Category Archives: Tablets

Laptops, Microsoft, Surface, Tablets, Windows Phone

Every device is a compromise, part 2

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In May last year, when Microsoft unveiled the Surface Pro 3, I wrote a piece about the new device but also about the way it was unveiled, titled, “Surface Pro 3, like every other device, is a compromise.” In that piece, I wrote about Microsoft’s insistence that the Surface Pro 3 was a no-compromise device, when in fact all devices represent compromises of one sort or another. I went on to say:

The biggest change in Microsoft’s Surface strategy over the last several years has been the locus of the compromise it’s still inevitably making. The first Surfaces were intended to be good tablets first and good laptops second (and ended up being neither). But with the Surface Pro 3, Microsoft has created a competitive laptop first, and a compromised tablet second. But it’s still pretending that there’s no compromise, and that is why the Surface line will continue to perform poorly. At some point, Microsoft has to stop pretending that a single device can meet all needs and start optimizing for different use cases with different devices, just like every other manufacturer.

Fast-forward to today, and we got the next version of the Surface Pro, the Surface Pro 4. And we saw two of the same phrases from that first event repeated: “no compromise” and “the tablet that can replace your laptop. So far, so predictable.

But then, immediately after the SP4 was introduced, we were shown the Surface Book. Which is a laptop. And Panos Panay, the presenter, started out by talking about all the things a laptop does that the Surface Pro does poorly – a better typing experience, a bigger screen, and so on. This was one of the most bizarre juxtapositions I’ve ever seen at a tech event. After 30 minutes of talking about how the Surface Pro 4 could replace your laptop with no compromises, the very same presenter offered up a laptop which was clearly better, because it didn’t make certain of those compromises.

Taking a step back for a minute, both products look really promising. I’ll withhold final judgment until I get to use these devices (or at least until others I trust have done so and shared their opinions). But this “no compromise” nonsense continues to do a massive disservice to Microsoft and to its customers. As I said in that earlier piece, every device involves a compromise. That compromise might involve features, functionality, look and feel, size, weight, price, or any number of other elements. But every device does involve compromises. And instead of pretending that it doesn’t, Microsoft needs to embrace what’s distinctive and best about each of the devices it offers. However, when you look at the Surface Pro 4 and Surface Book side by side, you start to realize that the Surface Book is really just the concept of the Surface Pro taken to its logical conclusion – thin, light, with a detachable keyboard and pen.

Is there anything that the SP4 does better than the Surface Book? Yes, it’s slightly smaller, and quite a bit lighter than the Surface Book if the keyboard is attached. To my mind, the only benefit to the SP4 is that it’s cheaper – in other words, it’s an inferior but more affordable version of the Surface Book. By the end of the Surface Book demos, I saw people asking on Twitter, “why does Microsoft even need the Surface Pro 4?” and as far as I can tell, the answer is “because the Surface Book starts at $1499”.

One quick comment on OEMs. Unlike the Surface, with which Microsoft said it was creating a new category, and therefore has somewhat been able to skirt around the fact that Microsoft is now competing with its partners, the Surface Book was not burdened with any qualifiers. It was simply positioned as the best, the thinnest, the most powerful Windows 10 laptop. Period. If I’m one of Microsoft’s OEM partners, I’m betting I’m not very happy about that at all. However, those OEMs have only themselves to blame if Microsoft, which has zero experience in making laptops, is able to produce a more compelling computer than the OEMs that have had decades of experience. What does it say about Microsoft’s OEM partners that Microsoft has been able to do this to them, and that it’s willing to do so? The one saving grace is that the vast majority of Windows PCs are sold at well under $1500, and so this really isn’t targeted at the core of the Windows PC market. But it’s still a finger in the eye of the Windows OEMs.

Lastly, this parting thought. Satya Nadella took the stage at the end of the event and gave the kind of speech he’s given at almost every event Microsoft has had since he took over as CEO – big picture themes, Microsoft’s mission statement, and so on. I’m a fan of Nadella, but this speech felt like so much waffle after what was a really compelling set of device introductions. All the energy seemed to go out of the event when he took the stage. The other thing that happened was that, as he mentioned them, I suddenly remembered that Microsoft had introduced a new Band and the Lumia 950 devices earlier in the event. I had almost completely forgotten those by the time the Surface stuff was over with. They were so completely overshadowed by what came after, and for all Panos Panay’s attempts at enthusiasm about the Lumias, it was very clear that he had inherited those products and his true loves were the Surface products. I might still write about the Lumias separately at some point, but for now I see little in them that’s going to transform the fortunes of Windows Phone or Microsoft’s phone hardware business.

Connected car, Devices, Smartphones, Smartwatches, Tablets, Wireless

The changing devices on the US mobile networks

For much of the last three decades, the terms “wireless carrier” and “cellphone provider” have largely been synonymous.  Your wireless carrier was the company that provided the service for your cellphone, and in the vast majority of cases also sold you that cellphone, often at a heavily subsidized rate. However, the reality is that the wireless carriers in the US are becoming much more than just cellphone providers, and in fact cellphones are becoming a smaller percentage of devices on the major US mobile networks over time.

Phones are growing, but not as fast as in the past

The total number of phones on the four major US mobile networks (AT&T, Sprint, T-Mobile, and Verizon Wireless) continues to grow, but the rate of growth has slowed. Whereas in the past phone subscribers grew by double digits every year, now they grow by single digits at best, and the reason is obvious: the vast majority of people who will ever own a phone already have one.

Screenshot 2015-05-05 15.05.47The small amount of growth there is in phones comes in large part from the generational effect of new users emerging at the younger end of the population scale, combined with a few laggards and late adopters among the older generations. Continue reading →

Earnings, Q1 2015, Smartphones, Tablets, Verizon, Wireless

Thoughts on Verizon’s Q1 2015 earnings

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Verizon reported results this morning. In listening to the call and reviewing some of my numbers, I was struck my the fact that Verizon is in the midst of several important transitions. I’ll highlight three here today:

  • Converting the phone base to smartphones
  • Converting the phone base to installment billing
  • Converting broadband subs to FiOS

Each of these three transitions is largely about moving a portion of Verizon’s base from one thing to another, rather than about growth per se, but each has a financial impact, and two of the three are accompanied by new growth opportunities.

Converting the phone base to smartphones

The first transition is converting the phone base to smartphones, and specifically to 4G LTE smartphones. Here’s what that process looks like at Verizon Wireless:

Converting base to smartphonesAs you can see, the total number of phones isn’t really growing much (in fact, Verizon lost phone customers in Q1). But smartphones within the base, and especially 4G smartphones, are growing very rapidly. The financial impact here is that smartphone owners, and 4G smartphone owners in particular, consume lots more data. In a world where almost every plan includes unlimited text and voice, the path to growth from these customers is increasing data usage, and getting them on a 4G smartphone is the best way to do that. This growth opportunity will last for another couple of years at least – there are still 11 million 3G smartphones and 17 million basic phones in the base to convert. But at some point it will come to an end. Continue reading →

iPad, Microsoft, Surface, Tablets

Surface Pro 3, like every other device, is a compromise

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Microsoft today announced the Surface Pro 3, its latest Windows 8-based tablet, with the tagline “The tablet that can replace your laptop”. That sounds great in principle, and it’s a great slogan, but the reality is that the Surface Pro 3, like any other device – be it smartphone, tablet, laptop or whatever – is a compromise. Microsoft’s biggest mistake in marketing the Surface – and Windows 8 – is its repeated claims that there is no compromise, or that the Surface can somehow meet needs normally served by a combination of tablets and laptops or desktops.

Satya Nadella provided the setup for the launch with talk about “dreaming the impossible” and creating a device which (I’m paraphrasing based on my notes) “enables any individual to be able to read, create and write. Allows you to watch a movie and make a movie. To enjoy art and create art.” To me, that sounded just like the reality of the iPad. There was nothing unique in this vision, nothing impossible about it – it’s a reality we’ve had with us for the last four years. But the point is, Apple has never claimed that professional moviemakers should be using the iPad camera for shooting movies or iPad apps to edit them. Apple knows better than anyone that professionals want professional-grade equipment and software (including Apple’s own Mac Pro and Final Cut Pro products) to make movies. And the same goes for many other professions. The iPad offers great benefits – smaller, lighter, longer battery life, more personal and interactive – over laptops and desktops. But the tradeoff is that it lacks the power, the large screen, the peripherals and so on of a larger device. Apple will happily sell you a device from five different major product lines: the iPhone, the iPad, the MacBook Air, the MacBook Pro and the Mac Pro – because it knows no single device meets all needs, and doesn’t try to convince consumers that it can.

The problem for Microsoft is that it only makes one device, the Surface, itself. And so its mission from the start has been to turn that device into the holy grail – the single device that can meet all your needs, replacing both other tablets and laptops. It has good strategic reasons for wanting to do this, which I’ve covered elsewhere. But the result is that it has to constantly claim that its single device can replace two devices from any other vendor, notably the MacBook Air and iPad shown repeatedly at today’s launch event. But it fails to acknowledge the compromises such an approach entails. Though Panos Panay repeatedly compared the Surface Pro 3 to the 13″ MacBook Air, he never compared it to the iPad Air or even the 11″ MacBook Air, which has a much more comparable size. Here’s why:

SP3 to iPad and MBA comparison

It’s because Microsoft recognizes that this isn’t really a tablet that can replace your laptop: it’s a laptop that happens to have a detachable keyboard. It’s priced like a premium laptop, and it weighs the same as a premium laptop.Start comparing it to the best tablet on the market, though, and it starts to look much less attractive: the iPad Air and iPad Mini cost substantially less (even if you add a good third party keyboard for $100), and weigh much less. They’re much easier to hold in the hand and they come with a far greater number of tablet-optimized apps.

The biggest change in Microsoft’s Surface strategy over the last several years has been the locus of the compromise it’s still inevitably making. The first Surfaces were intended to be good tablets first and good laptops second (and ended up being neither). But with the Surface Pro 3, Microsoft has created a competitive laptop first, and a compromised tablet second. But it’s still pretending that there’s no compromise, and that is why the Surface line will continue to perform poorly. At some point, Microsoft has to stop pretending that a single device can meet all needs and start optimizing for different use cases with different devices, just like every other manufacturer. If it isn’t willing to do that, it should probably just cede the market to its OEMs.