Jan 2014 – Page 2 – Naofumi Kagami

How to Make the Screen Larger Without Making the Phone Larger

The Wall Street Journal is reporting that Apple is preparing iPhones with bigger screens (4.5 inches and > 5 inches).

Now we all know that Apple is not like Samsung, and that they don’t simply create any screen size they can imagine. We know that Apple makes very careful decisions so it’s prudent to analyze what the sizes are like; i.e. what a 4.5 inch screen would actually look and feel like.

I superimposed a 4.5 inch screen size on top of the current iPhone 5s. You can see that the width of a 4.5 inch screen would actually fit in the current iPhone 5s dimensions if the bezels surrounding the sides of the screen could be eliminated. Since I doubt that a taller iPhone would be comfortable in your pocket, Apple would have to also reduce the height of the top and bottom bezels, but there is definitely space for that.

If Apple is really preparing a 4.5 inch screen iPhone, this is most likely the path that they would take. As I mentioned in a previous post, I seriously doubt that Apple would create a larger sized phone that would be more cumbersome to carry with you all the time. Also, reducing side bezels is something that Apple has been doing quite well with the iPad mini and iPad Air.

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Tablets and Laptops are Used for Different Things

There is a lot of talk about tablets replacing PCs (desktop and laptops). The people who make this point usually cite the decline of PC sales which coincided with the rise of tablets.

I have always been rather skeptical of this view because for me, laptops and tablets served very different roles. It’s not that I program therefore I need a laptop kind of thing. It’s that for any kind of work that I do in my office, a laptop is more convenient. On the other hand, when I am on my sofa playing with kids, then a tablet is much better.

The general tendency is to segment by people; i.e. power users who do a lot of stuff vs. casual users who mainly just do email and a bit of the web. I think this is the wrong approach.

The correct approach is to segment by the jobs-to-be-done. Hence even for a single person, he is sure to have multiple jobs-to-be-done in the course of a day. Some of these are better suited for a laptop and some are suited for a tablet. Or they may be an old lady who just wants to see photos of her grandchildren. A tablet would be ideal for her. Since this discussion is about form factors, the posture is also very important; are you at your desk, are you standing, are you reclining on the sofa, are you lying down on bed, or are you crouching in the toilet.

In March 2013, Chitika published data that showed when people used their respective devices to surf the web during the day.

Smartphones dip during working hours, but are still used during work hours, especially during commute hours.
Tablets are used a lot less during working hours and are mainly used for leisure.
PCs usage peaks during working hours and also during leisure hours.

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From the charts above, it is evident that tablets usage is not replicating PC usage. Although there is likely to be some overlap, it is clear that they are being hired for different jobs-to-be-done.

According to a recent interview between Apple executives Phil Schiller and Craig Federighi and MacWorld, Apple seems to think the same way.

“It’s not an either/or,” Schiller said. “It’s a world where you’re going to have a phone, a tablet, a computer, you don’t have to choose. And so what’s more important is how you seamlessly move between them all…. It’s not like this is a laptop person and that’s a tablet person. It doesn’t have to be that way.”

“Sometimes you want a large display, with many different windows open, and sometimes you just want to lay back on the couch or are standing at the bus stop. There’s a natural form factor that drives the optimal experience for each of those things. And I think what we are focused on is delivering the tailored, optimal experience for those kinds of ways that you work, without trying to take a one-size-fits-all solution to it.”

What Android Tablets are Being Used

It has often been mentioned that although Android tablets seem to be selling rather well, they aren’t being used much. Apple’s Tim Cook uses Chitika’s data in his presentations, the most recent showing that iPad usage share was 81% in North America.

What always intrigued me about this data was how many Samsung Galaxy tablets were being used relative to the Google Nexus tablets. There were many reviews that praised both the specifications and the low price of the Google Nexus 7 tablet, whereas not so many praised the Samsung Galaxy tablets. However, if you look at the usage statistics from Chitika, Galaxy tablet usage is many times more than Nexus tablets.

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So the question that I had was what are the Galaxy tablets that are selling. Are they the large size ~10-inch tablets or are they the 7-inch ones? Are they WiFi models or are they Galaxy Notes with 3G connectivity?

Until now, I didn’t know of a source where I could get the data to answer this. However, I recently learned that Mixpanel provides this data.

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Looking at this data, it is evident that the answer is the Galaxy Note series. Although the Mixpanel data does not tell us which Galaxy Note models are included in the data, I strongly suspect that the phablet models are. If phablets are included, it explains why Galaxy Notes are being used so much. Otherwise, it’s hard to see why Galaxy tablets are selling whereas Nexus tablets are not.

So my tentative understanding is the following;

Chitika’s 81% usage share iPad most likely includes phablets. Otherwise, it contradicts with Mixpanel’s data.
If we exclude phablets from tablet web usage statistics (for both Chitika and Mixpanel data), iPad’s usage share is even higher than 81%.

P.S.
Looking at Mixpanel’s data, the Nexus 10 is really, really small. It’s quite clear that 10-inch Anroid tablets are hardly being used for web browsing.

Analysis of How External Scripts Can Block Page Loading

I recently found two excellent blog articles (1, 2) by Steve Souders on how a single externally loaded Javascript, CSS and fonts can block page loading, resulting in completely or partially blank pages. Steve calls these Frontend SPOF (Frontend Single Point of Failure) and shows some screenshots of what the pages actually look like. I have copied one below.

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This screenshot was taken when Steve was in Beijing and was caused by the Chinese firewall blocking the domain cdn.eyewonder.com. I also had a similar experience when I was in Shanghai and the firewall blocked a Twitter badge that I had (I was using an old synchronous Twitter badge. Twitter now uses synchronous badges only, which do not cause fronted SPOF).

However, this experience is not limited to China. Technically, this can happen whenever loading of a resource takes a lot of time. This often happens when you have a bad Internet connection, for example when you have a weak 3G connection or you have an unreliable WiFi setup. I experienced this a lot in conferences and exhibitions where not enough money was spent to beef up the WiFi.

It is unfortunate that many web developers are still unaware of this issue.

Thoughts on Mirrorless Cameras

Reuters had an article a month ago where they reported that sales of mirrorless cameras are “sputtering”.

This phenomenon is interesting for several reasons. Before we go into that, let’s look at what the article is saying;

Meanwhile, sales of mirrorless cameras – seen as a promising format between low-end compacts and high-end single-lens reflex (SLR) cameras – are sputtering as buyers put connectivity above picture quality.

Panasonic held 3.1 percent of the camera market in July-September, down from 3.8 percent a year earlier, according to IDC. Canon Inc, Nikon Corp and Sony Corp controlled over 60 percent between them.
“Only those who have a strong brand and are competitive on price will last – and only Canon, Nikon and Sony fulfil that criteria,” added Yoshida.

Mirrorless cameras such as Panasonic’s Lumix GM eliminate the internal mirrors that optical viewfinders depend on, so users compose images via electronic viewfinders or liquid crystal displays. This allows the camera to be smaller than an SLR, while offering better quality than compacts or smartphones due to larger sensors and interchangeable lenses.

From a high level, mirrorless cameras have the following characteristics;

They are technically simpler than SLRs.
They are smaller and more convenient than high-end SLRs.
They are a middle category sitting between low-end compacts/smartphones and high-end SLRs.

In regards to the 3rd point, mirrorless cameras targeted a speculative market that was hoped to exist between the low-end and the high-end. In reality, that market did not exist or was much smaller than expected. Furthermore, due to technical advancements in sensor and processing technology, the low-end cameras became more sophisticated and more capable of taking good photos. Thus any middle market that did exist became narrower and narrower with time.

It is also interesting that Canon and Nikon seem to be relatively immune to the onslaught of smartphone cameras. This is simply because the high-end SLR market was never about convenience or taking simple snaps, but has been for a long time about taking really good pictures. Smartphones with their tiny lenses are severely limited by their optics and are not capable of taking artistic level photographs. You could say that the high-end is serving a very different market or that the jobs-to-be-done are very different from smartphones.

With this perspective, it is relatively straightforward to predict the future.

For casual photos that most people want to post online, smartphones will evolve to be more than enough. As smartphone penetration increases, low-end cameras will continue to be squeezed out.
Mirrorless cameras will find a niche for consumers who want something a little better than smartphone cameras. This niche however will shrink with time. Connecting mirrorless cameras to the Internet so that you can easily upload photos will shortly extend the life of this niche. However this feature alone cannot save this category because ultimately, the jobs-to-be-done is in direct competition with high-end smartphone cameras.
High-end SLRs will continue to do just fine. Smartphones cannot touch this market due to optical limitations. The lower-cost SLRs may be more vulnerable. Connecting to the Internet may help sales, but a more desired feature is probably to effortlessly transfer photos to iPads etc.
Price erosion may further happen in the low-end, but not in the high-end. Companies from Korea and China may try to enter the high-end but will easily fail. This is firstly because Nikon and Canon have a very high professional brand, and secondly because the expertise in optical mechanics is not something that the Korean and Chinese entrants are likely to possess. Korean and Chinese companies have high-level expertise in digital electronics and this allows them to compete in the low-end. However, without expertise in analog optical mechanics, you simply cannot create a good high-end SLR.

If it somehow becomes possible to take better pictures than a high-end SLR using a different technology, then it will become possible to disrupt the duopoly of Nikon and Canon on the high-end. That is after all, how Nikon and Canon disrupted the German camera makers which had been using range-finder optics (Leica, Contax, etc.) with the then new SLR technology in the mid 20th century.

Market Leader Mentality vs. Follower Mentality

When comparing market leaders and followers, I often notice large differences in how they view the market and future innovation. These have large implications on their respective strategies and what products they introduce.

Market leaders look for ways to expand the market. They notice new applications that will bring in new customers. They simplify the product so that it becomes accessible to a wider audience. They often redefine the market to look for more room to grow.

Followers look for ways to take customers away from the leader. Instead of expanding the market, they try to attract customers with higher specs and lower costs. They tend to be oblivious to whether the specs are truly useful or not and are more focused on specs that attract the attention of prospective customers.

By market leaders, I am not referring to the companies with the largest market share. I am using this term to identify the companies that define the market and how it will evolve. These are often the companies that initially created the market and are also the companies that have a strong brand. Sometimes a market will no longer have a leader. Sometimes a market leader will not have the largest market share. If a leader is present however, that is the company in which the vast majority of innovation will be found.

What is interesting is that market leaders in a certain industry segment are also often leaders in another. For example, IBM was the undisputed leader in mainframe computing. It also continued to be the leader in personal computing. Even though it found its market share eroded by Compaq and other IBM-clone vendors, it still was the leader in laptop computers with the ThinkPad line. The ThinkPad brand was strong, not because they had the laptops with the highest specifications or because the laptops were the thinnest and the lightest. People bought ThinkPads because they trusted IBM to make the decisions that meant most to people in business. Decisions around the keyboard, pointing device, durability and all the things that do not make sexy specifications. IBM knew what business people really needed and made decisions that really counted for getting work done.

In comparison, IBM-clones were more focused on low-price and high specifications. Decisions were made to bump up the specifications while keeping prices low. The actual usability of the keyboard or pointing device was often neglected, because they don’t add to the specs. IBM-clone vendors had little regard for actual business needs.

When discussing Apple and trying to figure out what their next move will be, it is important to understand that there are these two completely different mentalities in the market.

Apple obviously has the market leader mentality. They have continuously expanded the personal computer market, first the the Apple II, then the Macintosh. After Steve Jobs’ return, the iPhone and then the iPad. All of these products brought new customers and completely new applications to personal computing.

Looking at the smartphone and tablet market, all the other vendors, including Google appear to have the follower mentality. Google copied Apple’s touch user interface and then attempted to gain market share by providing it for free. Google also copied Apple’s AppStore concept which allowed users to download and purchase software easily and cheaply. Samsung copied Apple’s designs and created phones that had very powerful CPUs and large screens; sexy specifications. Both Google’s and Samsung’s penchant for being a follower actually goes back before Android. In fact the original prototypes for Androids were Blackberry clones. Also if you look at the designs for Google Docs, you can easily identify the similarities with Microsoft Office. Google Docs is an attempted clone of Microsoft Office that is free to use.

It has been discussed that Apple should and will offer a larger size screen for the iPhone. This is typical follower mentality. Large screen phones are succeeding in the market and maybe eating away at Apple’s market share, hence Apple needs a large screen phone. This conclusion may or may not be true, but this is not really the point. The point is that because Apple has market leader mentality, it does not really care about specs. What market leaders often care about is whether or not large screens will allow new applications and expand the market as a whole. I doubt large phones will.

When we realize that Apple is more concerned about expanding the market rather than fending of Samsung, then we can make very different predictions. First of all, expanding the market means much more than selling iPhones in China. It means making iPhones and other iOS devices a larger part of our lives. It means truly integrating with cars and many more devices. Importantly, I suspect that it means iPhones should be smaller and lighter so that we can take them along even when we are not wearing baggy jeans or carrying a purse; for example, when we go jogging.

Going further, it is possible that Apple is not thinking of smartphones in the same way as they did in 2007. Steve Jobs introduced the iPhone as a “Phone, an iPod and an Internet communicator”. I suspect that Apple might have gone beyond this definition and moved towards something different. The clue is that they included the M7 chip inside the iPhone 5s. The M7 chip is something that most people would expect to find in a wearable device. It is therefore possible that they now define the iPhone itself as the wearable device that everybody is clamoring about. If so, the direction would be to make the iPhone as small as possible.

Smartphone Screen Size and The Reason To Exist

There are speculations that Apple may introduce a larger iPhone in 2014. The reasoning is that high-end Android smartphone users generally tend towards large displays and therefore the iPhone has to have a larger screen to compete.

I think that this line of logic forgets that fact that smartphones are no longer just phones or even Internet communication devices. Smartphones are general purpose computing devices that you can carry around with you, almost all the time. This should be the new definition of what smartphones are.

Why is this important?

If you consider smartphones to be primarily Internet communication devices, then yes, a larger screen size may be preferable (this is actually debatable because mobile websites are becoming better and better, making a smaller screen more comfortable for web browsing, but that’s another discussion).

However if you use a smartphone as a fitness tracker, then smartphones should get smaller. When you are running, you are probably not wearing baggy jeans nor are you carrying a purse. You will put your phone on your regular size pocket or strap it to your arm or something.

Apple integrated the M7 chip on the new iPhone 5s, strongly suggesting that Apple wants users to carry around the iPhone all the time. Obvious applications are fitness, but I expect more than just that. This suggests that the direction Apple is heading is not larger phones, but rather phones that are even smaller and lighter.

You have to remember that Apple seriously thinks about why certain products exist. Products have to fulfill a meaningful use-case, and have to fulfill it better than any other product. If you create smartphones that are larger, then they basically become half-sized tablets. There remains little reason why a large smartphone and small tablet (like the iPad mini) should co-exist.

My guess is that Apple is positioning iPhones as devices that you carry with you all the time almost like a wearable. Hence iPhones will evolve to make you more likely to keep in your pocket, not less.

Reiterating my point, I don’t necessarily doubt that a larger iPhone would make financial sense, at least in the short term. It is very possible that such a product would boost iPhone sales. I just don’t think that that is a priority for Apple. I sense that their priority is the long term evolution of smartphones into something more.

Could Cloud Computing be Commoditized?

There is a common conception that hardware and software will eventually be commoditized and all significant computing will move to the cloud. This trend will supposedly result in the hardware companies like DELL, HP and even Apple finding themselves selling commodities with little or no profit. Likewise, software will also be commoditized so that software companies like Microsoft will find their profits eroded.

Google has strongly pursued this strategy. Besides search and advertising, Google has consistently tried to commoditize software. They started by basically copying MS-Office with Google Docs and providing it for free. The aim was to make all computing happen inside a web browser, so that Google could place Ads. This was again the strategy for Android. They wanted to commoditize mobile operating systems so that any hardware manufacturer could easily enter the market, driving down prices. By commoditizing the OS, they assumed hardware commoditization would follow.

Their are many issues with this argument.

One is the assumption that the Cloud is harder to commoditize than hardware or software.

This is definitely true for search. Microsoft and Yahoo have tried to compete with Google in search, and have found it very difficult.

However, there is little evidence that the Cloud is harder to commoditize for web applications like Google Docs. These web applications are basically applications, hence the same market and technology dynamics affect how the market progresses. For example, OwnCloud provides an open-source implementation of DropBox that you can run on your own servers.

I think that the idea that commoditization linearly progresses from hardware to software to services (the Cloud) is a huge oversimplification, and that in reality, there are many case where this does not fit. Reality is probably that any market in which any significant innovation occurs will become de-commoditized. Likewise any market, including the Cloud, will be commoditized when real innovation is lacking.

Whether or not the Cloud will eventually be commoditized depends on whether the Cloud allows a pace of innovation that cannot be matched by hardware or software. If Cloud computing allows companies to make significant innovations much faster, then it will escape commoditization.

I don’t think that this is the case at all.

Chromebooks Are Competing With iPads

Gregg Keizer of ComputerWorld wrote an article that corrected the misinformation spread by many journalists/bloggers a few weeks ago regarding Chromebooks sales in the “commercial channel”.

The initial report by Stephen Baker of NPD was released on December 23rd, 2013 and mentioned that Chromebooks accounted for 21% of all U.S. notebook sales through the commercial channel for the first 11 months of 2013. The important word is “commercial channel”. Stephen Baker defines the commercial channel as follows;

Baker defined the commercial channel as the distributors — like CDW and Ingram Micro — that many businesses, government agencies, schools and other organizations use to buy personal computers and other devices. His data did not include consumer sales, nor PCs sold by OEMs, such as Dell and Hewlett-Packard, directly to businesses.

I analyzed Baker’s data to find that “commercial channel” is only a fraction of total PC sales in the U.S., and that this report does not directly show Chromebooks gaining popularity in the mainstream market.

The question is then, what does this report mean for the mainstream market. Stephen Baker provides some clues;

“On the subject of Chromebooks versus clamshell notebooks, I don’t subscribe to the idea that [the former] are taking sales from Windows,” Baker said. “In my view, they are just as likely, actually more likely, to be taking sales from Android tablets or iPads, or just expanding the market than they are taking sales from Windows PCs in these business-to-business and education markets.”

What Mr. Baker is saying is that education customers who eventually deploy Chromebooks were not looking at Chromebooks vs. Windows but rather Chromebooks vs. iPad. The decision was whether to purchase large numbers of Chromebooks or whether to purchase iPads. A simple Google search actually pulls up a lot of educators discussing this topic. It apparently boils down to Chromebooks having a physical keyboard, and iPads having a much more immersing experience.

The reference to “expanding the market” is probably about schools deploying computers on a scale so that each student has a computer of their own. This apparently has only become possible with the large reductions in hardware costs and is now a reality for an increasing number of schools. Growing the market is likely referring to how iPads and Chromebooks are helping to make this happen.

As to whether gaining a foothold in the education market will eventually enable Chromebooks to move up-market into general-purpose computing devices, there is very little precedent for that. Apple used to be very popular in education, but that didn’t help it grow market share in businesses or consumer markets.

Apple iPhone Strategy in India

Although I have very little knowledge of the cell phone market in developing countries, it seems quite evident that Apple’s strategy is not to sell cheap phones, but to sell the best phones that you can buy at cheap prices.

Here are two articles that describe the situation;

From the first article;

Under the subsidy scheme, the 16GB version of the iPhone 5s and iPhone 5c would be available at zero upfront cost, with a monthly fee of Rs. 2,500 for the iPhone 5c and Rs. 2,800 for the iPhone 5s, in lieu of which consumers will get unlimited voice calls, SMS and 3G data. It’s not clear if a fair usage policy would be applicable. Consumers would be locked-in into a 24 month long contract and would not be able to switch their telecom operator before that, according to the report. The non-contract costs for the 16GB iPhone 5s and iPhone 5c are Rs. 53,500 and Rs. 41,900 respectively.

…

RCom will reportedly offer the subsidy scheme to credit card users and has tied up with banks, including ICICI Bank and HDFC Bank for the same to ensure that consumers don’t dishonour the contract.

A major reason for the success of Apple’s iPhone in first world markets is the operator subsidy model that allows customers to pay a small (or no) upfront cost for the phone and pay a fixed monthly amount in exchange for services, under a contract that ties them up with the operator for a fixed period. Operators have always been hesitant to offer subsidy schemes as India is majorly a pre-paid subscriber market and it’s hard to ensure that people will honour contracts due to a lack of a centralised credit check system.

Judging from this article, it seems that what was holding the subsidy scheme back was the lack of a credit check system. Apparently, if a good credit check system is in place, then even developing countries can move to the subsidy model.

A subsidy model will enable Apple to sell iPhones at high prices, but still make them affordable to consumers. Effectively, the carriers will pay for the iPhone.

From the second article;

Making the phones cheaper, without appearing to be cheap, is enticing a new category of young, brand-conscious Indians, like Chaithra Nayak, to switch to the more expensive iPhones.

The tactics described in the second article are financing, trading-in of the customers older phone and subsidies.

This is a good example of Apple “Thinking Different”. While everybody else thinks Apple is doomed for not offering a cheap iPhone, Apple seems to be taking a totally different direction. Apple’s strategy is to either use financing or to get the carriers to subsidize the price, and Apple seems confident that even developing countries will eventually move in this direction.

It’s taking time, but I think it’s working.