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Microsoft Surface is still a failure

Jason Del Ray, writing for Re/Code on the apparently-impressive Microsoft Surface:

In its fiscal second-quarter earnings release today, Microsoft said Surface revenue was $893 million during the final quarter of calendar year 2013, up from $400 million in the preceding quarter. It didn’t, however, provide information on the number of units sold and it did cost the company $932 million to generate the Surface revenue.

Still, that’s some holly jolly holiday season news, considering the Surface’s track record. The bad news, of course, is that Microsoft’s share in the tablet market is still minuscule.

The market share is irrelevant at this point: The bad news is that Microsoft is still losing money on every Surface it sells. 

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Samsung’s road to smartphone dominance is a dead end

How many stories in the tech press have you read over the past year which posited a theory of Apple being in trouble? Tens – probably hundreds of articles have appeared which put forward the idea that Apple’s needed to move the iPhone downmarket and create a cheaper version to gain market share. Failure to do this means doom.

So let’s take a look at a company which has followed exactly this plan, competing at every level of the smartphone market from cheap devices for the masses through to expensive, high-end phones: Samsung.

Samsung’s earnings are out, and they’re not pretty:

“Earnings will remain stagnant this year as the explosive growth of the past two to three years seems to have ended,” said Lee Sun Tae, a Seoul-based analyst at NH Investment & Securities Co. “Although the lower-end smartphone market will continue to grow, the scale of profit from that segment doesn’t compare to the high-end market so the growth seems limited.”

Samsung’s problem is simple: at the low end it is being squeezed out of existence by low-name and no-name Chinese manufacturers, all happy to stick “good enough” Android on their phones with no costly extra software. Although the company has tried to differentiate its products by value-ended extras and services, for price-conscious consumers these are meaningless or, in some cases, a turn-off.

At the high end, it is being squeezed by Apple, which has proved it can compete in any market.

If you want to make a comparison to the PC market, Samsung is like IBM was: a “quality brand” producing products which aren’t sufficiently different from cheaper commodity players like Dell. In the smartphone market, for Dell read Lenovo or (long term) Xiaomi.

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Why I fucking love Bill Gates – and you should too

Great interview with the man that too many techies think of as The Great Satan himself. Gates has now found something better to do than create second-rate software: saving the world.

And better yet, he has no time for young whipper-snappers who think all that needs to happen is connectivity for the poor:

“These days, it seems that every West Coast billionaire has a vision for how technology can make the world a better place. A central part of this new consensus is that the internet is an inevitable force for social and economic improvement; that connectivity is a social good in itself. It was a view that recently led Mark Zuckerberg to outline a plan for getting the world’s unconnected 5 billion people online, an effort the Facebook boss called “one of the greatest challenges of our generation”. But asked whether giving the planet an internet connection is more important than finding a vaccination for malaria, the co-founder of Microsoft and world’s second-richest man does not hide his irritation: “As a priority? It’s a joke.”

Then, slipping back into the sarcasm that often breaks through when he is at his most engaged, he adds: “Take this malaria vaccine, [this] weird thing that I’m thinking of. Hmm, which is more important, connectivity or malaria vaccine? If you think connectivity is the key thing, that’s great. I don’t.””

And to those who think making new companies does more good than charity, he's equally-dismissive:

To Diamandis’s argument that there is more good to be done in the world by building new industries than by giving away money, meanwhile, he has a brisk retort: “Industries are only valuable to the degree they meet human needs. There’s not some – at least in my psyche – this notion of, oh, we need new industries. We need children not to die, we need people to have an opportunity to get a good education.”

This is why I fucking love Bill Gates. He's going to save a lot of kids lives.

 

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Kevin Marks, on the “Dishfire” system which apparently hoovers up millions of SMS messages:

I don’t think this is correct. As I understand it, and in all instances I’ve used, the codes delivered by SMS for two-factor authentication are time and use limited: that means after a few minutes, they’re useless, or if you use them once, they can’t be used again.

This means that, in order to be useful to someone, they would need to be monitored in real time and used before you used them – which would, of course, alert you to the fact they’ve been used, as they would fail when you tried it yourself.

Panic over, people.

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Ina Fried, reporting on a survey of iPhone users which apparently shows the iPhone 5c doing worse than the equivalent model in the range did last year, the iPhone 4S:

The iPhone 5s accounted for 59 percent of October through December U.S. sales, according to a study from Consumer Intelligence Research Partners. This compares to the iPhone 5′s 50 percent of sales when it was the high-end model a year ago.

The iPhone 5c, meanwhile, represented 27 percent of sales, less than the 32 percent that the iPhone 4s had a year ago when it was the mid-range model. CIRP’s findings are based on a survey of 500 buyers of Apple gear during the survey period.

How accurate a survey is depends on the sample size. And while 500 is a valid sample size considering the overall “population”[1] of around 50m iPhone buyers, it isn’t enough to reduce the margin of error to the kind of point which would justify the claims being made.

With a sample this size, unless they’d taken a lot of precautions, the margin of error would be around +/–4–5%. This means, potentially, the models could have the reversed share: 32% for the 5c (27% + margin of error upwards of 5%) and 27% for the 4S (32% – margin of error down of 5%).

All that you can say based on these numbers is the iPhone 5c is performing about as well as the iPhone 4S did in the same role. However, a conclusion like that isn’t enough for CIRP. According to CIRP analyst Josh Lowitz:

“If the old iPhone 5 had been the mid-priced phone, we expect that it would have sold a higher percentage of iPhones than the 5c did, as previous mid-priced legacy iPhones have,” Lowitz said. “The 5c seems to have been designed to force certain buyers to the 5s.”

I’m not sure how you can “force” buyers into buying something more expensive if they haven’t got the money. Sure, it probably does well at “upselling” customers: those who would never consider buying the top-end phone and so walk into an Apple Store to get the 5c, but then play around with a 5S and get a case of profound gadget-lust. But I can’t imagine that more of those kinds of customers took at a look at last year’s top of the line phone and didn’t feel equally lustful.


  1. A “population” in survey terms is the number of people who fall into the group you’re trying to sample: in this case, the roughly 50m people in the US who bought iPhones that year. The bigger the population, the bigger the sample size you need.  ↩

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Some thoughts on what Google has bought Nest for

Some smart points about Google’s acquisition of Nest from John Gruber, who notes that in Tony Fadell Google has got someone who knows how to do hardware capable of scaling to tens of millions of units.

However, one minor point about John’s story, from this paragraph:

One of Alan Kay’s numerous oft-cited quotations is, “People who are really serious about software should partner with an OEM in Asia.” No, wait, that’s not what he said. What he said is, “People who are really serious about software should make their own hardware.” That’s never been true of Google, putting aside Motorola (which they seemingly acquired more for its patent portfolio than for its phone hardware acumen) and the niche Google Search Appliance.

In fact, Google has independently designed two pieces of hardware: The Chromebook Pixel and Nexus Q. But that, I think, makes John’s point stronger. Both the Pixel and Q were expensive, high-end pieces of hardware which could never have scaled to selling tens of millions of units. The Pixel was (and is) effectively a flagship demonstrator the potential for Chromebooks; and the Nexus Q was a unique media device which, because of its design, cost about four times as much as its competition.

With the Pixel and Q, Google proved it could design high-end hardware on its own. What it hasn’t been able to do is create high-quality hardware capable of being mass produced at low cost. Of all the tech hardware companies, only Apple and Nest have really nailed that one. And Apple wasn’t available for sale.

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Apple “not in the bidding” for Nest

Liz Gannes, for Re/Code:

Nest had been close to completing a funding round of upward of $150 million that would have valued it at more than $2 billion, Re/codereported earlier this month. That round never closed, because Google swept in with its huge offer. Sources familiar with details of the acquisition said that Google was the only serious bidder and Apple was not in the mix.

I get the feeling from the extremely sarcastic comments on Twitter that Google just pushed themselves way beyond the creepy line. Being on your phone gathering data is one thing: being in your home gathering data is quite another.

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What’s The iPad advantage?

Ben Bajarin gives a brilliant account of the advantage that the iPad has over other PCs, in “The iPad Advantage” ($). In particular, this paragraph absolutely hits the nail on the head:

The PC is for certain a general purpose computer. Yet its form factor limits all its general computing capabilities to only be taken advantage while in a fixed position either at a desk, or with the device sitting on your lap. The iPad, and the slate form factor take this idea of mobile general purpose computing to an entirely new level. The iPad enables its general purpose computing power to be used in both stationary and mobile situations. The iPad liberates general purpose computing from the lap or desk and enables it in contexts where computing was absent before.

The iPad is usable pretty much everywhere, and that on its own increases its power compared to other PC types. I’ve used my iPad to write hundreds of words on the London Underground, something I’d never do with a laptop (mostly for fear of impaling people either side with my elbows).

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The proliferation of new desktops

Billy MacInnes, writing for MicroScope on the announcement of a couple of new Android-based computers:

PC vendors are starting to ask whether there might be something to be gained from finding a place for Android in their desktop product roadmaps. Some have even announced products. This is aside from Chromebooks based on Google’s Chrome OS, which are already available from the likes of Samsung, Acer and HP, products which have started to gain some traction in commercial organisations in the US, especially schools.

The proliferation of “new” desktop types is one of the most interesting current trends. Ten years ago, the choice was Windows, Mac or – if you wore your beard around your neck with pride – Linux. Now you can get yourself a laptop running Windows, Mac, Linux, ChromeOS, Android, and more.

The reason for the proliferation is simple: the cloud. Cloud-based data means you can access the same data on multiple platforms with ease. The pain of switching between Android and Mac, for example, isn’t great because the stuff of value – the data – all lives in the cloud.

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Gmail and Google+ sitting in a tree…

Sarah Perez, writing for TechCrunch about a new feature that Google is implementing to link Google+ with Gmail:

Google is today making a change to Gmail that will further bake in Google+ to its webmail product in a way that’s actually somewhat practical, though also potentially invasive. Going forward, you’ll now be able to directly email your Google+ contacts from Gmail, even if you don’t know their email address. And by default, anyone on Google+ will be able to email you as well, thanks to this new option, if you don’t adjust your settings.

Yes, of course the default for this feature is on: Google wants more social data to flow into its data centres, because it needs to know more about you to deliver more “relevant” search results (and, by the way, ads).

While I’m comfortable with this kind of thing, the assumption that it should be default-on is exactly the reason I’m gradually weening myself off Google’s services.

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