom." Great, finally we'll get some details. #gettysburg
"Government shall not perish from the earth." Good to know. #gettysburg
Where's he going? #gettysburg
What, that's IT? I waited five hours in the sun for THAT?? #ripoff #votedemocrat #gettysburg
Maybe I'll make it four miles. #outahere #gettysburg
=====
Posted April 1, 2012
2011: The microwave hairdryer, and four other colossal tech failures you've never heard of
2010: The Yahoo-New York Times merger
2009: The US government's tech industry bailout
2008: Survey: 27% of early iPhone adopters wear it attached to a body piercing
2007: Twitter + telepathy = Spitr, the ultimate social network
2006: Google buys Sprint
Friday, 9 March 2012
The Real Significance of the New iPad
The reactions to the New iPad announcement this week were all over the map.
Some places said it was basically a yawner (link), while others bought into the "end of the PC" rhetoric (link) . Some people even warned all developers to stop programming for the keyboard and mouse, even for complex applications like computer-assisted design (link).
My take: I think the announcement was both more and less important than people are saying. Here's why:
This is not the end of the PC era
I'm sure I'll get some push-back from people who disagree, but I think the whole "PC era" meme from Apple is self-serving hype. Of course they want to convince you that the world is shifting away from a market where Apple has less than 10% worldwide share to a market where Apple has well over 50% share. I'd say the same thing if I still worked at Apple. And the iPad is shiny and sexy, while Windows PCs are old and boring, so I want to believe that the PC is dead. It makes me feel all Jetson-y. But think about it rationally for a minute.
First of all, what exactly was the PC era that is now supposedly ending? Was it the years when Windows was the dominant API for software innovation? That ended in the late 1990s with the rise of web apps. Was it the era when PCs outsold smartphones? That ended last year.
To many people, the end of the PC era seems to mean that tablets are starting to replace PCs as thoroughly as PCs replaced minicomputers. Or that the keyboard and mouse are going away. I don't buy it. We've been declaring the PC dead for at least 15 years, but we're still using them today because for certain tasks, PCs are the best way to get work done. It may be unsexy and it may seem old-fashioned, but if you're working on a big spreadsheet a mouse and numeric keypad are incredibly productive. And if you're writing a report, a keyboard is still the easiest way to input text (for now) and edit (for the foreseeable future).
Kind of like a steering wheel and pedals are still the best way to drive a car. I could do that with a multitouch tablet as well (three-finger swipe to the right means turn at the next corner, four fingers down means apply brakes), but sometimes direct control is the best approach.
And yes (comma) I have tried Dragon (pause) Naturally (pause) Speaking (pause) many times (period) (space) And I found that by the tame I went back and fixed all the types it created (comma) I had not saved any time (comma) plus it was difficult to speak in the sort of sentences I wanted to write because you know I kind of speak more casually than I write (period)
My point is not that touch and speech input and tablets are useless. I think they're great, and I've been playing with them for more than a decade. But I'm going to have the most productivity if I can choose the best tools for a particular job, and that means I still need a pointing device and keyboard for some sorts of work.
Now, if Apple were saying that the PC will be less dominant than it was in the past, I'd have no trouble with that. Although we're not seeing the overall death of the PC, we're definitely seeing a narrowing down of it. For tasks like reading or interacting with content, a tablet is far superior to a traditional PC, and if that's all you do with your PC, by all means get rid of it. But PC-like devices (or maybe mice and keyboards that connect to tablets) are going to linger for the sorts of work that they do best.
So if you have a touch-sensitive screen connected to a keyboard and mouse, do you call that hybrid device a PC or a tablet? I don't really care; it's a game of semantics at that point, and semantics are the playground of companies that want to score marketing points. Which brings us right back to Apple and its enormous tablet market share.
(Oh and by the way, the tablet needs a stylus for certain types of work. One of Steve Jobs' strengths was his willingness to revisit his assumptions when he was wrong, and this is one of those cases. I worry that since Jobs died, Apple may now get locked into his religious opposition to the stylus. That would leave Apple vulnerable to a competitor who does the stylus right by tuning the hardware and software to work together.)
What does matter about the new iPad
Two things stand out to me. The first is the screen. Yes it's very pretty, but that's not the point. The Retina display is a very nice feature in a smartphone, but in a tablet it's far more important because tablets get used more for reading long-form text like novels, textbooks, and magazines.
For displaying photos and videos, enormous screen resolution isn't actually all that important; what matters most is color depth. If you have millions of colors, the pixels blend together and most images look real even at 150 dots per inch. But for reading, where you have sharp contrasts between black text and white background, much higher resolution is needed. At 264 pixels per inch, the new iPad's screen is close to the 300 dpi resolution of the original LaserWriters, which most people found an acceptable substitute for printed text, and which drove a revolutionary change in publishing. I doubt Apple's display has the same contrast ratio as printed paper, which is also important for readability, but I still think it's likely to give a much nicer reading experience to all those students who are supposed to use iPads as their new textbooks.
Apple posted a clever widget that shows a magnified image of text on the old and new iPads. I pasted an image from it below. Yes, in real life the dots are tiny and it will be hard for some people to see the difference. But eyestrain hinges on little details like this, and as a longtime publishing guy, I can tell you that resolution matters.
On most other hardware specs, the iPad is very good but not overwhelming. Gizmodo has a good comparison here. It shows that the upcoming Asus Transformer matches up pretty well on a lot of the specs, although it's a bit pricier and has less powerful batteries. You could be forgiven for thinking that Android's within striking distance of iPad.
But then there's the software, and this is the second place where I think the new iPad stands out. As a systems vendor, Apple innovates in both hardware and software, so you have to look at both areas to understand the full iPad offering. Apple is innovating very aggressively on the software side. Speech recognition is now being bundled with iPad, and although as I just said I don't think it's ready for writing a long report, Apple has a history of tuning and improving its technologies over time, and I bet we'll see that happen with speech. The keyboard isn't dead, but if Apple makes speech work well, the tablet can more thoroughly displace the PC in a few more use cases (like creating short messages).
Then there are the new iLife tablet apps, which were probably the most compelling part of the whole announcement. I'm very impressed by the way Apple refactored photo editing for touch, and I can't wait to play with it.
Add together the high-res screen, the long-term path for speech, and the new apps, and the new iPad looks like a formidable product.
Hey Google, copy this
Think of it from the perspective of an Android tablet product manager. You don't just have to beat Apple on hardware, but you also have to figure out how to duplicate a rapidly-growing list of Apple-branded software features that are either bundled or sold at ridiculously low prices.
Yes, Google is working to copy any features that Apple adds, but how good is it at integrating UI functionality and crafting exquisite applications? Would you want to bet your product on Google's ability to craft end-user software?
And thanks to Apple's volumes and wickedly controlled supply chain, its prices are low enough that no products other than Amazon's subsidized tablets can get down under them. So as an Android cloner, you're stuck at rough parity on price, and you are increasingly falling behind on integrated software features. It's an ugly life.
And then there's Microsoft
It'll be interesting to see how Microsoft deals with all of this. Windows 8 is an effort to recast Windows for tablets, but will Microsoft be willing to go toe to toe with Apple on app pricing? Undoubtedly not; that would involve giving up most of the Microsoft Office revenue stream. So Microsoft has to walk a difficult line in which it embraces touch tablet functionality, but attempts to convince people that they still need to pay big bucks for good old Office. The first try in that direction, Tablet PC, demonstrated that you can't just cut the keyboard off a PC and call it a tablet. Windows 8 is much more tablet-centric, but if it makes people feel like they're buying a tablet, they may start looking for tablet-like pricing in their apps, and Office sales could collapse like a house of cards.
If that happens, we'll all stop talking about the end of the PC era and talk instead about the end of the Microsoft era.
Some places said it was basically a yawner (link), while others bought into the "end of the PC" rhetoric (link) . Some people even warned all developers to stop programming for the keyboard and mouse, even for complex applications like computer-assisted design (link).
My take: I think the announcement was both more and less important than people are saying. Here's why:
This is not the end of the PC era
I'm sure I'll get some push-back from people who disagree, but I think the whole "PC era" meme from Apple is self-serving hype. Of course they want to convince you that the world is shifting away from a market where Apple has less than 10% worldwide share to a market where Apple has well over 50% share. I'd say the same thing if I still worked at Apple. And the iPad is shiny and sexy, while Windows PCs are old and boring, so I want to believe that the PC is dead. It makes me feel all Jetson-y. But think about it rationally for a minute.
First of all, what exactly was the PC era that is now supposedly ending? Was it the years when Windows was the dominant API for software innovation? That ended in the late 1990s with the rise of web apps. Was it the era when PCs outsold smartphones? That ended last year.
To many people, the end of the PC era seems to mean that tablets are starting to replace PCs as thoroughly as PCs replaced minicomputers. Or that the keyboard and mouse are going away. I don't buy it. We've been declaring the PC dead for at least 15 years, but we're still using them today because for certain tasks, PCs are the best way to get work done. It may be unsexy and it may seem old-fashioned, but if you're working on a big spreadsheet a mouse and numeric keypad are incredibly productive. And if you're writing a report, a keyboard is still the easiest way to input text (for now) and edit (for the foreseeable future).
Kind of like a steering wheel and pedals are still the best way to drive a car. I could do that with a multitouch tablet as well (three-finger swipe to the right means turn at the next corner, four fingers down means apply brakes), but sometimes direct control is the best approach.
And yes (comma) I have tried Dragon (pause) Naturally (pause) Speaking (pause) many times (period) (space) And I found that by the tame I went back and fixed all the types it created (comma) I had not saved any time (comma) plus it was difficult to speak in the sort of sentences I wanted to write because you know I kind of speak more casually than I write (period)
My point is not that touch and speech input and tablets are useless. I think they're great, and I've been playing with them for more than a decade. But I'm going to have the most productivity if I can choose the best tools for a particular job, and that means I still need a pointing device and keyboard for some sorts of work.
Now, if Apple were saying that the PC will be less dominant than it was in the past, I'd have no trouble with that. Although we're not seeing the overall death of the PC, we're definitely seeing a narrowing down of it. For tasks like reading or interacting with content, a tablet is far superior to a traditional PC, and if that's all you do with your PC, by all means get rid of it. But PC-like devices (or maybe mice and keyboards that connect to tablets) are going to linger for the sorts of work that they do best.
So if you have a touch-sensitive screen connected to a keyboard and mouse, do you call that hybrid device a PC or a tablet? I don't really care; it's a game of semantics at that point, and semantics are the playground of companies that want to score marketing points. Which brings us right back to Apple and its enormous tablet market share.
(Oh and by the way, the tablet needs a stylus for certain types of work. One of Steve Jobs' strengths was his willingness to revisit his assumptions when he was wrong, and this is one of those cases. I worry that since Jobs died, Apple may now get locked into his religious opposition to the stylus. That would leave Apple vulnerable to a competitor who does the stylus right by tuning the hardware and software to work together.)
What does matter about the new iPad
Two things stand out to me. The first is the screen. Yes it's very pretty, but that's not the point. The Retina display is a very nice feature in a smartphone, but in a tablet it's far more important because tablets get used more for reading long-form text like novels, textbooks, and magazines.
For displaying photos and videos, enormous screen resolution isn't actually all that important; what matters most is color depth. If you have millions of colors, the pixels blend together and most images look real even at 150 dots per inch. But for reading, where you have sharp contrasts between black text and white background, much higher resolution is needed. At 264 pixels per inch, the new iPad's screen is close to the 300 dpi resolution of the original LaserWriters, which most people found an acceptable substitute for printed text, and which drove a revolutionary change in publishing. I doubt Apple's display has the same contrast ratio as printed paper, which is also important for readability, but I still think it's likely to give a much nicer reading experience to all those students who are supposed to use iPads as their new textbooks.
Apple posted a clever widget that shows a magnified image of text on the old and new iPads. I pasted an image from it below. Yes, in real life the dots are tiny and it will be hard for some people to see the difference. But eyestrain hinges on little details like this, and as a longtime publishing guy, I can tell you that resolution matters.
On most other hardware specs, the iPad is very good but not overwhelming. Gizmodo has a good comparison here. It shows that the upcoming Asus Transformer matches up pretty well on a lot of the specs, although it's a bit pricier and has less powerful batteries. You could be forgiven for thinking that Android's within striking distance of iPad.
But then there's the software, and this is the second place where I think the new iPad stands out. As a systems vendor, Apple innovates in both hardware and software, so you have to look at both areas to understand the full iPad offering. Apple is innovating very aggressively on the software side. Speech recognition is now being bundled with iPad, and although as I just said I don't think it's ready for writing a long report, Apple has a history of tuning and improving its technologies over time, and I bet we'll see that happen with speech. The keyboard isn't dead, but if Apple makes speech work well, the tablet can more thoroughly displace the PC in a few more use cases (like creating short messages).
Then there are the new iLife tablet apps, which were probably the most compelling part of the whole announcement. I'm very impressed by the way Apple refactored photo editing for touch, and I can't wait to play with it.
Add together the high-res screen, the long-term path for speech, and the new apps, and the new iPad looks like a formidable product.
Hey Google, copy this
Think of it from the perspective of an Android tablet product manager. You don't just have to beat Apple on hardware, but you also have to figure out how to duplicate a rapidly-growing list of Apple-branded software features that are either bundled or sold at ridiculously low prices.
Yes, Google is working to copy any features that Apple adds, but how good is it at integrating UI functionality and crafting exquisite applications? Would you want to bet your product on Google's ability to craft end-user software?
And thanks to Apple's volumes and wickedly controlled supply chain, its prices are low enough that no products other than Amazon's subsidized tablets can get down under them. So as an Android cloner, you're stuck at rough parity on price, and you are increasingly falling behind on integrated software features. It's an ugly life.
And then there's Microsoft
It'll be interesting to see how Microsoft deals with all of this. Windows 8 is an effort to recast Windows for tablets, but will Microsoft be willing to go toe to toe with Apple on app pricing? Undoubtedly not; that would involve giving up most of the Microsoft Office revenue stream. So Microsoft has to walk a difficult line in which it embraces touch tablet functionality, but attempts to convince people that they still need to pay big bucks for good old Office. The first try in that direction, Tablet PC, demonstrated that you can't just cut the keyboard off a PC and call it a tablet. Windows 8 is much more tablet-centric, but if it makes people feel like they're buying a tablet, they may start looking for tablet-like pricing in their apps, and Office sales could collapse like a house of cards.
If that happens, we'll all stop talking about the end of the PC era and talk instead about the end of the Microsoft era.
Tuesday, 28 February 2012
OS Licensing and Firewalls: That's Not the Point
I see where Andy Rubin said Google is building a "firewall" between the Android team and Motorola Mobility (link). That's exactly what we called it when Palm licensed out its OS, and actually the firewall worked pretty well. I'm sure Google can and will prevent information leaks between the Android team and the Motorola team. Those teams do not work in the same buildings (many of them are not even in the same state), so that's pretty easy to do.
Most PalmOS licensees didn't have big worries about our firewall. They wanted to know it was in place, and they were careful about sharing information with us, but we were able to work together. The reality is that if your OS is selling well, the licensees will put up with almost anything (look at the early history of Microsoft if you doubt me). And if sales slow down, no amount of firewalling will keep them loyal. Look at the, uh, more recent history of Microsoft in mobile.
The place where Palm had trouble (okay, one of the places) was that it could not figure out what to do when the financial interests of the OS conflicted with the financial interests of the hardware team. It wasn't about the firewall, it was about the corporate business goals. To put it in Google terms, what happens when a change to Android will hurt sales at Motorola Mobility?
Let's make up an example: Suppose that Motorola needs a new feature in the OS to support its next-generation product line. It has already started building the new devices, and has...say, $200 million in parts already ordered to build them. The orders cannot be canceled, and the parts will become obsolete if not used quickly. The Android team has trouble implementing the feature, and realizes that it will have to choose between the feature that Motorola needs and another feature that HTC needs for its next-generation products. It's a zero-sum game; there are only enough engineers to produce one of the features. Who wins? Will Google accept a writedown of $200 million to protect its promise to HTC?
This is not a theoretical question; tradeoffs like that happen all the time when you're developing an OS.
Want to guess how those questions were answered when Palm hardware and Palm OS were in the same company?
I think that's the real reason why Palm and PalmSource had to be separated, and I think that's the real question Android licensees are thinking about. Not is their information safe, but would Larry Page accept a financial bloodbath at Motorola to protect other Android licensees? If Google has addressed that question, I haven't seen the answer. It's a very hard question for any CEO because it pits the interests of Android licensees against Google shareholders.
None of this will drive away Android licensees, but I think it will affect the strength of their interest in also working with Microsoft -- which, when it abuses its licensees, tends to abuse all of them equally.
Most PalmOS licensees didn't have big worries about our firewall. They wanted to know it was in place, and they were careful about sharing information with us, but we were able to work together. The reality is that if your OS is selling well, the licensees will put up with almost anything (look at the early history of Microsoft if you doubt me). And if sales slow down, no amount of firewalling will keep them loyal. Look at the, uh, more recent history of Microsoft in mobile.
The place where Palm had trouble (okay, one of the places) was that it could not figure out what to do when the financial interests of the OS conflicted with the financial interests of the hardware team. It wasn't about the firewall, it was about the corporate business goals. To put it in Google terms, what happens when a change to Android will hurt sales at Motorola Mobility?
Let's make up an example: Suppose that Motorola needs a new feature in the OS to support its next-generation product line. It has already started building the new devices, and has...say, $200 million in parts already ordered to build them. The orders cannot be canceled, and the parts will become obsolete if not used quickly. The Android team has trouble implementing the feature, and realizes that it will have to choose between the feature that Motorola needs and another feature that HTC needs for its next-generation products. It's a zero-sum game; there are only enough engineers to produce one of the features. Who wins? Will Google accept a writedown of $200 million to protect its promise to HTC?
This is not a theoretical question; tradeoffs like that happen all the time when you're developing an OS.
Want to guess how those questions were answered when Palm hardware and Palm OS were in the same company?
I think that's the real reason why Palm and PalmSource had to be separated, and I think that's the real question Android licensees are thinking about. Not is their information safe, but would Larry Page accept a financial bloodbath at Motorola to protect other Android licensees? If Google has addressed that question, I haven't seen the answer. It's a very hard question for any CEO because it pits the interests of Android licensees against Google shareholders.
None of this will drive away Android licensees, but I think it will affect the strength of their interest in also working with Microsoft -- which, when it abuses its licensees, tends to abuse all of them equally.
Information Overload: Several Different Problems Under a Single Name
I want to thank everyone who participated in the information management survey that I posted at the start of the year (link). The survey was long and complex, but more than 400 of you responded to it. I know you've got a busy life, and it was very nice of you to help.
Your responses helped to shape the work we're doing on Zekira, the new app being developed by the startup I'm working on. I have posted a summary of the survey findings here (link). I know you read Mobile Opportunity for tech industry commentary, so I'm going to continue to blog on that subject here (hopefully more frequently). I will post Zekira-related information at the Zekira weblog. If you're interested in information management issues, I hope you'll visit us there.
I think some of the survey results will be interesting to folks here, so let me give you a quick summary of the highlights.
In the tech industry, we talk a lot about information overload, but we haven't defined it very well. What I learned from the survey is that info overload means something slightly different to every person. It's not a thing, it's a range of problems caused by dealing with more information than you can hold in your head.
For some people the problem is too much e-mail. For others it's too many meetings. For still others, the biggest problem is finding a way to access the archive of old files and information they have accumulated over the years.
Some of you -- I guess I should say some of us -- have amassed truly awesome personal archives of information. Literally terabytes of data in some cases. Now if only we could get the information back out of them.
A few statistics on information overload:
--More than 40% of the respondents said they feel overwhelmed by the amount of information in their lives.
--About half of the respondents experience information overload several times a week, and about 15% experience it several times a day.
--20% of the respondents receive more than 25,000 e-mails every year.
--A quarter of the respondents receive more than 100 text messages a day.
--A third of the respondents have saved more than 100 gigabytes of business files in their personal archives.
One of the biggest challenges in creating a product to help with information overload is figuring out where to focus it. Which specific problem(s) do you want to solve? Which people care about those problems? And how do you put a dent in those problems with a startup's resources?
In the next few weeks we'll be talking about how we answered those questions. You can follow our progress at the Zekira weblog. And you can read more about the survey results here.
And again, many sincere thanks for your help.
We now return you to our regularly scheduled programming.
Your responses helped to shape the work we're doing on Zekira, the new app being developed by the startup I'm working on. I have posted a summary of the survey findings here (link). I know you read Mobile Opportunity for tech industry commentary, so I'm going to continue to blog on that subject here (hopefully more frequently). I will post Zekira-related information at the Zekira weblog. If you're interested in information management issues, I hope you'll visit us there.
I think some of the survey results will be interesting to folks here, so let me give you a quick summary of the highlights.
In the tech industry, we talk a lot about information overload, but we haven't defined it very well. What I learned from the survey is that info overload means something slightly different to every person. It's not a thing, it's a range of problems caused by dealing with more information than you can hold in your head.
For some people the problem is too much e-mail. For others it's too many meetings. For still others, the biggest problem is finding a way to access the archive of old files and information they have accumulated over the years.
Some of you -- I guess I should say some of us -- have amassed truly awesome personal archives of information. Literally terabytes of data in some cases. Now if only we could get the information back out of them.
A few statistics on information overload:
--More than 40% of the respondents said they feel overwhelmed by the amount of information in their lives.
--About half of the respondents experience information overload several times a week, and about 15% experience it several times a day.
--20% of the respondents receive more than 25,000 e-mails every year.
--A quarter of the respondents receive more than 100 text messages a day.
--A third of the respondents have saved more than 100 gigabytes of business files in their personal archives.
One of the biggest challenges in creating a product to help with information overload is figuring out where to focus it. Which specific problem(s) do you want to solve? Which people care about those problems? And how do you put a dent in those problems with a startup's resources?
In the next few weeks we'll be talking about how we answered those questions. You can follow our progress at the Zekira weblog. And you can read more about the survey results here.
And again, many sincere thanks for your help.
We now return you to our regularly scheduled programming.
Tuesday, 3 January 2012
Why Web OS Really Failed, and What it Means for the Rest of Us
The New York Times has an interesting article this week explaining why HP's adventure with Palm failed. The latest explanation is that Web OS just wasn't ready for prime time, according to Paul Mercer, who was senior director of software at Palm (link).
Paul's an extremely bright software guy. It's unusual for someone with his seniority to go on the record with criticisms of his former product, and I applaud him for it because it helps us all learn. If Paul says Web OS was unready, I'm sure it was. But respectfully, I don't think that's why Web OS failed. I think the company's business strategy was fundamentally flawed, in ways that would have almost certainly doomed Web OS no matter how it was built.
The point is important because other companies planning similar products might take away the wrong lesson from Palm's demise. (For example, Information Week concludes that it's too hard for any startup to play in the mobile device market [link]; MIT Technology Review says the lesson is that you have to retain key employees [link].) To explain what the right lesson is, I need to give you a little background on the dynamics of creating a new operating system.
New operating systems always suck
Sorry for my language, but sometimes it's best to be blunt. An operating system is an incredibly complex piece of software, just about the most complex software you can write. In the first version of an OS, the list of features you want to add is always much longer than what you can implement, there are always bugs you can't find, and performance is always a problem. What's worse, there is a built-in tension between those three problems -- the more features you add, the more bugs you create. The more time you spend fixing bugs, the less time you have to improve performance. And so on. As a result, every new operating system, without exception, is an embarrassing set of compromises that frustrates its creators and does not deliver on the full promise of its vision.
Remember these beauties?
--The original Macintosh can't create a word processing document longer than 10 pages.
--The original version of Windows can't display overlapping windows.
--The original iPhone doesn't allow third-party native apps, and lacks 3G and MMS support.
The operating systems that succeed are the ones that survive long enough for their big flaws to be fixed. That happens if the OS's supporter has a deep, multi-version commitment to it (Windows) or if the OS does something else so compelling that customers are willing to buy it despite its flaws (graphics on the Mac). Your chances are best if you have both patience and differentiation.
Palm's problem: Lack of a compelling advantage
The Palm Pre and HP TouchPad had neither advantage. Palm was not rich enough and HP was not patient enough to keep investing after the first versions showed a lot of flaws. And more importantly, there was nothing compelling enough about either product to make people buy it despite those flaws.
Think about it, what was the one special thing Web OS devices could do that absolutely compelled you to go out and buy them? And don't say "multitasking;" I'm talking about a genuine, easily explained benefit that would appeal to normal people, not technophiles.
I wrote about this problem back in 2010 when the Palm put itself up for sale (link). To recap: you don't run TV ads featuring a Borg hive queen if you have something compelling to say about your product (link).
Hi, I'm here because the ad agency couldn't figure out anything concrete to say
Contrast those ads to Apple's current iPhone ads in the US, which are basically a 30-second demo of Siri (link).
The original Palm OS succeeded because it made a great appliance for managing your calendar and address book. That jump-started the market, and all the additional stuff empowered by the OS came later.
iPhone succeeded, in my opinion, because it was the first device to make PC-style browsing work well on a smartphone. That killer feature bought Apple the time and market credibility it needed to enable native apps, fix the phone's problems, and add a raft of additional features that fleshed out the product vision.
Android succeeded (in part) because Apple stupidly left a void in the marketplace that Google could fill. In the wake of Steve Jobs' death, there has been a lot of well-deserved praise online for the brilliant decisions he made. But I think one of Steve's biggest mistakes ever was the decision to wed Apple exclusively to AT&T in the US for multiple years. That forced Verizon to find an iPhone competitor and market it aggressively. Verizon's choices were Windows Mobile (unpopular with customers, and a vendor with a history of shafting its partners), Nokia/Symbian (unpopular in the US, and a vendor with a history of shafting operators), or Google (sexy web brand, believed at the time to be open and non-controlling). People outside the US don't realize this, but in the US Verizon was the main marketing muscle behind the success of Android. It forced the product into the market and kept pushing for a long time, giving Google the time it needed to improve Android and get it past the crucial first release.
The Pre and TouchPad had no patient sugar daddy. And they had no breakthrough feature that would compel people to buy the first versions despite their inevitable flaws. I think Palm's product strategy was broken, and so Web OS was probably doomed no matter how well it was implemented.
The lesson: Who's your daddy, and what's your killer feature?
Two companies are working on new mobile platforms scheduled to ship in 2012: Nokia's next-generation Windows phones, and RIM's BlackBerry 10. In both cases, the press has been focusing on their development schedules. The schedules are very important, of course. But the real questions to ask are:
1. Do they have the financial backing to complete versions 2 and 3, which will be needed to fix the inevitable flaws in version 1? and
2. Will the products do anything unique and compelling that will cause at least some customers to prefer them even if they have other drawbacks?
I think Nokia can probably say yes to question 1; RIM is in doubt. And as far as I can tell, neither vendor has even started to address question 2. If they don't, in a year or two we'll probably be doing more post-mortems.
Paul's an extremely bright software guy. It's unusual for someone with his seniority to go on the record with criticisms of his former product, and I applaud him for it because it helps us all learn. If Paul says Web OS was unready, I'm sure it was. But respectfully, I don't think that's why Web OS failed. I think the company's business strategy was fundamentally flawed, in ways that would have almost certainly doomed Web OS no matter how it was built.
The point is important because other companies planning similar products might take away the wrong lesson from Palm's demise. (For example, Information Week concludes that it's too hard for any startup to play in the mobile device market [link]; MIT Technology Review says the lesson is that you have to retain key employees [link].) To explain what the right lesson is, I need to give you a little background on the dynamics of creating a new operating system.
New operating systems always suck
Sorry for my language, but sometimes it's best to be blunt. An operating system is an incredibly complex piece of software, just about the most complex software you can write. In the first version of an OS, the list of features you want to add is always much longer than what you can implement, there are always bugs you can't find, and performance is always a problem. What's worse, there is a built-in tension between those three problems -- the more features you add, the more bugs you create. The more time you spend fixing bugs, the less time you have to improve performance. And so on. As a result, every new operating system, without exception, is an embarrassing set of compromises that frustrates its creators and does not deliver on the full promise of its vision.
Remember these beauties?
--The original Macintosh can't create a word processing document longer than 10 pages.
--The original version of Windows can't display overlapping windows.
--The original iPhone doesn't allow third-party native apps, and lacks 3G and MMS support.
The operating systems that succeed are the ones that survive long enough for their big flaws to be fixed. That happens if the OS's supporter has a deep, multi-version commitment to it (Windows) or if the OS does something else so compelling that customers are willing to buy it despite its flaws (graphics on the Mac). Your chances are best if you have both patience and differentiation.
Palm's problem: Lack of a compelling advantage
The Palm Pre and HP TouchPad had neither advantage. Palm was not rich enough and HP was not patient enough to keep investing after the first versions showed a lot of flaws. And more importantly, there was nothing compelling enough about either product to make people buy it despite those flaws.
Think about it, what was the one special thing Web OS devices could do that absolutely compelled you to go out and buy them? And don't say "multitasking;" I'm talking about a genuine, easily explained benefit that would appeal to normal people, not technophiles.
I wrote about this problem back in 2010 when the Palm put itself up for sale (link). To recap: you don't run TV ads featuring a Borg hive queen if you have something compelling to say about your product (link).
Contrast those ads to Apple's current iPhone ads in the US, which are basically a 30-second demo of Siri (link).
The original Palm OS succeeded because it made a great appliance for managing your calendar and address book. That jump-started the market, and all the additional stuff empowered by the OS came later.
iPhone succeeded, in my opinion, because it was the first device to make PC-style browsing work well on a smartphone. That killer feature bought Apple the time and market credibility it needed to enable native apps, fix the phone's problems, and add a raft of additional features that fleshed out the product vision.
Android succeeded (in part) because Apple stupidly left a void in the marketplace that Google could fill. In the wake of Steve Jobs' death, there has been a lot of well-deserved praise online for the brilliant decisions he made. But I think one of Steve's biggest mistakes ever was the decision to wed Apple exclusively to AT&T in the US for multiple years. That forced Verizon to find an iPhone competitor and market it aggressively. Verizon's choices were Windows Mobile (unpopular with customers, and a vendor with a history of shafting its partners), Nokia/Symbian (unpopular in the US, and a vendor with a history of shafting operators), or Google (sexy web brand, believed at the time to be open and non-controlling). People outside the US don't realize this, but in the US Verizon was the main marketing muscle behind the success of Android. It forced the product into the market and kept pushing for a long time, giving Google the time it needed to improve Android and get it past the crucial first release.
The Pre and TouchPad had no patient sugar daddy. And they had no breakthrough feature that would compel people to buy the first versions despite their inevitable flaws. I think Palm's product strategy was broken, and so Web OS was probably doomed no matter how well it was implemented.
The lesson: Who's your daddy, and what's your killer feature?
Two companies are working on new mobile platforms scheduled to ship in 2012: Nokia's next-generation Windows phones, and RIM's BlackBerry 10. In both cases, the press has been focusing on their development schedules. The schedules are very important, of course. But the real questions to ask are:
1. Do they have the financial backing to complete versions 2 and 3, which will be needed to fix the inevitable flaws in version 1? and
2. Will the products do anything unique and compelling that will cause at least some customers to prefer them even if they have other drawbacks?
I think Nokia can probably say yes to question 1; RIM is in doubt. And as far as I can tell, neither vendor has even started to address question 2. If they don't, in a year or two we'll probably be doing more post-mortems.
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