A Path to Success

Chasing the consumer smartphone market is killing RIM

And that's why RIM must find a way to partner or acquire with a company like Microsoft, and fast. The reason is simple: If Microsoft wants to have a foothold in the mobile space in the long term, which seems like a must for their software business, they must find a way to acquire a ton of customers that are considering a switch or may be forced to switch to RIM. That planning is happening now at many companies, and the Bring Your Own Device mantra is just one side-effect of this planning process. In the absence of a plan, people bring their own device. Microsoft is waiting patiently for that suitor. They are waiting to strike, like they always do.

The enterprise won't wholesale switch to Apple iPhone and iPads.  Apple doesn't sell to enterprises and all their previous attempts have failed (A/UX, X Server, DAL, etc etc). There is nothing to indicate that this will change any time soon. Sure there are small and medium sized companies who adapt the iPhone, but that happened with Macs in the 80s and 90s, and they are back using Windows now. Apple is a consumer electronics company, not a business company. Companies adapt iPhone because their employees subsidize this effort.

RIM though is an enterprise company. I contend that their lunch has been eaten by Android, not iPhone. And that's because they squarely lost focus and decided to chase the money in consumer sales in the US (failing) and internationally(seemingly winning). These charts by Dan Frommer at SplatF indicates that very clearly:

It's easy to say that iPhone killed RIM, but that is just a coincidence. Everyone bought smartphones in 2007-2011 and now almost 70% of phones bought are smartphones. The truth is that RIM entered the consumer market in a big way across the world, and they still claim that this is the reason for their growth. Sure it is, especially internationally. But this is a low margin market for anyone BUT Apple. You can't make up in volume in a market where people are getting your device practically for free. The Blackberry sips data too, and the telecoms want to sell big data plans. So even there, the Blackberry becomes the only feature phone among the smart phone manufacturers. That feature is BBM, and the Blackberry is at the bottom of the heap. Even android with its weird interface wins out when consumers look to the next big thing and the charts show that.

There is one clear saviour for the company -- it's strength is in the enterprise. Apple's strength was in simplicity of design, Steve Jobs cut all the models of Macs when he came on board and consumerized IT with the iPod and iPhone. Now RIM needs to take their strength back again and leverage their QNX acquisition and show the world just how terrific their toolsets are in the enterprise.

This can only be done by strong partnerships with a company like Microsoft. They must focus on products spaces beyond email communication. RIM must look at Microsoft Dynamics integration (the current mobile offering on CRM2011 pales in comparison to what salesforce.com is doing in mobile). RIM must talk to the enterprise and introduce features that make sense to procurement, billing, system management. Above all they must encourage their ecosystem to write compelling enterprise frameworks and integrations. Need for Speed HD should not be the leading demo when you show launch a Playbook.

RIM must make itself an attractive acquisition target now. Noone will buy them the way they are right now, all over the place. It's like a wedding -- even the ugliest bride can get all dolled up for the big day. RIM, it's time to get married and you need to look your best for the big day.

The Internet moves into Moore's "Early Majority" phase

Something very interesting has happened while we were busy talking about the Great Recession. The Internet has moved into the "early majority" phase of Geoffrey Moore's technology (innovation) adoption lifecycle. This is the lifecycle:

The theory that Moore adopted from others before him states that the population adopts technology in this manner. The percentages break up the target market audience with 2.5% of the audience being innovators, 13.5% being early adopters, 68% in the majority, and 16% being laggards. Laggards adopt pretty much nothing or have to be pulled kicking and screaming into technology once 85% have already adopted. Moore improved the theory and said that there was a chasm between early adopters and the early majority (right there between 13.5% and 34% of the potential market). If a product doesn't break this chasm it fails and withers and dies (think BETA video tape and now music Compact Discs). The Internet it appears has broken through the Early Majority. (click on chart for a larger view).

The indicator show above is a simple one: the # of generic top level domain names that have been registered. A domain name is registered for any somewhat unique entity like a business, a person, or an idea. They are cheap, ubiquitous and easy to obtain. They must be maintained and usually derive some value for the owner. The curve of total registred gTLDs (.com and .net as well as .biz, .org and .info) is similar to the one proposed by Moore, chasm included (the .com bust). It continues to rise hitting 113.8M in Q42011, indicating that there is still more to be sold, marketed and invented to be described on the Internet. If you have ever tried to buy a domain name in the .com or .net TLD you know how hard it is to pick one that isn't already taken, not suprisingly.

The total number of top level domains (TLDs) hit over 225M which includes all the country code (ccTLDs). This indicates the late majority and laggards will enter the field (if they have not already) from international registrations that cannot or do not want to obtain a gTLD.

This is an important event, because it not only means that the Internet is here to stay (duh), but that the products and services that are now being developed should meet the needs of the late majority, the next biggest piece of the audience, equivalent in size to the early majority. I think this explains the rise of the tablet device: this is the access and consumption device that the late majority (and maybe even laggards) want. Now it is a question of the standards (HTML5?), the deployment platform (apps?) and the access (wireless LTE speeds?) that is required to power the biggest chunk of the audience that is yet to come.

This is an incredible opportunity for the Internet and all the companies that work online. Service the majority well, and you will be rewarded.

Can Apple Sell 80 Million iPads in 2012?

UPDATE October 26 2012: It has been almost 8 months since I published the hypothetical drive to 80M iPads in FY2012. The answer is a flat "NO". Apple cannot sell 80M iPads in 1 year. Even they are not that dominant in a fiscal environment that restricts people from buying a $500+ discretionary device. Apple has for now reached the saturation point of who is willing to pay a premium for a tablet. And now they've announced an overpriced "mini" device (which Steve Jobs said he'd never announce) which will fail in my opinion.

The market for tablets is all about sub-$200 devices, as the cutthroat competition for the early and late majority begins in the tablet wars. And here's Microsoft coming to the table with a tablet priced in the iPad range - the Surface. Surely another fail, because there does not appear to be space for 2 premium tablets in the market.

Without innovation in the pipeline for Spring/Summer 2013, Apple is going to see their lead (and stock price) erode in 2013. The only real new revenue generator must be content which is now at a paltry 6% (iTunes). This is the real opportunity for Apple to grow - to become a hardware and content company, something they have never done before. Time to spend some of that $120B cash stockpile.

The updated FY2012 figures for iPad is just shy of 60M units - not bad, but not what was expected or predicted based on "hockey stick effect" detailed below.

That's the main question on everyone's minds after yesterday's "new" iPad launch. The device is getting better with every iteration and it now has a screen that has more resolution that your 60" 1080p High Defintition television. Think about that - 3.1M pixels on the screen for your media. It is a hugely impressive device. It runs on the latest 4G LTE network capable of 70Mbps+ download speeds.

But the main question on everyone's mind is can Apple double their sales of ipads from 2011. Can Apple sell 80 Million iPads in 2012?

The current estimate is 50-60M iPads in 2012, bringing the total iPads sold to 100M since April 2010, when the iPad was introduced. That means keeping the current trend of 15M iPads per quarter at a standstill, which is very conservative. But if they sell 80M (very likely if the current trend shows) in 2012 they will effectively make more revenue from iPads than they made from ALL products in 2009. That is saying something -- it puts even the much lauded iPhone to shame.

 

Let's look at the trends:

 

The iPod was a cyclical device bought around the holidays and product announcements, it never really took off. The iPhone is a subsidized device that accelerated as more telecoms carried the device around the world. The iPad is a non-subsidized, laptop/PC replacement. Some families have multiple units. There will be repricing of the lower end iPad2 and with the new iPad name you can expect various pricing shenanigans to squeeze out every cent without going to a 7" tablet, ever. The new iPad will set the bar for all other tablet makers. And as a result the traditional PC makers have a lot to fear from this trajectory below - 80M iPads in 1 year is very likely.

UPDATED:The R value of .9863 is for a 3-rd order polynomial curve trendline which is a better fit than an exponential trendline. It includes the last 3 quarterly forecasts for rest of 2012.

In fact, if Apple doesn't hit 80M iPads this year, it means that the overall tablet market has peaked (or that Apple's addressable market has been saturated). What other tablet makers cannot match in technology they will have to make up in price and value. If Apple does not hit 80M iPads you can be sure that the Mac vs Windows effect will hit iPads too -- that is, people are willing to pay less for an inferior tablet or even buy 2 for the price of 1. And if that happens, the Apple roadmap will come into play forcing people to ask what else the technology pipeline has up its sleve.  Beyond the iPad horizon stands an interactive TV. Apple has to go up, because the only other way is down, and it has been there before. I hope the enterprise picks up the iPad once and for all because this is where the buyers are to support the trendline above, failing that I do not see how we can be in Tim Cook's "post-PC" world quite yet.

UPDATE 2:

Ryan Block says:

“The resolution is what brings it home though. Let me put it this way: when I pulled up a nice, high resolution photograph on the iPad 3rd-gen, I genuinely could not tell the difference between what I was seeing onscreen, and a nice, beautifully shot, well-printed, glossy photograph. It was seriously to that level.”

Aereo Gets Sued by Pretty Much Every Media Conglomerate

Poor Aereo -- 2 weeks before launch they are hit with a copyright infringement lawsuit. The $20M funded company wanted to rent out mini-antennas all over New York City and allow you to watch OTA HD TV from any device on the Internet. And record the content. It would probably increase reach of each local affiliate but instead they are all suing them. One of the full legal filing documents is below. There are others.

 

Broadcasters v. Aereo

NextBox 2.0 from Rogers - "No I don't have the service, and never will."

Rogers just announced their next generation set top box and whole home PVR service called NextBox 2.0. There are a lot of very compelling features that many some people are now used to having with services like Boxee, AppleTV and FibeTV from Bell. Rogers is using the Cisco set top boxes, which is the newly minted Scientific Atlanta acquisition from several years back. Hinted at selling the full set top box business, Cisco reiterated to their support for this product line. Good for Rogers -- you would not want to offer the next generation set of hardware on a product line that is on its death bed.

The features are as follows:

• a PVR with a 1TB hard drive to record hundreds of hours of content
• watch TV on any TV in your home, live or recorded
• Start watching on 1 TV show, finish on another TV or Tablet
• Rogers Live TV allows you to use your tablet to stream many of the channels on an iPad or Android tablet

The review after the break...