Chromebooks and iPads in U.S. Schools

A recent blog on the New York Times described how Chromebooks are gaining in the U.S. education market (K-12). I have wrote quite a lot about Chromebooks on this block, and this article tells us that progress has been made on the part of Google. Of course, the market that is described in this article is quite small with only 13.2 million units annually, in comparison to over 300 million PC units (excluding tablets) sold worldwide, and as far as I know, Chromebook’s success in K-12 education has not expanded to other markets (including international). Nonetheless, this is good news for Google.

The comments section is also very good, with some specific examples of why certain schools decided to purchase Chromebooks instead of iPads or Windows PCs.

My broad-view understanding is that Chromebooks are serving pre-existing needs that are mainly administrative by nature, and are best understood as sustaining or efficiency innovations. The blog post and the associated comments strengthen my view.

The real problem as I see, it is that there is a huge amount of potential in bringing technology to the classroom, but there is still too little investment in terms of hardware, software, curriculum and teaching skills. Sustaining and efficiency innovations won’t take us there. They don’t provide administration with good reasons to invest more; they only give us reasons to spend less. We need empowering innovations (such as which the iPad promises to bring) for that.

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Illustration Of Why India’s Market Is Difficult For Apple

I’ll just show some graphs that clearly illustrate the differences between the smartphone markets in China and India, and tell us that Apple still needs to do a lot of basic groundwork in India before it can expect iPhone sales to boom there.

The data is taken from StatCounter, and I have used mobile operating system (excluding tablets) web usage share statistics going back to June 2010.

China
StatCounter os CN monthly 201006 201507

India
StatCounter os IN monthly 201006 201507

  1. Web usage from iPhone in China was already above 10% in Jan. 2011. This is presumably mostly due to gray market phones or the second-hand market since Apple wasn’t selling nearly that much iPhones in China back then.
  2. This suggests that the Chinese market was already primed for a big jump in iPhone purchases, far before the iPhone became available on their largest carrier, China Mobile (2014).
  3. In the Indian market however, there is absolutely no priming of iPhone demand. Web usage from iPhone is very small.

It is clear that for iPhone to succeed in India in the mid-term, Apple has to be pretty aggressive. The situation is nowhere like how the Chinese market was.

Does Google Now Really Need All Your Data?

On June 17th, 2015, I discussed Google Now, Apple’s Proactive and their respective approaches to obtaining your data. My main thesis was that as far as I could tell, the predictive assistant functions that most people come up with seem to be perfectly possible even with Apple’s approach. In conclusion, I said the following;

Although I certainly need to dig into this in a bit more detail, I am skeptical that invading your privacy is essential for providing a better personal assistant service. I would welcome any examples where the personal assistant must absolutely send all knowledge of everything about you to servers in the cloud to be analysed.

Phil Schiller made some comments in an interview with John Gruber which indicate that Apple thinks the same;

If ever there’s a modern definition of a Faustian bargain, this is it, right? Which is, that if you want to get the features, give us all this information about your life that you’d really rather not.

And we’ve believed for a very long time that that doesn’t have to be the case. And so we’ve built systems and processes all around the idea that, in order to help users, you can do things that are surprising and delightful and magical—but we don’t know your data.

So now the fight is on. On one side, we have Google which suggests that they need all your data to provide you with wonderful predictive assistant services (actually I haven’t seen anybody from Google actually say that, but it seems to be what the pundits are collectively thinking). On the other, we have Apple which believes that they don’t need all this data. Essentially, Apple is saying that there is an upper limit to what they need to know, and that limit is actually very low. It would be interesting to watch how good Apple’s Proactive turns out to be versus Google Now.

Of course, Google and Apple have very different business models and hence the business requirements for their predictive assistants are different. Google’s business is advertising so they need enough information to target you with ads. That might require much more personal information than what is required for just providing a predictive service. For example, if you’re just thinking of going to town, all that a predictive assistant needs to do is to give you the directions, time, lunch suggestions, etc. This can all be done anonymously. However, if Google needs to send you ads on behalf of advertisers, then the more they know about you, the higher they can sell you to advertisers. Advertisers love targeting information and would pay for a detailed profile of whom they are targeting. For example, they would love to know if you are married or have kids. They would like to know what kind of food you eat regularly. They may even like to know if you are fit or overweight. None of this is relevant for the predictive assistant task itself, but it is relevant for the ads given through the assistant. And in Google’s case, these ads are what financially support the service. Essentially, Google Now needs more personal information because they need to finance the service through ads. Even if a predictive assistant didn’t need this data to give users advice, Google would still need to collect data on behalf of the advertisers in order to sustain the service financially.

Google’s Slow Adoption Of Mobile First

I have recently commented (1, 2) on how I suspect groupthink to be creeping in at Google. Another area where I think we can find evidence of this is Google’s slow adoption of “mobile first”.

While my assertion that Google has been slow to “mobile first” may seem very odd given that Google developed the most popular smartphone operating system, I see that as a whole, Google has maintained a PC-centric view. That is to say, although the Android group is very mobile focused, it seems that not every division shares this view and this includes many of the strategically important ones. In many key areas, Google has failed to embrace the priorities and mentalities that are required to succeed in mobile.

One very evident example is the lack of focus on power efficiency. In a recent post by Google software engineer, Peter Kasting, Google mentions its commitment to make its Chrome browser more energy efficient. Kasting in particular mentions Chrome’s power efficiency on the Mac, but that is only because Safari on the Mac is extremely well optimised for battery life. Google’s lack of attention to power efficiency has also been evident on Windows.

This is very much in contrast to Apple which has been making power consumption a huge priority ever since 2005 when Steve Jobs announced their switch to Intel processors. Recent MacOS X and Safari updates have also frequently focused on improvements in energy efficiency. It is very obvious that the synergy with iOS development and the iPod before that has been a major factor in driving the Mac to power efficiency. In this sense, one can argue that the whole company, including the Mac division, shares the same mentality towards energy efficient design and optimizations. This apparently has not been the case with Google.

I suspect that inside Google, the groups that develop software for servers, the groups that develop for desktop application or web applications, and the groups that develop for Android are not talking to each other. The power-saving techniques developed for Android are not being transferred to their desktop applications. In fact, one observation that stands out in Android app development is how long it took for Chrome to be ported to Android in a version that did not suck (discussed here for example, among numerous other places, and also in my personal experience), which clearly shows that they had trouble developing Chrome for less powerful devices.

If this truly is the case, then Google can only be as strong as the sum of its parts. Synergy between Google’s divisions can only happen at the product level (lock-in etc.) and not at the development level.

Maybe given that Google’s real strength lies in its cloud business, this doesn’t really matter. If Google wishes to keep all the intelligence in the cloud and to keep computing on the client-side to a minimum, then all they have to do is keep improving their browser (which interestingly they haven’t been very successful at on mobile). They don’t really have to invest in creating the very best client software because their cloud services can make up for it (or at least that’s their plan).

If however the tides change and for some reason, computing on the client side becomes important (maybe due to increased awareness of privacy issues for example), I would be rather pessimistic of the transfer of knowledge between Google’s AI experts and their mobile development experts. I don’t think they would be able to create very good client software (maybe Chrome for Android quality).

Of course, in Apple’s case, it is the other way around right now. Apple is strongest when the device teams and the software and services teams work together and create synergies. It all depends on how technology and customer expectations evolve.

Did Google Expect Apple to Focus This Much On Privacy?

In relation to my previous post where I raised the possibility that groupthink might be happening within Google’s top management, I would like to bring attention to the possibility that Google might have totally failed to predict Apple’s very strong focus on privacy.

In the WWDC keynote, Craig Federighi repeatedly mentioned Apple’s focus on privacy. Proactive Assistant has privacy, Photos has privacy, and the News app has privacy. Furthermore, in addition to focusing on privacy on its own apps, Apple has build in what one could call an adblocker API into Safari so that users can install adblocker extensions that would also protect them from the user tracking activities that ad networks often conduct behind the scenes. Apple has also added many capabilities to the Spotlight feature so that you don’t have to visit Google and help them create a ad targeting profile of you nearly as often.

Although it is still unclear whether for example Proactive Assistant will work as well as Google Now, or whether normal users will install and adblocker extension, it is evident that the features that Apple introduced are potentially very damaging to Google if users embrace them. It would result in significantly reduced traffic to Google search, which is Google’s sole monetisation engine.

My question is, are there any clues that Google predicted these features from Apple? Do they have a plan already in place to counter any negative publicity on privacy (other than the heavy lobbing that they are doing in Washington), especially outside of the US? What was their contingency plan in the event that Apple would embrace adblockers? What Apple introduced was not completely unexpected given their previous comments on privacy and Tim Cook’s emphasis on human rights, and if Google’s management had been paying attention, they could easily have predicted them. If we actually end up seeing clues that Google completely missed these cues, then it reinforces my argument that Google management might be in groupthink.

I will be keeping an close eye on how Google executives react.

Android No Longer Competes With iOS

The Google I/O keynote on May 28th 2015, confirmed a thought that I have had for a long while.

On April 3rd 2013, I wrote a post (in Japanese) titled “Predicting Android’s Change Of Direction: Thoughts from Andy Rubin’s Demotion” (「Androidの方向転換予想:Andy Rubin氏の降格を受けて」). In that post, I argued the following;

  1. Andy Rubin considered Android to be very valuable in and of itself. For him, it was important to make Android the best that it could be. This meant being better than iOS.
  2. Larry Page is not very interested in Android itself. His interest is in Google’s cloud services, and Android is only one of many initiatives to maximise their user base.
  3. Hence Android’s market share itself is not important, nor is controlling Android an imperative. Even if iOS, Firefox OS or Tizen expanded their market share, that would not be a problem as long as they used Google’s services.
  4. Android does not need to be the best smartphone OS.

From this, I predicted that Android would stop trying to copy iOS in the attempt to get iOS users to switch. Instead, Android would probably focus on the low-end in order to expand the use of smartphones in markets where iOS would not have a strong presence.

The 2015 Google I/O keynote strongly suggests that this indeed has been their strategy ever since. The signals that I observed were;

  1. Android M itself (excluding the cloud services that would also be available on iOS), no longer adds major features that would give it an advantage over iOS.
  2. The announced Photo service is also available on iOS from day one. Now on Tap which is not feasible on iOS which is why there isn’t an iOS version.
  3. The improvements on offline connectivity are geared towards countries where Internet connectivity is unreliable or expensive compared to the average income.

Google itself mentioned that Android M is mainly about fixing bugs and annoyances in Lollipop, and if that is to be believed, then the next version of Android coming out in 2016 should have many more features. However, since I am now more confident of my reading of Google’s strategic imperatives, I am pretty sure that this will not be the case. I predict that the 2016 version of Android will also not have any major new features.

In short, I am now sure that Google no longer intends to compete with iOS with Android. Essentially, they are giving up the high-end smartphone market to Apple and they are cool with that. Instead, Google sees Android as a vehicle to spread their services to market segments that iOS cannot penetrate.

How will this strategy fare in the future?

This strategy is sound if Google’s sole objective is to learn about what people are doing. However, from a financial standpoint, there are many risks. By far the largest risk is, what if Apple is successful in distancing itself from Google? What if Apple somehow succeeds in significantly reducing the number of Google searches performed on iOS?

There are several dark shadows on the horizon in this regard.

  1. Google search may no longer be the default search engine on Safari. (link)
  2. The vast majority (75%) of mobile search ad revenue comes from iOS (from Goldman Sachs)
  3. Apple has been working to reduce iOS’s search reliance on Google, and the ability to display Wikipedia search results in Spotlight have reduced Google clicks(9to5mac).

It seems that either these reports are false, are insignificant, or simply that Google’s management is oblivious to these threats.

Either way, Google’s strategy makes it financially vulnerable due to an over dependence on iOS. Since Google still lacks a strong alternative revenue source to search ads, anything that causes it to lose this revenue will significantly slow the company’s growth. The only way to mitigate this risk would have been to attempt to capture the high-end smartphone market in collaboration with Samsung. This is very much to opposite of what Google’s actions suggest.

In conclusion

I am now quite sure that Google’s management gave up on the high-end smartphone market at the time when Andy Rubin was demoted on March, 2013. The past two years has seen Google focus on the low-end smartphone market, while deemphasising high-end features, and even fighting with the vendor that dominates high-end Android phones.

2015 is the year when we might see this strategy backfire. There are multiple reports that suggest that Apple will more aggressively distance itself from Google, and that this will have a significant impact on Google’s growth.

Importantly, by neglecting the high-end smartphone market, Google has burnt the bridges and has no backup strategy if this is indeed what happens.

Overhyping the Revenue Potential of the Emerging Countries

A beautiful infographic on the state of App Stores by App Annie.

Unfortunately, I can’t agree with the title “Mobilizing the Next 5 Billion”. If anything, this infographic tells us how dominant the “app store superpowers”, Japan, South Korea and the United States are. These superpowers are not only dominant in current revenue, but also have revenue growth that is equal to the emerging countries. This means that the emerging countries are not catching up; instead the lead of the superpowers is widening.

The infographic tells us that the superpowers will remain dominant in revenue for the foreseeable future. The next 5 billion is unlikely to contribute significantly to total revenue from app stores for quite a while.


Infographic GMIC 11182014 2

Will High-End Android be a Samsung Exclusive?

I have been very wary of Google’s efforts to build in the tools that Android requires to compete with Apple in the high-end smartphone market. My feeling has been that Google is no longer interested in the high-end smartphone market and is satisfied to let Apple have it. Instead, Google is focusing on the low-end market and on bringing low-cost smartphones to the emerging markets.

Recent announcements reinforce my thinking.

On Nov 13, 2014, Samsung and BlackBerry announced a partnership to build and market a tightly integrated, end-to-end secure solution aimed for enterprises. It is well known that Apple dominates corporate market share in smartphones and tablets, and security is one of the reasons why Android is struggling. The interesting thing is that Google seems very uninterested in developing a solution of their own for this quite lucrative market.

At the keynote of Samsung Developer Conference 2014, Samsung introduced Samsung Flow, which is basically their version of Apple’s Continuity features. The important thing to note is that Continuity is a feature that is only valuable for customers who can afford multiple devices. Again, why did Samsung and not Google develop this? Is it because Google is relatively uninterested in the customers who are wealthy enough?

Samsung recently announced its answer to Apple’s iBeacon feature, Proximity. This is a technology to enhance customer experience at stores, mall, stadiums, museums, etc. and also push you special offers and stuff. As stores embrace iBeacons, there was the possibility that some of the offers would end up being exclusive for iPhone users. Now it will be exclusive to iPhone and Samsung users. Why wasn’t Google interested?

If this continues, Samsung might create a rather formidable barrier-to-entry for the high-end Android market, blocking HTC, LG, Lenovo and others from competing.

Although I do suspect that the overall market for high-end Android devices might shrink, I do not doubt that Samsung will continue to dominate for the foreseeable future.

How Apple Has Actually Introduced New Category Products Every Few Years

There are several people who seem to have had difficulty applying Clayton Christensen’s Disruption Theory to the tech world, and have proposed that this theory itself does not apply to either the tech market or consumer goods. However Horace Dediu, who is now working for the Clayton Christensen Institute specifically for the task of applying Disruption Theory-based analysis to the tech market, has argued in a podcast with Ben Bajarin, that there is no reason why it cannot be done. Horace argues that the challenge lies in defining what constitutes the “jobs-to-be-done”, and a failure to do this successfully is why Disruption Theory sometimes seems to fail.

This point is very important and is worth reiterating. The reason why Disruption Theory occasionally fails to explain a certain situation is not because the theory itself is limited in its scope; it is because identifying the jobs-to-be-done is extremely difficult. In fact in the typical example of the jobs-to-be-done, the milkshake example, the jobs-to-be-done is so unintuitive that its unlikely that even an industry expert would have accurately predicted it. It is no wonder that Clayton Christensen himself failed to predict how Disruption Theory would affect Apple.

More often then not, the people who attempt to expand, supplant or even discredit Disruption Theory have simply neglected to carefully analyze the jobs-to-be-done.

To further complicate things, if you look at the brief history of personal computing, which has only been with us for four decades at most, you can also observe that the jobs-to-be-done has shifted extremely rapidly. At most, a certain jobs-to-be-done will be mainstream for only five years.

For example, the PC started out in the Apple I era as a hardware hobbyist’s kit. With the Apple II, the PC was now a platform for a hobbyist software programmer. Then with the advent of packaged software like VisiCalc, the PC became a business tool for performing large numbers of calculations. With the arrival of the Macintosh and the Laser Writer, the PC now became a tool for creative professionals, and then with the Internet, it became a tool for communication and collaboration. After the year 2000, the PC became a tool to manage digital photos, music and video.

With each shift in the jobs-to-be-done, the required hardware specifications to sufficiently perform the task increased. At the same time, the customer base continuously expanded to less tech-savvy users which required the user interface to improve. This meant that the PC rarely reached the good-enough threshold because the bar was constantly being raised.

The exact same thing can be said for smartphones. The original iPhone started out as a phone, an iPod and an Internet communicator. In a short amount of time, it quickly became your main camera, your gaming console, your map, your photo album, your fitness tracker, your newsreader, the pacifier for your kids, your TV and so much more. And now with Touch ID and Apple Pay, Apple is making your iPhone your ID and credit card. From its initial humble jobs-to-be-done, the smartphone is now the center of a huge portion of your life. The jobs-to-be-done of smartphones has exploded.

And as with PCs, each shift in the jobs-to-be-done has required new and better hardware. Being your main camera has demanded better optical and image processing hardware and software. Being your gaming console has demanded better 3D graphics performance which technologies like Metal and better embedded GPUs can provide. Being you fitness tracker has resulted in technologies like the M7 motion co-processor which can constantly track your movements with minimal battery drain. And of course Touch ID and Apple Pay required new biometric hardware.

By now it should be plainly obvious why Apple has avoided being disrupted; Apple has consistently been at the forefront of the shifts in the jobs-to-be-done in personal computing (except for the years when Apple was run by John Sculley and R&D was run by Jean-Louis Gassée). That is why new Apple hardware has constantly been in high demand and can still command a high premium.

On the other hand, the reason why Samsung is being disrupted at the low-end is because Android is not expanding the frontiers of smartphone jobs-to-be-done. Other than UI tweaks that work equally well on less capable devices, Android has recently failed to introduce compelling features that require new or better hardware. In fact, this might have been intentional on Google’s part as an initiative to reduce fragmentation. As a result, Android phones have become as good-enough as they can be, even on the hardware that can be bought for $200-300. The Android OS is holding Samsung back.

This also means that Apple products will be disrupted if they start failing to create new jobs-to-be-done. It also means that the resurgence of the Mac could be attributed to a new jobs-to-be-done that the Mac can uniquely satisfy. Strong integration with iPhones could obviously be one of these jobs-to-be-done which is not available on Windows PCs.

Actually, if you look at computing from a jobs-to-be-done standpoint, the idea of a “new category” device starts to look rather ridiculous. It becomes clear that the emphasis should be on whether or not a new jobs-to-be-done has emerged. Sometimes this might require a new device, but oftentimes, it simply requires new hardware on top of a preexisting device. This in itself is sufficient to transform the previous hardware into a new category device. For example, Touch ID has transformed the iPhone into a digital ID and wallet with unprecedented security and convenience, something that was hitherto impossible with a smartphone. Focussing solely on new category devices is completely missing the point.

In fact you could even argue that every few years, Apple has introduced a new category product in the guise of the iPhone or a new iOS version; a product that enables new jobs-to-be-done to emerge.

Who Is To Blame For Samsung’s Bad Fortune?

As the profits plunged on Samsung’s smartphone business, the web has been awash with reasons.

Ben Bajarin has shown very nicely that the largest problem that Samsung faces is the decline of the high-end business, which is also mentioned by a Samsung executive in the Guardian article.

The high-end of the business has been dominated by Samsung and Apple and still is. This means that there are two possibilities.

  1. Apple took away Samsung’s sales in the high-end. That is to say, users of high-end Android phones (who were mostly using Samsung devices) switched to the iPhone.
  2. The high-end market for Android smartphones saw a sudden shrinking. That is to say, mid-range smartphones were perceived as good enough and hence there was no need for customers to purchase high-end Galaxy devices anymore.

I suspect that both of these happened but I want to analyze them in isolation because it makes the situation easier to understand. Although these two look similar, they are actually very different. The first means that Apple was able to steal market share away from Samsung. The second means that vendors of mid-range smartphones (including Samsung of course) captured the customers who previously bought high-end phones. We will look at each separately.

Apple is stealing away the high-end

This is obviously happening. All reports point to Apple selling huge numbers of iPhones and it has been suggested that a lot of these are switchers who have abandoned Android phones.

The important thing is why. Of course the triggering event is the increased screen size of the iPhone 6. However, what is more important is why couldn’t Samsung match the iPhone 6 before Apple threw down the gauntlet. Why was Samsung left clinging to screen size as the only feature that could keep it competitive in the high-end.

Although design and/or Apple’s brand could well be a factor, it is also as likely that iOS and its app ecosystem could have been perceived to be superior than Android. If this was the case, then the blame would have to be put onto Google. Google failed to create an operating system and ecosystem that was competitive against iOS. The only reason that the high-end Android market existed at all was because Samsung had large screens while Apple did not.

If it was design or branding, then it would be harder to place the blame on either Samsung and Google simply because Apple is so good at these. Either way though, the result is that the high-end Android market cannot exist anymore.

The high-end Android market is shrinking

This is a completely different dynamic. If this were the case, then we should be seeing customers who previously owned the flagship Galaxy devices either downgrade to mid-range Android devices or to extend their replacement cycle. I have not yet seen a statistic that suggests that this is happening, but it is plausible.

This can only happen if Android smartphone hardware is starting to be considered as good enough, even by previous high-end purchasers. This also has to happen while at the same time, on the Apple side of the fence, Apple customers are not considering iOS hardware to be good enough. There must be something very different happening to Android customers and iOS customers.

The good enough of hardware is determined by software. If the software can take advantage of new hardware and create a true benefit for the customer, then old hardware will not be good enough. On the other hand, if the software does not have any compelling features that require new hardware, then old hardware will be good enough. No matter how much the hardware improves, whether customers will demand it depends on software.

In the case of iOS, the OS made full use of the 64-bit hardware to enable much faster processing of photos and movies. The OS made use of the TouchID sensor, which is also now being used by the Apple Pay service. Apple has given each piece of new hardware a significant reason for existing, and that is why customers want new devices.

On the Android side, that has not been the case. Google has not moved quickly to 64-bit, it has not worked hard on corporate level security, and it has not introduced software support for biometric sensor technology. Instead, Google has introduced a lot of software technologies that enable low-powered devices to smoothly run the latest operating system. Instead of adding new features that would take advantage of new high-end hardware, they focused on making sure that the mid-range and low-end hardware would be able to run the latest operating system and to take advantage of all of its features. In summary, Google actively designed their new operating system so that Samsung would have a hard time differentiating itself.

Although I’m not sure whether Google did this intentionally, it has made it very difficult for high-end Android smartphones to compete with mid-range ones. This is not only a challenge for Samsung, but it will also be a challenge for any OEM that plans to move upmarket. It will mean that companies like Huawei, Lenovo and Xiaomi will not be able to move up-market unless they gain significant control of the OS.

So what should we blame?

I think that Google was targeting the low-end from the start, but Andy Rubin was not. I genuinely think that Andy Rubin was much more focused on the high-end and he didn’t seriously consider making Android work better on low-end devices. I think he wanted to make Android as good as or even better than iOS. The fact that his reign coincided with when Samsung was strongest is no coincidence.

When Andy Rubin was removed and Sundar Pichai took over, it became rather clear that instead of fighting with iOS, Android would focus on the low-end. In fact, most products that Google creates (many of which were under the supervision of Sundar) aim at the very low-end where prices are normally zero. Google Docs is a prime example of this, as is Chrome OS. Google’s strategy is to commoditize all markets except for search and advertising, by providing a good enough product for free.

Samsung could have tried harder to take control of Android so that they could create software that took advantage of high-end software. In fact, they tried. Considering that Samsung was mainly a hardware company, I don’t think that they ever misunderstood that they needed good software; it was just that they didn’t have the resources or the culture to create great software. It’s hard to blame their strategic thinking for this.

Google could have tried harder to preserve the high-end. However, it’s priorities were clearly in the low-end. It’s hard to focus on both.

I would say that the only strategy that we could actually blame was Samsung’s decision to team up with Android. Samsung should have seen that Google would ultimately aim to commoditize their own OS and all hardware vendors using their platform. Samsung should not have helped Android to gain market share, and instead waited for a contender whose priorities aligned better with Samsung’s goals. Of course, that is what Nokia did.