Google vs. Amazon – Battle of the Home pt II.

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Alexa still ahead despite very poor performance.

  • New data suggests that Google Assistant is even more superior to Amazon Alexa than RFM’s tests have suggested, but still Google remains at risk of suffering a Betamax-like defeat (see here).
  • The digital agency, 360i has written a piece of proprietary software aimed at scientifically testing how good digital assistants are at answering queries (see here).
  • This software asks 3,000 questions and then assesses the answers given.
  • It is here that I suspect some human intervention is needed as both Google Assistant and Amazon Alexa often give answers that I think software will have difficulty in assessing.
  • This is why I suspect the results are being considered as very preliminary and that some human parsing of the answers is needed.
  • While, there is no hard data available yet, 360i has said that the initial indication is that for any question, Google is six times more likely to come up with the right answer compared to Amazon Alexa.
  • This contrast is so stark, that I suspect that Google will still beat Alexa hands down once the real data has been scrutinised and published.
  • This reflects RFM’s own much less scientific tests where every person asked to live with Amazon and Google side by side for four days expressed a strong preference for Google Assistant.
  • The one exception was a small child who was much more interested in endlessly turning the lights on and off rather than improving his general knowledge.
  • It is here that we find Google Home’s great failing as Google Home does not support the smart light system tested, as it is only available with Amazon Alexa.
  • This problem is reflected right the way through the entire smart home ecosystem where every smart device one can think of works with Amazon Alexa but only a small proportion work with Google Assistant.
  • Amazon has been extremely welcoming to third party developers giving a lot of support as well as meaningful discounts for running their services on AWS.
  • The same cannot be said of Google as almost every developer I have spoken to has not been complimentary when describing the experience of trying to develop for Google Home.
  • I find this to be a big surprise because Google’s Android developer program has been huge and thriving for years.
  • This is why Google suffered such a resounding defeat at CES in January where Amazon Echo was everywhere and Google Home was barely seen or talked about.
  • Google’s strategy to fix this issue is to focus developers on the assistant rather than the device.
  • This has two advantages:
    • First It ensures that any device with Google Assistant in it can control any product written to the one API.
    • Second and most importantly, developing for the Google Assistant is part of the highly successful Android developer program rather than the poor effort made by Google’s hardware division to date.
  • I still think that smart home is Google’s to lose but Amazon Alexa is still orders of magnitude greater when it comes to the number of home devices in the hands of users.
  • The home speaker is a much more convenient device with which to control the home as there is no requirement to remove the device from a pocket or unlock it.
  • Furthermore, I don’t think that users have yet really understood that the functionality on the phone is exactly the same as it is on the home speaker or anything else meaning that Amazon still has the volume advantage in the mind of the developer.
  • I still think that Google has the advantage as it has by far the better product but developers start really making their products work with the assistant soon, then the game will quickly be lost.
  • Google’s outlook for 2017 remains pretty good but the shares still look fairly priced leaving me preferring Microsoft, Tencent and Baidu.

Digital Car – Sitting ducks pt. II

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The best automotive infotainment unit is the one in my pocket

  • A car maker with a future is a car maker that realises how vital its data is and pays the buyers of its vehicles for the right to use it.
  • This also has the added benefit of creating a relationship with the buyer of the vehicle which is something car companies have not really bothered with to date.
  • The latest survey from IHS examines the technology that consumers are and are not willing to pay for when they buy a new vehicle (see here).
  • The data shows that consumers across the world are most willing to pay for a sunroof and rear seat entertainment systems with things like telematics and in-car Wi-Fi trailing significantly.
  • The survey also revealed that consumers expect technology in vehicles to evolve as quickly as it does in mobile devices.
  • This creates an enormous problem for an industry with a 4 to 5 year design cycle where even the top end infotainment systems costing thousands of dollars are using hardware that is 5 years out of date.
  • The result is that they can be outperformed by a $150 Android device.
  • This means that the user is likely to have a better digital experience in a top of the range vehicle with a cheap smartphone rather than with the infotainment unit.
  • This strongly encourages the user to access his Digital Life with his smartphone in the vehicle rather than to use the infotainment unit.
  • This is the last thing every car maker needs.
  • Users still buy cars based on performance, form factor, safety and economy but increasingly digital services will play a part in the user’s decision of which car he buys.
  • If the infotainment unit is not being used and everything is being done on a smartphone then the digital battle will have already been lost and cars will have moved closer to being commodities.

 

  • Furthermore, I think that the automotive industry has its strategy with regard to telematics completely back to front.
  • Instead of forcing users to pay for telematics, they should be giving users a discount or free services for agreeing to grant access to the data that these systems generate.
  • Using digital ecosystems as a benchmark, I think that car companies could give users meaningful discounts on the price of the vehicle and still end up with higher revenues and margins.
  • This is because the data that these vehicles generate could be very valuable to other companies who provide services based on collecting data.
  • For example, using cars as weather or traffic probes would cut down on the need to install expensive infrastructure.
  • However, to be valuable, all cars need to be generating this data and while car makers continue to charge users for this feature, penetration will remain low leaving the door open for disruptors.
  • One only has to delve very briefly into the world of start-ups to see this disruption coming.
  • For example, many start-ups are providing their automotive related digital services on smartphones and not infotainment units and there is significant development of technology that could by-pass the car companies entirely.
  • For example, a quick tour of the automotive section of a technology trade show revealed two companies that use vibration to work out exactly what is happening within the vehicle rather than use the traditional sensors.
  • One of these claimed that it could, using 10 vibration sensors on a helicopter, completely replace the 160 sensors currently being used.
  • This data could easily be relayed to a smartphone app and cut the car companies out from the only data source which remains proprietary to them.
  • I found these start-ups on the stands of the very companies which they intend to disrupt, further reinforcing my opinion that most of the automotive industry still has its head in the sand.
  • Instead automakers should be aggressively moving to obviate the reason to be bypassed by making their infotainment units and sensor data easy to use and readily available with simple APIs.
  • Currently, by far the best infotainment unit I have is the one that is in my pocket which is further enhanced because I can use it in any vehicle (including trains and planes).
  • While, this reality persists, the automotive industry remains a sitting duck for the ecosystem companies who have long understood the value of that which the car industry seems to ignore.

 

  • RFM would like to acknowledge John Ellis of Ellis and Associates which was the starting point for some of the views presented here (see here).

 

Alphabet – Goodbye blue sky pt. II.

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Homeless robots find permanent shelter.

  • Alphabet has reached a deal to sell both Boston Dynamics and Schaft to SoftBank leaving it more focused on its core business of collection and monetisation of Internet data.
  • Boston Dynamics is a robotics company that specialises in robots that are autonomous as far as navigating and adjusting to their immediate environment.
  • SoftBank is also acquiring Schaft from Google which is a humanoid robotics company that was spun out of the University of Tokyo.
  • These robots can move around with relative ease but how they would be able generate value for Alphabet shareholders was always unclear.
  • At the end of the day Alphabet is a data and analytics company whose objective is to categorise and understand every piece of digital information that users generate and to sell those insights to marketers.
  • Every other piece of hardware that Alphabet makes from Google Home to Pixel and Internet Balloons, have the capacity to collect huge amounts of data and thereby generate can value to the core business.
  • Autonomous robots that can carry out physical tasks do not generate data about users because they are designed to replace them making them a bad fit inside Alphabet.
  • Furthermore, the robotics effort at Google was the brainchild of Andy Rubin and his departure, combined with the much greater focus on fiscal discipline, meant that the robots became homeless inside Alphabet.
  • I have long believed that Boston Dynamics will be much more at home inside a company that can make use of them.
  • Good examples of this are Amazon and Alibaba for logistics or someone like DHL or UPS.
  • Softbank is a good example of this but also has the benefit of a very long-term mindset when it comes to its strategy.
  • SoftBank already produces the Pepper robot which is supposed to be able to read human emotions and help shoppers when they enter a shop or place of business.
  • I met Pepper when wandering the halls of Mobile World Congress and CES and have to admit I was not that impressed by what it was capable of.
  • Consequently, it looks like SoftBank needs to really beef up its robotics expertise if it wants to be a player in this space which is what these two acquisitions should start to accomplish.
  • Hence it looks like this acquisition will not be part of the $93bn Vision Fund but instead be part of SoftBank itself.
  • Boston Dynamics, Schaft and I suspect SoftBank’s own robotics division have been struggling to find ways to generate revenue necessitating a home with a very long-term view.
  • That home used to be Alphabet, now it is SoftBank.
  • The sale of these two businesses will further boost Alphabet’s short term financial performance but I continue to think that all of the recent fundamental improvement in Alphabet is more than discounted in the share price.
  • Hence, I continue to prefer Tencent, Baidu and Microsoft.

Essential Products – Domestic bliss.

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Home is where the heart is

  • While I am not a fan of Essential Products’ phone (see here), I think that the strategy around the smart home is bang on I think it has created the right product.
  • I don’t like the phone simply because it does not do anything particularly special in a brutal commodity market and given the company’s overall strategy, I see no real need why it can’t make use of the phones of others.
  • However, the Home product is something else, and although it may not succeed, I think that it has a good chance.
  • This is because, I think Home has been designed to explicitly address the two biggest problems with home automation that exist today.
  • These are:
    • Firstly, voice control: RFM research (see here) has found that voice communication with machines is very far from being good enough to work effectively without a screen for output.
    • The issue is that even the best machines are not yet intelligent enough to provide a useful experience using voice only and often have to fall back to a screen.
    • In Google Assistant’s and Alexa’s case this means using the screen of the phone which is not an optimal experience especially as most voice usage is when the hands are busy doing something else.
    • Essential Home has already taken this into consideration and the small device has an attractive looking screen on the top.
    • This looks much better than hideous Amazon Show which seems to have been designed to be a jack of all trades.
    • I think that Essential has hit the nail on the head and its product should optimally fix the single biggest current problem with human machine voice interaction.
    • Second, fragmentation: Despite Amazon Alexa being able to talk to almost everything, the experience remains horribly fragmented.
    • The real use case for the smart home is where all elements of the home are aware of each other and can be controlled together.
    • For example, the use should be able to say “I am going to bed” resulting in the doors locking, blinds drawn, heating turned down and so on.
    • Instead each separate device has to be manually operated and adjusted.
    • The experience on Alexa is so bad that it is quicker and more convenient to make these adjustments by hand.
    • Apple HomeKit also addresses this problem effectively but I see little traction among the smaller, more innovative smart home device creators.
    • Furthermore by being limited to Apple products only, 85%+ of the market is not being addressed.
    • This is the problem that Essential has recognised and is trying to address this by making its Home APIs and Ambient OS as open as possible.
  • I like the potential of this product as it is both differentiated from its competition and has been designed to explicitly solve the biggest problems with home automation.
  • There has been no word as to what assistant will be resident in the device, but if Essential is smart, it will ensure that the user can use any assistant he chooses.
  • The problem is going to be getting the device into the hands of users in volume.
  • This will be critical because volume deployments will be needed to get developers to make their products work on Ambient OS.
  • This is the old chicken and egg problem which is very difficult to crack but once it is solved creates real momentum for a platform.
  • This is the problem that Amazon cracked earlier this year and now every developer of any smart product will make it work with Alexa.
  • This will be the key to getting the Home product to succeed but it is going to be an uphill battle even for a start-up as well financed as Essential Products Inc.

WWDC 2017 – Catch-up gems.

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Mostly catch up but studded with a few gems.

  • While Apple spent most its time catching up with innovations made by other ecosystems, there were a few areas where its announcements put it ahead of the pack.
  • Machine Learning
    • Apple is weaving machine learning into all of its services.
    • This combined with increasing integration of Apple’s own apps and services promises to enhance the user experience.
    • This includes new predictive faces (like Google Now) on the Apple Watch and photo recognition and organisation and smart responses predicted from the user’s history in other apps.
    • The demos were slick and effective but how well this will work in the field and with a user that does not use all of Apple’s Digital Life services remains to be seen.
    • Apple is working hard on AI but I think it still remains way behind Google, Baidu, Yandex and even Microsoft.
  • iOS 11
    • For the iPhone, iOS11 is an incremental update but one that focuses most attention on iMessage and the App Store.
    • Apple, is following Tencent in allowing users to do more and more with iMessage including the enablement of peer to peer payments using Apple Pay.
    • iMessage and Photos are the only two services that really got some attention this year leading me to think that these are the two areas where Apple is really trying to create stickiness.
    • This is particularly relevant as I observed yesterday (see here) that leaving iOS for Android was particularly easy as I don’t use iMessage.
    • The network effect can be particularly strong leading me to think that iMessage is now one of the most important services that Apple has.
    • I think that it is much more important than photos as Google Photos is just as good and makes it easy to move photos off iOS.
    • The App Store update aims to address the problem created by its own success which is that discovery of new apps and services is now pretty difficult.
    • New tabs aimed that highlight the new and cool stuff as well as give tips on existing apps is curated through the user’s history and aims to drive more purchases.
    • The aim is clearly to further distance itself from the humdrum experience of Google Play.
    • App Store is an area where Apple is extending its lead.
  • iOS 11 for iPad
    • However, it was for the iPad that the new iOS software really shines.
    • In conjunction with a solid update to the line, iOS 11 enables new functionality that takes the iPad even closer to the laptop.
    • The iPad now has a file system which combined with enhancements to multitasking and window management take its usefulness to a new level.
    • This includes the ability to drag and drop links, pictures and files from one place to another and to share them in multiple ways more easily.
    • This takes the iPad (particularly the pro) closer to a laptop in terms of functionality but it does still fall short.
    • Without support for a mouse and full fat office, the iPad cannot replace a laptop for most content creators although it is getting closer all the time.
  • Hardware
    • In addition to the iPad Pro, the iMac and MacBook Pro all received incremental updates that keeps them in line with the high end of the PC market.
    • Apple also launched a super high end iMac Pro all in one aimed at the professional who needs to spend more than $5000 on a computer.
  • HomePod
    • Apple also gave a sneak peak of a home speaker that aims to replace expensive WiFi Speakers but also has the functionality of Amazon Echo and Google Home.
    • This is a high-end speaker that sports features that are designed to produce excellent sound quality and functionality potentially rendering Sonos obsolete.
    • At the same time the HomePod has Siri embedded meaning that it can answer questions and control the smart home through HomeKit.
    • Apple has positioned this as something that the user buys for a high-quality audio experience with Siri coming as an added bonus.
    • This is a smart move because Siri is not that bright and is easily out performed by Google Assistant while being on a par with Amazon’s Alexa.
    • HomePod shows no sign of being open to developers other than through HomeKit and I was disappointed that Spotify and other music services have not been enabled on the device.
    • Hence, this a device for the Apple Music subscribers of which there are now 27m and not really for anyone else.
  • The net result is that while I think there are some very interesting moves being made around the productivity elements on the iPad, Apple is mostly keeping step with the competition.
  • The good news is that its edge as the best distributor of apps and services of third partied has yet to be matched by Google, giving it time to re-invent its hardware differentiation.
  • The valuation case in Apple is not nearly as strong as it was 6 months ago leaving me still preferring Microsoft, Baidu and Tencent.

ARM vs. Intel – Silver bullet pt. II

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Implementation and performance will be everything.

  • The second lap of trying to get Windows to work on ARM processors is in full swing but the key to success will be the performance of the devices.
  • At the Computex trade show in Taipei, ASUS, Lenovo and HP have all announced that they will be producing Windows 10 devices that are powered by Qualcomm’s Snapdragon 835.
  • This is the final piece of the puzzle to get devices into the hands of users after Qualcomm and Microsoft announced that they would be giving Windows on ARM another try (see here).
  • ASUS, Lenovo and HP will be using Qualcomm’s Snapdragon 835 to provide both the horsepower to run the device as well connectivity to ensure and always on experience.
  • With its first attempt, Microsoft modified Windows 8 such that it would work on an ARM processor and in the process killed flexibility and backwards compatibility to legacy software.
  • The result was a platform that was shunned by both developers and users, completely killing any hope that ARM would gain penetration in Intel’s home turf of PCs.
  • This time the approach is completely different as Qualcomm and Microsoft have produced an x86 emulator that fools the software into thinking that there is an x86 chip present.
  • The net result is that any Win32 and Universal Windows Apps (UWP) will run on the device with no modifications being required by the developer.
  • I understand that UWP apps will run natively on the Snapdragon 835 but the emulator will be required for everything else.
  • This is where the success or failure of this venture will be determined.
  • The computing devices will lightweight, low cost with a long battery life making them ideal candidates to run Windows 10S (see here).
  • This device category is ideally suited for schools but for students who have their own devices, the appeal is less clear.
  • This is because the majority of the kind of apps that I think students will want on their PCs are not available as UWPs.
  • Students tend not to have a lot of spare cash and therefore will rely heavily on free software which if they are using Windows 10S needs to be on the store.
  • Taking the top free PC software as recommended by TechRadar, I found that 3 apps were available as UWPs compared to 10 that were not but of which, for 2 or 3 there was something similar.
  • Google Chrome, iTunes, Google Drive or any BitTorrent clients are available as UWPs, all which I suspect are pretty important for cash strapped students.
  • Therefore, the performance of the emulator will be critical as I think it will be heavily used in these devices.
  • On bench tests, the Snapdragon 835 is perfectly capable of running Windows 10, but there is a huge difference between performance in the lab and performance in the hands of real world consumer.
  • Furthermore, emulators always incur a performance overhead meaning that apps running via the emulator can never perform as well as those running natively.
  • The key questions are:
    • First: How well will Windows 10 be implemented on the ASUS, HP and Lenovo hardware to ensure the Snapdragon 835 can perform to the best of its ability.
    • Second: How much performance drag will the emulator incur?
  • The answers to these questions will only be apparent once the devices are available but I think it is quite easy to draw a line in the sand.
  • To succeed, I think these devices must perform at least as well as an Intel powered device at the same price point and have better battery life.
  • I think that this is the minimum requirement as without this, there is no incentive for a user or an institution to purchase the device.
  • I also think that always on connectivity is not a requirement for a Windows 10 device because all of the Digital Life activities that require this kind of connectivity have long since moved to smartphones.
  • Hence, I do not consider it to be a valid selling point of the devices.
  • The launch of these devices is obviously a negative for Intel but it is worth remembering that every attempt to dislodge Intel to date has been a miserable failure.

 

Essential Products – Not essential.

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Andy Rubin still works for Google. 

  • Essential Products Inc has launched a series of products aimed at creating an ecosystem but none of them do anything or enable anything that is desperately new.
  • Consequently, the real beneficiary from another nice looking, easy to use phone will be Google whose ecosystem will be front and centre of the flagship device.
  • Essential Products Inc. was founded by Android creator Andy Rubin and has launched two devices and two accessories in a bid to stitch together the fragmented smart home space.

Phone

  • The Phone is similar to the Galaxy s8 although its screen is lower resolution, not waterproof and the battery has a slightly lower capacity.
  • Its one major area of differentiation is that the chassis is made from injected Titanium and has a ceramic back, potentially making it much more resistant to being dropped and scratched.
  • When it comes to screen protection, both are using Gorilla Glass 5 meaning that resistance to screen smashing should be about the same.
  • It also has two pins on the back (much like the Moto Mods concept) to which accessories can be attached.
  • The API for the accessory pins will be made available to developers to create their own devices to attach to the phone.
  • However, it has the price to match at $699 compared to $750 for the Galaxy s8 which is where I think the trouble will begin.
  • Phone is nice looking but I can’t see how it does anything that is not already available and outside of chassis resistance, Samsung gives more hardware bang for the buck.

Home

  • Essential products has also launched a voice activated home controller that aims to bring the smart home together in one place.
  • This is something that the smart home badly needs as the Alexa user experience is dire and hardly any products and services work with Google Home.
  • This product is different for two main reasons:
    • First: it is not designed to play music unlike other offerings although it does has a small speaker like the Echo Dot.
    • Instead, it is aimed at bringing all of the home’s devices together into a single place to manage them in an easy and fun to use way.
    • This device is also able to integrate these products such that smart devices can work together in new, fun and potentially very useful ways.
    • For example, when the timer goes off, the room’s lights can be flashed on and off rather than the generic alarm bell sound that everyone else uses.
    • Second: Home has a small screen on the top that is designed to enhance communication and interaction with the user.
    • RFM research (see here) has found that voice communication with machines is very far from being good enough to work effectively without a screen for output.
    • Consequently, this configuration makes a lot of sense.
  • The device runs its own OS called Ambient OS but Essential intends to open this up completely such that anyone can write functionality for the product.
  • This device takes a massive risk because 70% of the usage of devices in this category is as a Bluetooth speaker.
  • Consequently, there is a sizeable risk that this device will not appeal to the majority of users looking to buy something in this category.
  • Another big issue is the source of the AI that will be running Home as this will be the heart and soul of this product and the AI in Ambient OS currently looks as dubious as Bixby (see here).

Accessories.

  • Essential products has launched a charging plate for the Phone that connects through the two pins as well as a 360 degree camera.
  • I think that the charging plate is pretty useless as wireless charging is starting to come of age and inclusion of one of the standards in the device would have enabled a good user experience with products already present in the market and in users’ hands.
  • For example, because the Galaxy S8 supports Qi charging it will work with any compatible pad.

Take Home Message.

  • When I originally wrote on Essential Products (see here), my view was that it needed to produce must have devices and in that regard, I think it has failed.
  • The Phone is a Google Ecosystem device with a few nice features but less bells and whistles than the Samsung Galaxy S8 for almost the same price.
  • The Home has the most potential but it is taking an awful risk in that it is not addressing by far the biggest use case and has dubious AI.
  • It will also be dependent on third party developers meaning that it will need volume but even in its best case it is not going to out-ship Google Assistant or Amazon Alexa.
  • Consequently, I remain unconvinced with regards to what is special and different about Essential Products and suspect that many consumer electronics buyers will feel the same way.
  • Differentiation in hardware is extremely difficult meaning that Andy Rubin needs to have some software tricks up his sleeve that he is yet to show.
  • Failing that, it seems that this company will end up enriching Google more than itself.

DJI – Brains not brawn

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The spark at DJI is in its software prowess.

  • DJI has launched a new drone which I think clearly demonstrates this company’s unique ability to take on its US rivals and come up with a better product.
  • DJI has launched the Spark which is a palm sized drone that looks to be so easy to fly that the controller is an optional accessory.
  • The Spark is equipped with a 1080p 12MP camera and is controllable with a smartphone app but most importantly it sports a level of autonomy that makes it easy for anyone to fly.
  • Its chief rival in this space is the Dobby drone from Xerotech, which is pretty easy to fly using a smartphone but does not offer the level of sophistication that the Spark does.
  • Specifically, I am referring to the ability to completely control the drone using hand gestures and a series of autonomous modes that are aimed at still and video selfies.
  • This level of autonomy has been under development for quite sometime and DJI continues to demonstrate that it is ahead of all its competitors, including those based in US.
  • This is extremely rare for a Shenzhen-based hardware company which tend to turn out very cheap copy-cat devices and have no understanding of software at all.
  • The difference between Chinese designed devices and the much more expensive versions sold by US companies tends to be found in software functionality and reliability.
  • This is why the US versions still sell well in developed markets as consumers can recognise and are willing to pay up for quality products.
  • DJI completely bucks this trend as it is turning out better products than all its competitors making it a worthy leader of the still small, but growing drone market.
  • What is unusual about DJI is that its differentiation is now rapidly becoming based on its software which offers the best level of autonomy currently available.
  • This has really come to light in its two most recent products, the Mavic Pro and now the Spark.
  • The Spark is DJI’s first attempt at the consumer market as the device is priced at $499 compared to all of its other products that are above $1,000.
  • For its more expensive products it is not so important for them to have a high level of autonomy as they tend to be purchased by users who are either professionals or experienced flyers.
  • This is aimed at those that have never picked up a drone before and as long as it lives up to its billing it should be very easy and great fun to fly.
  • Most of all, the autonomy should allow selfies to be taken where the “pilot” is participating in the scene rather than flying the drone.
  • DJI is continuing to stay ahead of its competitors and is the first Chinese company to lead a segment of consumer electronics rather than be a fast copier.
  • If it was listed, I would be looking at DJI with great interest.

Microsoft – Breathing space

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Microsoft gives the PC makers room to breathe.

  • Microsoft updated its Surface Pro at an event in Shanghai but left plenty of space for its partners to innovate within the fledgling tablet-PC category.
  • Microsoft has followed Apple in dropping the version number from the name and the new product makes incremental improvements which include:
    • Battery: Microsoft claims that despite looking very similar, the new product has 50% more battery life than the Surface Pro 4, clocking in at 13.5 hours under optimal conditions.
    • This will be well received by road warriors who spend a lot of time in airports and coffee shops looking for power sockets.
    • Fan-less: The new Surface Pro is fan-less in the m3 and i5 versions which is a meaningful saving both in terms of power and noise.
    • Microsoft is very late to fan-less computing and I see it as behind the curve as there are other devices (see here) available that run the same processors but are fan-less across the whole range.
    • I am assuming that as the i7 version also runs Intel Iris Plus Graphics 640, more heat may be generated under heavy load than the i5, necessitating the presence of a physical fan.
    • Going fan-less is a good opportunity to reduce thickness and weight but again Microsoft does not appear to have taken this route as it is keeping the same chassis for all versions.
    • Instead it is leaving this to other companies like Samsung, Huawei, Eve Tech and HP which has clearly been doing some work on its form factors.
    • Hinge: A new hinge has been created to enable what Microsoft calls studio mode.
    • This is where the device is almost horizontal but is slanted at the same angle as the workspace of an architect or illustrator.
    • This is very similar to the use case provided by the popular but expensive all-in-one PC Microsoft launched last year called Surface Studio.
  • Outside of these upgrades, the new Surface Pro is an incremental upgrade which leaves plenty of room for others to address this space.
  • I don’t think that it has ever been Microsoft’s intention to take market share away from its partners but more to show them the way forward
  • Historically, PC makers have really been starved of form factor innovation, having outsourced almost all of its to the ODMs.
  • However, there are signs of this coming back.
  • A good example is HP which as seen huge improvements its form factors with the Envy line of laptops finally living up to its name.
  • Most PC makers now offer a Surface Pro-like product which if marketed properly, still has the potential to change the nature of PC market.
  • A tablet PC with a separate keyboard and mouse offers a more productive, healthier and more ergonomic computing experience which I still think renders the laptop form factor obsolete.
  • However, PC makers and the marketing departments of Intel and Microsoft have been selling laptops for 40 years which has become a very difficult habit to break (see here).
  • I still believe that this has the potential to kick the PC market back to growth as old laptops are quickly replaced, but given that this is just a product cycle, it would only last for a few years.
  • This rising tide would float all boats but I would prefer to be aboard either Microsoft or Lenovo for this ride.

LeEco – Le-trenchment

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LeEco looks to return to its roots at home.

  • LeEco’s foray into the United States looks like it is coming to an end which combined with a major restructuring at home, probably brings to an end any realistic hope of becoming a digital ecosystem.
  • I understand that LeEco is about to lay off all of its employees in the US that are involved in developing, building and selling the devices and ecosystem that LeEco is offering.
  • Those that remain are thought to be staying to look after existing customers but I suspect that most that remain will be the ones that are working on the automotive ambitions of Faraday Future.
  • On top of this, Jia Yueting, the mercurial founder of LeEco, is also stepping back from his position as CEO of Leshi Internet Information & Technology Corp. (LeEco’s parent) although he will remain chairman.
  • He will be replaced by Liang Jun who has been running the content business since joining from Lenovo in 2012.
  • LeEco’s CFO has also been replaced with the CFO of the China business.
  • Furthermore, it looks like all of the content related businesses will be merged into Leshi while the automotive business is spun out as a separate unit.
  • All of this points towards a big retrenchment where LeEco will once again become a Chinese digital content company with a shareholding in an electric car company.
  • I think that this means that all LeEco’s activities in the US will be focused on Faraday Future which is trying to build an electric vehicle at a yet-to-be-completed factory in Nevada.
  • At the end of the day, I think LeEco tried to do things much too quickly and did not pay enough attention to the fundamentals of creating an ecosystem.
  • If I take LeEco’s ecosystem as it is today it has weak coverage of the RFM Digital Life Pie as it really only covers Media Consumption.
  • It also gets a poor score against RFM’s 8 Laws of Robotics mostly due to the fact that it has not paid enough attention to detail when it comes to the user experience.
  • I get the impression that the software was simply ported over from the Chinese version and not enough time has been taken to adapt the user experience for the US consumer.
  • The devices themselves offer great value compared to competitors with an 85 inch 4K TV for $5,499 being the best deal available by quite some margin.
  • However, it all falls to pieces when it comes to software and this is where LeEco was hoping to make its money.
  • I have long held the opinion that LeEco did not have the resources to create both a digital ecosystem and an electric vehicle and that it should close its automotive operation and focus on its core business (see here).
  • However, it appears to have gone one step further in closing its ecosystem ambitions and spinning out automotive where I suspect it will be seeking participation from other investors.
  • I suspect that Leshi will now return to competing in the Chinese market which is heating up with increasing levels of investment in content coming from the BATmen.
  • Consequently, the outlook is pretty bleak as Leshi’s ability to out invest the BATmen is highly questionable especially given the troubles that it has had with expanding into the US.
  • I would pick Tencent as my favourite Chinese ecosystem for investment.