Ronnie05's Blog

Wintel on a rough patch

Posted in Computing and Operating Systems by Manas Ganguly on January 14, 2011

Is the end of the long heralded Wintel Platform nigh? Or so it seems. Click here for an earlier post on Wintel failing to ride the future.

Microsoft’s big announcement that came this CES was that it was making the next version of Windows work on ARM chips. It’s a major break in Microsoft’s longstanding relationship with Intel. On the other hand, Intel has nothing significant about its Smartphone or Tablet plans at CES. However, Intel has reportedly reorganized itself with a new tablet and netbook group and is splitting its tablet strategy between Windows, Google’s Android, and Nokia’s MeeGo operating systems.

Microsoft parting ways with Intel has touched a nerve with Intel. Citing a lack of foresight on the part of Microsoft, Intel has commented that PC makers like Dell and Intel had been trying to get Microsoft to tailor Windows for touch-screen tablets for years, with no luck. This was because revamping Windows for different types of devices is expensive and time-consuming, and Windows revenue had been growing just fine without Microsoft venturing into newer categories. Tablets only became a problem for Microsoft when non-Windows tablets started cutting into Windows PC sales. That’s starting to happen now, which is why Microsoft is finally taking notice. Is it too late? Microsoft has a couple of good concepts in Kinect and Surface and that could be leveraged going forward, but from the looks of it now, Microsoft’s inability in predicting the future in computing may cause it to loose ground in Tablets.

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Will History overwhelm the Wintel Platform?

Posted in Computing and Operating Systems by Manas Ganguly on December 3, 2010

For as long as I remember, Computers meant Windows and “Intel Inside” to me. This was called the “Wintel” platform because the Microsoft Windows operating system and Intel processors were virtually synonymous. In an era of rapidly increasing mobility, though, Intel and Microsoft are facing an uphill task. Their de facto dominance has been challenged and are now faced with potential irrelevance. Both Microsoft and Intel are fending off competitors in their core markets, while also struggling to establish a presence on smaller, mobile platforms.

History doesnot favour Wintel
To many, this is the history of computing revisited. Each wave of computing had its share of Goliaths (Large and Powerful incumbents) loosing out to Davids. There was mainframe first, which was dominated by IBM, then came the mini computer dominated by DEC in the second wave, then came the third wave with workstations dominated by Sun and Apollo, then the PC which is where Wintel had a free and undisputed run. Now it’s the mobile architecture that is going to be the main computing platform at least on the terminal side with the cloud backing it as the Data dump.

Android driving Windows Irrelevant
Android is also subtly shifting our understanding of the purpose of an operating system. Android is a means to an end for Google. The better Android is and the more it lets us do, the more of our data Google can potentially get access to. And data is Google’s raison d’être. By way of comparison, Windows is an end in itself–a dead end. Microsoft gains little benefit from Windows other than the income from software licenses, which is starting to sound like a very old-fashioned way of thinking in this age of mobile devices and data clouds. Windows Mobile 7.0 and its suit of services have been launched and have received some traction. However, challenging the Android would be mean WinMo 7.0 would have to play at a different level altogether.

ARM severely challenges Intel
What smartphones and tablets have in common is that they are almost universally built using ARM processor technology rather than Intel. ARM also powers the next big category of products: Tablets, EBooks and Internet TVs (Google). It is not that Intel is unaware of the benefits of the ARM architecture on mobility platforms. The tablet processor architecture unveiled by Intel codenamed Oak Trail–is a system on a chip (SoC) that promises to consume 50 percent less power while also enabling full HD video playback. This however is not expected to go into production until early 2011. In the mean time, ARM steam rolls establishing very key strategic partnerships that would take it to the next level.

Both Microsoft and Intel have been late to react to subtle shifts in the landscape which have suddenly cascaded into a all embracing powerful wave. Both these powerhouses are making and effort to re-orient and re-invent their businesses. However, the falls of greats in computing history is a telling story.

One thing is for sure, though–the fight for market share and market relevance will be good for business professionals and consumers because it creates competition which will force all parties to be innovative in their designs, and appealing in their pricing in order to set their smartphone or tablet apart from the crowd.

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The tale of two Steves- Bee and Jay

Posted in Computing and Operating Systems, Device Platforms by Manas Ganguly on August 28, 2013

The two Steves- Bee and Jay have been vanguards of technology – and yet the difference between them couldnot have been stark. Everything Jay was Bee wasn’t. Bee’s accomplishments are an antithesis of the achievements of Jay. This is the follow up on my earlier post – Microsoft’s lost decade and it looks down upon (Literally) on Bee’s big judgement errors….

Bee and Jay

A good part of the 90s and early 2000s will be remembered as Microsoft’s decade – and Microsoft was the most dominant force in the technology space, the Alpha-male in technology. The ubiquitous Wintel partnership as it was then however fell behind the Moore’s law and grossly underestimated the migration from desk stationed devices to handhelds. Even while Microsoft had launched its Windows Mobile in 2000 and brought out the first tablet in 2000, Gates, Ballmer & Co misread the shifting sands in personal computing and were unable to capitalize on both these fronts. On hindsight, Microsoft did not open up to the eco-system effects and benefits – and were more happy selling proprietary licenses – A lack of flair and foresight there, which precipitated into a losses that we see today. Put simply – The world has moved faster that Microsoft’s licensed software business model could respond (Analyst Ted Sandler)

Here’s comparing how the two Steve’s measure up on different and yet common device, technology and platform initiatives-

Apple versus Microsoft - the story of two Steves

The list doesnot quite stop there – There’s Microsoft’s wasteful effort on Bing versus Google and its advetures with XBox and Kinect versus Playstation. To me Xbox and Kinect were ideal innovations – but Microsoft and Bee failed to push it… across platforms. Microsoft worked across disparate platforms and was never able to integrate the customer experience across devices and platforms. And then again, projects such as Microsoft courier never saw the light of the day – the plug pulled out through half way.

Bluntly put – Technology is one thing – the ability to conceptualize the portfolio, integrating the services in a manner of user experience that is engaging and habit forming, a layer by layer structured format of business allowing scalability of services and devices into different domains is something that Ballmer missed upon very completely. Take an Apple for instance – It started with an iPod, created a layer of services around it (iTunes), scaled the device into new form factors , upstaged the Music industry, leveraged the design into a smartphone (iPhone), scaled up another service layer (Application Store), upstaged the industry and leveraged it yet again for new device/dimension (iPad) and upstaged the industry all over again – there is this continuity in design, form factor, service, portfolio and monetization streams. Instead Microsoft had a Windows media Player, a Zune, a Zune Media Store, an Xbox and a Kinect, a Surface – they are all great pieces plagued by a discontinuity. The best examples being xBox and Kinect – good innovations, mind numbing possibilities and yet these innovations have struggled to give Microsoft worthwhile mileage.

What they said ... when Steve was asked to retire is not all that great!

What they said … when Steve was asked to retire is not all that great!

Steve (Jay) put the Microsoft problem in a neatly worded statement: “ The trouble with Microsoft is they have no taste. They have no taste and I don’t mean that in a small way, I mean that in a big way.” Absolutely right Steve! Ballmer’s successor clearly has an awful lot of work to do….

Steve Ballmer & Microsoft’s Lost Decade

Steve_Ballmer_peace

Steve Ballmer, CEO Microsoft since January 2000 is to retire from his post within the next 12 months. Rumours are that our man was asked to march since the board was not too please about the $900 Million write offs on a spate of current projects. Within a few hours of this release, Microsoft stock jumped by $2.36 (7.3%) over a broad trade of 223.3 million shares. The news of Ballmer’s exit added an immediate $20 billion to Microsoft’s capitalization.

The movement of the MSFT scrip shows a variance of 97 cents on 23rd August with the share touching $34.97 post Ballmer's Announcement. Initial Euphoria?

The movement of the MSFT scrip shows a variance of 97 cents on 23rd August with the share touching $34.97 post Ballmer’s Announcement. Initial Euphoria?

Over the course of last 14 years, Microsoft hasn’t really done significantly different – besides sharing the spoils with investors in terms of dividends. Yes, it has increased the market capital of Microsoft – but as far as results go – there is hardly anything much on the board. With Ballmer at the helm – Microsoft has actually offered negative returns. Ballmer can be credited with an effort to shift strategies at Microsoft – but it didnot really pay off.

MS Share Prices

If you compare the indices of Microsoft versus Dwo Jones, NASDAQ and S&P500, the picture that comes through is an eye opener.

Microsoft Compared

To put the numbers – Dow Jone outperformed Microsoft by 3X in Ballmer’s Decade, S&P outdid Microsoft by 10% through the Decade. The face saver was NASDAQ, the technology index itself dropped by 10%. Compare Microsoft’s stagnant share price to 700% increase in Gooogle’s share price value and a 1600% escalation in share price of Apple.

Microsoft versus Apple & Google

Microsoft S&P NASDAQ DJ

Infact, Apple’s Get a Mac campaign was a very clever lampoon of the archetypical Ballmer personality. In Ballmer’s decade, Apple overshadowed the Redmund giant and emerged as the quintessential technology business after bringing the revolutionary iPod, iPhone, and iPad platforms to market. To date, only Google Android has emerged as a formidable rival to the popular Apple iOS operating system. Meanwhile, Microsoft and Ballmer have been literally caught with their pants down. In hindsight – Ballmer never really estimated the eco-system effects and advantages and consequentially was never able to capitalize.

Ballmer met some degree of success with the Microsoft XBox and Kinect – the only game changers. However, XBox and Kinect have not translated into any huge seismic impact – quite unlike the other Steve in town – the one from Apple.

Steve Ballmer’s greatest gambit (and his greatest failure in course) was Windows 8 – The equivalent to the promised land for Microsoft – the back bone of Microsoft’s future in personal computing from Tablets to Laptops to Smartphones. A year of Windows 8 later –

1. Windows 8 has not even nudged the cash registers at Microsoft
2. Reports have suggested that Windows 8 sales and adoption has trailed behind Vista at similar points of Product Life cycle chronologies
3. Windows is still some distance from being able to make a mark in the Tablet segment even while PC Desktops and Laptops keep getting written off… PC Markets have been shrinking for 5 consecutive quarters and there appears no hope of recovery in the horizon
4. At low single digits market shares in Smartphones and Tablet markets – Microsoft is a relative non factor. At Microsoft’s scale – they ought to be looking at upstaging Android and not be overjoyous about the decline in Apple.

It is perhaps ironical, that Microsoft and its Wintel partnership must fail to Moore’s law. Wintel understood the law pretty well in terms of size and power management principles – but miscalculated the consumption shift towards smartphones and tablets.

To sum up, Steve Ballmer has been very instrumental and effective in running existing product lines – but in terms of innovation and new products – Ballmer has been less than good and the 13 years at helm of Microsoft have been years of opportunity loss – Microsoft’s lost Decade.

Why Intel doesnot inspire any much confidence any more?

Posted in Industry updates, Mobile Computing, Mobile Devices and Company Updates by Manas Ganguly on August 7, 2013

photo

As tablets continue to pound on Laptop and Netbook segments – and the Laptop/Netbook segment is at best projected to be stagnant if not decreasing in terms of y-o-y shipments it is difficult to harbor any significant optimism about Intel. Intel has been trying to migrate its business to the Handhelds given the impending fall of the Wintel Franchise. It is clearly trying to move away from the Wintel Monogamy to separate alliances with Android, Samsung (Tizen) apart from the Windows Phone platform. However, creating a platform with meaningful revenue stream to replace its Wintel franchise is a long shot – something it has not been able to do for a very long time.

Highlights of Intel’s Performance
Full-Year 2012 Key Financial Information and Business Unit Trends
Full-year revenue of $53.3 billion for FY2012
PC Client Group had revenue of $34.3 billion, down 3 percent from 2011.
Data Center Group had revenue of $10.7 billion, up 6 percent from 2011.
Other Intel architecture group had revenue of $4.4 billion, down 13 percent from 2011.
Gross margin of 58% not broken down by group.

I am listing out a few thoughts on the Intel prospects going forward-

1. Intel Versus Qualcomm: Qualcomm with its leadership of the mobile space is possibly Intel’s biggest competitor in the mobile space. What works for Qualcomm is its economies of scale – hence allowing it to price itself very suitably. Intel chips in its current state would be 5X costlier than Qualcomm.
2. Intel’s specialty was the Windows platform and its complete monopoly. I don’t think they can repeat the same success with Google’s Android because the spots are already taken.
3. The low end growth in volumes will be typically driven in low price markets such as India, SE Asia. In this segment, there are pretty strong guerillas such as MTK, Allwinner and even Qualcomm has a spot of bother targeting these segments
• The problem with these markets is that none of them seems to offer the kind of margins that Intel has become accustomed to–even *if* Intel is successful in those markets
4. Either in terms of competing with Qualcomm or finding new markets, If Intel was to beat the market by considerably pricing itself lower (assuming very high volumes) – it would impact its profit margins dearly.
5. Intel has been innovating at the high end of the market. Thus, the cleverness that has gone into Intel’s current generation of high-end processors is simply stunning, but the market that benefits from that cleverness, and the margin that goes with it, is disappearing.
6. The only saving grace to this equation could be Microsoft – but the platform had its share of problems with Windows 8 and I am not sure if Windows Blue can reverse the tide.
7. Intel’s share of the server markets is also under threat with the ARM architecture and Atom like low margin chips being purported to be lopping off a big chunk of the server markets in near future. The driver is the cost of electricity and of cooling data centers. (Low power rules)
8. The third of Intel’s strengths – high-reliability enterprise computing and high-end analytics for business or national security applications is also moving the IBM way. IBM doesnot make any profits on its processors – its makes it dough from the services.

Finally, from cumulative experience of high end technology industry – any incumbent Goliath who missed one technology cycle – cannot by any means play catch up unless it re-invents the whole industry yet again. Intel doesnot have to look too far – beyond Microsoft – to learn missing out a technology cycle and losing the plot.

The 2012 Intel Results
09082013

Google’s penetration of Android is as important as Android’s penetration of the handset market

Posted in Device Platforms by Manas Ganguly on February 19, 2013

Continued from an earlier post on Android being Google’s best strategic move ever. This Post examines how and why Android undermines the strategic intent of Google in the mobile space.

The best anti-thesis to “Android is selling in huge numbers” is possibly “Android has huge problems in fragmentation” arguement. On a superfical level what this translates to is the consistently lower engagement and monetization of the platform – a far cry from the Apple iOS. Android is the quintessential open source which also means that the Android army stretches from the Samsungs to the Shenzhen sweat shops – the smallest white label OEMs who are fragmenting the low end markets all ends. Samsung’s dominance of Android platform is not the best solution for Google as it struggles with its own line of Motorola Android phones.

Android today is at the same place where Wintel was a decade or two back with an armmy of clones of cheap PC makers churning out tens of millions of cheap commodity PCs. What Android and its eco-system ( Qualcomm, EMP, Mediatek, Allwinner, Spreadtrum) have enabled is a flood of cheap commodity smartphones and tablets. A vast range of other devices ( netbooks, in-car PCs and DVD players, set-top-boxes and lots else besides) following on behind. Often the fragmentation of the Android means a $45 smartphone with no access to Android Play market – but only a way to latch on to the internet. Google thus starts missing out on mapping this strata of smartphone buyers. (Agreed the search would still come through Google).

Compare this with Apple, a $650+ device – bought by a completely different set of consumers to whole experience, exploration and ads make more sense.Thus,it is quite possible that iPhones generate more advertising revenue for Google than all Android phones combined. In that respect 20% iPhones sold globally are more valuable than 70% of the Androids sold.

Beyond the search and advertising revenues that Google makes from Android, there are those bits of signalling data- that the low cost Androids miss out – those valuable bits of information that map the user holistically. A data mine that can be leveraged for data with relevance to the user. The real structural benefit to Google from Android comes from the understanding it gives of actual users, and the threat comes from devices that do not provide this data – even though theoretically, it can still leverage Google search. A significant portion of the $45 handsets skimp on Google apps just as they skimp on IMEI numbers. These devices are like dark matter: a lot of it around – but nothing really adding up to the worth.

Benedict Evans does a very accurate description of the Android platform- Very powerful but spiralling semi-randomly with no clarity on where it would land. Even when there is the threat of Amazon or Samsung forking the platform, there is also the threat that an increasing number of Android devices might have no more connection to Google than does an iPhone.

To put that another way, Google’s penetration of Android is as important as Android’s penetration of the handset market.

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