Asha to Asha

Posted on

Nokia released two phones last week: one critically important called the Asha 501, and one simply iterative called the Lumia 925. Techmeme, at least, got the relative importance exactly backwards:

Nokia Lumia 925 stories on the left; Asha 501 story on the right
Nokia Lumia 925 stories on the left; Asha 501 story on the right

Not to blame Techmeme; few if any of their readers were the target market for the Asha 501, while the Lumia 925 is squarely aimed at the kind of folks reading this blog. But the truth is the Asha 501 is far more interesting.

Asha is Nokia’s evolved feature phone line, and the 501 is the newest model in that line. Based on Smarterphone, the successor to Series 40, the 501 will be sold for less than US$100; more importantly, it will have an SDK for 3rd-party developers, a first for Nokia’s low-end phones.1

At first glance, the 501 seems kind of pointless in a world of $100 Android smartphones. Consider this conclusion from GSM Nation:

The Asha 501 faces stiff and fierce competition from low-cost Android phones. Nokia’s Stephen Elop unveiled this phone in India, a key market for the Finnish phone manufacturer. At a price of nearly $100, the Asha is asking customers to leave Android phones that can be bought at this price point carrying superior tech. India has several local phone companies that offer a modern, dual-core Android experience at prices from just $120. Android brings with it the power of a burgeoning app store and the wonderful realm of rooting. The Asha 501 on the other hand, features a fresh OS and bottom-end hardware specifications.

When you look at the performance and the price, it’s not clear how the Asha can compete:

The price-performance frontier; anything not on the edge is uncompetitive
The price-performance frontier; anything not on the edge is uncompetitive

The red line in this graph is the price-performance frontier; the only competitive position is on this frontier.2 If you are inside of the frontier, that means there are competitors that have the same performance for a cheaper price, or have better performance for the same price.

Asha seems to be an example of the latter. It has worse specifications than a cheap Android phone, and a much worse app selection.3 Thus it has been largely ignored by a tech press that considers little more than features and price.

However, finding a market is about finding a new axis of differentiation. In the case of low-end smartphones, are there things that matter beyond price and performance?

Consider again where Asha will be sold: India, Africa, Latin America – all have markets where mobile phones are the primary form of computing, as well as areas without consistent electricity. In such markets, nothing matters more than battery life. From CNN:

The internet in Africa is entirely different to the internet used in the developed world. In America or Europe, the internet is generally something you surf on a computer or tablet — a device with a 10-inch to 15-inch screen.
In Africa, hundreds of millions of people will experience the internet for the first time on a 2-inch cellphone screen. Probably in black and white. And probably only as text…

The reason is simple: With a dearth of infrastructure, the vast majority of people (an estimated 1.5-billion globally, according to the UN) have no electricity. More people in Africa have a mobile phone than access to electricity. That means, for a phone to be functional, it needs decent battery life. These feature phones have anywhere up to a week.

Look again at what makes an ideal phone: a week of battery life, which necessitates a text-based screen and a dependence on SMS.

The Asha 501 blows this away: the battery life is amazing – 48 days on standby – and that color screen is looking much more impressive. And now there is an app platform to deliver drought alerts, health information, banking and more.

Suddenly, a graph of Asha’s competitive position looks much more promising:

Asha competes on a different vector than iPhone and Android
Asha competes on a different vector than iPhone and Android

Nokia is particularly well-suited to this market; their phones have always been the most durable, with the best battery life, and their distribution channel is still unmatched. If the company returns to prominence the headliner will likely be Asha, thanks to a strategy predicated on identifying a new axis of competition4 instead of simply trying to be a little bit better.

  1. This previously stated, incorrectly, that the Asha 501 was based on Series 40. Thanks to Niels Leenheer for the correction ↩

  2. This article is not about the iPhone versus Android, and besides, I’m talking about low-end Android, not the Galaxy S4 or HTC One ↩

  3. Incidentally, Lumias have the exact same problem, except they’re much more expensive as well ↩

  4. I know the strategy isn’t new, but the SDK is ↩

Paul Otellini’s Intel

Posted on

From an extended feature in The Atlantic:

Even Otellini betrayed a profound sense of disappointment over a decision he made about a then-unreleased product that became the iPhone. Shortly after winning Apple’s Mac business, he decided against doing what it took to be the chip in Apple’s paradigm-shifting product.

“We ended up not winning it or passing on it, depending on how you want to view it. And the world would have been a lot different if we’d done it,” Otellini told me in a two-hour conversation during his last month at Intel. “The thing you have to remember is that this was before the iPhone was introduced and no one knew what the iPhone would do… At the end of the day, there was a chip that they were interested in that they wanted to pay a certain price for and not a nickel more and that price was below our forecasted cost. I couldn’t see it. It wasn’t one of these things you can make up on volume. And in hindsight, the forecasted cost was wrong and the volume was 100x what anyone thought.”

This was certainly the XScale, which is ARM-based. There is no way an x86 chip could have fit in an iPhone (and there remains no way today).

The issue facing Otellini wasn’t just cost; rather, Intel saw themselves as a chip design company, and that meant their focus was on x86, the instruction set architecture (ISA) they invented. ARM was licensed, and that just didn’t fit with Intel’s image of themselves (they proceeded to sell XScale in 2006).

A few weeks ago, I wrote that Intel needed to change their identity:

It is into a climate of doom and gloom that Krzanich is taking over as CEO. And, in what will be a highly emotional yet increasingly obvious decision, he ought to commit Intel to the chip manufacturing business, i.e. manufacturing chips according to other companies’ designs. Intel is already the best microprocessor manufacturing company in the world. They need to accept and embrace their destiny.

Otellini is right. What a different world it would be had Intel followed this advice back in 2006.

The Tragic Beauty of Google+

Posted on

Harry McCracken has a pretty good articulation of the conventional wisdom about Google+:

Google+ is exuberant. It’s fun to use. And yet I’m pretty positive I won’t spend remotely as much time in it as I will in Facebook. You might have already guessed why: My friends, family and acquaintances are all on Facebook, where they add up to a bustling community I enjoy being part of. More than any particular feature that Mark Zuckerberg and company have cooked up, it’s the people in my life that make Facebook, well, Facebook…

I don’t feel guilty about favoring the social network that feels more like an extension of my world. That’s Facebook. And since Facebook exists, I don’t have much of an incentive to pour more energy into Google+. The two services aren’t identical in particulars and emphasis — today’s Facebook seems to be built on the philosophy that everyone should share everything at all times, sometimes in an automated fashion, and Google+ isn’t like that at all — but ultimately, they scratch the same itch.

I don’t know much about itches, but I believe the conventional wisdom is wrong: from Google’s perspective, Google+ is not a social network meant to compete with Facebook. Rather, it’s an identity system that follows you everywhere.1

Think about it: what is more valuable? Inane chatter, memes, and baby photos, or every single activity you do online (and increasingly offline)? Google+ is about unifying all of Google’s services under a single log-in which can be tracked across the Internet on every site that serves Google ads, uses Google sign-in, or utilizes Google analytics.2

Every feature of Google+ – or of YouTube, or Maps, or GMail, or any other service – is a flytrap meant to ensure you are logged in and being logged by Google at all times.3

Google’s mission is ostensibly “To organize the world’s information and make it universally accessible and useful.”

That was once true, but a better formulation today is: “To organize user information and make it universally trackable and marketable.”

Make no mistake, Google+ has been a massive success. Credit to Google for their willingness to be misunderstood and portrayed as a loser even as they mine information Mark Zuckerberg can’t even dream of.4

  1. Not that Google doesn’t love the social stuff, but that’s icing on the cake ↩

  2. I was challenged on this point, and originally hedged, but I believe it’s true. It’s not clear technically how it would be done, but the terms of use for Google Analytics were amended to allow this. See this thread on Hacker News for both points of view. I’d love to be proven wrong and will change this if I am. ↩

  3. And they’re successful! I’m signed in right now, and you probably are too. ↩

  4. This is a tad hyperbolic; those ubiquitous “Like” buttons accomplish the same thing for Facebook ↩

The Android Detour

Posted on

Today’s I/O keynote was Google in all its glory. Expansive, overly dramatic, nerdy, impressive, self-unaware, exhausting. It’s no accident that, relatively speaking, Android was nowhere to be found.

Oh sure, there were the usual perfunctory activation numbers, and a new feature or two, and even a product announcement: the native Android Samsung Galaxy S4. But the S4 cost $649; only the Chrome Pixel was given away for free.

Google is a web company, and the I/O keynote was about the web and web services. Music, photos, search, messaging, Google Now, maps, Google Play game services: all available on the web and/or cross-platform.

Services are where Google excels, and it’s where they make their money. It’s why they make the most popular iOS apps, even as their own OS competes for phone market share.

Apple, on the other hand, makes money on hardware. It’s why their services and apps only appear on their own devices; for Apple, services and apps are differentiators, not money-makers.

Look again at the Mobile Hierarchy of Needs:

The Mobile Hierarchy of Needs and how Google and Apple make money
The Mobile Hierarchy of Needs and how Google and Apple make money

Apple invests in software, apps, and services to the extent necessary to preserve the profit they gain from hardware. To serve another platform would be actively detrimental to their bottom line. Google, on the other hand, spreads their services to as many places as possible – every platform they serve increases their addressable market.

So what about Android? I remain convinced that Android was, first and foremost, defensive. To own the bottom of the pyramid is to own access to the top, where Google’s profit lies. Android ensured that no one company would ever monopolize the bottom of the pyramid like Microsoft did for PCs.

In fact, Sundar Pichai said almost exactly that:

Most of you in this audience have lived through the PC revolution. An incredibly important revolution in our lifetime. It started around 1980, but if you take a look back, for over 25 years, most people in the world used one operating system, which was Windows. And in terms of hardware form factors, it evolved from desktops to laptops over a long period of time.

This, from Google’s perspective, was a very bad thing. Windows firmly controlled the pyramid, to the detriment of web-based competitors (Hi Netscape!).

But fast forward to about seven years ago.

Google acquired Android in 2005 as a defense against Windows Mobile dominating smartphones just as Windows dominated PCs. When the iPhone arrived in 2007, Google quickly pivoted Android to defuse the new threat. And they were hugely successful.

With the advent of smartphones. there’s been an explosion of devices. Phones and tablets and increasingly new types of devices. People are adopting these devices at an amazing pace because it has a profound impact on their daily lives…the world has changed pretty dramatically just in a span of six to seven years.

And no one company controls that world, thanks to Android.

We are very very fortunate at Google to have two platforms…Android, and Chrome… Android and Chrome as I said before are really designed for people to build amazing experiences on top. We at Google are working hard on top of these platforms. We call this the best of Google. We are building products like search, maps, youtube, Google Now, and many more new things that you will hear about later today. So we are working hard on top of these platforms to push the journey of computing forward.

For Google, Android was a detour from their focus on owning and dominating web services; it ensured that those services would be freely accessible in this new world of computing, including on the iPhones and iPads that were used liberally in nearly every keynote demo. And, now that Android is successful, Google is back to focusing on “the best of Google”.1

  1. This was almost certainly the reason for Andy Rubin’s departure ↩

As of today, every major mobile competitor… also makes apps for iOS

Posted on

Rene Ritchie:

A few minutes ago BlackBerry announced BlackBerry Messenger (BBM) for iOS. With that announcement, every single one of Apple’s major mobile competitors now makes apps for iOS.

Follow the money: Apple makes it on hardware, so there is precisely zero benefit to supporting other platforms. Google and Microsoft, on the other hand, make money through advertising, software and services; serving iOS users is simply a way to increase their addressable market.

What this says about Blackberry is more interesting: apparently they’re no longer a hardware company with services, but a services company with hardware.

Facebook phones and the future of mobile communication

Posted on

Frank Meehan, who built integrated communications platforms at INQ Mobile/Three in the mid-2000s:

We had a lot of early success…because in 2008/2009 most people just used a handful of key internet communication centric services. Facebook, MSN Messenger, Skype etc dominated. So integrating just those services was such a useful step that people loved what we did, and didn’t need more.

But in 2013, there are a plethora of options, and people want instant access to the service of the moment. The flexibility of iOS and Native Android gives people that. If something like Snapchat or Viber or Whisper or whatever suddenly becomes central to your comms, then you want it on the home screen. And when inevitably, it gets replaced by the latest fad, again you want the flexibility to change.

I don’t agree with everything in this article – specifically, the Samsung pieces – but there is something here that is spot on and hints at a larger truth about Facebook in particular. Specifically:

Facebook is an app, not a platform.1

An app can afford to be prescriptive about the user experience and means of interaction; in fact, the best apps have a point of view on how the user ought to use their service.

Platforms, on the other hand, are just that: a stage for actors (i.e. apps) of the user’s choosing to create a wholly unique experience that is particular for every individual user.

It follows, of course, that no successful platform can be built on advertising.2 Advertising demands eyeballs; platform success demands the ability to fade into the background as said unique experiences take center stage.

I’m not sure an app is worth $64 billion.3

  1. At least on mobile; Facebook is the last great PC company ↩

  2. Note the lack of advertising on Android. I do think Google sees Android as a success for reasons beyond money-making, however ↩

  3. Facebook’s market cap as of May 14, 2013 ↩

The Facebook Flop

Posted on

I’ll admit it: I’m rather enjoying the Facebook Home/First flop.

First off, it’s always fun to say “I told you so.” Specifically, pre-launch I questioned Mark Zuckerberg’s assertion that people, not apps were the center of our smartphone experience in Apps, People, and Jobs to be Done:

Apps aren’t the center of the world. But neither are people. [Jobs are.] The reason why smartphones rule the world is because they do more jobs for more people in more places than anything in the history of mankind. Facebook Home makes jobs harder to do, in effect demoting them to the folders on my third screen.

Second, this flop was in many ways a validation of what I want to accomplish with this blog: highlight all the factors beyond product features that go into the success or failure of a product. Things like brand, marketing, channel, distribution, strategic positioning, retail experience, etc. With regards to the Facebook Home, and the HTC First in particular:

This stuff matters just as much as the product itself (it’s why, for example, I think it doesn’t matter that the Galaxy S4 design stinks).

Third, this entire episode exposes the cavalier way too many in technology approach design. Look, I’m glad we all agree that “Design isn’t how it looks, it’s how it works.” But that’s not enough.

Design is about identifying, understanding, and ultimately feeling your end users’ needs, and then meeting those needs. Facebook Home, like countless SV startups, looks beautiful, works elegantly, and doesn’t meet any needs.

(Actually, that’s not strictly true: Facebook Home happens to perfectly align with Facebook’s business-model-driven need to monopolize user attention. User needs, not so much. An immediate red flag.)

There are really only two proven methods for building breakthrough consumer products:

  1. Build something to meet your own needs and find a market with the same needs
  2. Find a market, then do real, qualitative, ethnographic-driven research that lets you truly empathize with said market and understand their needs

Notably missing from this list is build something pretty for a platform you don’t even use.

Facebook didn’t realize just how important widgets, docks, and app folders were to Android users, and that leaving them out of Home was a huge mistake. That’s because some of the Facebookers who built and tested Home normally carry iPhones, I’ve confirmed. Lack of “droidfooding” has left Facebook scrambling to add these features, whose absence have led Home to just 1 million downloads since launching a month ago.

That’s not design; it’s a glorified art project.

The Week in Review – May 5-11, 2013

Posted on

The Week In Review is a weekly digest of what I found interesting in tech over the last week. It consists of the story of the week, a summary of stratechery articles and links, a huge collection of links that I found noteworthy (plus commentary), and my favorite tweets of the week. I post this weekly at stratechery and email it to the stratechery mailing list (sign up here).

Acquisitions, acquisitions, here, there, and everywhere. Eleven by my count, in chronological order:

  • Intel’s McAffee acquired network firewall specialist Stonesoft link
  • Dell acquired cloud-management software maker Enstratius link
  • Samsung acquire TV-app maker MOVL link
  • Baidu acquired video-streaming site PPS link
  • Facebook was rumored to buy social mapping app Waze link
  • Yahoo acquired frequent flier search service MileWise link
  • Yahoo acquired mobile polling service GoPollGo link
  • Box acquired document viewer Crocodoc link
  • Twitter acquired scalable-computing startup Ubalo link
  • Salesforce acquired web clipping service Clipboard link
  • Yahoo acquired mobile-gaming studio Loki Stuidios link

Half of these are strategic or product fits: Stonesoft, Enstratius, PPS, Waze and Crocodoc.

The other half are clear acqui-hires, particularly the Yahoo ones. Josh Constine at TechCrunch had a good summary of how mobile and the importance of great native experiences are driving this:

You need not just mobile designers, or even mobile-first designers. You need mobile-best designers…You either “get” mobile, or you’re doomed. If you can’t build it, and you can’t hire it, you’re pretty much forced to buy it. Yahoo didn’t buy GoPollGo to concentrate on polling. It did it because the startup was mobile in its heart.

Of course, many of the startups have no choice but to sell. This Pandodaily headline says it all: Can’t raise a Series A? Just sell yourself to Yahoo.

It’s funny; in a week that saw serious kvetching about LinkedIn (see below), it’s angels who are proving to be the most effective – and well-compensated – recruiters around. One wonders if the entire model wasn’t built around such failures.

Meanwhile, it looks like Facebook Home is a disaster. I’m not above an I-told-you-so. I argued Zuckerberg’s vision of people as the center of our smartphone experience is fundamentally wrong in Apps, People & Jobs to be Done and noted there was no natural audience for the HTC first in The Vanishing Uninformed. Facebook is already retrenching.

It was a great week on stratechery. I greatly appreciate your spreading the word about stratechery and following @stratechery.

Articles | Linked List Items | Other Links Worth Reading | Tweets of the Week

Continue reading “The Week in Review – May 5-11, 2013” →

Facebook in Talks to Buy Waze

Posted on

Reuters:

Facebook Inc is in advanced talks to acquire Israeli mobile satellite navigation start-up Waze for $800 million to $1 billion, business daily Calcalist reported on Thursday. Due diligence is underway after a term sheet was signed, Calcalist said, adding that talks began six months ago.

Waze uses satellite signals from members’ smartphones to generate maps and traffic data, which it then shares with other users, offering real-time traffic info.

Much has been written about Google’s app incursion into iOS, and Facebook is clearly on the same path,1 and for the same reasons. Their business model depends on it.2

Facebook, as an ad-driven business, must maximize user attention. That is why the Facebook website, for example, is a full-blown platform, supporting all kinds of apps that keep you safely on site. Unfortunately for them, they don’t own a mobile platform, and their core competency – social – is increasingly fragmented on mobile.

The fact this deal looks and feels a lot like Instagram is no accident. In lieu of organically gaining mobile eyeballs, Facebook has little choice but to buy them.3

  1. Android is obviously a target as well ↩

  2. I wonder what Facebook’s business model would be if they had started as a mobile company? ↩

  3. To be fair, the data collection enabled by an app like Waze is a very tasty bonus ↩

What LinkedIn is Good For

Posted on

Ben Evans is annoyed with LinkedIn:

LinkedIn fails to hit absolutely basic product features that should have been in there 5 years ago, both on mobile and desktop. Instead, the core features get buried under successive layers of mediocre non-core products, the latest being a flood of me-too news aggregation that’s creeping through the product like ivy, and none of which can be properly configured, let alone turned off.

David Veldt says its creepy:

This is a post I’ve been wanting to write for a while. In fact, it stems from something I noticed way back in August of last year. After digging for answers and even a couple attempts at contacting their customer support, I’ve concluded that LinkedIn is by far the creepiest social network. The primary reasons LinkedIn is the mustached, trench coat and wire frame glasses wearing mouth breather of the internet are the “People You May Know” and “People Also Viewed” features.

LinkedIn is the poster child for value chains: the jobs you pay LinkedIn to do work very well, and the stuff you get for free doesn’t. Specifically:

  • Recruiters pay for the right to scout and spam you
  • BD/Sales people pay for the ability to “cold contact” potential partners/sales leads

Use LinkedIn for these two functions, and maintain your profile only to the extent it fits these two scenarios (i.e. if you want to be recruited, update your profile).

If you want to market yourself, don’t depend on LinkedIn. Own it and show the world what you can do.

  • If you’re business person, blog. Regularly. Prove your expertise.1
  • If you’re a developer, publicize your GitHub profile. Document your talent.
  • If you’re a designer, build the most amazing portfolio website you can. Demonstrate your ability.

For too many years, I fell into the LinkedIn/resume trap, but after starting stratechery, I’ve received more offers for better positions with more interesting companies worth more money than I ever did on LinkedIn.

Oh, and for the record, I’d hire Ben Evans in a heartbeat.2

UPDATE: To be clear, I’m not blogging to get a job — that part has come as a total surprise. Rather, I blog because I really do love it and plan to do it for a long time. And, now that I think about it, maybe that has something to do with getting traction as well.

  1. I’m referring primarily to the tech industry here – PMs, PMMs, BD folks – and appreciate that blogging often isn’t possible for other types of roles. My bad for being so cavalier. Of course, many more traditional roles also have more traditional career progressions, so a resume works ↩

  2. To clarify, he’s not looking. However, he has an amazing blog and is one of the best Twitter follows I know. That’s his resume ↩