Friday, December 31, 2010

2010 Year End Wrap-up and Predictions

Looking Back

I covered a number of different topics over the past six months.  NVidia & Apple were mentioned frequently as were the Motorola Droid X, Kindle and the IPhone .  I also did a series of three articles that analyzed Martin Guitars apparent pricing strategy.  Here are brief followup comments on some of these companies & products.
  • Nvidia: Discreet graphic sales have rebounded in recent months and their embedded GPU's are finally gaining some traction.  Publicity wins in the HPC space have been impressive.  They've obviously decided to punt on the X86 market long term since they don't appear to have any plans to develop an Intel compatible processor of their own or acquire VIA for theirs.  I don't see PC's or Windows vanishing any time soon but it's clear that in the future people will primarily interact with the Internet via mobile devices and ARM based solutions fill this space nicely and the NVidia Tegra product is an increasingly credible offering in this space.  With both Intel & AMD offering products with GPU's integrated onto the same packaging as the main processor the discreet GPU is going to be an increasingly niche product.
  • Apple: The IPhone 4 woes have pretty much blown over.   Apple has continued to establish themselves as a premium brand with innovative design wins and great marketing.  This company more than any other understands that the technology is secondary to putting out compelling products that customers feel a connection to.
  • Motorola Droid X: I'm still happy with my Droid X.  The Froyo update added some nice capabilities and overall it's been a very good experience.  Inevitably though it seems like the longer I have a device the more unstable it becomes.  Adding and removing software is always a crap shot.  In theory it shouldn't make a difference but perceptually anyway it certainly seems to.  On the plus side, when I do need to pull the battery to clear the phone I only have to wait a couple of minutes for it to boot up, which is much better than the past couple of RIM Blackberry phones I've used or owned.  In regards to stability, I'm less inclined to blame Android than I am the fact that the more complex a device is, the more difficult it is to get everything to work properly together.  Today's smart phone's are essentially palm sized personal computers and all that functionality comes at a price in terms of reliability.  This is likely one of the reasons Apple is so draconian in how they approach 3rd party Apps for their mobile platforms.  
  • Kindle: Which brings me to the Kindle.  Within the limitations I discussed in earlier BLOG entries it continues to be a pleasure to use.  The recently announced ability to loan books  was a pleasant surprise; as with the text to speech function Amazon has left it up to content providers to say yes or no to enabling this feature on a book by book basis. Simplicity is a wonderful thing in some cases and this is one of those.  There is increasing evidence that the Kindle and IPad fill different enough niches that there isn't currently a lot of overlap.  This is particularly true given the relatively low price of ~ $140 for the entry level Kindle.  If you can afford $500 or more for an IPad you can probably come up with the money for a Kindle as well.  .  
Looking Forward

Here are some fearless predictions on various products and companies and what the new year might hold.
  • IPhone: This is a device that may have reached maturity.  I'm not saying that Apple won't continue to try to innovate, but future functional changes are likely to be much less revolutionary.  Stylistically I'd expect a fairly radical departure from the IPhone 4, likely to a form factor with softer edges like the latest Touch & the first generation IPad.  I also expect a CDMA capable IPhone.  Adding a CDMA IPhone will clear the technological hurdle that has prevented Verizon from selling IPhone's in the past.  I believe the contractual hurdle ends January 1 2011.  
  • IPad: On the IPad front the most likely change is the addition of a back facing camera.   I expect to see some modest price drops and enhancements but nothing earth shattering.  I'm not even convinced that we'll see a substantial increase in the resolution of the display.  Fragmentation is something that Apple has been criticizing Android for recently and with every new device they come out with that has a different display resolution their fragmentation increases.Other credible rumors include a mini USB port. Less likely, at least in the short term is some sort of hybrid display that works both in bright light and darkness.  There is at least one option.  The technology used in the OLPC is available from a company called "Pixel Qi" and features both a color mode similar to LCD's and a black and white mode that shares many properties with E-Ink.  If Apple adopts this or a similar technology for the IPad then Amazon and other companies producing E-Book readers are going to see their sales drop primarily on the high end since there would no longer be a compelling reason for people to buy an E-Book reader in addition to their IPad.
  • Kindle: I don't see dual mode displays being as big a boost for E-Book readers such as the Kindle.  Yes, they would add some nice capabilities but much of the appeal of these devices, particularly the Kindle is their simplicity and cost.  A color display would be a plus, but if it adds significantly to the initial purchase cost or tempts Amazon to try to go head to head with Apple and other tablet producers it is likely to be a net negative long term.  There are no clear answers here but I'd be inclined to move to a hybrid display and keep the functionality of future Kindle's focused on books and possibly other media.  I'd also want to keep the price of the entry level model below $150. 
  • Amazon: In theory Amazon can cut and run at any time in regards to the Kindle.  They already support reader software on the majority of platforms that people care about and it's hard to believe that the margins on the Kindle are very high, or even positive when all costs are taken into account.  However, no other platform makes it easier to buy books from Amazon.  If you're making the bulk of your money selling "media" as most companies do in this situation than clearly facilitating purchases is in your best interest.  
  • Software Patents: I'd like to think that this is the year that software patents will become saner but there is plenty of evidence to argue to the contrary.  Here's just one example.  This is why I'm not a fan of software patents.  The concept of double clicking initiating an action has been around for a long time.  probably decades.  The trivial differences described in this patent required no innovation and little thought.  I don't think it is productive or beneficial to have entities going around filing for and being granted these kinds of patents.  If software patents are legitimate at all than the bar should be MUCH higher than this.
  • Paying For Online Content:  It seems like we've finally turned the corner in regards to paying for online content.  I'm not going to claim that piracy does not exist or that there isn't room for improvement but I'm seeing things happen in this space that I wouldn't have just a few years back.  Minecraft is a simple yet addictive game that is currently in Beta but available for sale.  As I write this they have managed to sell nearly a million copies at about $20 per.  In the bad old days we essentially had a situation where legitimate access to digital content was nearly non existent and expensive while illegitimate copies were readily available and free.  This created a culture of entitlement that has been very slow to subside.  Apple made the first significant dent with the ITunes store and others have followed. Making online payments and purchases easy and reasonably secure by way of services such as PayPal has also helped.  The cost of creating and delivering digital content is almost entirely in the creation part of the process.  The per unit variable costs are essentially nil.  As people become increasingly willing to pay for online content we're going to see more business models that are based off of customers paying directly, rather than indirectly by way of ad revenues.  
Closing Musings

As 2010 comes to a close I've been writing this BLOG for almost exactly six months.  I've had a lot of fun and am looking forward to continuing to make updates in 2011 as time and inspiration allows.

I'm grateful for a lot of things this year, one of which is the fact that at least a few people have apparently taken the time to read some of my musings.  While I'm not writing here to become rich or famous I'd be lying if I claimed that I don't get a bit of pleasure out of every single hit this BLOG gets.  Thank you to everyone who has read even one word I've written.

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  1. Mike

    Nicely done. Some insightful comments on the tech toys.

    Not sure the iPhone has "matured". My experience with it is that it is great for everything except phone calls.


  2. Prof. Graff, good to hear from you and thank you!

    In regards to the iPhone, from a hardware perspective the only radical addition I can see Apple making for the next year or two is 3D, and I think they'll want to wait to see how Nintendo does with their 3DS before making a decision on that. So, from that perspective I think the iPhone is fairly mature as a platform. The innovation is more likely to come on the software side, either from their marketplace or from Apple themselves. This is an area though where they are vulnerable since they keep such tight control on the platform. The Android phones are the wild west, and that has downsides but it also means a more rapid pace of innovation. It'll be interesting to see how the Android/iPhone battle plays out over the next few years.

    They have made some significant investments in companies with semiconductor experience over the past few years, so we might see some interesting developments on that front, probably in the area of better battery performance by way of improved design and integration.

    As an aside, in my opinion the biggest mistake people make in regards to Apple is thinking of them as a great technology company. They are not. They are a great marketing company with a good grasp on technology and how to leverage it to meet customer needs. Most technology companies are mediocre at best in the marketing area which explains in part why Apple has been such a huge success. Do you have any thoughts on this topic?