Techpinions Insiders post on Mozilla, Google and Apple

Going forward, while I’ll continue to post regularly here, I’ll also be contributing increasingly to the Techpinions Insiders service, which is a subscription-based offering that complements the publicly-available content on Techpinions. Right now it’s $5 per month, and subscribers get lots of extra content for that $5. I highly recommend subscribing.

My first post for the service is a quick take on the news from yesterday that Mozilla is switching its default search engine for Firefox from Google to Yahoo, ending a long-standing relationship. I examine the key data around both search engine and browser market share, as well as the changing economics of Google’s search business, and I also talk about Apple’s slow and subtle move away from Google for search. I encourage you to go take a look (individual pieces may be read for a micropayment of 25 cents).

Oh, and I also have my regular weekly post on Techpinions today, which is about the various lenses through which one can see Google, and the implications.

Quick thoughts: BlackBerry’s announcements

BlackBerry yesterday made a series of announcements around its enterprise software and services strategy and roadmap, and I was able to attend both the event itself and some analyst-only sessions under NDA afterwards. I obviously can’t share the afternoon’s content, but from what we learned in the morning and from other insights I gained yesterday, I wanted to update my recent takes (here and here) on BlackBerry a little.

Focus on regulated industries, ambitions beyond

I’ve praised BlackBerry for their focus on the regulated industries when it comes to devices, because it shows how realistic BlackBerry is being about its prospects in the enterprise today. Especially in the US and other mature markets, BlackBerry is unlikely to sell devices other than in the public sector and other highly regulated industries. However, as I’ve said before, BlackBerry’s future lies in building a business that’s not directly tied to its dwindling device installed base and in going beyond these regulated industries to other businesses.

BlackBerry shared results from a survey yesterday about enterprises’ concerns about security and risk. There were no new findings here and lots of old themes: a vague sense of unease about the management of mobile devices and potential risks their use in the enterprise pose. BlackBerry is hammering away at worn themes here, but it’s hoping that broader awareness of the growing security risks in the enterprise will eventually pay off for them. There’s an element of scaremongering here, and the real challenge will be convincing enterprises beyond the regulated industries that there’s a real threat in mobile security that (a) requires going beyond the standard basic protections available in major operating systems and management systems today and (b) requires a BlackBerry solution rather than one from a competitor.

Fleshing out the cross-platform story

A big part of that story, in turn, has to be fleshing out the cross-platform story BlackBerry has been trying to tell since the announcement of BES 10. The vision has always been there, but it hasn’t been clear why a company would choose BlackBerry to manage non-BlackBerry devices. BES 12 is part of the answer to that, as it finally provides a unified approach to managing all devices, but the Samsung deal is the first concrete step in fleshing out the cross-platform vision. That’s because it’s the first step towards crafting truly optimized solutions built around a very popular device category in the enterprise rather than just focusing on standard APIs and tools. Samsung KNOX hasn’t been a great success yet, and its contribution to Android’s efforts and the BlackBerry partnership are both signs of its weakness and need to gain momentum. But on BlackBerry’s side, it’s also an admission that the generic approach hasn’t resonated, and something more targeted may be needed. There’s more coming as part of the Android for Work initiative too.

Multiple tiers now available on BlackBerry

CEO John Chen started the day’s sessions by talking about BlackBerry’s end-to-end solution for secure mobile communication and productivity. He made much of the multi-layered approach, starting with chips and firmware, the OS, the applications, the BES and the NOC. This is the top tier of the secure solutions BlackBerry offers. But it now arguably offers two other tiers as well: Samsung KNOX as part of the BES and NOC system, and other devices managed through a BES on a more generic basis. This creates a slight awkward situation where BlackBerry devices managed by the BES are the gold standard, with KNOX/BES devices a second tier (silver?) and others a third. I asked BlackBerry executives about this, and specifically how they imagined enterprises using each of these tiers within their companies, and they said they see companies using multiple tiers for different kinds of users based on their security and risk profiles. That makes a certain amount of sense, but the top tier has always been more or less exclusive to BlackBerry: the question is whether it can make inroads in the middle and bottom tiers, which is where the vast majority of devices in use are today.

Selling productivity against the big guys is tough

BlackBerry’s other big story is selling a suite of communications, collaboration and productivity solutions, with its content storage and syncing solutions such as Blend, BBM Meetings announced yesterday, and so on. It believes it’s created the best mobile-first solution for these things and points to the lack of full feature sets on the mobile versions of Lync, Adobe Connect and other similar products. That’s a fascinating value proposition, but I see two major problems with it. Firstly, the others will catch up fast: for example, Microsoft’s rebranding of Lync as Skype for Business is likely to come with an expanded feature set on mobile devices in the near future. Secondly, BlackBerry isn’t known for these things, and once again the challenge will be selling these new products and services beyond the traditional BlackBerry base. With a direct sales force of only a couple of hundred, BlackBerry will be heavily reliant on its indirect sales teams, many of whom also sell competing products. Why will channel partners sell these solutions when awareness is lower, preference for others is stronger, and many companies already have relationships with competitors?

Short-term growth prospects are all in enterprise software

BlackBerry is very aware of the two peaks problem I talked about in an earlier piece – that is, that its traditional business, which was directly tied to its device base, is in decline, and it needs significant new revenues to slow the decline and eventually get back to growth. The company has in the past talked about three potential new sources of revenue: enterprise software and services, BBM and the Internet of Things. However, of these, only enterprise software and services is going to generate any significant amount of revenue in the near term. The company’s target for BBM is $100 million by next financial year, whereas the target for enterprise software and services is $500 million, a doubling year on year. The company’s Internet of Things efforts, meanwhile, are too nascent even to warrant a public revenue target in the near term. That puts a heck of a lot of weight on the enterprise software and service activities, and the success of BES 12 in particular since so much else is dependent on that. The company’s management seems to be extremely realistic about its prospects overall, but this is one area where their goal seems like it’ll be a real stretch.

Overall, I remain somewhat positive on BlackBerry’s short-term prospects: they’ve reduced costs and cash burn to the point where there’s no longer an immediate danger of going under, and revenues are starting to stabilize. The question continues to be whether these new businesses can grow, and importantly grow independently of the device base, sufficiently in the coming years to return the company to significant growth. The next year or so will give us a really good sense of whether that’s possible or not.

US cable, satellite and telco provider review for Q3 2014

As a counterpoint to the US wireless market trends deck I published last week, today I’m making available a review of some of the major operational metrics and revenue trends for the largest publicly-held cable, satellite and wireline telecoms providers in the US market. This deck focuses on pay TV, broadband and voice telephony services, and shows growth on an annual and quarterly basis as well as total revenues and revenues per user for these services. Some of the key messages are:

  • TV subscribers aren’t shrinking – if looked at annually, to overcome the inherent cyclicality in the market, subscribers are actually growing very slightly
  • Broadband is still growing rapidly, adding several million subscribers each year
  • Voice is shrinking fast, though the rate of decline has slowed recently, as decent cable growth fails to offset the rapid shrinkage among the telcos
  • Pay TV is around a $100 billion a year market, and shows no sign of shrinking despite the shift in viewing habits towards DVR, VoD and online consumption.

I’ve embedded the deck below. You can also see it directly on SlideShare here, where you can find the code to embed it elsewhere or download it as a PDF. As with the wireless trends deck, the data behind these slides is available as a paid service from Jackdaw Research. Please contact me if you are interested in this option.

Q3 2014 US Wireless Trends Deck

Last week, FierceWireless published my brief analysis of some key trends in the US wireless market in Q3 2014, along with exclusive early access to the slide deck I do each quarter. As of this morning, the deck is now available on Slideshare for viewing, embedding and downloading (as a PDF). I’ve embedded it below for easy access, but feel free to share it and download it as you see fit.

The data behind the deck is available in Excel or Numbers format as a paid product from Jackdaw Research, on either a one-off basis or an annual subscription. Please contact me if you are interested in either of these options. I hope you find these useful. Equivalent decks for the past two quarters may be found (along with some other decks) on my Slideshare page.

Quick Thoughts: Microsoft’s Office moves

Microsoft today made a series of announcements relating to Office running on platforms other than Windows:

  • Individual Office apps for iPhone are now available, mirroring those launched on the iPad earlier this year
  • Office will be coming to Android, starting with a limited beta/preview next week and full versions next year
  • All the versions of Office on iOS and Android will shift the dividing line between free and paid-for functionality significantly.

My initial reaction to the news was summarized in 140 characters in this tweet:

I wanted to expand on those ideas just a bit.

What the announcement says about Android

The announcement is most telling about Microsoft and its evolving strategy for Office, but it’s also illuminating about Android. Note that Microsoft announced Office for iPad in March and it became available essentially immediately for anyone running the latest version of the operating system. No delay, no beta label, just instant availability. But for Android, Microsoft is adopting a very different model, with a preview period with a limited number of beta testers and general availability coming months later. Why? Well, this is the same old story we’ve heard for years now: the fragmentation of the Android base, although we’re not even talking about Android smartphones. Go to the signup page for the Office for Android tablet preview and you’ll see that you have to specify the make and model of the tablet you want to try it on, and that’s the key here: developing complex software such as Office for Android is enormously more complex than on iOS, and especially if you want to achieve full feature parity across devices and platforms.

What the announcement says about Microsoft

The rest of the announcement is incredibly important in what it says about Microsoft and its strategy for Office. First, the context: Microsoft launched Office for iPad in March and says it’s seen 40 million downloads of the three apps since then. But the full functionality of the apps has only been available to Office 365 subscribers, and it’s added less than three million Home and Personal subscribers since then, at roughly the same pace as it added subscribers earlier.  People have been very interested in the apps, but most haven’t been willing to pay for the full functionality (or already had access to it through existing Home or Business subscriptions).

Why is that? Well, think about the kind of Office-related work you might want to do on an iPad. It likely isn’t writing the next great American novel, preparing the slides for your TED talk or working with pivot tables in Excel. It’s fixing a typo in a Word document, updating a cell in an Excel spreadsheet or inserting an extra slide in PowerPoint. Is that functionality worth $70-100 a year for most users? Likely not. Arguably, Microsoft drew the line between what was free and what wasn’t in the wrong place here, for obvious reasons: full Office functionality has always cost a lot, and there’s never been a version of Office available for free, so it was just following its long-standing pattern. But the way people use Office on tablets will be different from the way they use it on PCs, and Microsoft seems to be recognizing that. As such, it’s shifting the dividing line between free and not-free in favor of providing more functionality for free.

But I think there may be at least two other reasons for this move to provide more functionality for free. Firstly, Microsoft’s Consumer Office business is dwarfed by its Commercial Office business: last financial year, total Office System revenue was just over $24 billion according to Microsoft’s 10-K, but Consumer Office revenue was only around $3 billion over the same period. The vast majority of Office comes from businesses, who can now buy per-user licenses for their employees allowing them to use Office across multiple devices. At some point, Microsoft may decide that allowing consumers (whether acting in their personal lives or as employees) to use at least some functionality for free on some devices is a price worth paying to cement the position of Office as the productivity tool of choice for businesses, who pay most of the bills.

Lastly, Office has long suffered from the fact that it over-serves most users’ needs considerably, and the price charged for Office reflects 100% of the features whereas many users only use a small percentage. One of the attractions of Google Docs and other Office alternatives both for consumers and for businesses is that they allow users to accomplish many of the more basic tasks for free or for a much lower price. Microsoft should be considering a bifurcation of the Office product into at least two alternative versions: a more basic one with limited functionality offered for free or at least a lower cost, and a fully-featured one offered at the traditional price points. Perhaps it sees the new tablet and smartphone apps as an opportunity to experiment with just such a model.

What’s in and what’s out with the free version?

One other interesting thing to look at is what’s in and out of the free version. According to Microsoft’s blog post, these are some of the features that will be exclusive to the paid version:

advanced editing and collaboration capabilities, unlimited OneDrive storage, Dropbox integration and a number of other benefits.

It’s interesting that both of the recently-announced storage enhancements are exclusive to the paid version: Dropbox integration and unlimited OneDrive storage. The latter has a real cost associated with it, so it makes sense that it’s reserved for the paid version, but it’s intriguing to see a partner feature exclusive to the paid version too. I’ve pasted a screenshot from the iPad app that summarizes the premium features. I think there’s a risk that the dividing line feels arbitrary, but this list looks like it makes sense. It’s also interesting to see that Microsoft still requires the user to log in with a Microsoft account for the new functionality, even though a paid Office 365 subscription is no longer necessary.

Office premium features