Monday, 21 June 2010 14:36

There Is Another Paradigm Shift Coming in Technology and Media: Apple, Microsoft and Google Know its Winner Takes All

With the cult-like adherence to Everything Apple, cultivated by the viral marketing engine that is Apple, it is very, very difficult to get objective comparisons and reviews of practically anything in a product category that Apple is present in. Yes, even the stalwart geeky tech site's have bitten the Apple, so to speak. Cnet, Wired, etc. are so Apple biased as to be borderline embarrassing. I know they report on what (and how whatever) brings the page views, but come on fellas!!! BoomBustblog thrives because it tells the truth in the financial and economic space, not matter how unpopular or controversial. Is it time to open up a BoomBustBlog, Technology edition????

What this abject bias does, despite irritating the hell out of those of us who are not plugged into the Matrix, is mask the exciting technical revolution that is occurring due to the intense competition borne from the weakening of the Wintel hegemony, the advent of a slew of new technologies across the telecomm, media, semiconductor and software industries and the new business models cropping up as the world finally embraces the World Wide Web as an actual permanent and primary platform for basic business, social and economic transactions.

This post will surmise the qualitative aspects of the companies and products listed below. I will follow up with full forensic analyses of not only the companies, but the business model and market share potential of each, as well as a thorough valuation scenario analysis. One of these companies will probably take over portable computing, and I think it will pay to hitch onto the right one. The next Microsoft is in the making. Hey, Microsoft may even be the next Microsoft. Don't sleep on them, although it does appear that they have been asleep themselves. We won't know until the Windows Mobile 7 OS is released. I recommend all who are interested in this tech, media or investments send the link to this article around the web, for it is one of the few (if not the only) truly unbiased reviews of the products that compete with Apple in the ultra portable and handheld space.

An Overview of the New Windows to the Web

376 - blog

From the top left hand corner, clockwise: The Amazon Kindle 2, Asus EEE PC, Apple IPad, Archos 5 Internet tablet, HTC Touch Pro2, Apple Itouch 3rd Generation, Archos 9 Internet Tablet, Sony Vaio. The paper under the Apple product is a testament to the viral marketing ability of Apple. My son did not want his ITouch to touch the floor!!!

What do all of these devices have in common? They all allow you to consume very high end BoomBustBlog content, nearly in its entirety, on the go. Most of them actually allow you to produce said content and compute as well. Many people are unaware that the computer and telecomm world is now changing at the fastest pace in the history of said industries. Exciting things are happening, and investors are well served to stay abreast. I am a tech geek (and actually own and use a lot of this stuff daily), ex-owner of a small tech company, investor, analyst, and distributed media company owner: I feel I am well versed in describing what is happening. Let's get a run down from Reggie's perspective...

First, lets take a look at the state of portable computing and media consumption/production. Below I identify the devices in the pic above, starting from the upper left hand corner, going clockwise:

Amazon Kindle 2

A significant improvement over the first Kindle, both of which have claimed (and rightfully so) the mantle of the premier e-book readers, mostly due to wireless connectivity, practical reading screens and on demand book purchasing, they still suffer from usability issues. Though you do have access to the web and Internet, said access is limited and rudimentary, for this is a focused ebook reader. The gossip is that the Apple IPad will bring about the demise of this hardware, but truth be told the Kindle2 is simply a better (black and white) ebook reader than the IPad. If you are a die hard book reader, the IPad will not replace the Kindle  but if you are an occasional reader or enjoy color or graphics, the IPad will probably be your choice. Amazon has hedged against this possibility by creating cross platform Kindle readers (as software) to allow you to access your Kindle content via the IPad (a very nice app, BTW), IPhone, PC, Mac, and Blackberry.

Kindle
(Global Wireless)

Kindle Wireless Reading Device (6" Display, Global Wireless, Latest Generation)

Kindle DX
(Global Wireless)

Kindle DX Wireless Reading Device (9.7" Display, Global Wireless, Latest Generation)

Display
6" diagonal E Ink 9.7" diagonal E Ink
Size
8" x 5.3" x 0.36" 10.4" x 7.2" x 0.38"
Storage
1,500 books 3,500 books
Books in Under 60 Seconds
3G Wireless
Wireless Coverage
Global Global
Native PDF Support
Text-to-Speech
Whispersync
Rotating Display
Manual Rotation Auto-Rotation
Price
$259.00 $489.00
This page See details

Read Your Kindle Books on All Your Devices

Free Kindle Reading Apps

Asus Eee PC

Although lacking the slick, sexy, cult-like marketing prowess of Apple, this Asian manufacturer is producing bleeding edge products and not only single handedly defined the net book category, but has upped the ante creating a fully capable (runs Windows, office apps, full connectivity and full HD Flash), ultra portable computer with a usable keyboard that can last 11 hours playing full HD video. At a $400 price point, 2.8 lbs, and 250GB of storage, it will make many think twice about the purchase of a an IPad! I can tell you from experience, this device is more of a work horse than the IPad, for you can blog and run spreadsheets directly off of it, and it is not Flash crippled. The IPad's touch interface is more intuitive for web browsing, though. All in all, this little device is the second most capable and practical device in this list.

Asus 333pc

Apple IPad

This is a difficult product to accurately describe. When it was first announced, I said to myself, "Yeah right, this sounds like  a flop in the making, but one should not underestimate Apple". Many people who know that I am a tech geek were shocked that I wasn't willing to look into it. They fail to realize that a) I'm not that enthused by most Apple products (although the IPhone and IPod Touch were quite innovative), and b) I didn't really see a practical use for this product. Apples strengths are, aside from killer marketing and viral cult status, that it controls both the software and hardware platforms - enabling it to create and ease of use, compatibility and integration level that is not capable in much more diverse environments, ex. Wintel. The problem is you give up pricing advantages  through the channel (which is directly translated in to Apple margin, may I add)  as well as flexibility and extensibility. The average user will opt for simplicity, while the power user will opt for flexibility. This is a very important concept that will both help and hinder the release of the new IPhone 4 (more on that later) and define the user base for both Apple and its competitors as the market develops. Apple's next advantage is that they are damn good at engineering the user experience. Smart, sexy products combined with pretty UIs and a hell of a marketing machine make a deadly combination. This is what has landed Apple at the top of the pile. Of course, there is no free lunch though. Apple apparently subsidizes much of the hardware costs with Itunes revenue and phone carrier contracts. The connectivity and call quality problems and lack of actual profit associated with AT&T's IPhone relationship is well documented, as well as these problems being a deterrent to an even wider adoption of the IPhone. The question remains, how does Apple remedy this? Apple has blocked the killer Internet app of the year from the Apple store (more on this later as well), and has done so to appease the margin challenged carrier AT&T (this is not how it was reported in the media, though). Google Voice is a game changer, and could significantly boost the appeal of the IPhone, yet Apple has to push it away to avoid true beef with AT&T who relies on the beefier margins embedded in its voice business. The same with the ubiquitous Flash video from Adobe (Apple does not want Adobe getting too much control and decries efficiency and security deficiencies in Flash, despite the fact it can stream Flash through Youtube (which is too ubiquitous to diss), debunking the technical reasons given for limiting flash content in the first place), and streaming music, ala Rhapsody (at all you can eat at $10 per month, who will buy songs for 99 cents each from ITunes???? - Apple has very recently allowed this to stream to their products due to market pressure and the impending introduction of their own product which will probably hurt margins some). These are all weaknesses in the Apple business model that stem from the fact that it is now king of the hill and has to overcharge for (or prevent the use of) certain products that should flow freely and relatively inexpensively through the ecosystem. This is the problem that Microsoft had and why it never sold its own computers and cell phones, at least until very recently after having their lunch money taken by Apple (see the Kin).

My feelings toward the IPad changed significantly once I had the opportunity to actually spend some time with one. It is quick, sharp, very portable, easy to use and it lasts all day long. This is quite the endorsement, coming from a PC man. Of course, it's three main weaknesses are its lack of flash compatibility (except Youtube), it is awkard to use with office productivity apps (and impossible to use with the ubiquitious Microsoft Office) and the fact that the browser cannot fully render rich text boxes used in nearly every blogging platform. That's right, you can't even blog from an IPad.  This (relatively minor technical) drawback in the lightweight browser leads to a very detriment to mobile content producers such as myself. The office productivity issue is also a major drawback, albeit one that is expected. Without fixing these issues, the IPad is more of  content consumption device in lieu of being a true computer that is flexible and powerful enough to be both  production and consumption device. It is just not as practical as the Asus above.

Even despite these limitations, I really thought this device was a game changer (and it was, until I experienced the device expounded upon in detail below). It's only real serious competition was the Asus (adn similar products) above. The Asus is much more practical for work, while the IPad is more practical for media consumption, although they both do a pretty good job of the other's core task. The always on Web access of the IPad and the 12 hour battery life (during full use, yes - its true) is a big plus. The raison d' etre for the appeal of this device, notwithstanding sexy design and viral marketing is the ITunes app store. This will be very difficult for the competition to counter, although not impossible (see the cell phone reviews below). It is also ironic that the number one app maker and marketplace for the last 30 years has been so quickly subsumed in the mobile phone space by Apple. This is much more a case of Microsoft dropping the ball and succumbing to big company-itis (the exact same disease that allowed them to eat IBM's lunch, thus becoming one of the most powerful companies in the world from a two person start up). With that being said, the new mobile OS coming from Microsoft looks to probably be superior to nearly all else offered (Google's Android, Apple's iOS, Palm's WebOS, Symbian, etc.) if there implementation of the Zune HD OS is indication of things to come. The problem is that the delay is killing them in both market awareness and market share. What the hell are the guys over at Microsoft doing as these other companies eat their lunch? As we all have experienced, the best product is not necessarily the most widely adopted product (ex. the Zune HD).


Archos 5 Internet Tablet

Archos was always a company that had kick ass hardware and middling software. They have made some of the best best video players around, but to be honest, they are simply outdone  by the newest crop of tech to come out. Although the Archos is still the best at video with either the biggest screen or the most open (in terms of codecs) platform, the ZuneHD is a better all around media player and the ITouch and IPad is more expandable and a smoother experience. The advantage of the Archos 5 is that it is open - wide open - and available with Windows 7, Linux or the Android variant. Archos also does not attempt to create an ecosystem to lock you in like Microsoft and Apple does with their media players. The productivity computing and web surfing components are okay, but do not stand up to real ultraportable netbook computers or even some cellphones due to their superior connectivity options (see EVO review below). I have not used the Android version of this device, which probably offers a better experience, but the Linux version is interesting, but not best of breed. The Windows version is reviewed below.


Archos Windows Tablet

This device is slightly underpowered, but offers the full connectivity and openness of a typical windows computer. The caveat is that the touch screen interface is awkward and very unrepsonsive - so much so that it is actually a displeasure and aggravating to use. It pales in usability when compared to the IPad and the Asus, thus despite the fact that you have USB ports, HDMI and VGA out and real Office apps available, it is literally too difficult to use them. The battery life is also quite poor.


HTC Touch Pro2

Up until a few weeks ago this was, bar none, the most capable business phone available. It had decent multimedia capabilities, the best cell phone keyboard available, an office capable full duplex speakerphone with dual noise canceling mikes, speed and flexibility in a practical form factor with a large (3.7 inch) screen. Any business user seen using an IPhone with this  gadget around needed to have their business license snatched. As much as I liked this phone and used it (and several iterations of the preceding models) exclusively for years, it has been totally outdone by its large screen big brother below, the Evo. I will leave the description to the HTC marketing people (click the link above) and move on to the newer tech.


Sony Vaio

This is a very stylish device and it is from a manufacturer that knows how to make high end portable computers. As a matter of fact, a 13.3 inch screen Vaio has been my mainstay, workhorse laptop since the inception of this blog. That being said, this particular device is more flash than functional. Although significant changes have been made to the second generation it still suffers from subpar speed, difficult to read screens (high resolution packed into an proprietary ultra wide screen format) and an unjustifiably high price point. Although the Asus EEE is twice weight, it also happens to offer 3x the functionality at half the price. You do the math.


The Apple IPhone, 4th Generation

This will be a very cursory over view of the newest IPhone. I have had very limited time with it, and it has been covered ad nauseum in the blogosphere.

What I will do is provide the specs of the new IPhone with its closest and most capable competitor, the HTC Evo, and walk through real life experience with the Android powered Evo, debunking many a myth along the way. These comparisons are all over the web as well, unfortunately 95% of them that attempt any  qualitative (or even an extended technical) comparison are biased as hell - extremely so. I leave it up to you to guess whose favor the biased tilts. I wanna be like Steve Jobs....

From Mashable.com:

Now, for those who didn't pick up the biases, let me point them out. In addition, be aware that this is not just Mashable. Cnet, Wired, endgadget, ZDnet, PC Week, practically every major media tech rag that reported on these comparisons were highly unrealistic in their comparisons if they went beyond a simple table (in the example above even a simple table was significantly distorted), furthering the Apple cult marketing hegemony. Do you want to know what made me counter the noise? I actually spent time with the products.

First, let's throw some facts at the comparison graphic above:

  • To begin with, both HTC phones have more physical presence than the IPhone 4 due to their significantly larger screens, yet the graphic shows the IPhone 4 as larger. Whose marketing who? The color coding also causes the IPhone 4 to stand out demonstrably.
  • Ports: What in the hell is a "standard" proprietary jack? The I/O port for the IPhone 4 is the proprietary Apple port, and it is standard only if you have an IPhone or IPod. There are no standards here. Conversely, the author fails to state that the HTC phones do use standard ports (USB 2.0). The author also fails to note that there is significant additional connectivity in the EVO with the inclusion of a micro HDMI port that outputs 720p video to any "standard" HDMI enabled device. Yeah, that term standard...
  • Camera: The author failed to note that the Apple phone's front facing camera is only VGA resolution, giving it about a quarter of the resolution of the EVO's front facing camera. This difference should be noticeable, but we will have to test both phones in person to come to any realistic conclusion.
  • Storage: The author gave the maximum possible storage for the Apple product, while simply quoting +microSD slot for the other products. In reality, the Incredible should read "up to 40 GB" and the Evo should read "up to 33 GB" if they are to be realistically compared to what was published for the Apple product. To be even more realistic and forth coming, it should be noted that the memory capacity for both Android phones can be maxed out (making both more capacity than the Iphone at its limit) and the phones will still be at least $5o cheaper than the IPhone 4.
  • Connectivity: The author failed to note that the Evo features 4G connectvity in 32 cities (and counting) which is about 3 to 5 times faster than the 3G signal used by the Apple phone and the Incredible.
  • The ability to wirelessly tether for business users has been totally ignored, most likely because Apple can't do that without 3rd party apps and/or hacking into the OS.
  • At the bottom, the author has "Apple debuts...."
    • Video chat: It may be a debut for Apple, but other phones had it a long time ago. The Evo has it know, before the Apple was even launched. Why wasn't this mentioned???
    • Multitasking that supposedly doesn't drain the battery: Doesn't the Evo have that. With an adjustment of settings and/or the download of a free app, I have achieved 12 to 15 hours on my Evo without the battery going below 47%. This is at least as impressive as the Apple IPad, which admittedly impressed the hell out of me in terms of battery endurance.

In looking at reviews of the IPhone, it is near impossible to find an objective review. People are either Apple fanboi slave fanatics, or geeky Apple haters, with the vast majority (including both the MSM and the independent channels such as blogs, I'm talking to you Mashable, Wired, Cnet and ZDnet) falling into the fanboi camp. This is a good thing for Apple. Apple product ownership, particularly the mobile computing product ownership, is akin to belonging to a cult and seems to be considered a status symbol. I have everyone from the CEO's of financial companies, to customer service reps in cell phone retail outlets to little bratty kids in the hood saying, "Hey, is that an Ipad, it's so cool!" "Let me see it". They don't even identify it as a tablet computer, they refer to it by the Apple brand name. Kudos to Steve jobs in achieving marketing nirvana. He's going to need it though, because I think Google is about to get in that ass! Below is  a pic to illustrate the relative size and screens of the ITouch 3G, the HTC Touch Pro2 (Windows 6.1) and the HTC Evo w/Android showing that cool investment website.

Itouch, HTC touch2, HTC EVO

Here are a few things that I have not seen on the web regarding the HTC Evo should be of interest to users and those who have an interest in the space:

  1. There is an OS refresh coming right around the corner (later this month) and the flash is available for download now. It includes a capable looking 3D interface and many new features, namely the ability to play full Flash video without compromise. Take a look at Froyo for Geeks or if you don't speak Geeklish, in plain English.
  2. The HTC has tight integration with Google's killer apps, namely;
    • Google Docs: It's not Microsoft Office, and it does have its shortcomings, but it does work. You can also open word docs natively right in the Android OS. We use Google Docs here to embed live spreadsheets, like the illustration of the lies coming out of Europe's indebted sovereign nations.
    • Google Voice: VOIP done correctly, Google literally frees your from your carrier's overpriced SMS, voicemail and long distance services by routing all through the web, mostly for free. You also get an alternate phone number that you choose, automated message transcription, and recording. Carriers should be shuddering if they haven't invested heavily into their data networks and/or are relying on voice margins to remain where they are.
    • Google Tranlsate
    • Google Maps and Google Earth with intuitive use of the integrated GPS that makes these apps very, very useful and utilitarian, and allows them to serve as helper apps to 3rd party applications such as Zagats guides, yellow pages, etc..
    • Voice activated Google Search throughout the vast majority of the phone features/apps - Now, most of these apps (save the most groundbreaking, voice which is just available on the Blackberry as far as I know) are available on other platforms but they are not as tightly integrated as they are in the Android system. In addition, the voice recognition on this phone is amazingly accurate.
  3. HDMI out: this actually works, but only on 720p output, and there are some glitches. The video quality of both the IPhone 4 and the Evo are wanting in terms of videophile needs, but they stand head and shoulders above most of their competition (except maybe the 12 megapixel Nokia phone) and their predecessors. The problem is the sensors are still just too small.
  4. 8 gb camera takes respectable pics, alas still with some noise - still amazing for a camera phone (and significantly better than the IPhone 4 pics that I have seen, although I haven't personally compared side to side). The IPhone does seem to have marginally smoother HD playback, potentially due to the slightly higher frame rate. In any event, the HD video in both of these devices is technically in name only, and pales if compared to any dedicated HD recording device of decent caliber. In other words, don' t get your hopes up, but realize that this is probably the best videography that you will always have in your pocket  - at least for the time being. Below is a sample of the 8 megapixel pic taken outdoors with the Evo.htc outdoors This is a pic taking indoors with similar settings, both without the aid of the double LED flash... htc indoors
  5. 720p HD video: technically, and in name only - video is very noisy due to tiny sensor. The IPhone 4 is marginally better due to a 5 fps higher frame rate
  6. The Evo appears to have a higher definition video call due to a much better quality front facing video camera.
  7. Qik video conferencing, LIVE video broadcasting and sharing to nearly any client. This is a game changer, with widgets to automatically embed real time, live video in any web page and/or sharing to friends and contacts. This is heralding a paradigm shift in media, broadcast and publishing. Now, anyone can literally implement their own eyewitness news program, live and in real time. This technology actually works, and without many geeky tech glitches either.
  8. The Evo allows streaming music from Rhapsody, et. al., all you can eat music for $10 per month. Apple finally caved on this as well, but there goes those margins in ITunes if this catches on, and how could it not? Apple has a heavy fan base, but this is a very, very big difference in costs here.
  9. Battery is quickly consumed by all of the myriad features running simultaneously, not the power. The flexibility allows you to turn off the options a la carte to conserve power significantly. This entails going through the settings or reading the directions. As stated earlier, with about a minute or two of tweeks, my phone goes the entire day without breaking the 40% mark, rivaling the IPad in its miserly qualities.
  10. The Evo is MUCH more of a micro ultraportable/tablet with full communication capability than a mere phone. This is a very powerful, very fast and very capable device with tons of expandability. I expect much of the same out of the Apple, but not all of the same. The Apple has a more refined, albeit significantly smaller screen (the IPad screen will be of a lower resolution than the IPhone 4, but movies will look better on the IPad due to the larger screen), and much less flexibility and expandability. On paper, it appears to be lesser powered as well, but the only way to find out is a real world test with some time spend with each device, something that I did not have opportunity to do.

While everybody is celebrating the Ipad and the IPhone 4, pushing Apple stock through the plasmoshere (I actually like Apple as a company, a literal marketing market - what Microsoft use to be), Google is quietly creating a technological, business model and strategic advantage wherein there will be no way in hell Apple will be able to keep up if things continue to progress at the current pace. In essence, Apple will be relying more and more on marketing prowess and less on capability and competitive technological innovation to maintain margin and revenue growth. That is a dangerous place to be. Simply observe the speed upon which the Google/Android/HTC ecosystem has developed and the power, flexibility and usability of this early product after just two years on the market. I am confident there will be a major Droid update way before Apple can get an IPhone 5 to the finish line and if they do get it, they will alienate their customers with near real time obsolescence. As it stands now, the current iteration of the droid appears to stand materially superior to the IPhone, albeit many of the advantages are in the eye of the beholder. Those who want status symbols and ultimate ease of use may prefer the IPhone. My time with the IPhone is non-existent, but from what I have seen, heard, experienced and according to the specs - it is totally outdone and there is an Android OS refresh coming out at the end of the month that will allow full flash (as compared to flash lite now, think Hulu on our cell phones) and additional power saving features - just in time for the official IPhone launch. Now, the chances of Apple sitting on their hands are close to nil, since they are well aware that handsitting is how THEY ate the previous handset hegemony's lunch. The battle is on, and the end users are the ultimate winners through comptetitive innovation.


The latest technology released in the months of May, June and July show that Apple truly is an engineering, UI design, and marketing genius of a corporation, and more importantly that Google is increasingly well poised to knock Apple off of its perch.

For those of you are not yet aware, the Android is no joke. One reason why retailers such as Best Buy love to sell Apple products is because Apple kicks back some of the largest retail margin in the industry. One of the main reasons why the smaller but more prolific retailers dislike Apple but are forced to sell their products is because Apple's retail store gets preference with products and product placement. Since Apple controls the entire channel, the only way to make money with

Other

Recent

Droid

Handheld

Computers

Google Nexus One

Verizon's Droid Incredible

Motorola Droid

Apple is to be a supplier or a retailer. Enter Google, who has created an open source OS that runs on a very wide variety of hardware. Yes, open source, as in free. From Wikipedia:

The unveiling of the Android distribution on 5 November 2007 was announced with the founding of the Open Handset Alliance, a consortium of 71 hardware, software, and telecom companies devoted to advancing open standards for mobile devices.[12][13] Google released most of the Android code under the Apache License, a free software and open source license.[14]

According to NPD Group, unit sales for Android OS smartphones ranked second among all smartphone OS handsets sold in the U.S. in the first quarter of 2010.[15][16] BlackBerry OS and iOS ranked first and third respectively.[17]

... With the exception of brief update periods, Android has been available as open source since 21 October 2008. Google opened the entire source code (including network and telephony stacks[32]) under an Apache License.[33]

With the Apache License, vendors can add closed-source extensions without submitting those back to the open source community.

This a potentially lethal threat to the Apple hegemony. For those who believe the Apple myth, drink the Kool Aid, or have just never tried a recent Google device such as the Nexus One with Froyo or the Evo, here are some findings from Nielson.com (be aware that Apple had a material head start over Google in the handset space):

Androids are being used more as actual computing devices than Apple, and both are more diversified in use then the rest of the smartphone community. Since Android users are younger, they rely much more on social media than the older audience of the IPhone whose users are heavier email users. This means that sticky social media apps will most likely proliferate.

Android is by far the newest OS out and has already claimed market share and is growing like a weed. Apple and Android are taking share from the others, but if Microsoft drops the ball with the V. 7 release of Windows Mobile, it will be Apple vs. Android! Palm, Symbian and RIM don't stand as much of a chance as I see it, and RIM has a lot to lose!

... and that market share is growing faster than everybody else! Apple's market share is three times that of Android, RIMM's is 3.5x and MSFT's is twice, but remember that Android is brand spanking new and has gained faster than ALL of those phones - all of them. The open source environment leaves fodder to go viral and the cost structure to handset makers and can't be argued with - free is free. Admittedly, it has been my experience that open source is not truly free, it is just that the up front licensing costs have been shifted around to maintenance and customization costs, but it appears that this still may be cheaper than the Apple/MSFT/RIM solution. Look at the success of PHP, MySql, Joomla, etc.

Android also shares that damn near cult status loyalty found in the Apple lover's crowd...

Next up, we attempt to sum this up in terms of business models, margins and most importantly potential valuation scenarios.


Last modified on Tuesday, 22 June 2010 23:01