by Adam Hartung | Aug 29, 2017 | Innovation, Leadership, Marketing, Mobile, Web/Tech
For most consumers an Android-based phone from one of the various manufacturers, most likely bought through a wireless provider if in the USA, does pretty much everything the consumer wants. Developers of most consumer apps, such as games, navigation, shopping, etc. make sure their products work on all phones. For that reason, the bulk of consumers are happy to buy their phone for $200 or less, and most don’t even care what version of Android it runs. As a stand-alone tool an Android phone does pretty much everything they want, and they can afford to replace it every year or two.
But the business community has different requirements.
And because iOS has superior features, Apple continues to dominate the enterprise environment:
- All iPhones are encrypted, giving a security advantage to iOS. Due to platform fragmentation (a fancy way of saying Android is not the same on all platforms, and some Android phones run pretty old versions) most Android phones are not encrypted. That leads to more malware on Android phones. And, Android updates are pushed out by the carrier, compared to Apple controlling all iOS updates regardless of carrier. When you’re building an enterprise app, these security issues are very important.
- iOS is seamless with Macs, and can be pretty well linked to Windows if necessary for an apps’ purpose. Android plays well with Chromebooks, but is far less easy to connect with established PC platforms. So if you want the app to integrate across platforms, such as in a corporation, it’s easier with iOS.
- iPhones come exactly the same, regardless of the carrier. Not true for Android phones. Almost all Androids come with various “junkware.” These apps can conflict with an enterprise app. For enterprise app developers to make things work on an Android phone they really need to “wipe” the phone of all apps, make sure each phone has the same version of Android and then make sure users don’t add anything which can cause a user conflict with the enterprise app. Much easier to just ask people to use an iPhone.
- iOS backs up to iCloud or via iTunes. Straightforward and simple. And if you need to restore, or change devices, it is a simple process. But in the Android world companies like Verizon and Samsung integrate their own back-up tools, which are inconsistent and can be quite hard for a developer to integrate into the app. Enterprise apps need back-ups, and making that difficult can be a huge problem for enterprise developers who have to support thousands of end users. And the fact that Android restores are not consistent, or reliable, makes this a tough issue.
- Search is built-in with iOS. Simple. But Android does not have a clean and simple search feature. And the old cross-platform inconsistencies plague the various search functions offered in the Android world. When using an enterprise app, which may well have considerable complexity, accessing an easy search function is a great benefit.
Most of these issues are no big deal for the typical smartphone consumer who just uses their phone independently of their work. But when someone wants to create an enterprise app, these become really important issues. To make sure the app works well, meeting corporate and end user needs, it is much easier, and better, to build it on iOS.
This allows Apple to price well above the market average
Today Apple charges around $800 for an iPhone 7, and expectations are for the iPhone 8 to be priced around $1,000. Because Apple’s pricing is some 4-5x higher, it allows Apple’s iOS revenue to actually exceed the revenue of all the Android phones sold! And because Android phone manufacturers compete on price, rather than features and capabilities, Apple makes almost ALL the profit in the smartphone hardware business. Even as iPhone unit volume has struggled of late, and some analysts have challenged Apple’s leadership given its under 20% market share, profits keep rolling in, and up, for the iPhone.
By taking the lead with enterprise app developers Apple assures itself of an ongoing market. Three years ago I pointed out the importance of winning the developer war when IBM made its huge commitment to build enterprise apps on iOS. This decision spelled doom for Windows phone and Blackberry — which today have inconsequential market shares of .1% and .0% (yes, Blackberry’s share is truly a rounding error in the marketplace.) Blackberry has become irrelevant. And having missed the mobile market Microsoft is now trying to slow the decline of PC sales by promoting hybrid devices like the Surface tablet as a PC replacement. But, lacking developers for enterprise mobile apps on Microsoft O/S it will be very tough for Microsoft to keep the mobile trend from eventually devastating Windows-based device sales.
As the world goes mobile, devices become smaller and more capable. The need for two devices, such as a phone and a PC, is becoming smaller with each day. Those who predicted “nobody can do real work on a smartphone” are finding out that an incredible amount of work can be done on a wirelessly connected smartphone. As the number of enterprise apps grows, and Apple remains the preferred developer platform, it bodes well for future sales of devices and software for Apple — and creates a dark cloud over those with minimal share like Blackberry and Microsoft.
by Adam Hartung | Apr 2, 2015 | Current Affairs, Defend & Extend, In the Rapids, Innovation, Leadership, Web/Tech
Microsoft launched its new Surface 3 this week, and it has been gathering rave reviews. Many analysts think its combination of a full Windows OS (not the slimmed down RT version on previous Surface tablets,) thinness and ability to operate as both a tablet and a PC make it a great product for business. And at $499 it is cheaper than any tablet from market pioneer Apple.
Meanwhile Apple keeps promoting the new Apple Watch, which was debuted last month and is scheduled to release April 24. It is a new product in a market segment (wearables) which has had very little development, and very few competitive products. While there is a lot of hoopla, there are also a lot of skeptics who wonder why anyone would buy an Apple Watch. And these skeptics worry Apple’s Watch risks diverting the company’s focus away from profitable tablet sales as competitors hone their offerings.
Looking at these launches gives a lot of insight into how these two companies think, and the way they compete. One clearly lives in red oceans, the other focuses on blue oceans.
Blue Ocean Strategy (Chan Kim and Renee Mauborgne) was released in 2005 by Harvard Business School Press. It became a huge best-seller, and remains popular today. The thesis is that most companies focus on competing against rivals for share in existing markets. Competition intensifies, features blossom, prices decline and the marketplace loses margin as competitors rush to sell cheaper products in order to maintain share. In this competitively intense ocean segments are niched and products are commoditized turning the water red (either the red ink of losses, or the blood of flailing competitors, choose your preferred metaphor.)
On the other hand, companies can choose to avoid this margin-eroding competitive intensity by choosing to put less energy into red oceans, and instead pioneer blue oceans – markets largely untapped by competition. By focusing beyond existing market demands companies can identify unmet needs (needs beyond lower price or incremental product improvements) and then innovate new solutions which create far more profitable uncontested markets – blue oceans.
Obviously, the authors are not big fans of operational excellence and a focus on execution, but instead see more value for shareholders and employees from innovation and new market development.
If we look at the new Surface 3 we see what looks to be a very good product. Certainly a product which is competitive. The Surface 3 has great specifications, a lot of adaptability and meets many user needs – and it is available at what appears to be a favorable price when compared with iPads.
But …. it is being launched into a very, very red ocean.
The market for inexpensive personal computing devices is filled with a lot of products. Don’t forget that before we had tablets we had netbooks. Low cost, scaled back yet very useful Microsoft-based PCs which can be purchased at prices that are less than half the cost of a Surface 3. And although Surface 3 can be used as a tablet, the number of apps is a fraction of competitive iOS and Android products – and the developer community has not yet embraced creating new apps for Windows tablets. So Surface 3 is more than a netbook, but also a lot more expensive.
Additionally, the market has Chromebooks which are low-cost devices using Google Chrome which give most of the capability users need, plus extensive internet/cloud application access at prices less than a third that of Surface 3. In fact, amidst the Microsoft and Apple announcements Google announced it was releasing a new ChromeBit stick which could be plugged into any monitor, then work with any Bluetooth enabled keyboard and mouse, to turn your TV into a computer. And this is expected to sell for as little as $100 – or maybe less!
This is classic red ocean behavior. The market is being fragmented into things that work as PCs, things that work as tablets (meaning run apps instead of applications,) things that deliver the functionality of one or the other but without traditional hardware, and things that are a hybrid of both. And prices are plummeting. Intense competition, multiple suppliers and eroding margins.
Ouch. The “winners” in this market will undoubtedly generate sales. But, will they make decent profits? At low initial prices, and software that is either deeply discounted or free (Google’s cloud-based MSOffice competitive products are free, and buyers of Surface 3 receive 1 year free of MS365 Office in the cloud, as well as free upgrade to Windows 10,) it is far from obvious how profitable these products will be.
Amidst this intense competition for sales of tablets and other low-end devices, Apple seems to be completely focused on selling a product that not many people seem to want. At least not yet. In one of the quirkier product launch messages that’s been used, Apple is saying it developed the Apple Watch because its other innovative product line – the iPhone – “is ruining your life.”
Apple is saying that its leaders have looked into the future, and they think today’s technology is going to move onto our bodies. Become far more personal. More interactive, more knowledgeable about its owner, and more capable of being helpful without being an interruption. They see a future where we don’t need a keyboard, mouse or other artificial interface to connect to technology that improves our productivity.
Right. That is easy to discount. Apple’s leaders are betting on a vision. Not a market. They could be right. Or they could be wrong. They want us to trust them. Meanwhile, if tablet sales falter….. if Surface 3 and ChromeBit do steal the “low end” – or some other segment – of the tablet market…..if smartphone sales slip….. if other “forward looking” products like ApplePay and iBeacon don’t catch on……
This week we see two companies fundamentally different methods of competing. Microsoft thinks in relation to its historical core markets, and engaging in bloody battles to win share. Microsoft looks at existing markets – in this case tablets – and thinks about what it has to do to win sales/share at all cost. Microsoft is a red ocean competitor.
Apple, on the other hand, pioneers new markets. Nobody needed an iPod… folks were happy enough with Sony Walkman and Discman. Everybody loved their Razr phones and Blackberries… until Apple gave them an iPhone and an armload of apps. Netbook sales were skyrocketing until iPads came along providing greater mobility and a different way of getting the job done.
Apple’s success has not been built upon defending historical markets. Rather, it has pioneered new markets that made existing markets obsolete. Its success has never looked obvious. Contrarily, many of its products looked quite underwhelming when launched. Questionable. And it has cannibalized its own products as it brought out new ones (remember when iPods were so new there was the iPod mini, iPod nano and iPod Touch? After 5 years of declining iPod sale Apple has stopped reporting them.) Apple avoids red oceans, and prefers to develop blue ones.
Which company will be more successful in 2020? Time will tell. But, since 2000 Apple has gone from nearly bankrupt to the most valuable publicly traded company in the USA. Since 1/1/2001 Microsoft has gone up 32% in value. Apple has risen 8,000%. While most of us prefer the competition in red oceans, so far Apple has demonstrated what Blue Ocean Strategy authors claimed, that it is more profitable to find blue oceans. And they’ve shown us they can do it.
by Adam Hartung | Feb 7, 2015 | In the Rapids, Innovation, Leadership, Transparency, Web/Tech
Apple was a high flyer. As the stock hit $700, analysts predicted it would reach $1,000. Then Steve Jobs died. He so personified the company that many felt his death left Apple leaderless. So the stock lost 42% of its value dropping to $400.
Apple has now recaptured that lost value, and trades a bit above its former historic high. Apple is the most valuable publicly traded company in America, worth about $700B. For some perspective on just how large this valuation is, it roughly equals the combined values of Dow Jones Industrial Average stalwart, industry leading mega-companies Walmart ($281B #1 retailer,) GE ($242B #1 conglomerate,) McDonalds ($91B #1 restaurant,) and Dupont ($70B #1 chemical.)
Since Apple was on the edge of bankruptcy just 15 years ago, and its value has risen so far, so fast, many people question if it can go much higher. Yes, it’s had a great recent quarter. But can anyone expect this company to continue growing at this pace? Won’t smartphones be commoditized causing Apple to lose share, sales and profits to alternatives? And aren’t its new products like the iWatch sort of “faddish?”
Apple is actually leading another new marketplace development that may well be bigger than any previous market development (digital music, smartphones, tablets) which could well send its value much, much higher. This new market success revolves around developers, beacons, consumers, retailers and payments. Just like we didn’t know we wanted an iPod until we saw one, or an iPhone, new products that exploit the Internet of Things (IoT) is where Apple is again leading the creation of new products and markets.
Start with Apple’s developer ecosystem. No device has any value unless it has applications. Apple created the first smartphone developer network around iOS. Because Android implementations vary based on device manufacturer, Apple’s iOS remains by far the largest installed common device base in the USA, and globally. Thus, developers are attracted in the largest numbers to develop applications for iPhones and iPads running iOS before any other device. To have a sense of the size of this developer base, and the speed with which they develop for Apple products, when Apple launched its own software language for developers called Swift it was downloaded over 11million times in the first month. These developer companies, in total, captured over $25B in revenue just in the 4th quarter from AppStore sales.
Understandably, these developers are constantly creating new products which leverage the installed Apple mobile base. A base which continues to double every few months as globally people buy more iPhones (75million iPhone 6 and 6+ devices sold in the 4th quarter.) And a base growing internationally, as Apple just beat out Louis Vuitton and Hermes to become the #1 luxury brand in China. It is now a virtuous circle, where the more apps developers create the more people want iPhones, and the more iPhones people buy the more developers want to create new apps.
And this is not just consumer apps. Increasingly business systems are being built to use Apple products. Many of these are small to medium size developers and resellers. Additionally, in 2014 Apple and IBM joined forces to create IBM MobileFirst which is building enterprise applications for multiple industries which will allow people to do all their work on iPhones and iPads sold by IBM. Even though IBM has struggled of late, its enterprise application skills have long been a corporate strength, and the first wave of products rolled out in December.
Now focus on iBeacon. Beacons are small electronic devices which transmit a signal that can talk to a smartphone. These can cost anywhere from a few dollars to a nickel, depending upon what they do and signal range. Years ago Apple started developing beacons, and then optimized iOS 8 to selectively and efficiently pick up beacon signals and establish 2-way communications without dissipating the battery. Without a lot of fanfare to the general public, they began rolling out iBeacons several months ago.
Today there are millions of beacons in place. Miami airport uses them to help travelers find gates, food, etc. The New York Metropolitan Museum of Art and Guggenheim Museum use them for wayfinding, virtual guided tours and buying products. The Los Angeles Union Station and zoo, as well as the Orlando Seaworld, uses beacons to aid the customer experience, as this technology has become ready for prime time. Starbucks uses them to help loyal customers place orders. Retail applications are many, including finding products, couponing, product information, pricing and even purchase. Chain Store Age says that 2% of retailers had beacons installed in 2014, but that number will grow to 24% by end of 2015. A 12-fold increase in the installed base, at least.
Additionally, Facebook is now integrating beacons into the Facebook mobile app. This means iPhone users won’t need to download a museum or store app to communicate with beacons for their personal needs. Instead they can communicate via Facebook to find items, know what their friends think of the item, compare prices, etc. When the world’s largest social media platform incorporates beacons Mobile Marketer says this bridges digital and physical marketing, increases personalization in use of beacons, and beacons now accelerate the move to seamless mobile marketing and sales.
So, beacons and your idevice (including your iWatch or other wearable,) with the help of all those developers who are writing apps to bring you information, now make it possible for you to find your way around and learn more about things. And with ApplePay you can actually achieve the “last mile” of concluding the relationship between the business and consumer.
While mobile payment systems have been slow to get started, ApplePay has a lot more going for it. Firstly, it has the support of about all the major bank and card-issuing institutions because they see ApplePay as possibly lowering costs and increasing their revenue. Second, 78% of retailers think mobile pay is better and faster than their current point of sale systems. As a result, 43% of retailers plan to implement ApplePay by the end of 2015.
So, during 2015 we will be able to use beacons to find our way around, use beacons to identify services and products we want, and use beacons to tell us about the services and products either with apps from the location and retailer, or via Facebook mobile. Then we can buy those products immediately with ApplePay.
Even though Apple is a very highly valued company, it is again doing what made it such a big winner. Pioneering entirely new ways for consumers and businesses to get things done. New solutions are happening in all kinds of industries, pioneered by developers big and small. And when it comes to IoT, Apple products are at the center of the next big wave. Ancillary products, like watches and headphones, further support the use of Apple mobile products and the trend to IoT. Apple’s had a great run, but there is ample reason to believe that run has not stopped. There looks to be an entirely new wave of growth as Apple creates new products and solutions we didn’t even know we needed until they were in our hands.
by Adam Hartung | Aug 6, 2014 | Defend & Extend, In the Whirlpool, Innovation, Lifecycle, Web/Tech
Remember the RAZR phone? Whatever happened to that company?
Motorola has a great tradition. Motorola pioneered the development of wireless communications, and was once a leader in all things radio – as well as made TVs. In an earlier era Motorola was the company that provided 2-way radios (and walkie-talkies for those old enough to remember them) not only for the military, police and fire departments, but connected taxies to dispatchers, and businesses from electricians to plumbers to their “home office.”
Motorola was the company that developed not only the thing in a customer’s hand, but the base stations in offices and even the towers (and equipment on those towers) to allow for wireless communication to work. Motorola even invented mobile telephony, developing the cellular infrastructure as well as the mobile devices. And, for many years, Motorola was the market share leader in cellular phones, first with analog phones and later with digital phones like the RAZR.
But that was the former Motorola, not the renamed Motorola Solutions of today. The last few years most news about Motorola has been about layoffs, downsizings, cost reductions, real estate sales, seeking tenants for underused buildings and now looking for a real estate partner to help the company find a use for its dramatically under-utilized corporate headquarters campus in suburban Chicago.
How did Motorola Solutions become a mere shell of its former self?
Unfortunately, several years ago Motorola was a victim of disruptive innovation, and leadership reacted by deciding to “focus” on its “core” markets. Focus and core are two words often used by leadership when they don’t know what to do next. Too often investment analysts like the sound of these two words, and trumpet management’s decision – knowing that the code implies cost reductions to prop up profits.
But smart investors know that the real implication of “focusing on our core” is the company will soon lose relevancy as markets advance. This will lead to significant sales declines, margin compression, draconian actions to create short-term P&L benefits and eventually the company will disappear.
Motorola’s market decline started when Blackberry used its server software to help corporations more securely use mobile devices for instant communications. The mobile phone transitioned from a consumer device to a business device, and Blackberry quickly grabbed market share as Motorola focused on trying to defend RAZR sales with price reductions while extending the RAZR platform with new gimmicks like additional colors for cases, and adding an MP3 player (called the ROKR.) The Blackberry was a game changer for mobile phones, and Motorola missed this disruptive innovation as it focused on trying to make sustaining improvements in its historical products.
Of course, it did not take long before Apple brought out the iPhone and with all those thousands of apps changed the game on Blackberry. This left Motorola completely out of the market, and the company abandoned its old platform hoping it could use Google’s Android to get back in the game. But, unfortunately, Motorola brought nothing really new to users and its market share dropped to nearly nothing.
The mobile phone business quickly overtook much of the old Motorola 2-way radio business. No electrician or plumber, or any other business person, needed the old-fashioned radios upon which Motorola built its original business. Even police officers used mobile phones for much of their communication, making the demand for those old-style devices rarer with each passing quarter.
But rather than develop a new game changer that would make it once again competitive, Motorola decided to split the company into 2 parts. One would be the very old, and diminishing, radio business still sold to government agencies and niche business applications. This business was profitable, if shrinking. The reason was so that leadership could “focus” on this historical “core” market. Even if it was rapidly becoming obsolete.
The mobile phone business was put out on its own, and lacking anything more than an historical patent portfolio, with no relevant market position, it racked up quarter after quarter of losses. Lacking any innovation to change the market, and desperate to get rid of the losses, in 2011 Motorola sold the mobile phone business – formerly the industry creator and dominant supplier – to Google. Again, the claim was this would allow leadership to even better “focus” on its historical “core” markets.
But the money from the Google sale was invested in trying to defend that old market, which is clearly headed for obsolescence. Profit pressures intensify every quarter as sales are harder to find when people have alternative solutions available from ever improving mobile technology.
As the historical market continued to weaken, and leadership learned it had under-invested in innovation while overspending to try to defend aging solutions, Motorola again cut the business substantially by selling a chunk of its assets – called its “enterprise business” – to a much smaller Zebra Technologies. The ostensible benefit was it would now allow Motorola leadership to even further “focus” on its ever smaller “core” business in government and niche market sales of aging radio technology.
But, of course, this ongoing “focus” on its “core” has failed to produce any revenue growth. So the company has been forced to undertake wave after wave of layoffs. As buildings empty they go for lease, or sale. And nobody cares, any longer, about Motorola. There are no news articles about new products, or new innovations, or new markets. Motorola has lost all market relevancy as its leaders used “focus” on its “core” business to decimate the company’s R&D, product development, sales and employment.
Retrenchment to focus on a core market is not a strategy which can benefit shareholders, customers, employees or the community in which a business operates. It is an admission that the leaders missed a major market shift, and have no idea how to respond. It is the language adopted by leaders that lack any vision of how to grow, lack any innovation, and are quickly going to reduce the company to insignificance. It is the first step on the road to irrelevancy.
Straight from Dr. Christensen’s “Innovator’s Dilemma” we now have another brand name to add to the list of those which were once great and meaningful, but now are relegated to Wikipedia historical memorabilia – victims of their inability to react to disruptive innovations while trying to sustain aging market positions – Motorola, Sears, Montgomery Wards, Circuit City, Sony, Compaq, DEC, American Motors, Coleman, Piper, Sara Lee………..
by Adam Hartung | Dec 3, 2013 | Current Affairs, Leadership, Web/Tech
“A horse, a horse, my Kingdom for a Horse” King Richard cried out just before he was murdered (Richard III by Billy Shakespeare ~ 1592.)
King Richard of England was really, really unpopular. He was accused of ascending to the throne via various Michiavellian behaviors. Eventually he was trapped on the battlefield by his enemies, his horse was slain, and he uttered the above line – metaphorically begging for a way out of the trapped world that was his kingdom. He didn’t get the horse – and he died.
After over 20 years of fighting about health care the U.S. Congress passed the Affordable Care Act and the President signed it into law in 2010. About the only agreement in the country was that the ACA appealed to almost no one due to the compromises required to get it passed. It was fought by wide ranging constituencies, until in 2012 the Supreme Court upheld the law.
But not even that was the end of the fight, because in October, 2013 Congress shut down the government as groups fought about whether the act would receive any funding to implement its own provisions. Eventually an agreement was reached, the government re-opened, and it looked like the ACA was going into practice.
Oh, but wait…
In today’s world everyone uses the internet. Face-to-face meetings are largely gone, and forests by the score are being saved as we refuse to use paper when a digital screen will accomplish our tasks. So it only made sense that when the U.S. population was to sign up for the benefits of this new law they would do so on the World Wide Web.
Folks would buy health insurance just like they buy books and clothes, and download movies, from a web site. Billions of transactions have happened over the web the last decade. Why, Google alone does over 5 billion searches each and every day. So it seemed easily practical, and doable, for implementation to be as easy as opening a new web site. We all expected that come November we’d simply hit the search button, go to the web site, price out the options and make our health insurance decisions.
Of course we all know how that worked out. Or didn’t. The site didn’t work for spit. Apple may be able to track about a million apps on its site, and it seems able to deliver about 4 million per day at an average price of about a buck. But the U.S. government web site – after spending over $400million (maybe even $1B) – couldn’t seem to process but a few thousand applications a day. So Congressional hearings started – cries for firing Secretary Sebelius rang out – and President Obama’s favorability plummeted faster than the failed effort messages came up in browsers at Healthcare.gov.
You could almost hear the President on the steps of the White House “A web site, a working web site, my Presidency for a working web site.”
There was a Chicago mayor who lost an election because he couldn’t clear the streets of snow. Something as simple as removing snow in a 1979 blizzard overtook everything Mayor Bilandic’s administration did, and wanted to do, for his great city. When Chicagoans couldn’t access their streets for 3 days they “threw the bastard out” by electing a new candidate (Jane Byrne) in the next primary – and she went on to be the next mayor.
And the only thing anyone remembers about Mayor Bilandic was he didn’t get the snow off the streets.
This lesson is not lost on any local mayor. You can have grand plans, and vision, but if you can’t keep the streets clean you get thrown out.
We’ve entered a new era of political expectations. Citizens now expect their politicians to build and operate functional web sites. They expect their government to do as least as good a job as private industry at everything digital. And if politicians, or administrators, flub a web implementation it can have signficant, damaging implications.
Failure to build a functional web site, meeting the average person’s expectations, is a terrible, terrible falure these days. Perhaps enough to lose the voters’ trust. Perhaps enough to breath new life into those who want to overturn your “landmark legislation.” And perhaps enough to kill your place in history.
