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.

Data shown in this article

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Monitoring the Adoption of Windows 10

StatCounter gives us an easy way for us to monitor the growth of Windows 10 instalments.

StatCounter os US daily 20150727 20150802

Note the rise of the black Win10 line. Windows 10 web usage will soon surpass Window XP and it has already surpassed Windows 8.0. Although it is dangerous to simply extrapolate the data, it is possible that Windows 10 instalments will exceed Windows 8.0 + 8.1 in August.

Note:
The decline of Windows 7 usage over the weekend is not indicative of Windows 7 machines being upgraded to Windows 10. This is simply a result of Windows 7 machines being used mostly in the workplace on weekdays. Due to the weekly cycles of usage and normal fluctuations in the data, we will have to observe web usage data for at least a few weeks to confidently detect a decrease in Windows 7 usage.

Note2:
In the above analysis, I used web usage data from StatCounter that was restricted to the United States. The reasons for this are simple.

  1. The “Worldwide” statistics for StatCounter are not representative of actual worldwide usage, nor do they try to be. For that matter, Net Market Share statistics aren’t much better either.
  2. The United States is the most likely the largest single market for Windows.
  3. Countries where high-speed Internet access is less common will be slow to upgrade, irrespective of the appeal of Windows 10. The rate of adoption of Windows 10 in these countries cannot be a measure of how well it will fare long term. Just for your information, there is significant variation in the early adoption of Windows 10 according to StatCounter. Countries like the US (4.3% as of Aug. 2), the UK (6.3%), Germany (4.9%) and Sweden (5.0%) have a high adoption rate. Japan, France, South Korea, Spain, Italy, Turkey, Russia have lower rates. However, given the sample bias in StatCounter, I would not take these differences too seriously.

Note3:
Although not yet clear enough to be certain, there does seem to already be a small but visible reduction of Windows 7 and Windows 8.1 web usage in Sweden, where Windows 10 adoption seems to be particularly rapid.

StatCounter-os-SE-daily-20150704-20150802

The Lack Of Apps For Windows

I never thought I would say that Windows lacks apps. This is however, how I feel after using Windows 10 for a few day.

Granted, I am not a heavy Windows user and my experience is mostly confined to the PC that was handed to me at work. However, I suspect that for the majority of people, this is actually the full extent of their Windows experience. Although I am not a heavy user, I am pretty much an average user.

Now if your knowledge of apps on Windows is mostly limited to Microsoft Office and Exchange, then the only experience with a huge app ecosystem would be the iOS App Store and the Google Play store. You would not have known that there were a ton of apps for Windows even in the old days, and even if you did, you would not know where to find them. You best bet would have been to go the your local retail store to get a shrink-wrapped version, and no, Amazon isn’t really an option because they don’t even bother to include the descriptions that you can find on the boxes.

Therefore I would argue that for a regular user, their perception of the app ecosystem for that OS depends on the default app store, regardless of how many shrink-wrapped apps you can find at stores. In this regard, Windows 10 falls short. Terribly short.

It would be much better if Microsoft had a store for their non-Metro apps, much in the same way as Apple has their Mac App Store. They could even simply provide an app or a link to the Microsoft Store (which for some reason is down today) where they showcase hardware and software that run on Windows.

On the other hand, my expectation is that developers that are quick to embrace the Windows Store might get a lot of exposure, just like how early iOS developers were able to earn more money more easily than the current ones can. The Windows Store was available since Windows 8, but since the experience of using Metro apps on desktop PCs was so bad, I expect the vast majority of users didn’t take a serious look into the Windows Store. Now with Windows 10, the situation should be very different.

Will Windows 10 Invigorate Windows Store Apps?

One very clear observation with Windows 10 is that it lowers the mental barrier towards Windows Store applications. Given that Store apps are optimised for tablets and that the number of Windows tablets in use is very low in comparison to the total number of PCs in use, we can confidently say that not many store apps are being downloaded and used. In particular, very few are being used on desktop computers.

Windows 10 has the potential to change this. With Windows 8, I loathed Metro apps and was irritated when an icon that I mistakenly clicked took me to a Metro app that suddenly took over the screen. The keyboard shortcut to take me back to the desktop mode (Windows key + d) was one of the first that I remembered, and one that I never forgot. Now with Windows 10, Metro apps act more like regular desktop apps, consuming only a single window and leaving the rest of the screen alone. Interacting with background windows is a single click away, and you can view multiple windows at the same time. It’s something that we’ve been enjoying for decades, and it’s a relief to be freed of the tyranny of Windows 8 Metro apps. This should make users much more willing to try out Store apps.

For example, I never used the official Twitter app (a Metro app) on Windows 8. I like to have Twitter as a background window as I work on something more important, but Metro would not let me do this. Thus I never used that app. With Windows 10, my problems are solved. Keeping Metro apps in a background window is just as easy as it is with regular Windows apps. The only problem right now is that the Twitter app is still limited in features and the behaviour is a bit quirky, but it is no longer a hard limitation of the OS, but an issue with the app itself.

Because of this alone, I expect Windows Store apps to see much more interest than before. Because of the huge size of the Windows PC ecosystem and the rapid uptake of Windows 10, we might even see excitement in the Store. Now that would be something.

Update

One should also keep in mind the massive size of Microsoft’s goal of 1 billion Windows 10 devices in the next 2-3 years. Many analysts consider this to be conservative, but this would still be about twice as large as iPhone’s installed base. Android’s installed base is probably something like 1.5 billion to 2.0 billion so Windows 10 would be half of that. If we also consider that the Windows PC owner demographic is much more likely to spend money on stuff compared to the Android demographic, which skews strongly to relatively low-income owners, it could be that we on the verge of seeing the sudden emergence of new huge app store ecosystem. This is something to watch carefully.

Thoughts on Windows 10

Some quick thoughts on Windows 10 after playing with it for a couple of days after the release.

It is no longer confusing

I consider this to be the single, most important feature of Windows 10. Unlike Windows 8 and 8.1, I no longer am confused with how to perform really simple tasks like opening up a browser, getting to the control panel, opening up Evernote, etc.

The important thing to understand about the Windows ecosystem is that despite Windows 8 being released back in October 2013 and being with us for almost two years, the vast majority of users are still using the traditional Start Menu-based navigation system on Windows XP or Windows 7. This is more pronounced in corporate environments, most of which are still on Windows 7. One cannot overstate the importance of Windows 10 being intuitive to these users.

Number of Instalments

It has been reported that Windows 10 has been installed on 67 million machines as of 8AM July 31st. Since the release was on the 29th, this massive number was achieved in a just a couple of days. This is a tremendously huge number.

To put this number in perspective, the installed base of PCs is in the 1.0 to 1.5 billion range (Microsoft says that they have 1.5 billion Windows devices including phones, and 1 billion Office users). Of this, only about 15% are on Windows 8/8.1 (based on web usage statistics). This puts the number of Windows 8/8.1 instalments at 150-225 million. Windows 10 has achieved about 1/3 of this in 2 days. The number of Macs are only 5% of total PCs, at about 50-75 million (at WWDC 2014, Apple said it was 80 million), so Windows 10 instalments will likely exceeded the total number of Mac instalments any time now. Gartner is predicting Chromebooks sales of just 7.3 million in 2015, which is just a tenth of Windows 10 installs.

Simply put, the rollout of Windows 10 has been massive by any measure. Microsoft has also formally announced their goal of 1 billion Windows 10 devices within the next 2-3 years, which has been considered to be an achievable if not conservative goal.

Usage share

Given the massive uptake of Windows 10, Windows 10 should show up in web usage statistics. Sure enough, Stat Counter has put Windows 10 at 2.69% of US desktop usage as of July 31st. This compares with 0.92% for Chrome OS, 4.8% for Win XP, 3.19% for Win Vista and 20.9% for Win 8/8.1 and 17.04% for Mac OS. We can expect this this number to rise rapidly within the next few weeks.

Effect on future browser usage share

Windows 10 apparently sets your default browser to Microsoft Edge, even when you had previously set it to Firefox or Chrome. It will be very interesting to see how many people will stay with Edge and how many will set it back to the browser of their choice.

If many people stay with Edge, which is certainly possible given that it is actually quite nice, then Chrome usage share will suffer. More importantly, since the default search engine of Edge is Bing, Google Search market share may also decline significantly.

Misguided Expectations for Replacements Cycles

Many people have blamed the slowdown of iPad sales on the fact that the replacement cycle of iPads is quite slow. In fact, we don’t really know what the replacement cycle is yet because the device is still very new (even the first replacement cycle hasn’t yet kicked in) and the second generation device, the iPad 2 (introduced March, 2011) is still used quite a lot.

NewImage

My question is, is the replacement cycle too long and should we be blaming Apple (as quite a few analysts are) for the lack of reasons to upgrade? Should we blame Apple for not introducing compelling improvements to the iPad that would drive users to buy new devices? Should we blame Apple for mismanaging the App Store to the effect that not enough exciting titles are being released for iPad?

This hinges on what the natural replacement cycle for a tablet device should look like. If the natural cycle should be something like two years, then yes we can blame Apple. If it is however something like 4 years, then we cannot conclude that Apple is doing a bad job.

Therefore, I think we should give some thought on to what the natural replacement cycle for a tablet device should actually look like.

Smartphones

The replacement cycle for the phone market varies from less than 2 years to over 10 years (interestingly, Android phones seem to have a much faster cycle).

Screen Shot 2014 10 18 23 08 44

Recon Analytics sums up the reason for differences in replacement cycles as follows;

Based on the data and analysis outlined in the report, it is conclusive that over the last four years, handset subsidization is the dominant factor influencing the handset replacement cycle. The percentage of subscribers on postpaid and prepaid plans, as well as the relative income level in the countries, had a negligible impact on the handset replacement cycle.

Considering that the majority of iPads are WiFi-only and that these are not subsidized, we can expect iPad replacement cycles to be significantly longer that phones. There is very little reason to expect iPad replacements every two years.

PCs

The replacement cycle for business PCs in the US was a bit longer than 3 years. Why do they replace them so often?

  1. Increased productivity: If the old PC is much slower than the most recent models, then a new one would increase productivity.
  2. Escalating support costs: If the old PC tends to break down a lot, then buying a new computer may become cheaper than the maintenance costs.
  3. Software requirements: If the old PC cannot run new software, then it’s time to upgrade to a new PC.

Now how much of this would apply to tablets?

The amazing thing about the iPad, even the original model, is how fast it was on the limited hardware. Apple went to great lengths to achieve this, even sacrificing features that have been found on PCs since 2000 like multitasking in the background. Apple has kept third party software under strict restrictions, and this has helped keep software from bogging down the system. Apple itself has worked hard not to make iOS bloated.

As a result, the iPad 2 from 2011 still has enough performance to run the most recent iOS (iOS 8) with OK speed. Hence “increased productivity” does not apply very much to iPads and neither do “software requirements”. We also have to understand that iPads are mostly used by consumers, and so less emphasis is places on “increased productivity”.

Another amazing thing about the iPad is how durable it is. Without almost any moving parts, not even a keyboard, there is very little that can break. The build quality of the device was also superb from the onset. Also, unlike phones which you carry about you all day, you are much less likely to drop and shatter an iPad on concrete. Simply put, the cost of maintenance for an iPad is remarkable low.

Since none of the reasons for a 3 year PC replacement cycle apply to iPads, there is no justification for expecting similar cycles for iPads. It is very possible that the replacement cycle for an iPad is much longer than 3 years.

The one thing to note is that the iOS 8 is bearable on iPad 2, but stutters quite a bit. This is probably due to the fact that it only has 512 Mbytes of RAM and I think that it is unlikely that the next iOS version will support it. If so, then “software requirements” will demand a replacement next year.

Other consumer electronics devices

For most consumer electronics devices, we generally only replace them if they break down or our family gets larger (and we need a larger refrigerator or washing machine). Unless you buy them from a manufacturer that is seriously skimping on important components, they should last at least 5 years.

Summary

As we can see, the 2 year replacement cycle that many analysts were initially expecting for tablets was completely misguided, and hence we cannot blame Apple for a cycle that may be 3 years or longer.

We could even argue that having compelling new features is only rarely a reason why people ever upgrade their devices. This is for the most part irrelevant to the upgrade cycle. In fact, the main pain points cited for upgrading PCs are mitigated by stricter control of third-partly applications, better hardware build quality and simpler hardware design on iPads.

Are Chromebooks Losing Market Share in the Sub-$300 Notebook Segment?

Yesterday I wrote about an NPD report that came out for back-to-school PC sales in 2014.

In that report, Chromebook sales were reported to account for 18 percent of all sales of notebooks under $300.

This sounds like good news if you don’t remember what NPD was telling us a year ago. Stephen Baker, NPD’s Vice President of Industry Analysis for Consumer Technology, said the following;

In the last eight months Chromebooks have snagged 20 percent to 25 percent of the U.S. market for laptops that cost less than $300.

If Chromebooks sales have truly fallen from 20-25% market share to 18% market share in the sub-$300 laptop segment, that’s pretty bad news for them. Not that it’s particularly good news for Microsoft either.

Back-to-School PC Sales 2014

NPD published their report for US consumer retail PC sales during the 10 week back-to-school period yesterday.

スクリーンショット 2014 09 25 8 07 49

U.S. consumer retail PC sales grew almost 3 percent during the 10 week Back-to-School period (week of July 4th through Labor Day week) after declining by 2.5 percent in the previous year.

So it seems like PC sales aren’t falling too badly and have actually risen a bit. Mac sales are continuing to be quite strong. Chrome OS has made some gains but not nearly as impressive as compared to 2012-13.

As I have repeatedly said in this blog, what I find interesting is how Microsoft is retaliating to Chromebooks.

Chromebook sales were up 32 percent in 2014 and accounted for more than 5 percent of notebook sales, and 18 percent of all sales of notebooks under $300. Windows notebook ASPs fell over the last three weeks to just $441, which was 8 percent lower than last year, but the price cuts lifted units by 4 percent. Entry-level Windows Notebooks priced under $300 increased by 37 percent as prices dropped from $271 to $242. 2-in-One Windows devices accounted for 13 percent of Windows sales as volume increased 6x over 2013.

What we see is that low-cost Windows notebooks that are price-competitive with Chromebooks are increasing sales in line with the rise in Chromebook sales (37 percent vs. 32 percent). Hence it appears that although Chromebooks sales are up 32 percent, the market share of Chromebooks within the notebooks-under-$300 segment is not increasing. What is happening is that the notebooks-under-$300 segment expanded 30%, and both Chrome OS and Windows machines increased their sales at the same rate within this segment.

Simply put, Chromebooks are not gaining market share relative to Windows notebooks in the sub-$300 segment. What’s happening is that the sub-$300 segment is rising 30%.

Within this segment, Chromebooks have 18% market share whereas Windows has the remainder. To eventually win over Windows, Chromebooks has to be growing much more rapidly. The possibility that Chromebook share is not rising at all in this segment is a huge red flag.

Looking at the big picture, Microsoft has simply made the typical response that an incumbent would make when faced with low-end disruption. Microsoft’s software business is very much fixed-cost, and hence they tend to fiercely guard market share at the expense of margins. They have also made similar responses in the past.

Nothing new here, but still interesting to see this play out according to theory.

Linux-on-the-desktop Pioneer Switching back to Windows

This post recently caught my attention;

“Linux-on-the-desktop pioneer Munich now considering a switch back to Windows”

This is very interesting because it relates to the current growth in Chromebooks and the new Chinese OS that is in development. It tells us how hard it is to move away from Windows.

Let’s look at why Munich decided to go back to Windows;

Schmid describes two major problems. The first is the issue of compatibility; users in the rest of Germany that use other (Microsoft) software have had trouble with the files generated by Munich’s open source applications. The second is price, with Schmid saying that the city now has the impression that “Linux is very expensive” due to custom programming. Schmid also appears to be an Outlook fan, bemoaning the loss of a single application to crosslink mail, contacts, and appointments.

Regarding the compatibility issue, Munich reportedly used LibreOffice on Ubuntu. At least in the open-source world, this is regarded a quite a good cross-platform solution. Munich’s decision suggests that it wasn’t good enough for a large scale deployment.

The question is, does the same apply to Chromebooks as well? I think it might.

Regarding the second issue, it warns us that “free” is not always the cheapest option. It is not always obvious what will cause costs to go up, but we must be aware that it is always a large possibility. I wrote about one example in this blog (“Japan’s Largest University Switching to Microsoft Office 365 from Google Apps (Docs)”).

It would be nice if I could get more information on this.

Can China Develop a Successful Operating System

Reuters reported that China is developing a homegrown operating system.

This is not the first time they have done this. However this time, they have a much better chance;

  1. China’s worries about the U.S. owning computing technology have largely been justified by the the revelations by Edward Snowden.
  2. China now is much more powerful in the computing scene. They manufacture most of the world’s smartphones.
  3. Chinese Internet companies have grown to the extent that they make a Google-less Internet a reality in China. Although they have yet to expand to other countries, China has demonstrated that they can develop viable alternatives to the most powerful Internet company.
  4. The dominance of Microsoft Windows has waned. In China, the majority of PCs ran Windows but only pirated versions of Windows XP. Now that Microsoft has ended support for Windows XP, China’s PC OS situation is up for grabs. This is even more so given that China has recently banned Windows 8 for government use.
  5. Although I don’t have hard data, it seems that the software industry in China is quite vibrant. There are many titles for both Android and iOS developed inside China. I suspect that there is quite a bit of software talent in China.

This time around, the Chinese OS seems to have a fair chance.

It’s obvious that this will be a Linux based system.