if connected

Everyone knows the biggest battles in technology are today being fought by a small number of large organizations. We intuitively know who these great powers are: Google, Apple, Facebook, Amazon, and maybe Microsoft. But we’re not so clear on what it is that makes those particular companies the key protagonists rather than other equally large digital companies — Samsung, Sony, Nokia and Yahoo! among them — who appear to be sidelined.

Calling this a battle, or “The Great Tech War of 2012″, misses the point. It’s far too negative a sentiment when these companies’ main focus is on long term strategy. They are aiming to construct a future in which their products and profits will prosper.

These great digital powers are now building Digital Civilizations, rather than a series of mere products, individual platforms or even ecosystems (around a platform). They are pursuing strategies that reach far beyond the confines of existing markets. They are causing widespread market collisions as they push industries to overlap, merge or cease to exist. They are outflanking and disrupting companies that follow less ambitious corporate strategies.

These new Digital Civilizations use identity to tie numerous disparate products, many devices, multiple platforms and product portfolios together into their long term strategy. Each Civilization has hundreds of millions of active users — often with credit cards attached — far more than even the largest telecom operators or media companies. They straddle industries rather than operating within legacy market sectors. They have an organizing ideology underlying their strategy that motivates and attracts talented employees, excites partners, and is the foundation for the marketing that entices users to become their customers.

What defines these Digital Civilizations? What makes them new and different? Many organizations, companies, industry consortiums, and companies have parts of this strategy in place within their current products. But the new Digital Civilizations have all of the following characteristics:  Read the rest of this entry »

If you buy an unlocked iPhone you’ll see why “SIM-free” won’t be like freedom, to misquote a famous Apple superbowl advert.

Unlike other manufacturer’s SIM-free phones, “unlocked” iPhones continue to behave differently based on the network SIM inserted — see the screenshots below. This sets a precedent for future iPhones that may dispense with any need for a physical SIM card.

An unlocked phone allows a consumer to use their phone with any operator. Such iPhones have long been on sale in many European and Asian countries and Apple US has just started selling unlocked and contract-free iPhones on the online US Apple store. As consumers pay the full unsubsidized price for these iPhones, buyers expect to have complete control over their devices. Network operators should have no say on how they’re used. But that’s not the whole truth.

Apple has just secured a patent that will allow them to ship an iPhone with no need for the for the tiny operator-provided smartcard known as a SIM. This is being widely reported as an attack on operators by threatening their customer relationship.

If operators are smart, this won’t be the outcome. Instead, end users will be the ones whose freedom is squeezed by such a future iPhone.

Why? Current “unlocked” iPhones show that Apple is prioritizing their carrier relationships over end users, even for those that buy iPhones at full price, with no operator subsidy or contract lock.

On these “unlocked” iPhones the network settings available to the phone’s owner depend on what operator SIM is placed into the phone. Read the rest of this entry »

After ten years as a joint venture, Sony has bought out partner Ericsson to take sole charge of mobile phone maker Sony Ericsson. The split appears amicable. Sony gains full control of the products plus access and/or ownership of numerous patents. Ericsson receives Euro 1.05bn ($1.45bn) for its stake.

This move is even more important for Sony group than for Sony Ericsson itself.

Mobile phone technology is becoming ubiquitous. Similarly, digital media is becoming personal as smart mobile devices are a mainstream way of reading, viewing, and listening to media. Mobile phone connectivity is being integrated into everything from eReaders, tablets computers, to portable games consoles and beyond. Soon, no area of consumer electronics will be untouched by mobile’s reach. Sony group makes many of these consumer devices, including the upcoming PSP Vita handheld games console that includes a 3G mobile phone radio and eReaders that compete with the 3G-enabled Amazon Kindle.

The future is mobile and personal. Sony needs the competencies that Sony Ericsson has worked for years to nurture. Equally SonyEricsson needs the unreserved commitment of Sony to ensure that its smartphones — now 80% of Sony Ericsson’s shipments — intelligently tie into all of a person’s digital life: on Sony TVs, on notebook PCs, tablets, music, gaming and other media.

HTC demonstrates the importance of digital media for smartphones and tablets:

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Just eight months after Nokia announced a complete reversal of their smartphone strategy, Nokia unveiled the first new phones to result: the Lumia 800 and Lumia 710. And, impressively, the Lumia 800 is already shipping and will be available for sale in six European countries in November.

On the eve of Mobile World Congress 2011 — the mobile industry’s main conference — new Nokia CEO Stephen Elop overturned Nokia’s previous smartphone strategy. Rather than building smartphones based based on in-house Symbian and MeeGo software, Nokia instead embraced Microsoft’s Windows Phone. Nokia’s future rests on the success of this decision, at least in developed countries across Europe, Asia and North America.

Alongside their initial Windows Phone handsets, Nokia today announced a new range of smarter feature phones aimed at emerging markets. This new Asha range includes more dual SIM devices, more full keyboard designs, and more touch screens. “Asha” means hope in Hindi but Nokia’s real long term hopes rest more with the new Lumia smartphones than with these evolutionary Series 40 handsets.

With Windows Phone, Nokia hopes to regain market share in the high end part of the mobile phone market because today’s high end technology and features become tomorrow’s mid market mainstream. If Nokia loses to Android and Apple in the high end, then the danger Nokia faces is that it will lose in the mainstream just a few years from now.

Early signs are that Nokia has regained credibility and is on a path to recovery with its Nokia World announcements:

• Dual SIM is now a foundation of Nokia’s emerging market strategy. Nokia was slow to offer consumers the ability to switch SIMs — essentially run more than one number on a phone with different pricing — compared with LG, Samsung and numerous small phone makers. In the second quarter of this year their phone shipments suffered dramatically: down 34% compared with the previous quarter. But the arrival of dual SIM enabled a full recovery in Q3, although admittedly with lower average price per handset. Nokia shipped just 2.6m dual SIM handsets in Q2 but 17.9m in Q3 and has launched five new dual SIM handsets since June. Across Asia, the Middle East and Africa Nokia phone unit shipments rose 32% in Q3.
• Nokia is finally executing quickly. The Lumia 800 Windows Phone is already shipping from Nokia’s factories just eight months after the major strategy change. It will be available in November. By contrast, Nokia unveiled 2010′s flagship phone, the N8, in April but failed to ship in time for Nokia World 2010 that September. Read the rest of this entry »

The iPod is now 10. The original 5Gb scroll wheel model launched in October 2001. In the years since, Apple has shipped 321m units.

Everyone looks to Apple’s current dominance — who could have imagined writing that phrase a decade ago — and contrasts it with the troubled mid 1990s period when the company almost failed. The iPod was the turnaround product that proved that Apple could diversify outside of the computer business. It established a new revenue source and boosted morale. Without the iPod, Apple would not have tackled the smartphone and tablet markets in the way they did.

For those seeking to understand the iPod and learn from Apple’s turnaround in the last decade, here are the ten key iPod takeaways:

1. Success does not happen overnight, companies have to persevere with a strategy. In its first year on sale the iPod sold just 376,000 units. To compare, in Apple’s most recent quarter it took on average five days to sell that many iPods. Also, RIM shipped 700,000 tablets in its first six months — many more than the initial iPod — and yet that product line is widely considered to be troubled and struggling.
2. Product quality is more important than being a first mover. The iPod wasn’t the first mp3 music player. The market had started in the late 1990s. Apple launched the iPod against multiple players and initially it cost much more than other devices that had more features. What Apple executed differently was that the iTunes sync software made it supremely easily to transfer music from a Mac or PC onto the player. Apple set sync to be automatic once a user plugged their iPod into a computer. At the time, competitors argued ‘drag and drop’ was easier. They may have been right that it was easier to set up initially as users did not need to install any new software on their computer, but drag and drop took much longer to do each time a person wished to update their iPod than a painless automatic sync. Drag and drop was a hassle in day to day use. Apple’s solution was fast and elegant.
3. Apple leveraged openness and compatibility to establish the iPod and maintain its lead. Like Sony, Apple has the reputation of being highly proprietary. While there is truth in that generalization, it’s far from the whole truth. Apple has repeatedly leveraged open standards in its products and been selective about which parts of a product to keep closed and where to allow third party development or standards. The original iPod was mp3-compatible, unlike Sony’s ATRAC-only portable media players of the same era. Apple’s adoption of the AAC format and DRM copy protection was added much later. Apple rapidly moved to offer a Windows version of the iPod in July 2002 which dramatically widened the addressable market for the iPod, rather than tying the iPod to be solely a Macintosh peripheral as would have been the reaction of many companies. With the third iPod design, Apple added the dock connector and created a vibrant market for third party accessories that acts as a significant barrier to competitors seeking to overtake the iPod due to the numerous  iPod peripherals available as a result.
4. The iPod drove people to the iTunes music store, not vice versa. The music store launched 18 months after the iPod, but to begin with only in the US. By the time the store opened in three European countries in spring 2004, Apple had already sold 3.7m iPods. Unlike competitor music stores of the time, Apple integrated the music store into their PC and Mac app — rather than delivering it as a website — this placed the music store right alongside the tools people used to update their iPod and listen to music. In retail, store location and in-store product placement is everything. Apple made sure their digital store emulated traditional retail strategy. Read the rest of this entry »

Apple’s product announcements today are a tale of two iPhones: the iPhone 4States and the Immortal 3GS.

Today at Apple’s annual event, new CEO Tim Cook unveiled evolved iPods, a new dual core iPhone 4S, and the voice-controlled virtual assistant based on Apple’s acquisition of Siri. He also recapped on iOS5 and iCloud which were announced back in June. Although Apple sell two thirds of their iPhones outside the US, I fear that the most innovative new parts of the iPhone 4S product design will appeal most to a US audience. Apple will still do well globally, but it could do even better with some tweaked product thinking.

Much more significantly, Apple now is moving to a three iPhone model portfolio: Apple will continue to sell both last years’ iPhone 4 and the previous years’ iPhone 3GS at cheaper price points. This will dramatically boost Apple’s phone sales volumes and enable Apple to compete head on with more Android smartphones.

The Immortal iPhone 3GS

The decision to keep on the 3GS as well as the old iPhone 4 is a massive move for Apple. It will extend the iPhone competitive threat to rivals into the mid tier of the mobile market. Apple’s competitors have often sidestepped the full force of the iPhone threat by positioning their models as cheaper phones. That strategy is now being squeezed and may become untenable in the US market.

Apple is positioning to counter Android with the new pricing and continued use of the iPhone 3GS.

Apple is motivated by great margins and not premium end user prices. If Apple can deliver keen prices to grab a market without sacrificing margins they will. The growth of the iPod product portfolio over the years as Apple’s economies of scales have enabled them to maintain margins yet lower prices demonstrates Apple’s aspirations:  the new 2011 iPod Nano is the cheapest Nano Apple has ever launched. As the iPhone 3GS is so old, component prices will have fallen and Apple will have steadily improved manufacturing to minimize defects.

Those that are disappointed by the iPhone 4S’s identical appearance to its predecessor forget the success that its forerunner model enjoyed and in fact still enjoys. Back in 2009 there were similar comments to those being made today: Then, the new iPhone 3GS looked just the same as the older iPhone 3G. Those people were wrong then and so are they now:

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Next week Apple will announce new iPhones. There will be a backlash. There will be praise. Much of significance will be lost in the noise.

Instead, Apple’s metrics should focus rivals’ attention on the importance of multi-year strategies.

Competitors are forever seeking to emulate Apple. But too many deploy me-too tactics, rather than following a consistent and sustained long term strategy:

• HP fired its CEO under a year after appointment. There’s only time to kill things, not build them, in such a short period.
• Nokia dithered on MeeGo. In 2009, Nokia partnered with Intel on MeeGo, then killed MeeGo just a year later, to focus on Microsoft Windows Phone instead.
• Samsung’s Galaxy S of 2010 resembles the Apple’s old iPhone 3GS of 2009, not the designed-from-scratch iPhone 4 that the S actually competed against at the time the S arrived in the market.

Part of the problem is that Apple keeps its strategy to itself: New products seem to appear out of Apple’s magic hat fully-formed at high profile launch events as if they’ve been born an adult, with no incubation or nurturing period. There are rarely betas or pre-announcements months ahead of availability, unlike the perpetually beta services of others. But we know Apple takes years to create these products. The iPad’s origins pre-date the iPhone and go back to around 2004 — six years before it launched — while serious development began in 2007, again years before competitors had anything publicly available that they could copy.

By mistaking tactics for strategy Apple’s many competitors are doomed to poor results. The time needed to build products as deeply and well designed as Apple’s can’t be completed overnight. Software design takes years to do. The supplier relationships that Apple is securing are long term. The investment that Apple is placing in key component design — moving into chip design with the A4 and A5 — is not something that any company could achieve without clear multi-year strategy.

Despite the Android evangelists and Apple naysayers, Apple’s metrics are nothing short of outstanding:

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