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Mark

Microsoft Buys Nokia for €3.79B

Mark · Sep 2, 2013 ·

OK, so I got the price wrong.

In a surprise Labor Day announcement, Microsoft is acquiring Nokia’s devices and services business.

I already said most of what I think about this pairing two and a half years ago. If you get past that melodramatic headline, most of it still holds. But I liked it a lot more when the year was 2011 and the price was (even if rhetorically) free. What’s happened since then to justify going all-in now?Now all I have is a pile of questions:

1) Why was this announcement made after throwing Ballmer out? That news came a mere ten days ago. Combine this Nokia news with the big reorg, and you have a much more lucid claim that things are changing in a big way. If Ballmer were to announce his retirement this week, it’s a lot easier to credibly claim Microsoft is taking a new direction and that it’s time for new leadership.

2) Knowing that Ballmer is a lame duck, is this his deal, or the board’s? If it’s his deal, that straitjacket just became an iron box. If it’s the board’s deal, why is his name on the announcement? (“He’s not gone yet” is not a good answer. He’s gone.)

3) A lot of problems at Microsoft, from a poisonous adversarial culture to a lack of vision, have been illuminated in the last few weeks. Who honestly thinks this merger will solve any of them? (Bad acquisitions, by the way, are a piece of Ballmer’s legacy that has been, in my opinion, underreported since the news of his retirement broke.)

4) The Elop-as-next-Microsoft-CEO buzz has already begun. Why? How’s he done at Nokia? The only “rational” reason to have him succeed Ballmer is that he seems like an appropriate successor to Ballmer in every way — in other words, he absolutely should not get the job. Kara Swisher loves the vapor-video he apparently commissioned. I prefer Bret Victor’s take on these sort of things. Note Victor’s repeated, damning use of the v-word.

5) Nokia was already making very nice Windows Phone hardware. And the Windows Phone software, while not making a huge market share dent, has been routinely praised. What, then, has been the problem — and again, is this merger really the solution? This is easy to answer with another question: How would the Lumia line be selling if it ran Android, and without Nokia as a Google subsidiary?

6) Microsoft just disclosed it only makes $10 per Nokia phone sold. Gross margins per unit are estimated at $40. When, if ever, will this deal pay for itself? What does today’s news have to do with increasing either unit sales or device margins?

One thing must be observed: all the major mobile players — Apple, Google, Microsoft, and oh what the hell, BlackBerry — now own a top-to-bottom technology stack. Alan Kay was right as ever when he said “People who are really serious about software should make their own hardware.”

But Microsoft needs to be thinking big and ahead, and removing burdens. I just don’t think its inherent ills can be cured, or even disturbed, by this deal. Assuming nothing fundamentally changes at the top, I believe it will be a complication that only accelerates the fall of a giant.

Real

Mark · Jun 17, 2013 ·

“Why you got a new phone?”

Those words, spoken by my three-year-old immediately upon seeing it for the first time, are all anyone really needs to know about iOS 7. It’s a reimagining that catapults the system into a new era while retaining the most important intuitions built up over the last six years. So much has changed, yet the changes themselves are so basic. As Lessien wisely noted months ago, iOS didn’t need to change that much. The biggest risk was change for the sake of change: losing the efficiency that familiarity breeds.

Apple has kept all the right things, and built a new experience celebrating the values behind them. iOS 7 is truly the sum of its parts. On their own, many of these new elements — parallax, translucency, animations, motion — might seem out of place, even gimmicky. Together, they put forth a clear vision, one that’s reinforced by one of the best marketing videos I think Apple has ever made. Even considering Apple’s famously deliberate style, the choice and use of words in this video (and other WWDC materials) stand out: Clarity. Depth. Vitality. Detail. Deference. Realism.

It’s the realism I want to talk about. John Gruber calls it “A real thing, not pixels rendered on glass.” Rene Ritchie says “iOS 7 is alive.” This is the sort of update I was hoping iOS 5 would be nearly two years ago.

What took so long? I think it was a combination of hardware and momentum. Not so long ago, Steve Jobs was telling users that wallpapers were too slow. The deep animations and real-time blur effects you see between layers in iOS7 are all hardware-intensive operations. The tug of war between “realistic” design and hardware limitations led to an early compromise of false illusions — shadows, bevels, borders. Once these trends are in place, it’s hard to buck them.

Now the hardware has caught up, and the Apple design team has a new leader. We don’t need the deception of “photorealism” anymore. Despite the loss of these tricks, iOS 7 feels more real. The parallax effect conveys an entire living world under that glass, not just abstract pictures and icons. This is reinforced by the launch and quit animations: your eye never loses sight of where you’re going, or where you came from. You are moving through this world. There is almost no change in context, ever.

The emphasis on text is also striking. More than just content, text has replaced iconography in many cases. Look at Camera: the modes — VIDEO, PHOTO, SQUARE, PANO — are represented by text for the first time ever on iOS. This to me is proof that “clarity” has taken top priority. iOS is available in a number of countries and languages, which means every piece of text has to be localized (translated) many times over. This isn’t only time consuming, it’s disruptive to UI design: a short word in English is not necessarily short in German, and suddenly things don’t fit on screen anymore. I attended many meetings at Apple where people cringed at changing a word shortly before release, because it meant a whole new round of localize-then-build-then-test.

Icons avoid this problem — when done right. They speak no language, which is to say every language. Or they can only speak a few. The truth is, images have nearly as much cultural variance as text. They say a picture is worth a thousand words, but sometimes a single word is worth a thousand pictures. That realization, raised above any logistical or procedural consequences, tells me just how serious this new philosophy is.

Clarity. Depth. Vitality. Detail. Deference. Realism. The revelations of iOS 7 are overdue, but still quite welcome.

Open Season

Mark · Apr 8, 2013 ·

Facebook Home is coming. It’s a unique threat to Google’s mastery of Android that Google can blame nobody but itself for. It’s the unique nature of the threat — both Home’s technical foundation, and the nature of Facebook’s rivalry with Google — that I believe makes Home the first real test of Google’s “open” mantra regarding Android.

There have been many challenges to date, but most of them involve “forks” of the Android system: where another company builds their own system on top of a previous Android release. Amazon’s Kindle Fire, Barnes and Noble’s nook, and Samsung’s rumored / assumed proprietary fork are all notable examples of Android derivatives. None of these to date have looked poised to take Android away from Mountain View anytime soon. Samsung, with its market share momentum and marketing prowess, could stand to be a significant threat, but for now its flagship products still run Google’s “stock” Android, more or less.

Horace Dediu put it plainly:

Facebook Home can only reside on Android because only Google was daft enough to allow it.

I’d add “for now.” Now we get to see how true to its ethos Google and Android stay. How long will Home remain on the Google Play store? How often, and how mysteriously, will it have “compatibility issues” with new releases? How long before launchers in general start to get buried under convenient categorization?

At the least, I expect an increased emphasis from Google on the virtues of “stock” Android, and an increased push to make that consistent for consumers. This is already underway on both OEM and developer fronts, but Facebook’s lurking presence will force the issue that much harder.

Home’s to-be-determined success could also force Apple’s hand. Such a product is neither technically nor legally feasible on iOS at the moment, and Facebook’s integration into iOS 6, while powerful, is much less than Facebook Home provides on Android, and thus presumably much less than Facebook wants on iOS. As I said last week, if too many consumers start considering Facebook Home a deal breaker, Apple may need to make some moves of its own. How many consumers that is, and whether they’ll in fact get on board, remains to be seen. All of this just underscores what’s at stake for everyone — Facebook most of all. With just one announcement, Facebook has made itself a strategic stakeholder in the mobile landscape. It’s no longer just a website and an app.

Google knew what it was doing when it made and marketed Android as an “open” system. It surely anticipated forks by handset makers as a manageable risk as long as Google kept advancing the system. But I wonder if it expected something like Facebook Home: an inside-out heist, made by a company after the same exact user data and advertisers Google is after. How it chooses to respond in the near future should give us an answer.

Home Turf

Mark · Apr 5, 2013 ·

You’ve built an enormous business around a desktop website. Unfortunately, people around the world are spending more and more time on mobile devices. The vast majority of these devices run software from only two companies. One of these companies is actively competing with you.

You cannot put your future in a competitor’s hands. So what do you do? Do you enter uncharted territory, make your own mobile operating system, and hope people switch?

Of course not. You make your competitor’s system yours — overnight. Facebook Home is a trojan horse designed to steal the Android experience, and the Android user base, right out of Google’s hands. The majority of speculation over the last year or two had been that Facebook was working on its own mobile OS. It may well be, but this move is so much smarter on a number of fronts:

  1. Time. Home significantly increases Facebook’s mobile presence without being everything. A lot of time and care seems to have gone into it, but it’s surely far less than a full-blown operating system would require.
  2. Installed base. Built in. The sales pitch is very simple: If you have a device that Home supports, download it. No money, no switcher headaches. Blackberry and Windows Phone sales prove that people aren’t looking for new platforms right now.
  3. Software Experience. Facebook’s engineers have surely learned a lot from this project. That experience will be reapplied not only to expanding Home itself, but to building a full-blown OS if they want.
  4. Hardware Experience. While the software is the real news here, Facebook took the initiative to also start working with a handset maker. The HTC First is hardly a “Facebook phone”, but it’s a chance for Facebook to experience the complexity of coordinating hardware, software, and carrier partnerships from a distance. Remember the Motorola ROKR? Remember what happened fifteen months later?
    • HTC was the obvious choice. Samsung and Android have ruined them, and they’re desperate to stay relevant. Facebook likely got everything they asked for.

Facebook has loudly and confidently entered an arena it has no prior experience in, and has set a clear path to expand its influence at its own pace. Facebook Home will provide a halo effect to current Android users that warms them up to a full-blown “Facebook phone” in the years to come. It gives Facebook the experience, confidence, credibility, momentum, and time to build a better and broader mobile experience than they would have been able to build otherwise. It’s as prudent as it is ambitious.

I think we’ll know well before the end of this year how Facebook Home affects handset sales. If buyers start asking “does it have Facebook Home?” — and I think many will — that will be bad news for both Google and Apple. However, the Google – Facebook war is sure to be more vicious than the Google – Apple war because Google and Facebook have the same customers: advertisers. Users are their currency, and Facebook is about to rob the bank.

Why Apple Doesn’t Talk, Vol. 3: Sony’s PlayStation 4 Announcement

Mark · Feb 21, 2013 ·

An increasingly-justified fear of irrelevance seems to be driving Sony’s every move these days. Its latest public display: yesterday’s clearly-too-soon announcement of the PlayStation 4. It was by nearly all accounts a bizarre two-hour ordeal that featured no launch date, no pricing, and no product.

Everything about this event, from the lack of specifics, to the Office Space slides with MS Paint brains, to the creepy old man head, points to a rushed announcement. Why? Why did Sony need to talk on February 20th? Why not wait for a presentable product? Some playable games? Anything real? And why release the technical specs after the event, having just filled a room with reporters for two hours? Even the official press release feels sloppy, listing PlayStation 4 itself after the new controller and camera. Everything about the announcement is weird.

It’s easy to get sidetracked and ridicule Sony (again), but this is a teachable moment. People would have happily waited longer for a comprehensive, exciting product launch. It’s been nearly seven years since the last PlayStation was revealed; would another month or two have tipped some scale? Whoever this was aimed at — developers, hardcore gamers, casual gamers — the utter lack of usable information makes the timing questionable at best.

There are also competitive repercussions: Sony has now shown its hand way ahead of time. Microsoft is not expected to announce its next-generation Xbox until E3 in June, leaving more than three months to respond accordingly. If Sony’s offering ends up superior to the Xbox when that announcement happens, then Sony hasn’t gained much, because we still don’t know what it has or what it can do, and it’ll be months-old news. If Sony’s offering ends up inferior, it will be upstaged and stale.

If you’re going to strike early, you must strike hard. A strong offering is strong at any time. The same goes for a weak one. The difference is knowing what you have, and adjusting the message accordingly. Sony did not do that yesterday, and has now lost the opportunity to do so tomorrow.

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