Is India Really The Next Big Opportunity In Tech

A lot has been made about how important India is to tech, and what a big opportunity the 1.2 billion population is.

While that maybe true, I think it is also important to contemplate the possibility that this may not actually be the case; that despite its huge population, India may not yet be an attractive investment.

Rakuten Ventures had this to say at Tech in Asia Singapore 2016.

While India has a population of 1.2 billion, there are only about 40 million to 50 million people who actually have “real” smartphones – and not those weird Android permutations – and who are at least in the middle class, earning about US$10,000 a year.

If you’re looking at ecommerce alone, you’re talking about a demographic that has been shrunk from 1.2 billion to 40 million or 50 million. That’s basically the addressable market […] For us, when we look at a market, we ask ourselves: ‘Can we get in at the price point we want? Can we actually see a lot of these platforms accrue the value that they want?’ We don’t see that yet.

Objectively, the International Monetary Fund puts India’s GDP per capita for 2015 at 6,162 international dollars, which is less than half of China’s at 14,107. While obviously growing quite quickly, it isn’t necessarily growing that much faster compared to other countries with similar absolute levels. Although macro data obviously does not tell the full story, it does support Rakuten Venture’s view to a certain extent.

If we do accept Rakuten Venture’s view that ‘while India has a population of 1.2 billion, there are only about 40 million to 50 million people who actually have “real” smartphones’, then it does seem like other markets which aren’t receiving as much hype, might actually hold larger potential.

I think this is something worth thinking about. It might be more important to look at metrics of usage like Web usage or Twitter usage to understand how many people do have “real smartphones”, or use the ones they have as such.

iPhone SE Early Statistics

We now have some early statistics on iPhone SE sales in Japan from BCN Ranking. Note that BCN Ranking only provides data from their partners, which include Amazon and major retail outlets, but does not include the Apple Store for example. Also note that the current data is for the March 28th to April 3rd time period whereas the iPhone SE was only released on March 31st.

For clarity, I am only listing iPhones, and I am listing by carrier.

BCN ranking iPhone SE

The interesting observation is that unlike the iPhone 6s where the 64GB model sells better than the 16GB model on all carriers, the reverse is true for the iPhone SE; on all carriers, the 16GB iPhone SE model sells better than the 64GB model. This suggests that iPhone SE users intend to use their phones more casually, and are more driven by price. Importantly, we have to understand that the data is only for the opening weekend which is typically skewed towards early adopters, who we would expect to prefer higher capacity models. It seems that the trend for iPhone SE users to be casual owners might be very strong.

Of course, we do not know the product mix of the items in stock, so this might simply be a result of inventory skew. However, assuming that this trend holds true, then we can make the following tentative conclusions;

  1. The iPhone SE appeals more to users who are more considerate of price, and who do not intend to use their smartphones very heavily.
  2. These users would typically only replace their current smartphones after they have completed their 2-year contract. A strong opening day turnout of this segment suggests that these users were holding onto old phones (either old iPhones or Androids).

This is an interesting dynamic.

As we get more data, we should be able to make an assessment of the popularity of the iPhone SE relative to other iPhone models and to Android phones. Given that the majority of smartphone users are not techies nor social media junkies but plain ordinary citizens, I tentatively expect quite strong performance.

Update

The data for the first full week of sales in Japan (Apr-4 to Apr10) are now available on BCN Ranking, and I have used the new data to plot a chart.

IPhone SE BCN ranking numbers

We see the same trend as the opening weekend that I previously discussed in the above post. However, with the improved visualisation, we can see some additional points.

  1. The 16G iPhone 6s actually sells quite well on all carriers. Techies have ridiculed the 16G model as not having nearly enough capacity. While that may be true in use, many of the people who purchase even the flagship model do not seem to care. However, users of the iPhone 6s Plus model do seem less eager to purchase the 16G model.
  2. The iPhone SE clearly skews heavily towards the 16G model, and as I have said in the above article, this suggests that current iPhone SE buyers are more price conscious, and do not seem to be heavy users of smartphones. The new chart shows that this trend mirrors that of the iPhone 6. Hence it looks like the segment that purchased the one-year-old iPhone 6, is similar to the segment that has purchased the iPhone SE so far.

Considering that the iPhone SE (16G: ¥52,800) is significantly cheaper that the one-year-old iPhone 6 (16G: ¥74,800) and that both are probably attracting the same price conscious buyers, we can expect iPhone 6 sales to rapidly decline and be picked up the the iPhone SE. Of course we can also expect an acceleration of Android users switching to iOS.

The Outdated iPhone 6/6 plus

Going into 2016, I think it is prudent to remind ourselves of a couple of new additions to the iPhone product line that Apple made in Fall 2015, and which could significantly affect their ability to target the mid-range market. These are, the outdated iPhone 6 and 6 plus.

As they have been doing for quite a few years now, Apple has reduced the prices for their year-old models, and is selling them in parallel to their current ones. In the United States, the iPhone 5s starts at $450, the iPhone 6 at $549 and the current iPhone 6s is at $649. The iPhone 6 plus is $649 and the iPhone 6s plus is $749. While not yet in the budget phone range, these models significantly expand the iPhone product range for the more budget conscious customers.

Second hand iPhones are also quite popular in some developing countries. With the new iPhone 6s/6s plus models, we can expect a large number of iPhone 6/6 plus models to enter the used phone market.

This is significant because a) the larger size iPhones sold extremely well in 2015 and they should also sell well to budget conscious customers, b) developing markets tend to favour larger screens. As a result, we can expect the demand for the price-reduced or used iPhones to significantly exceed that of previous years. Although the effect on Apple’s short-term financial results is likely to be small, it could strongly impact Apple’s future prospects in developing countries.

This is something that was completely foreseeable, and I discussed this in Fall 2014 when the iPhone 6/6 plus was first announced. The year 2016 is when we will see the actual effects. I think we should remind ourselves that this year, we might see Apple making significant inroads into budget conscious countries (namely some European ones) and developing countries.

iPhones, Battery Cases, Battery Life and Samsung Galaxy S6

With the release of Apple’s new Smart Battery Case for the iPhone 6/6s, some pundits are proclaiming that this is proof that Apple has been putting form over function, and that this product is an admission that the iPhone’s battery life is not enough.

Of course, the more careful journalists like Joanna Stern do not forget to mention that the people who find the iPhone lacking in battery life are heavy users.

You know who I blame for my battery anxiety disorder? Obviously not me, and my excessive checking of email and social media. I point the finger at Apple, and its insistence on compromising battery life for phone slimness.

On Tuesday, the company finally admitted that heavy iPhone 6 or 6s users like me could use more power

Some are less so and make very careless comments (Phil Baker writing for Techpinions).

The thinness tradeoff most likely was driven by their passion for ID winning over usability. Apple’s design of nearly every product for years has been about thinness, from the Air to the iPads, to the phones. Each new generation is thinner than the last. Apparently, there was no one strong enough to push back. I bet at least 80% of iPhone 6 users would have preferred more battery life in exchange for a phone that’s 1 or 2 mm thicker.

Now I am totally aware that in survey after survey of smartphone users, battery life is the major concern. However, the percentage of customers who are complaining is in the 30-40% range, and it is also unclear whether they are suffering enough to chose a phone that has more stamina, but is also heavier and bulkier.

Lacking any good publicly available survey results, we could look at the market-wide product trends for clues.

The hugely respected Anandtech website conducted battery tests for a variety of devices, and concluded the the iPhone 6s/6s Plus have very good battery life compared to other smartphones. If the iPhone battery life was so inadequate, and 80% of customers would really put up with a few extra millimetres of thickness for a larger battery, then why haven’t the competition opted for better battery life then the iPhone?

NewImage

The Samsung Galaxy S6 is also reported as to having a smaller battery than its predecessor. Why would Samsung do this if most customers valued battery life over thinness?

Personally, I know I often run out of battery life and I bought the Smart Battery Case. I have my own opinions, but I am also aware that they do not represent the bulk of the market. That is why data is important and why personal opinions are mostly worthless, unless you are writing reviews for a audience that is just like you.

iPhone: “Good Enough” is Nowhere In Sight

A central tenet of disruption theory is that the threat of disruption occurs when products start to overshoot the market. Back in 2012, Horace Dediu posted “Is the iPhone good enough?” and offered a way to measure whether or not the iPhone has reached this point.

Horace suggested measuring sales of the newest model against the year-old versions that Apple sells in parallel at discounted prices. I am not currently aware of any data for this, but there are other ways (although not quantitative) to see whether this is the case. For example, you could look and see if the excitement over new products is high or not. You could see if the average selling price is increasing or decreasing. You could look at whether the new features are being used by the general public (and not just a few enthusiasts).

Judging from the record launch weekend sales of the iPhone 6s/6s plus which were just announced by Apple and from the glowing reviews of the new 3D touch feature, it seems that the iPhone has managed to escape becoming “good enough”. That is, they have discovered new features that customers truly want, and more importantly, their customers still trust Apple to deliver significantly better experiences with each new release. Of course we are only looking at the launch weekend, when sales are mostly supply constrained, so what we have right now is not a very good indicator of consumer attitude. It still seems very positive though.

Contrast this with the situation on Android where average selling price is falling, and each new Samsung Galaxy S release is getting less attention with each coming year. This is what you would expect from a market that has reached “good enough”, and sure enough, we are seeing Samsung being disrupted by low-end entrants. There is a stark difference here.

So back to Apple. Many pundits were worried that Apple would not be able to deliver a phone that would excite customers over new features, after picking the low-hanging fruit that was larger displays for the iPhone 6/6 plus. This does not seem to be the case. It seems that the innovation engine inside Apple is still running very strong, and that they still have ideas for new features that customers will be eager to upgrade for. That is to say, although pundits may declare smartphones to be “good enough”, Apple has stuff in the labs that will raise the bar when introduced. As long as these features keep rolling out and capturing the imaginations of consumers, “good enough” won’t come to the iPhone.

This also means that if Samsung (or any other Android OEM that aims to sell phones profitably) successfully copies the iPhone’s new features, then they will too manage to escape the “good enough” trap. That is the challenge though. Without controlling the software, Samsung will have difficulty getting traction with something like 3D touch.

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.

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.

The iPhone Did Not Disrupt the Mobile Handset Industry

Yesterday, I wrote about how smartwatches would be a sustaining innovation relative to the watchmaking industry, but instead by a disruptive innovation relative to the smartphone industry.

To illustrate my point, I described how smartphones were a sustaining innovation (and not disruptive) to the mobile handset industry, and how smartphones were instead disruptive to PCs.

Since many people will understandably have an issue with smartwatches disrupting smartphones, I think I should go into a bit more detail. Instead of going into logic, I will give my understanding of what happened when the iPhone entered the market (Christensen’s mistake) and examine the parallels with the Apple Watch.

  1. Smartphones did not disrupt the mobile phone market: Many people think that the iPhone disrupted the mobile phone market. Disruption means that new entrants successfully displaced the incumbents. While this is certainly true that one entrant, Apple, gained 8.4% market share of total mobile phones, if you look at the other players, the mobile phone market is still mostly comprised of incumbent companies that used to sell feature phones. These companies were fortunate that Google provided Android for free, so that they could easily and quickly develop their own smartphones. Some may note that Blackberry and Palm almost completely disappeared. I would argue that if you look at the total mobile phone market, they were never more than a small niche so they weren’t really incumbents at all. As for Nokia, they simply bet the company on the wrong horse. If they had chosen to use Android, there is little doubt that they would have still been a force to reckon with.
  2. Smartphones disrupted PCs: To understand this, you have to lump smartphones and PCs together to create a “personal compute market”. Ben Bajarin has done this, and the following chart shows what has happened. PCs have clearly been overrun, and importantly, neither Microsoft itself nor any of the PC OEMs (with the exception of Lenovo which is very agile at M&A) successfully made the transition to smartphones. This is what disruption looks like.
    Ben BajarinさんはTwitterを使っています Microsoft s journey of computing platform share through the years http t co taFsFr1sZp

Here, I’d like to look at this in a bit more detail. The thing is that if we take a look at the mobile handset industry before and after the iPhone, there certainly has been movement in the dominating players. At first glance, it would look like there has been some kind of disruption. However, as I will point out below, the truth is that disruption came from cheap Asian manufacturers and not from Apple.

Gartner Says Worldwide Mobile Phone Sales Increased 16 Per Cent in 2007
Source: Gartner 2007

Gartner Says Sales of Smartphones Grew 20 Percent in Third Quarter of 2014
Source: Gartner 2014

The Handset Industry Was Disrupted By East Asia

In the above tables, we see Nokia’s rapid decline and Samsung’s ascent. We also see Motorola and Sony Ericsson disappearing from the scene whereas LG maintained its position. Huawei, TCL, Xiaomi and other Chinese and Indian OEMs rose quickly.

This is the combination of a few of events;

  1. Korean manufacturers rapidly grew their presence, overtaking Western and Japanese firms. Korean companies simply made high quality devices and components cheaper than their rivals.
  2. Mobile handset users in both China and India exploded. To cater to these huge markets, homegrown companies sprung up and were successful. The rise of Chinese and Indian manufacturers is simply a result of the explosion of these markets.
  3. Nokia made a very large bet on the wrong technology. Nokia correctly understood that it would not be able to differentiate if it went with Android. However, there was not yet a good alternative OS so Nokia decided to bet on Windows phone in the hope that it would arrive in time. It didn’t. I’m sure that few people would disagree that Nokia would still be relevant if they had adopted Android.

Regarding item 1), this is exactly what Japan did in the 1960s and 1970s, disrupting US electronics and automobile manufacturers. Emerging industrialised nations capitalise on cheap labour and new factories to create high quality products at low cost. Just as Japan initially started out as a cheap, low-quality manufacturer, but quickly moved up the ladder to become a high-quality one, so has Korea in the last decade. The rise of Samsung in particular is simply a consequence of this.

The role of Apple in this is that it created a shake-up. It created a fast changing environment where every company was scrambling to produce a device capable of competing with the iPhone. These environments typically favour quick-moving entrants which have nothing to lose. In the case of Japanese electronics companies, it was the transition to transistors that shook up the environment. In automobiles, it was the oil shock that shifted attention to more efficient cars. Likewise, the iPhone did not directly disrupt the phone industry but instead created a volatile situation which the Koreans could then exploit.

Regarding item 2), this is again very obvious. When the vast majority of smartphone hardware is being made in China anyway, it is natural that Chinese firms would create their own brands. The iPhone has nothing to do with this.

Summary

  1. The iPhone did not disrupt the mobile phone industry.
  2. The mobile phone industry was disrupted from the low-end by Korean manufacturers which were climbing up the ladder from cheap, low-quality to cheap, high-quality.
  3. The iPhone only served as a catalyst for change. It did not directly influence the direction of the shift.

Quick Take on Disruptive Potential of Smartwatches

Just a few quick notes on the disruptive potential of smartwatches.

Smartwatches will not be disruptive to watches

This is very important. This tells you who will be the main players in the smartwatch market in the mid- to long-term. Smartwatches add features to traditional watches, and will often be more expensive than comparably built watches. Therefore, it makes perfect financial sense for incumbent watch makers like Seiko, Citizen, Swatch, Tag Heuer, Casio, and others to make a smartwatch. We are already witnessing this. If incumbents are motivated to fight back, the probability of an entrant being successful is greatly diminished.

Whether the incumbents (traditional watchmakers) can succeed in making a good smartwatch is another question, but given that the operating system is already freely available as Android Wear, and that the Shenzhen ecosystem should give them the electronic components that they need, it is likely that despite not having prior excellence in electronics, incumbent watch manufacturers will be able to create smartwatches that are almost as good as the ones coming out of Samsung, LG, Motorola, etc. Since brand and design are very important for selling wearables and that there is no easy way for entrants (smartphone OEMS) to acquire a strong brand image (i.e. they don’t sell strong brand images in Shenzhen), it is likely that the incumbents (traditional watchmakers) will prevail in the smartwatch space.

Smartwatches will be disruptive to smartphones

Instead of being disruptive to watches, smartwatches will be disruptive to smartphones. Smartwatches will make many of the smartphone computing tasks more convenient and easier to accomplish. Although their current functionality is rather limited, it is very likely that advances and innovations in both hardware and software will quickly expand the scope of tasks that we can accomplish with smartwatches.

For the most part, this will be a new-market disruption as opposed to a low-end disruption. In low-end disruption, you would typically target the least demanding customers. However, in the current format, smartwatches will depend on the user also having a smartphone nearby. A typical user will need both a smartphone and a smartwatch, so they will not be the least demanding customer.

Instead, smartwatches will be new-market disruptions. They will enable customers to interact with computers and the Internet in ways that were previously impossible or cumbersome.

Now in the previous section, I argued that traditional watchmakers will prevail in the smartwatch market. They will gain share of the total compute time per user. The question then is, who will lose share? Who will be disrupted by this new market disruption? My argument is that here the incumbents are smartphones and that smartphones will be disrupted by smartwatches.

Without going into detail, this is what I expect the smartwatch landscape to look like after the dust has settled;

  1. Apple will be the undisputed number 1. They will aggressively innovate on the Apple Watch, even to the extent that it cannibalises the iPhone. The Apple Watch will gradually become more and more independent of the iPhone.
  2. The current Android smartphone OEMs will initially play in the smartwatch market, but they will fail to make profits due to their lack of brand power. Eventually most will retreat from the smartwatch market and focus on making big and powerful smartphones. The few that remain will only get the scraps from the very low-end of the market. The exception might be Samsung. If their Tizen operating system enables them to innovate faster than Android Wear, there is the possibility that Samsung will be able to profit from smartwatches (due to the lock-in they get).
  3. Current watchmakers will be the major Android Wear players in the smartwatch space, especially in profits. The electronics will be provided by the Shenzhen ecosystem or a chipset provider (maybe Intel). Depending on how well Google can monetise from Android Wear, we might see some rapid innovation.
  4. Smartwatches in general will become more and more independent of smartphones. Ultimately, people may not carry a smartphone but instead carry a MiFi-like cellular connection device paired to their smartwatch (due to the battery requirements of connecting to a cellular network). For tasks requiring a larger screen, customers might carry a tablet-like device. The theme here is that smartphones will be at least partially replaced by smartwatches.

Final thoughts

Clayton Christensen famously misunderstood the disruptive potential of the iPhone. He saw it as a sustaining innovation to feature phones, and expected the incumbents to quickly respond and shut out the new entrant (Apple). Part of his mistake is that he failed to see how the iPhone would be a new-market disruption, making PC tasks possible on a mobile device.

We should be careful not to repeat his mistake. We need to be careful in understanding to which markets smartwatches are sustaining, and to which markets smartwatches are disruptive. If we fail to correctly assess this, we will end up with the opposite prediction.

Here I make the potentially controversial prediction that the traditional watchmakers will prevail and that smartphone OEMs like Samsung, Motorola and LG will drop out of the market. This will be the measure by which my understanding of disruption theory should be judged.

Update

Since many people will understandably have an issue with smartwatches disrupting smartphones, I think I should go into a bit more detail. Instead of going into logic, I will give my understanding of what happened when the iPhone entered the market (Christensen’s mistake) and examine the parallels with the Apple Watch.

  1. Smartphones did not disrupt the mobile phone market: Many people think that the iPhone disrupted the mobile phone market. Disruption means that new entrants successfully displaced the incumbents. While this is certainly true that one entrant, Apple, gained 8.4% market share of total mobile phones, if you look at the other players, the mobile phone market is still mostly comprised of incumbent companies that used to sell feature phones. These companies were fortunate that Google provided Android for free, so that they could easily and quickly develop their own smartphones. Some may note that Blackberry and Palm almost completely disappeared. I would argue that if you look at the total mobile phone market, they were never more than a small niche so they weren’t really incumbents at all. As for Nokia, they simply bet the company on the wrong horse. If they had chosen to use Android, there is little doubt that they would have still been a force to reckon with.
  2. Smartphones disrupted PCs: To understand this, you have to lump smartphones and PCs together to create a “personal compute market”. Ben Bajarin has done this, and the following chart shows what has happened. PCs have clearly been overrun, and importantly, neither Microsoft itself nor any of the PC OEMs (with the exception of Lenovo which is very agile at M&A) successfully made the transition to smartphones. This is what disruption looks like.
    Ben BajarinさんはTwitterを使っています Microsoft s journey of computing platform share through the years http t co taFsFr1sZp

Now if we apply this to the current smartwatch situation, we can expect the situation I described in 1) to happen to the current watchmakers, and the situation I described in 2) to happen to the current smartphone OEMs.

So for current watchmakers, they will quickly adopt the new emerging technology, and the freely available Android Wear will help them immensely. The Shenzhen ecosystem will also help on the hardware side.

On the other hand, smartphone OEMs will dabble in smartwatches in the same way that DELL and others briefly entered the smartphone market (Dell Streak 5, HP iPaq). Notice the bulkiness and inelegance of their offerings, which reminds me of the bulky and unfashionable Android Wear devices that we are currently seeing from Smartphone OEMs.

In a few years time though, I predict that smartphone OEMs will mostly exit from smartwatches, just like DELL and HP did. There seems to be something that holds back incumbents in the higher spectrum of the market from creating something that is simpler and more elegant.

64-bit Android Is Starting To Hurt

Ever since the iPhone 5s was announced with a 64-bit processor, I have been watching when Android will move to 64-bit. My concern is that if Android does not move to 64-bit soon, the performance gap between Android and iOS may widen to a point where it becomes ridiculous to talk about “High-End Android”.

I initially thought that it would be a software issue; that Google would not commit itself to the high-end and would not be aggressive in moving the OS and applications to 64-bit. This has been true to a certain point. However, AppleInsider reports that the CPU hardware might be having an even harder time moving to 64-bit.

Following up on rumors in December that described “hard to solve” issues that Qualcomm was experiencing as it works to deliver its first mainstream 64-bit mobile chip, Bloomberg has now reported that Samsung “will use its own microprocessors in the next version of the Galaxy S smartphone.”

Citing “people with direct knowledge of the matter,” the new report said Samsung tested Qualcomm’s Snapdragon 810 but “decided not to use it.” Both companies have declined to address the issue publicly.

Two weeks ago, a research note by JP Morgan described the same overheating issue, explaining, “For the Snapdragon 810, a flagship chip for use in high-end models, we believe the issues are related to the implementation of new 64-bit ARM cores (A57), which is causing overheating when accelerating above 1.2-1.4 GHz frequencies, which is a major limitation for a flagship phone.”

This is starting to look very bad. It is starting to look like high-end Android will truly end up being a Samsung exlclusive.