Larry King Live
Aired May 1, 2009 - 9:00 p.m. EDT
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KING: Tonight, people are calling it the most important business transformation in a generation. Bill Gates, the founder, chairman, and CEO of Microsoft joins us live. Bill, Microsoft just announced its quarterly earnings, and for the first time your revenue from personal computers actually dropped.
GATES: The economy is very tough, and that's affecting computer sales, just like everything else.
KING: But Microsoft's revenue and profits continued to increase, right? The stock market sure loved what you said last week.
GATES: I think our strategy's really starting to take hold. We don't manage Microsoft for quarterly earnings, but it's nice to see that investors are recognizing the progress we've made.
KING: You mentioned a new strategy. That started what, about eight years ago?
GATES: Roughly. We spent a lot of time looking at our business, asking where we were going, and we realized three important things.
KING: What were they? Lay them out for me.
GATES: Well, the first was that the biggest danger to Windows was Microsoft itself, and they way we were managing the product. Our philosophy for the last decade had been that whenever there was an innovation in personal computers, we copied it into Windows or into Microsoft Office. If there was an important new application, we built it into Office. If Apple or somebody came up with a new personal computer feature, we built that feature into Windows.
KING: You were trying to compete.
GATES: Yeah, but the effect was that Windows and Office were growing exponentially. If you extrapolated out the growth curve -- the number of lines of code and the number of features -- you could see that within about a decade we'd hit an asymptote...
KING: An assy-what?
GATES: A point of diminishing returns, where Windows would become so complex that we'd have to spend all our time just fixing bugs instead of improving the product. We were destroying our own ability to innovate.
KING: But that wasn't the biggest problem, was it? Your behavior also made Microsoft unpopular.
GATES: Not just unpopular, our aggressive business practices made people stop investing in writing new PC software. The entrepreneurs and the VCs were starting to say, "why should I bother writing a new Windows software program? Even if I'm successful, Microsoft will just take over my business."
KING: How's that a problem? It just means fewer competitors for you, right?
GATES: Not really, because people weren't going to stop writing new software overall. They just stopped writing it on Windows. By competing so hard with our own developers, we were forcing them to innovate on the Internet instead. So here we were, Windows was growing so big that we couldn't innovate, and at the same time we were driving all the other innovators to work on the Internet instead of building on our platform. We were in danger of strangling our own business.
KING: You said there were three things you realized. What was the third one?
GATES: That was probably the most painful one for us to face. We had to admit to ourselves that we just weren't very good at managing things outside the PC business.
KING: But today Microsoft is viewed as one of the best managed companies in the world.
GATES: Today, sure. But ten years ago, we were like the repair guy who has only a hammer. Everything looks like a nail. We thought we were a software company, but actually we were a PC company. To us, everything looked like a PC. We thought we could take what we already knew and apply it to any other technology business. Microsoft had this reputation that the third time's the charm...
KING: Your first two versions stink, but on the third try you'll get it right.
GATES: I wouldn't say stinks, but...you know, ten years ago I would have jumped all over a statement like that. But yeah, people said things like that, and I think at some level we started to believe it about ourselves. So we would enter these new businesses, and our first efforts would be a failure, and we'd tell ourselves that it was okay because of the learning curve. But that wasn't it; the reality was that we just weren't very good at those other businesses. You look at all the new things we were investing in...
KING: Let's make a list, there were video games, smartphones...
GATES: Lots more than that. Tablet computers. Music players. At one point we were even creating an operating system for watches, if you can believe that. And we were developing all of these things in-house, and most of them were very mediocre, very uninspiring.
KING: So let me get this straight, you had three problems at once...
GATES: Our products were getting so big that we couldn't innovate, we had driven away the other people who could innovate, and we weren't good at the new businesses we were getting ourselves into. Now, none of this was totally obvious in 2001. You could still rationalize at the start of the decade that all we needed to do was work a little harder. In fact, in a lot of ways it looked like we were stronger than ever. So the pressure to stay the course was pretty extreme.
KING: But that wasn't what you did.
GATES: No. It was the biggest decision of my career, but right when we were at the peak, we decided we had to remake the company. If we were going to diversify beyond the PC market, we needed to figure out how to manage very different businesses within Microsoft. We had to be more like GE, where they can run radically diverse businesses like jet engines and finance inside one corporate entity. And instead of growing everything ourselves, we'd need to acquire some companies with different DNA.
KING: But acquisitions were a problem for you.
GATES: Right. Because the government had decided we were a monopoly, we couldn't just go out and buy a bunch of companies. We would've drowned in lawsuits. So first we had to change the way we managed Windows. That's why we signed the consent decree with the government, agreeing to open up all the interfaces of Windows at no charge, and to stop copying the features of other software companies. That got the Department of Justice off our backs -- I mean, that made the regulatory authorities more comfortable with our strategy. You know, Larry, I still don't think we actually did anything wrong, but sometimes the perception is just as damaging as the act...
KING: Of course.
GATES: Then we made it clear to the VCs that instead of competing with the best Windows software companies, we were going to buy them. That turned around the whole investment dynamic -- instead of creating new software companies on the web, they started telling all the entrepreneurs to create Windows software, because they had an easy exit strategy. Plus we were able to make our Windows development more focused, because we weren't obligated to compete with everything all at once. It's like what Cisco did in networking. Get other people to do your R&D for you, and just buy the best ones. So that re-ignited innovation in Windows.
KING: It sounds so simple.
GATES: Actually, it is pretty simple, if you let the companies you acquire keep running themselves. We used to acquire a company and then "align" it with our strategy. In practice, that meant it disappeared like a tuna in a school of sharks. That was probably the hardest lesson we had to learn at Microsoft, that our way wasn't always the best way.
KING: Let's open it up to the phones. Peoria, Illinois, you're on with Bill Gates.
CALLER: Hello?
KING: Yes, you're on live with Bill Gates. What's your question?
CALLER: I wanted to ask about the acquisitions you've made in the last decade. Which one are you most proud of?
GATES: Oh, it's hard to choose just one. But the deal that set up Microsoft North is one of my favorites. People said we were crazy to buy those guys. We had to pay almost $3 billion for them in 2002. It was a huge risk at the time; Ballmer almost threw a chair at me when we discussed it. But today they're responsible for the whole Microsoft Blackberry product line.
KING: You mean that wasn't developed in-house?
GATES: People forget about that today, but yeah we bought this Canadian company that made Blackberry, and put them in charge of our mobile strategy. The analysts thought we were crazy -- they said we could just copy Blackberry and build it into our server and PDA products. But I thought about Microsoft Bob, and decided it was better to spend the money than risk missing the market. You know, that one $3 billion investment is probably worth at least $30 billion today.
Then there was the joint venture with Nintendo. God only knows how much money we would have lost if we'd tried to go into video games on our own.
KING: We're almost out of time. Nine years ago, on January 1, 2000, we had you on this program and you said that the biggest danger to Microsoft was that you would become complacent. How did you avoid that?
GATES: By assuming that we were complacent, and attacking it. Here's the rule: If you even suspect that you're at risk of becoming complacent, you probably already are. I mean, we could have just gone along with business as usual. That would have been the safe decision.
KING: If you had taken the safe approach, where do you think Microsoft would be today?
GATES: It's so hard to say. If we hadn't changed, we probably could have muddled through with high profits for about a decade before things would have started to come apart. I might have even gotten bored and retired, or given away all my stock to a foundation. But by the end of the decade, there we'd be, most of our business would still be centered on the PC, and when that market started to shrink, then we'd be in real trouble.
KING: Could you have fixed the company if you'd waited that long?
GATES: I don't really know. I want to say yes, because you know I'm kind of competitive. But when a company starts shrinking, there's huge pressure from the shareholders to cut costs. And logically, the first thing you cut is the speculative new products that might get you out of the mess. If I had given up my stock, I might not even have enough control over the company to step in and say, "ignore the investors for a couple of years while we fix everything." It was hard enough to do back in 2001.
Once you start to shrink, it's very difficult to turn things around.
KING: Instead, here you are. Sure enough the PC market is shrinking, but Microsoft's still growing...
GATES: Because we changed our strategy to use the talents of others, rather than feeding off them.
KING: Thanks, Bill.
GATES: You bet.
KING: Bill Gates, the founder, chairman and CEO of Microsoft.
Tomorrow night: Monica Lewinsky, where is she now?
Thanks for joining us. I'm Larry King. Good night.
Monday, 27 April 2009
The lesson from OQO
A lot of people online are lamenting the business troubles of the OQO mini-computer. Wired's commentary is pretty typical: "When OQO’s excited developers showed me a prototype behind closed doors seven years ago, it was clear that the company was ahead of its time. Now, its time appears to be up." (Link)
Baloney. OQO's time never arrived in the first place.
I'm always sad to see any startup run into trouble; especially a device company, because they're so rare. OQO did some beautiful things technologically. But in my opinion, they never had a chance as a business. There just wasn't a significant market for a shrunken, compromised PC at the same price as a full-size laptop. At first OQO was supposed to be a horizontal market device, and when that didn't take off the company went after business verticals (the place where struggling consumer technologies go to die). Sometimes that works, but usually it ends up being a gradual way to wind down the company.
But why, if OQO is failing, are netbooks taking off? Two words: They're cheap. It's one thing to ask someone to pay $900 for a less functional notebook. It's quite another to ask them to pay $300.
The lesson: Don't build something just because you can. Make sure there's a real market for your device before you create it. Geeky coolness will impress Wired reporters, but it won't get you a lot of sales from real people.
Baloney. OQO's time never arrived in the first place.
I'm always sad to see any startup run into trouble; especially a device company, because they're so rare. OQO did some beautiful things technologically. But in my opinion, they never had a chance as a business. There just wasn't a significant market for a shrunken, compromised PC at the same price as a full-size laptop. At first OQO was supposed to be a horizontal market device, and when that didn't take off the company went after business verticals (the place where struggling consumer technologies go to die). Sometimes that works, but usually it ends up being a gradual way to wind down the company.
But why, if OQO is failing, are netbooks taking off? Two words: They're cheap. It's one thing to ask someone to pay $900 for a less functional notebook. It's quite another to ask them to pay $300.
The lesson: Don't build something just because you can. Make sure there's a real market for your device before you create it. Geeky coolness will impress Wired reporters, but it won't get you a lot of sales from real people.
Sunday, 26 April 2009
Checking in on smartphone and Twitter usage
Over at Rubicon, we just did a quick consumer survey to check the status of a couple of hot topics in the tech industry, smartphone adoption and use of Twitter. I thought you might be interested. Here's a summary of what we found, and links to the full articles:
Smartphone adoption: RIM leads. In the US, about 10%-11% of the adult population uses smartphones. RIM has just under half of the installed base, followed by Apple at about a quarter.
The users of different types of smartphone have different feature priorities. iPhone users rate web browsing as their #1 feature, followed closely by e-mail. RIM users rank e-mail the most important feature, Palm users choose calendar, and Google phone users are partial to mapping. The profile for Windows Mobile users is similar to RIM's, but less enthusiastic about e-mail.
Mobile phone feature priorities of iPhone users compared to all mobile phone users. Percent of US users ranking a feature in their top four.
I think this is more evidence of something that I've been saying for a while -- most people buy phones more like they do appliances than like computers. They decide which functions are most important to them, and then pick the phone that does those things best, rather than looking for the best general-purpose device.
That's not to say that flexibility doesn't matter at all, but it's secondary. For example, adding third party apps is the #4 priority among iPhone users, and close to tied with several other features. It will be interesting to see how the priority evolves as Apple continues to advertise the daylights out of the app store.
For the full article, click here.
Twitter is a form of entertainment. Usage of Twitter is rising very rapidly -- as of April, it gets more daily visitors than cnn.com in the US, according to Alexa.com.
Our survey showed that the Twitter user base has more than doubled in the last six months. About 10% of US computer users have tried Twitter so far, and about a third of those people have stopped using it. You can decide for yourself if that's a big number or not, but a certain amount of churn is inevitable in any new web service.
Twitter awareness and usage among US PC users.
Most Twitter users say they are casual users of the service, and that it doesn't play an important part of their personal or business lives. The most active 10% of Twitter users say it does play an important role in their personal lives, but not in their business lives.
The overall pattern of usage indicates that for most people Twitter is currently a form of casual entertainment. There's nothing wrong with that, but the future of Twitter will depend on how that usage pattern evolves. Will Twitter become as important as e-mail, or will it be a fad like citizens' band radio (link)? It's too early to tell. But it's already clear that it's a separate medium with its own rules. Companies looking to use Twitter should make sure they understand how it's used; it's not the same as blogging.
For the full article, click here.
Smartphone adoption: RIM leads. In the US, about 10%-11% of the adult population uses smartphones. RIM has just under half of the installed base, followed by Apple at about a quarter.
The users of different types of smartphone have different feature priorities. iPhone users rate web browsing as their #1 feature, followed closely by e-mail. RIM users rank e-mail the most important feature, Palm users choose calendar, and Google phone users are partial to mapping. The profile for Windows Mobile users is similar to RIM's, but less enthusiastic about e-mail.
Mobile phone feature priorities of iPhone users compared to all mobile phone users. Percent of US users ranking a feature in their top four.
I think this is more evidence of something that I've been saying for a while -- most people buy phones more like they do appliances than like computers. They decide which functions are most important to them, and then pick the phone that does those things best, rather than looking for the best general-purpose device.
That's not to say that flexibility doesn't matter at all, but it's secondary. For example, adding third party apps is the #4 priority among iPhone users, and close to tied with several other features. It will be interesting to see how the priority evolves as Apple continues to advertise the daylights out of the app store.
For the full article, click here.
Twitter is a form of entertainment. Usage of Twitter is rising very rapidly -- as of April, it gets more daily visitors than cnn.com in the US, according to Alexa.com.
Our survey showed that the Twitter user base has more than doubled in the last six months. About 10% of US computer users have tried Twitter so far, and about a third of those people have stopped using it. You can decide for yourself if that's a big number or not, but a certain amount of churn is inevitable in any new web service.
Twitter awareness and usage among US PC users.
Most Twitter users say they are casual users of the service, and that it doesn't play an important part of their personal or business lives. The most active 10% of Twitter users say it does play an important role in their personal lives, but not in their business lives.
The overall pattern of usage indicates that for most people Twitter is currently a form of casual entertainment. There's nothing wrong with that, but the future of Twitter will depend on how that usage pattern evolves. Will Twitter become as important as e-mail, or will it be a fad like citizens' band radio (link)? It's too early to tell. But it's already clear that it's a separate medium with its own rules. Companies looking to use Twitter should make sure they understand how it's used; it's not the same as blogging.
For the full article, click here.
Saturday, 4 April 2009
The ugliest logo ever, but maybe it makes sense
Logo creation is a thankless task. Almost all of the interesting shapes and doodles were trademarked years ago. Unless you have hundreds of thousands of dollars to spend on artists and lawyers, and a lot of time, you usually settle on using your company name with no artwork at all.
Or you can take the approach adopted by the newly-formed Symbian Foundation, keeper of the Symbian OS:
Yes, that's really the new Symbian logo. I guarantee no one's going to sue them for it, unless it's the producers of the movie Juno:
I've already gone through a couple of stages of reaction to the logo. The first was horror. Not only is the font something out of 1974, but the color is one of the least popular in the world (step outside and count how many yellow cars you can see, or click here or here). I know I've seen uglier logos in the past, but I can't remember where, probably because I tried to block out the memory.
The discussion on All About Symbian has been amusing (link).
Once I got over my reaction, I reminded myself that the folks at Symbian are smart and very deliberate. Let's assume they have a good reason for choosing this logo. What would it be, and what would it tell us about the company and its business strategy?
The new Symbian is an open source software project. They need to appeal to open source developers, many of whom have a reflexive hatred toward slick and calculated marketing. After all, these are the sort of folks who, when allowed to choose their own logos, spontaneously chose a fat, stoned-looking penguin and a drunken ox:
The GNU Gnu Head and Tux the Linux penguin (link)
Tux drawn by lewing@isc.tamu.edu. Gnu head reproduced under the copyleft license (link).
To the open source community, Symbian has historically been kind of an antichrist -- controlled by some of the biggest tech firms in the world, bureaucratic, closed, and incredibly complex. If you're going to win over the open source crowd, you have to overcompensate by being excessively informal, friendly and "childlike." (That's Symbian's word for it, not mine.)
Here's how Symbian explains the logo (link):
In other words, the slick and calculated marketing approach is to give the company the most artless logo imaginable. And from that perspective, I think they succeeded.
I am wondering, though, what they'll do when it's time to use the logo for something other than just decorating a website. OS logos are generally used as compatibility marks. In that role they need to be displayed on screen, and preferably printed on the back of the phone, to let the user know that he or she can run Symbian applications on the device.
Picture a meeting where the folks at Symbian try to convince a product manager at Nokia or Samsung or SonyEricsson that they should print that logo on the backs of their phones, or that it should be displayed prominently on the screen. I don't think it'll go over very well. And even if they did agree to include the logo, the tiny details in the lettering won't show up well when reduced in size. The logo just isn't designed to travel.
So Symbian app developers should ask how they'll be able to market their applications when Symbian OS users don't even know what their OS is. Symbian has never had a good answer to that, and I think the new logo doesn't move them any closer to solving that problem.
Maybe the assumption is that all Symbian phones will have application stores built in, so developers won't need to communicate compatibility. Maybe, but that will still put a big marketing burden on an application developer to explain model by model which phones their apps work on.
The bottom line is that any logo artless enough to please the open source community would be problematic as a marketing tool. As is often the case in marketing, you can't please all your audiences, so you can either be universally bland or you can optimize for one audience. I think the folks at Symbian decided that open source street cred is the thing they need most.
And maybe they're right.
Or you can take the approach adopted by the newly-formed Symbian Foundation, keeper of the Symbian OS:
Yes, that's really the new Symbian logo. I guarantee no one's going to sue them for it, unless it's the producers of the movie Juno:
I've already gone through a couple of stages of reaction to the logo. The first was horror. Not only is the font something out of 1974, but the color is one of the least popular in the world (step outside and count how many yellow cars you can see, or click here or here). I know I've seen uglier logos in the past, but I can't remember where, probably because I tried to block out the memory.
The discussion on All About Symbian has been amusing (link).
Once I got over my reaction, I reminded myself that the folks at Symbian are smart and very deliberate. Let's assume they have a good reason for choosing this logo. What would it be, and what would it tell us about the company and its business strategy?
The new Symbian is an open source software project. They need to appeal to open source developers, many of whom have a reflexive hatred toward slick and calculated marketing. After all, these are the sort of folks who, when allowed to choose their own logos, spontaneously chose a fat, stoned-looking penguin and a drunken ox:
The GNU Gnu Head and Tux the Linux penguin (link)
Tux drawn by lewing@isc.tamu.edu. Gnu head reproduced under the copyleft license (link).
To the open source community, Symbian has historically been kind of an antichrist -- controlled by some of the biggest tech firms in the world, bureaucratic, closed, and incredibly complex. If you're going to win over the open source crowd, you have to overcompensate by being excessively informal, friendly and "childlike." (That's Symbian's word for it, not mine.)
Here's how Symbian explains the logo (link):
It is a brand that’s human and playful and friendly, where you feel the human hand. A brand that enables you to discover unlimited creative possibilities, that wants to share and talk A brand that’s fun, that isn’t fixed, but free to constantly evolve. A brand that’s owned by all the people that create and build with Symbian. A brand that celebrates new ideas and creativity in all forms. A brand that’s truly alive and refreshingly different, because it is! A brand that’s human to the core and that underneath beats a human heart.
In other words, the slick and calculated marketing approach is to give the company the most artless logo imaginable. And from that perspective, I think they succeeded.
I am wondering, though, what they'll do when it's time to use the logo for something other than just decorating a website. OS logos are generally used as compatibility marks. In that role they need to be displayed on screen, and preferably printed on the back of the phone, to let the user know that he or she can run Symbian applications on the device.
Picture a meeting where the folks at Symbian try to convince a product manager at Nokia or Samsung or SonyEricsson that they should print that logo on the backs of their phones, or that it should be displayed prominently on the screen. I don't think it'll go over very well. And even if they did agree to include the logo, the tiny details in the lettering won't show up well when reduced in size. The logo just isn't designed to travel.
So Symbian app developers should ask how they'll be able to market their applications when Symbian OS users don't even know what their OS is. Symbian has never had a good answer to that, and I think the new logo doesn't move them any closer to solving that problem.
Maybe the assumption is that all Symbian phones will have application stores built in, so developers won't need to communicate compatibility. Maybe, but that will still put a big marketing burden on an application developer to explain model by model which phones their apps work on.
The bottom line is that any logo artless enough to please the open source community would be problematic as a marketing tool. As is often the case in marketing, you can't please all your audiences, so you can either be universally bland or you can optimize for one audience. I think the folks at Symbian decided that open source street cred is the thing they need most.
And maybe they're right.
Wednesday, 1 April 2009
Thoughts on the tech industry bailout
I presume the big topic of discussion at the CTIA conference this week is going to be the government's emergency bailout package for the tech industry. I was surprised this morning when US Treasury Secretary Tim Geithner replaced RIM CEO Mike Lazaridis at the CTIA keynote to announce the package, and ever since I've been scrambling to sort through all the details. A lot of it's still fuzzy, but here's what I've been able to figure out so far:
--The largest single element in the bailout seems to be the $20 billion in subsidies for Motorola. I think the biggest shock here was President Obama's decision to replace Moto's co-CEO Greg Brown with Steve Wozniak. "We tried to get Steve Jobs, but he demanded control over the Seventh Fleet as compensation," Geithner explained. "So we went for the closest substitute we could find. Besides, Woz was available since he just got kicked off Dancing with the Stars."
Geithner said the subsidies to Motorola were originally designed to protect high-paying phone manufacturing jobs in the United States, but then the government discovered that those were all outsourced to China a decade ago. So the government settled on a requirement that the guy who glues the bat-wing logos onto Motorola's phones has to be an American citizen. He has already been hired, his name is Joey Carbonic, he lives in Wenonah, Illinois, and the crowd at CTIA gave him a nice ovation when he was introduced during Geithner's keynote.
There's a rumor at the show that the government also agreed to buy 500,000 unsold ROKR handsets and give them free to poor countries as a gesture of friendship, but that was denied by a government official who spoke to me off the record. "We're trying to get people in those countries to like us," he explained.
--In the spirit of the forced mergers between failing banks, Geithner announced the combination of Sun, Sprint, AOL, and 3Com. Called 3Sprun and combining the best of all four companies, the new firm will specialize in Java-based 56kbps wireless modems.
--I haven't been able to confirm this yet, but Palm has apparently been offered $2 billion in loans if it adapts the Pre to run on biomass power and merges within 30 days with either Black & Decker, Digg, or SonyEricsson. Ironically, reports from Stockholm say that the Swedish government has offered SonyEricsson 20 billion kronor if it merges with Airbus Industrie, so we may get a three-way deal that would see Treos built into the seat backs of every A380.
--Geithner also said $40 billion in grants have been reserved for use by Yahoo and/or Microsoft. "We like to plan ahead," he explained.
Those are just the highlights. There are apparently a lot more deals being arranged, with venture capitalists and members of Congress competing to get subsidies for various firms. The most intriguing rumor so far is the plan to provide three Twitter accounts to every American as part of the stimulus package, to produce the illusion that the country's population has suddenly tripled. And then there's Cisco's buyout of Six Flags to advance the creation of networked roller coasters (hey, it makes at least as much sense as their purchase of Pure Digital).
I don't know how those will turn out, but things are certainly going to get more and more interesting now that the government has decided that the free market can't be trusted to run the tech industry.
By now you've probably realized that this is April 1, and like the extended iPhone survey last year (link), the Spitr announcement in 2007 (link), and the Google-Sprint merger in 2006 (link), nothing I wrote above is true.
I hope.
--The largest single element in the bailout seems to be the $20 billion in subsidies for Motorola. I think the biggest shock here was President Obama's decision to replace Moto's co-CEO Greg Brown with Steve Wozniak. "We tried to get Steve Jobs, but he demanded control over the Seventh Fleet as compensation," Geithner explained. "So we went for the closest substitute we could find. Besides, Woz was available since he just got kicked off Dancing with the Stars."
Geithner said the subsidies to Motorola were originally designed to protect high-paying phone manufacturing jobs in the United States, but then the government discovered that those were all outsourced to China a decade ago. So the government settled on a requirement that the guy who glues the bat-wing logos onto Motorola's phones has to be an American citizen. He has already been hired, his name is Joey Carbonic, he lives in Wenonah, Illinois, and the crowd at CTIA gave him a nice ovation when he was introduced during Geithner's keynote.
There's a rumor at the show that the government also agreed to buy 500,000 unsold ROKR handsets and give them free to poor countries as a gesture of friendship, but that was denied by a government official who spoke to me off the record. "We're trying to get people in those countries to like us," he explained.
--In the spirit of the forced mergers between failing banks, Geithner announced the combination of Sun, Sprint, AOL, and 3Com. Called 3Sprun and combining the best of all four companies, the new firm will specialize in Java-based 56kbps wireless modems.
--I haven't been able to confirm this yet, but Palm has apparently been offered $2 billion in loans if it adapts the Pre to run on biomass power and merges within 30 days with either Black & Decker, Digg, or SonyEricsson. Ironically, reports from Stockholm say that the Swedish government has offered SonyEricsson 20 billion kronor if it merges with Airbus Industrie, so we may get a three-way deal that would see Treos built into the seat backs of every A380.
--Geithner also said $40 billion in grants have been reserved for use by Yahoo and/or Microsoft. "We like to plan ahead," he explained.
Those are just the highlights. There are apparently a lot more deals being arranged, with venture capitalists and members of Congress competing to get subsidies for various firms. The most intriguing rumor so far is the plan to provide three Twitter accounts to every American as part of the stimulus package, to produce the illusion that the country's population has suddenly tripled. And then there's Cisco's buyout of Six Flags to advance the creation of networked roller coasters (hey, it makes at least as much sense as their purchase of Pure Digital).
I don't know how those will turn out, but things are certainly going to get more and more interesting now that the government has decided that the free market can't be trusted to run the tech industry.
By now you've probably realized that this is April 1, and like the extended iPhone survey last year (link), the Spitr announcement in 2007 (link), and the Google-Sprint merger in 2006 (link), nothing I wrote above is true.
I hope.
Monday, 16 March 2009
Watch out for RIM
Based on what you read in the press, you'd think Apple had conquered the entire smartphone market, or maybe that they invented it in the first place. But to me the most surprising story in recent smartphone sales isn't Apple, it's the continuing rapid growth of Research in Motion.
Check out the latest numbers from Gartner (link). As you know if you've been reading this weblog for a while, I have very little faith in third party market share numbers. They're compiled from shipments self-reported by the vendors, and are subject to all sorts of inaccuracies (link). But they do give a very rough picture of what's happening in the market, and the picture they've been drawing recently is mildly astonishing.
Nokia is still the smartphone share leader, with about 41% unit share. But that's down 10 points from a year ago, on a shipment decrease of about 17% year over year. RIM is number two, with over 19% share and shipments up about 85% year over year. Apple is in third: 11% share, up 110% year over year.
So, roughly speaking, in smartphones Nokia is about twice the size of RIM, and RIM is about twice the size of Apple.
I have to put a caveat on that. Quarterly share and shipment growth fluctuates a lot depending on whether a company has just introduced a new product or is clearing inventory in preparation for a launch. So you have to look at several quarters:
Unit smartphone shipments, worldwide, in thousands. Source: Gartner.
That gives a slightly less apocalyptic view for Nokia. It had particularly huge shipments in Q4 of 2007, so it's down year over year, but overall its shipments are flat rather than collapsing. RIM and Apple are both definitely growing fast, though, with Apple's shipments fluctuating a lot as it adjusted inventory before and after the shipment of the iPhone 3G.
But let's put this all in perspective. The definition of "smartphone" is very sketchy; the way Gartner uses the term today, it refers to basically any phone that has an externally-programmable OS in it. Nokia deploys the Symbian OS in all of its high-end phones, so they are all classified as smartphones. So RIM's not really beating up on Nokia's smartphones, it is currently out-growing the entire top end of Nokia's product line. Project out the current trends for a year, and RIM would be close to overtaking Nokia in smartphones. No matter how you parse the numbers, that's pretty amazing.
Why don't you just die already?
This situation is all the more surprising considering that conventional wisdom has said for years that RIM was doomed. First e-mail phones were just a fad, an extension of the pager market. Then they were just a vertical product that only a few specialized groups like stock brokers would care about. Then Microsoft was on the verge of destroying RIM (not once, but every time a new version of Windows Mobile came out). Then RIM was fated to fall into irrelevance unless it licensed Blackberry clones. And on and on...
Fortunately, RIM completely ignored conventional wisdom and stuck to its core business. The rewards have been immense. In its most recent quarterly report (in December), RIM had a revenue run rate of about $12 billion a year, up more than 60% year over year, and profit of about $1 billion a year. The company now employs about 12,000 people. For comparison, RIM's revenue is now about the same as Apple's was four years ago.
Companies with $12 billion in revenue aren't supposed to grow 60% a year, especially when the economy is gasping, so I'll be intensely interested to see RIM's next quarterly report on April 2. In this economic climate I won't take anything for granted. But keep in mind that Nokia is already making ominous noises about its sales (link), while RIM says its unit growth has been accelerating (link).
Face reality
I think the big message from these numbers is that the analysts and press have done a terrible disservice to all of us by creating the fiction that there is a unified smartphone market. That hides the real news. For example, IDG's writeup on the Gartner sales report focused on overall growth of smartphone sales and didn't even mention RIM until the sixth paragraph (link).
I use the term smartphone "market" here for convenience, but as I've said before, there really isn't a single unified smartphone market and there probably never will be, because different people want different things from their phones (link).
If you look carefully at the shipment numbers, this is blindingly obvious. The smartphones from RIM (and Apple) are differentiated products that have special features appealing to particular segments of users (RIM for e-mail fanatics, Apple for entertainment-hounds). They solve customer problems in unique ways that people can value, so their sales are relatively resistant to an economic downturn. Not immune, but I think they're likely to fall less than the others.
And since Apple and RIM serve different markets, they can grow rapidly side by side. One doesn't usually steal sales from the other.
But Nokia has never had a strong play with this sort of product. Most of its smartphones are bought as high-end mobile phones, purchased by technophiles and status-conscious people with money. When the overall phone market slows down, they slow down too.
The analyst numbers told Nokia a comforting fantasy that it was the dominant smartphone company, when in fact it was a very secondary player in the markets served by RIM and Apple. I think this let Nokia avoid the agonizing changes in product development that are required to make a truly differentiated smart phone.
Instead, Nokia has gone off on tangents attacking Google, Microsoft, iTunes, and just about every other target I can think of in computing. It's a bit like a guy at his home putting up wallpaper in the upstairs bathroom while out in the yard his car is on fire.
I continue to be intrigued by parts of Nokia's strategy, especially the Ovi services suite. Nokia will be able to push Ovi out to hundreds of millions of mobile phone users. In theory, that might be a very powerful way for the company to build a mobile data business. But it could be crippled if the most data-hungry users have already been siphoned away by Apple and RIM.
What happens to RIM?
The question about RIM is what are the natural limits on its growth. Not everyone wants an e-mail phone, although RIM has already stretched the market a lot more than I thought they could. But I think the bigger threat may actually be within the company. Beyond about $10 billion in revenue, a tech company starts to require different management techniques. There's enough going on that management has to delegate much more than it did in the past, and processes have to be set up to ensure quality work and smart decision-making in the lower reaches of the company. That transition is incredibly hard for the leaders of a startup to make, and I wonder if the bug-filled launch of the Blackberry Storm wasn't a symptom of a company growing beyond its processes.
On the other hand, RIM has such a long history of beating my expectations that I'm not going to bet against them again.
Check out the latest numbers from Gartner (link). As you know if you've been reading this weblog for a while, I have very little faith in third party market share numbers. They're compiled from shipments self-reported by the vendors, and are subject to all sorts of inaccuracies (link). But they do give a very rough picture of what's happening in the market, and the picture they've been drawing recently is mildly astonishing.
Nokia is still the smartphone share leader, with about 41% unit share. But that's down 10 points from a year ago, on a shipment decrease of about 17% year over year. RIM is number two, with over 19% share and shipments up about 85% year over year. Apple is in third: 11% share, up 110% year over year.
So, roughly speaking, in smartphones Nokia is about twice the size of RIM, and RIM is about twice the size of Apple.
I have to put a caveat on that. Quarterly share and shipment growth fluctuates a lot depending on whether a company has just introduced a new product or is clearing inventory in preparation for a launch. So you have to look at several quarters:
Unit smartphone shipments, worldwide, in thousands. Source: Gartner.
That gives a slightly less apocalyptic view for Nokia. It had particularly huge shipments in Q4 of 2007, so it's down year over year, but overall its shipments are flat rather than collapsing. RIM and Apple are both definitely growing fast, though, with Apple's shipments fluctuating a lot as it adjusted inventory before and after the shipment of the iPhone 3G.
But let's put this all in perspective. The definition of "smartphone" is very sketchy; the way Gartner uses the term today, it refers to basically any phone that has an externally-programmable OS in it. Nokia deploys the Symbian OS in all of its high-end phones, so they are all classified as smartphones. So RIM's not really beating up on Nokia's smartphones, it is currently out-growing the entire top end of Nokia's product line. Project out the current trends for a year, and RIM would be close to overtaking Nokia in smartphones. No matter how you parse the numbers, that's pretty amazing.
Why don't you just die already?
This situation is all the more surprising considering that conventional wisdom has said for years that RIM was doomed. First e-mail phones were just a fad, an extension of the pager market. Then they were just a vertical product that only a few specialized groups like stock brokers would care about. Then Microsoft was on the verge of destroying RIM (not once, but every time a new version of Windows Mobile came out). Then RIM was fated to fall into irrelevance unless it licensed Blackberry clones. And on and on...
Fortunately, RIM completely ignored conventional wisdom and stuck to its core business. The rewards have been immense. In its most recent quarterly report (in December), RIM had a revenue run rate of about $12 billion a year, up more than 60% year over year, and profit of about $1 billion a year. The company now employs about 12,000 people. For comparison, RIM's revenue is now about the same as Apple's was four years ago.
Companies with $12 billion in revenue aren't supposed to grow 60% a year, especially when the economy is gasping, so I'll be intensely interested to see RIM's next quarterly report on April 2. In this economic climate I won't take anything for granted. But keep in mind that Nokia is already making ominous noises about its sales (link), while RIM says its unit growth has been accelerating (link).
Face reality
I think the big message from these numbers is that the analysts and press have done a terrible disservice to all of us by creating the fiction that there is a unified smartphone market. That hides the real news. For example, IDG's writeup on the Gartner sales report focused on overall growth of smartphone sales and didn't even mention RIM until the sixth paragraph (link).
I use the term smartphone "market" here for convenience, but as I've said before, there really isn't a single unified smartphone market and there probably never will be, because different people want different things from their phones (link).
If you look carefully at the shipment numbers, this is blindingly obvious. The smartphones from RIM (and Apple) are differentiated products that have special features appealing to particular segments of users (RIM for e-mail fanatics, Apple for entertainment-hounds). They solve customer problems in unique ways that people can value, so their sales are relatively resistant to an economic downturn. Not immune, but I think they're likely to fall less than the others.
And since Apple and RIM serve different markets, they can grow rapidly side by side. One doesn't usually steal sales from the other.
But Nokia has never had a strong play with this sort of product. Most of its smartphones are bought as high-end mobile phones, purchased by technophiles and status-conscious people with money. When the overall phone market slows down, they slow down too.
The analyst numbers told Nokia a comforting fantasy that it was the dominant smartphone company, when in fact it was a very secondary player in the markets served by RIM and Apple. I think this let Nokia avoid the agonizing changes in product development that are required to make a truly differentiated smart phone.
Instead, Nokia has gone off on tangents attacking Google, Microsoft, iTunes, and just about every other target I can think of in computing. It's a bit like a guy at his home putting up wallpaper in the upstairs bathroom while out in the yard his car is on fire.
I continue to be intrigued by parts of Nokia's strategy, especially the Ovi services suite. Nokia will be able to push Ovi out to hundreds of millions of mobile phone users. In theory, that might be a very powerful way for the company to build a mobile data business. But it could be crippled if the most data-hungry users have already been siphoned away by Apple and RIM.
What happens to RIM?
The question about RIM is what are the natural limits on its growth. Not everyone wants an e-mail phone, although RIM has already stretched the market a lot more than I thought they could. But I think the bigger threat may actually be within the company. Beyond about $10 billion in revenue, a tech company starts to require different management techniques. There's enough going on that management has to delegate much more than it did in the past, and processes have to be set up to ensure quality work and smart decision-making in the lower reaches of the company. That transition is incredibly hard for the leaders of a startup to make, and I wonder if the bug-filled launch of the Blackberry Storm wasn't a symptom of a company growing beyond its processes.
On the other hand, RIM has such a long history of beating my expectations that I'm not going to bet against them again.
Sunday, 15 February 2009
Speech recognition: Almost ready for mobile prime time
I've always wanted to see speech recognition incorporated into mobile devices. Since you don't have a big keyboard when you're on the go, you ought to be able to just talk to your phone and tell it what to do, or dictate memos to it and have it convert them into e-mails or SMS messages. In addition to being incredibly convenient, this would increase the safety of a lot of drivers. It's a spooky fact, but in surveys I've done more than 10 percent of the US population admitted to sometimes sending text messages while driving.
Not smart, not safe.
So, is voice recognition good enough to let you just talk to your mobile device and then send the converted text as a message?
I first asked myself that question a couple of years ago when I bought a copy of Dragon NaturallySpeaking and a small voice recorder. I tried recording weblog posts and other documents while driving, and then brought the recorded sound back to my computer to convert it into text. The result was a disaster. Dragon was unable to keep pace with the recorded sound in the files, and started dropping sentences, paragraphs, and eventually entire pages of spoken text. I was so disgusted, and so disappointed, that I gave up and went back to listening to sports talk radio while I drove.
Recently a newly appointed product manager at Nuance (publisher of Dragon) sent out a survey asking for feedback on the product. Unlike most product managers, she signed the survey form with her own name and with her own e-mail address. Most product managers wouldn't do that because they don't want to be overwhelmed with feedback. I don't know how much feedback she got in general, or how overwhelming it was, but she got a note back from me describing my problems with the product and explaining why I really wasn't satisfied with it.
I didn't expect to get any reply from the company; Nuance has a remarkably restrictive policy on providing technical support unless you pay extra for it. Usually, companies that do that aren't interested in getting any sort of conversation going with their customers. But to my surprise, I got a note from the product manager not only sympathizing with my problems but offering to send me a copy of the latest version of the software and a voice recorder that she said would work well with the software. I wish my weblog address hadn't been in my signature, so I would know if they do this sort of thing for every frustrated user. But anyway I took her up on the offer.
You can see the results here. I dictated this weblog post using the voice recorder, synced it onto my computer for recognition, and then corrected the (few) errors by hand. There are pluses and minuses to the dictation system. The good news is that the program can now keep up with my dictated speech. I no longer lose sentences or paragraphs of text. I'm also surprised with the way the product recognizes trade names, so for instance when I say Home Depot or McDonald's or Nike or Apple or IKEA or Lowes, Dragon gets the names correct and properly capitalized (I didn't have to fix anything in that sentence).
On the other hand it does make mistakes -- the packaging claims about 99% accuracy, which means that you should expect one word in every hundred to be incorrect. My guess is that I'm getting somewhere between 97 and 99% accuracy. That's not bad. In fact, it's pretty darned impressive. But in practice it still means you have to go back and do a lot of corrections.
The training is close to torture: reading aloud a 20-minute excerpt from a Dilbert book while trying to pronounce every word correctly. Later I tried setting up the program without any training, and it worked exactly the same. So my advice is to skip the training.
The software is not great at understanding where punctuation should be placed in the text. I have learned that I have to give grammatical guidance by saying things like "comma," "period," and "new paragraph" in order to make sure that the text will be reasonably well formatted.
If I just speak naturally the text will come out like this making it very difficult for anyone else to read and even making it hard for me to edit without punctuation inserted it is very hard to get tell where a sentence was supposed to end and another one start add in a few wreck cognition errors by the soft wear and the text is not something you would want to send to someone uncorrected
Speaking with punctuation is unnatural, and could be somewhat distracting while driving. I have to think carefully about the text that I'm dictating, and I believe for some people that could cause them not to pay enough attention to what's happening on the road. I think I can do it safely or I wouldn't do it, but it definitely is an issue to consider.
Overall, I think this approach will make me a bit more productive, so I should be able to produce a little bit more weblog content and maybe get some other sorts of things done as well.
So it's nice for me, and I finally feel like I got my money's worth from Dragon. But is the technology ready for broad deployment in mobile devices?
I think the answer is technically yes, but practically no. Mobile devices are casual-use; tasks that require too much commitment or effort just don't get used. Without careful attention to spoken punctuation, the software produces errors and the sort of run-on text you saw above. Even in a short message, I think it's likely that you'd get more mistakes than you'd find acceptable. Correcting those errors on a small screen with no mouse would be tedious at best (it's an annoying task even on a PC).
More importantly, the software is very sensitive to the quality of the sound file coming into it. I believe most phone microphones and headsets wouldn't produce the required quality. You'd probably get better results with a service that just records your speech and has someone in India retype it (such services exist today).
So, the news from the world of voice recognition is hopeful for mobile users but not yet wonderful. The technology is good enough that you can definitely use it as a substitute for typing if you have physical problems. It's also a useful PC productivity tool for someone who generates a lot of text for a living.
However, I think we're not yet quite at the point where you can just talk to your phone and have it reliably transform all of your speech into text. It's getting better, but it's not all the way there yet. For a mobile device, the dream of just talking is still a dream. But I do think it's a dream that's getting closer to reality.
===========
PS: I'd also like to compliment Kristen Wylie, the product manager at Nuance who responded to my message. Take notes, folks, this is the right way to communicate with customers online -- sign your real name, use an address they can respond to rather than a no-replies mailbox, and when someone has a problem help them solve it.
Not smart, not safe.
So, is voice recognition good enough to let you just talk to your mobile device and then send the converted text as a message?
I first asked myself that question a couple of years ago when I bought a copy of Dragon NaturallySpeaking and a small voice recorder. I tried recording weblog posts and other documents while driving, and then brought the recorded sound back to my computer to convert it into text. The result was a disaster. Dragon was unable to keep pace with the recorded sound in the files, and started dropping sentences, paragraphs, and eventually entire pages of spoken text. I was so disgusted, and so disappointed, that I gave up and went back to listening to sports talk radio while I drove.
Recently a newly appointed product manager at Nuance (publisher of Dragon) sent out a survey asking for feedback on the product. Unlike most product managers, she signed the survey form with her own name and with her own e-mail address. Most product managers wouldn't do that because they don't want to be overwhelmed with feedback. I don't know how much feedback she got in general, or how overwhelming it was, but she got a note back from me describing my problems with the product and explaining why I really wasn't satisfied with it.
I didn't expect to get any reply from the company; Nuance has a remarkably restrictive policy on providing technical support unless you pay extra for it. Usually, companies that do that aren't interested in getting any sort of conversation going with their customers. But to my surprise, I got a note from the product manager not only sympathizing with my problems but offering to send me a copy of the latest version of the software and a voice recorder that she said would work well with the software. I wish my weblog address hadn't been in my signature, so I would know if they do this sort of thing for every frustrated user. But anyway I took her up on the offer.
You can see the results here. I dictated this weblog post using the voice recorder, synced it onto my computer for recognition, and then corrected the (few) errors by hand. There are pluses and minuses to the dictation system. The good news is that the program can now keep up with my dictated speech. I no longer lose sentences or paragraphs of text. I'm also surprised with the way the product recognizes trade names, so for instance when I say Home Depot or McDonald's or Nike or Apple or IKEA or Lowes, Dragon gets the names correct and properly capitalized (I didn't have to fix anything in that sentence).
On the other hand it does make mistakes -- the packaging claims about 99% accuracy, which means that you should expect one word in every hundred to be incorrect. My guess is that I'm getting somewhere between 97 and 99% accuracy. That's not bad. In fact, it's pretty darned impressive. But in practice it still means you have to go back and do a lot of corrections.
The training is close to torture: reading aloud a 20-minute excerpt from a Dilbert book while trying to pronounce every word correctly. Later I tried setting up the program without any training, and it worked exactly the same. So my advice is to skip the training.
The software is not great at understanding where punctuation should be placed in the text. I have learned that I have to give grammatical guidance by saying things like "comma," "period," and "new paragraph" in order to make sure that the text will be reasonably well formatted.
If I just speak naturally the text will come out like this making it very difficult for anyone else to read and even making it hard for me to edit without punctuation inserted it is very hard to get tell where a sentence was supposed to end and another one start add in a few wreck cognition errors by the soft wear and the text is not something you would want to send to someone uncorrected
Speaking with punctuation is unnatural, and could be somewhat distracting while driving. I have to think carefully about the text that I'm dictating, and I believe for some people that could cause them not to pay enough attention to what's happening on the road. I think I can do it safely or I wouldn't do it, but it definitely is an issue to consider.
Overall, I think this approach will make me a bit more productive, so I should be able to produce a little bit more weblog content and maybe get some other sorts of things done as well.
So it's nice for me, and I finally feel like I got my money's worth from Dragon. But is the technology ready for broad deployment in mobile devices?
I think the answer is technically yes, but practically no. Mobile devices are casual-use; tasks that require too much commitment or effort just don't get used. Without careful attention to spoken punctuation, the software produces errors and the sort of run-on text you saw above. Even in a short message, I think it's likely that you'd get more mistakes than you'd find acceptable. Correcting those errors on a small screen with no mouse would be tedious at best (it's an annoying task even on a PC).
More importantly, the software is very sensitive to the quality of the sound file coming into it. I believe most phone microphones and headsets wouldn't produce the required quality. You'd probably get better results with a service that just records your speech and has someone in India retype it (such services exist today).
So, the news from the world of voice recognition is hopeful for mobile users but not yet wonderful. The technology is good enough that you can definitely use it as a substitute for typing if you have physical problems. It's also a useful PC productivity tool for someone who generates a lot of text for a living.
However, I think we're not yet quite at the point where you can just talk to your phone and have it reliably transform all of your speech into text. It's getting better, but it's not all the way there yet. For a mobile device, the dream of just talking is still a dream. But I do think it's a dream that's getting closer to reality.
===========
PS: I'd also like to compliment Kristen Wylie, the product manager at Nuance who responded to my message. Take notes, folks, this is the right way to communicate with customers online -- sign your real name, use an address they can respond to rather than a no-replies mailbox, and when someone has a problem help them solve it.
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