Thursday, December 15, 2011

Google Set to Surpass Microsoft in Value; Facebook is Next

This post was also published on CNET.

Brace yourself for the next passing of the torch in the tech industry.

Google, the leader of the Internet era of computing through the aughts, now has a $200 billion market capitalization and is on the verge of passing Microsoft's market cap of $215 billion. Microsoft was the leader of the PC era of computing and continues to dominate the desktop, notebook and server software market for Intel-based x86 computers.

I've been closely watching the relative valuation of these two companies for almost four years--ever since I predicted that Google would exceed Microsoft's valuation. The recent stock moves must come as a high note for Google chairman Eric Schmidt, who competed with--and lost to--Microsoft at both Sun Microsystems, as its CTO, and Novell, as its CEO.

Google's market capitalization (orange line) is creeping up on that of Microsoft (blue line).
Source: YChart

IBM, which led the mainframe and minicomputer era of business computing and now provides software and services around such hardware, recently passed Microsoft's market capitalization as well and is now worth $221 billion.

Oracle, which led the client/server era of business computing is worth $146 billion, but early this year was near parity with IBM, Microsoft and Google. Apple, the leader of the post-PC era of smart phones and
tablets, is an exception with a market capitalization of $353 billion. However, Apple is currently at a peak level of accelerated growth and some Wall Street analysts are predicting that it will settle.

Facebook is reportedly planning a public offering next year at a valuation of $100 billion. Although many question this valuation as high, it is likely that the leader of the social era of computing will be worth as much as the companies that drove the mainframe, desktop, client/server and Internet eras.

Monday, December 12, 2011

Is Apple Vulnerable in 2012? You Bet

This post was also published on CNET and VentureBeat.

After Steve Jobs was fired in 1985, it took Microsoft 10 years to catch up--and exceed--the technical and user interface innovations of the
Mac OS that Jobs helped create. Now, Jobs is gone and Apple is once again in a position of clear market leadership with competitors gunning to match its products.

Apple's rivals aren't taking a decade, however. Far from it. Google, Amazon, and Microsoft, along with partners such as Intel, Samsung, HP, and Lenovo are all heading into 2012 with impressive products aimed squarely at Apple's hits--the
iPhone, the MacBook Air, and the

The iPhone alternatives

When you hold the Samsung Galaxy S II, the Galaxy Nexus, or other versions for the new generation of Android devices, it's clear why Samsung phones are now outselling the iPhone and why Apple is suing various Android handset manufacturers. These devices are a huge threat to the iPhone. The screens are bigger than the iPhone's. They weigh less and they're speedier.

The new version of Android, Ice Cream Sandwich, is almost at parity with the beauty and ease of use of iOS. Plus, the emergence of apps from Pandora and Spotify, both amazing music streaming services, make the iTunes library lock-in hardly a lock-in at all. In fact, more than 370,000 apps are now available for Android, including most of the ones that people want. Apple is adding great new features such as Siri, but let's not forget that Apple acquired Siri and the underlying voice recognition technology is provided by Nuance. Android already has similar apps and Microsoft's TellMe will not be far behind.

Conclusion: even before all these advances, Android was already outselling iOS. Apple's position in this war is weakening.

Up in the air

Here come the MacBook Air clones. Air-like notebooks based on Intel's next-generation Ultrabook components are going to be announced en masse at CES in January. I recently played with an Asus Zenbook, the Asus version of an Ultrabook. The Asus looked great and even had stylish metal keys that are far nicer than I had expected from the photos. It's not as if Apple has an exclusive on making computers lighter and batteries last longer. Apple was just the first to perfect it because it controls the entire system--the operating system and hardware right through to retail--and has the will and pricing power to push for what it wants among the component makers.

I use both Windows 7 and Mac OS on a daily basis and really can't tell the difference between the two anymore, mainly because I spend most of my time on Google's Chrome and Microsoft Office. Windows 7 actually has better desktop management--when I open or select a document it only brings that document to front, not every other document already opened by that particular app. Yes, the Mac OS is easy to use and stable, but stand next to the Genius Bar at a Mac store and you will see that many people have many problems, just like Windows 7.

Conclusion: most notebook computers will adopt the MacBook Air form factor, and Windows will not only maintain its tremendous market share, but possibly even retake Mac's recent gains.

King iPad is at risk

Tablets are a category that Apple completely dominates, with 80 percent market share. Android competitors have flailed, but Amazon's Android-based Kindle Fire is likely to outsell the iPad in 2012 due to its low price ($199). Amazon is focusing the Kindle as a cheap, content-consumption device rather than full-fledged tablet, and it's subsidizing the price in exchange for people subsequently purchasing movies, apps, and physical goods from Amazon.

While the Kindle Fire will nibble at the iPad from the low end, at the higher-end, $500-plus price range, full-fledged computers based on the ultrabook and Netbook form factors and Windows 8 Metro will begin to compete with the iPad, including hybrids with pivoting screens and detachable keyboards that effectively merge an ultra-lightweight notebook and tablet.

Conclusion: the iPad will dominate through 2012, but after that the iPad will be squeezed on the low end by the Kindle and on the high end by full-fledged touch-screen PCs.

Of course, Apple is not sitting idly by. It is rumored that Jobs left years of product plans behind and Apple is widely expected soon to enter the TV set business in order to further ensconce consumers in its vision of gadgetry. Apple's vast manufacturing volume enables it to get the next generation of components, such as screens and processors, before its competitors.

However, technology is accelerating faster than ever before and it doesn't take long for the competition to catch up. Apple's ultimate attribute, that of design and "taste," is almost like fashion. And as with fashion, being first doesn't mean you will rule the market; it just means that you are going to get copied. Remember, H&M sells a lot more Prada-like designs than Prada.

Monday, December 05, 2011

How the Touch Screen is Revolutionizing TV

This post was also published on CNET.

The recurring rumors about Apple entering the TV set business are at fever pitch, with no less than former Apple President Jean-Louis Gassée recently jumping into the fray and joining the it-will-likely-happen bandwagon.

Gassée and I have been arguing about the idea of an Apple TV since 2008, when I was among the first to blog about the idea. Gassée had taken the position that since TVs are upgraded every five years on average, and computers every two years on average, melding the two would not make sense. The computer would make the TV obsolete too early.

Now, Gassée is usually right about Apple predictions, so what's changed?

In short, the TV set is on its way to becoming little more than a monitor that simply displays what's on handheld devices. Think about it: to be interactive, a TV no longer needs a computer built into it.

People are finally recognizing that the long-held idea of how Interactive TV should work--you look up something on the TV screen and interact with related content through some control--has been crushed by the emergence of mobile and
tablet touch screens. Sure, people want to interact--just not with the TV itself.

Nielsen reports that 40 percent of viewers are pulling out their laptops, tablets, and phones while watching TV to peruse the Web, find related content, and make comments on social media. New technology keeps making this more inviting. One example is Yahoo's IntoNow, an
iPad app that recognizes what program you're watching and adds the interactive elements, such as relevant Tweets.

The reason for the transition from interactive TV to simple TV is very simple: a touch interface is intuitive and common, while a TV interface is klutzy. It's almost painful to watch someone navigate a TV screen app using remote control. Even the perennial favorite television "app" known as the onscreen guide has moved to the user's hands, with products such as Comcast's Xfinity iPad app (shown above). New voice-activated technologies like Siri and the TellMe technology, which is integrated into Windows Phone handsets, will let you to talk to your handheld device to control your TV.

And increasingly, people are streaming the content from their mobile devices to their TVs, using technologies like Apple's AirPlay and the industry standard DLNA. This could be paid on-demand programming from iTunes, paid apps with content, such as my company CBS' "60 Minutes" iPad App, or YouTube videos. Essentially, anything you can see on your phone or tablet will soon be instantly viewable on your TV, just as if it were a computer monitor.

At the last CES conference, Vizio demonstrated a technology that will transfer a video being viewed from an Android device to the TV, rather than rebroadcasting the video the way Apple's AirPlay works. So once you decide to watch something, the TV will take control and download the content itself, and you can go back to using your handheld device to do other things without having to bear the battery and bandwidth of getting the content from the Internet and re-streaming it to a TV.

Now that TVs are becoming increasingly bound to mobile platforms, a successful product offering must be part of a tightly linked stack that includes mobile devices, apps, developers, and cloud services. These requirements leave us with just the three usual suspects: Apple, Google, and Microsoft.

  • Apple's Apple TV offering has been criticized as anemic, however it is the first to integrate handheld devices with the TV screen with the AirPlay feature that shows what you are watching on an iPad or iPhone. With its domination of the mobile and tablet market, and deep content relationships with iTunes, Apple is a strong position to deliver high-margin, stylish TVs that are fully controlled by handheld iOS devices that can transfer media to stream directly to the TV. These TVs would also include multi-user gaming, just like Apple's TV AirPlay currently supports multiple people with iOS devices concurrently playing the same game on one screen. As Steve Jobs biographer Walter Isaacson writes, TVs that will "be seamlessly synced with all of your devices and with iCloud."
  • Google has reset its Google TV platform after a disastrous foray into TV with Logitech. The new Google TV has a far better interface and also supports Android apps. Google is also starting to integrate Google TV directly into TV sets with partners such as Samsung, which is particularly interesting as Samsung is a leading Android handset manufacturer and could potentially provide integration between Google TV and Android handsets. In addition, the cable set top box Google acquired along with Motorola Mobility gives Google a nice inroad into consumer living rooms. Google is attempting to make YouTube a rich content experience by funding premium content and striking video on demand content deals. The next step for Google is to further integrate its mobile Android devices with Google TV so that they can easily transmit
    content from one to the other just as Apple's AirPlay does.
  • Microsoft actually has a strong lead in this market, with its pervasive Xbox 360 console in numerous living rooms and and recent deals that will stream television content. It is likely that the new Windows 8 Metro-style tablets will be able to control the Xbox 360 media player, just like Windows 7 can currently control the now-defunct Windows Media Center. Microsoft is applying is new Metro user interface to the Xbox, in addition to Windows 8 and Windows Phone 7, so that all of its screens look identical. While many write Microsoft off, it has a cohesive, integrated strategy and the money and will to pull it all off.

While Google, Amazon, and Microsoft have leading cross-device platforms, Sony and Amazon are the dark horses here. Sony CEO Howard Stringer has said that Sony is developing Apple-like television. Sony recently struck content streaming deals and it's trying to reclaim its mobile business from Ericsson Sony should consider bundling its PlayStation 3 into its televisions to get a leg up here rather than embedding yet another Linux-based content OS or Google TV.

Amazon has a large streaming business, a "rekindled" mobile strategy with its new Android-based Kindle, and relationships with TV video devices like Roku. Amazon could acquire Roku and tie it to the Kindle in order to have a competitive offering.

The upshot of all this? TV is becoming more relevant in the age of handheld computing -- and that's a plot twist no one had expected.