Apple Computer is on track to become the next great consumer electronics company. I believe this because they do things with electronics that few others can claim to do, which is make technology the way it should be.
Apple has always made great products, products that just work and are easy to use. Over the past few years I have observed Apple make some brilliant strategic moves that help the world understand how great their products really are. The first was positioning an Apple computer as the hub of the “Digital Lifestyle”. A few years ago at Macworld I heard Steve Jobs say “We (Apple) want to do for entertainment what Microsoft Office did for productivity”. He was making this statement while explaining the value of iTunes, iPhoto, iMovie, and iDvd. This was a telling statement about where Apple was heading.
The next great move Apple made was the iPod. They created this product around something everyone loves, music. They made this product affordable enough so more people can get their hands on an Apple product and see how great they are for themselves. Again the iPod was and is an MP3 player and more, the way it should be. Shortly after the iPod release they announced the iTunes music store, taking a model that was chaos before and creating a legitimate music service the way it should be. Even more recently they announced the iPod Photo, capitalizing on something else near to everyone’s heart, photos. With iPod photo they now expanded the iPod into more than just music and tightly integrated it with iPhoto, photo management the way it should be.
Lastly the Apple retail stores provide a fantastic way to let everyone see and use all the great products Apple creates. These stores capitalize on the notion that once you get to try an Apple product, it’s hard to want anything else. Apple’s retail presence has never been that of Windows machines. With these retail stores they control their retail presence and are in a much better position to make sales by having qualified sales reps talking to customers. Who also happen to love the products they sell, something I’m not sure many other computer retail sales reps can say.
Each year at this time I am asked for my predictions for the New Year.
I have been making my yearly predictions since 1981 and thanks to a lot of good research, spending a lot of time in tech labs as well as time with dozens of vendors around the world, my accuracy rate has been pretty good [knock-on-wood.] Earlier in my career I made predictions up to five years out, but as you know, things in tech change so fast these days, my current predictions are aimed at the next 18 months.
So, with that in mind, here are my top five predictions for 2005.
1- The emergence of a Digital Entertainment Hub.
A few years ago, Steve Jobs announced that the Mac should be the hub of a digital lifestyle. Since then, Microsoft, HP, Dell and others have moved to try and make the Media Center PC a digital hub for the home also. Although I do believe that the PC, and especially the Media Center PC, is a great hub for managing personal productivity and personal creativity, I also believe that there is another device that will emerge this year that I call a Digital Entertainment Center or DEC for short. I believe it is destined to become the center of a home’s digital entertainment experience. Microsoft would argue that the Media Center PC can play that role given the Media Center’s ability to display images, video and any other content from the PC on a TV. To that end, they have created what they call a 10 foot interface, controlled by a remote control that allows a person to sit on their couch and access all Media Center Content, including PC games and mainstream DVD movies and personal video, from a PC that has to be located somewhere in the vicinity of the room the TV is in. They recently introduced what they call Media Extenders which lets a person extend that content to TV’s in other rooms of the house, but all of the content resides on the Media Center and is distributed through some type of wired or wireless network. I believe that this is a legitimate approach to creating a digital hub for the home, but up to now, the prices of these systems suggest they are aimed at early adopters and not the mainstream digital consumer. Prices on Media Center PC’s are coming down, but I think this DEC hub needs to be well under $500 and optimized for the TV viewing experience.
This is why we will see an alternative approach coming in the form of the DEC. This box sits next to the TV and includes key PC components such as a mainstream high speed processor, media rich OS, hard drive, Tivo like capabilities and DVD for playback at first and eventually they will have DVD recording as well. It can also take info from a PC and display it on a TV as well as having slots for compact flash, SD, Memory Card, etc. It will support USB 2.0 and wired and wireless networking formats. In fact, next generation gaming systems will be targeted at this exact space by 2006.
Although it is an actual PC in its purest sense, its key role is to manage the digital entertainment experience and serve as the platform for viewing all entertainment related content. Expect to see DEC’s in the form of soupped up set top boxes as well as smart DVD systems by mid year but by CES 2006, this will be a very hot device and category. And, they will sell for under $500 and in many cases they will eventually be subsidized by cable, telcom providers and various types of entities who want to own the digital entertainment experience. Keep an eye on the new box shown recently in Japan by Zoran, Transmeta and ZeDeon. This could be one of the more important products in this space.
2. On Demand, dynamic computing and real time solutions start taking off.
After some false starts, I expect to see a lot more activity in the area of on demand and dynamic computing, which in the end is really the delivery of information and services in real time. The concept of real time delivery of information goes back to the late 1800’s with the introduction of Morse Code and the telegraph. It evolved rapidly after the turn of the previous century with the introduction of the telephone and trans-oceanic telecommunications and data based telephony became even more important to business with the invention of fax machines. Then, the Internet, with things like mobile email, via the Blackberry, and portable based instant messaging, began introducing the concept of sending and receiving real time data and information to a broader market over the last few years. But the real missing link to making data and communications truly real time for the masses was wireless WAN’s. Thanks to WIFI and next generation cellular networks, that missing link is being filled in. These wireless backbones will become even more important with the world wide build out of 3G and eventually 4 G high speed wireless data networks that are just now starting to come to market in most of the developed world. In fact, I expect these new high speed wireless data networks to serve as a “booster” for a lot of applications that will move from batch processing to real time as these networks become widely available in the US, Europe and parts of Asia.
This, along with new enterprise class applications that are built around real time technology engines will kick start this on demand/real time emphasis for all levels of business. I expect to see new applications and solutions aimed at this on demand/real time enterprise market start increasing in 2005 and begin its march to eventually making the ability to send and receive and react to any type of customer, partner or internal business need a mission critical application and eventually reshape the way companies work and deal with customers in the future.
3. Personal video conferencing gains momentum
The idea of a video telephone was created by science fiction writers and aficionados in the late 1800’s and early 1900’s in books and articles about the future and, until the mid 1960’s, they remained the figment of some writers imagination. But when AT&T showed off a prototype of its videophone at the 1964 Worlds Fair in New York and promised to make it a mass market product within 25 years, the videophone became less science fiction and more a certain reality. Although we are 15 years past AT&T’s original prediction of when we would see a video phone in every home, we are getting much closer to the day when most of us will have and use a videophone at work or at home every day.
The recent introduction of Apple’s iSight that works flawlessly with the Macintosh has convinced me that the day when we will all start using a videophone is not too far off. In fact, I believe that we will see a lot more products and services aimed at delivering better personal video-telephony in 2005 and it will become a larger market starting in 2006.
Indeed, I believe that as more and more homes get and start using broadband services, that the videophone will even be built into next generation PC’s, digital entertainment devices and even game machines in the future. This backbone also allows for free direct Internet telephony and is ideal for that purpose even if you don’t’ want the video camera on to see what you might look like in the morning before that shower and shave.
Although 2005 will not be the year that the videophone actually takes off, I believe that we will see important developments in this area in 2005 and we will start seeing it gain more acceptance as people realize that the technology and a high speed backbone can make the videophone a reality sooner then later.
4. Hosted applications become more important to large and medium enterprise accounts.
The fact that Salesforce.com is doing well is indicative of the fact that hosted applications, especially in CRM, are starting to take off. For me the adoption by Xerox of one of the earliest hosted sales applications from Upshot, convinced me that hosted applications like this was not just for the medium sized businesses they were targeted for when they first came out. Now, the Fortune 500 list of customers that both SalesForce.com and Siebel On Demand (expanded because of their Upshot acquisition) have gotten over the last three years shows us that at least in the CRM space, hosted apps are ready for prime time. Other companies such as Antenna software, Entillium and RightNow are also doing extremely well in this space and reinforcing the idea of hosted applications for broader markets. Also, look closer at how these hosted apps are evolving. Salforce.com originally came out with a sales application but recently added supportforce.com to handle online service and support for their customers. I expect them to add a field force component and perhaps even an accounting and/or finance component or module by the end of 2005. And competitors are trying to broaden out their applications in a similar way. Take a quick look at RightNow.com and you see a pattern emerging in which these hosted applications are turning in to full application suites and you see the future of next generation hosted applications. Watch for Microsoft to expand their CRM program and add more modularity in 2005.
One other observation about this trend: The hosted applications mentioned above are still aimed at the upper end of the business market. What about the small businesses who represent 92% of the companies in the US. The prevailing wisdom on this has been that a small business is not willing to trust their financial data and other applications to an outsider over the mostly insecure Internet. But Intuit, with their very popular Quicken online applications for small business, has shown that this is not necessarily true.
Another company, SmartOnline.com out of Raleigh, North Carolina, is also proving them wrong. They have over a million customers who use their online applications to do everything from write a business plan to using applications for starting and growing a small business. I expect SmartOnline to be very aggressive in expanding their partner programs, which includes banks and magazines like INC, as well as continue to develop more applications that help small businesses grow and manage their business online
While the upper end of the market for hosted apps is hot, I believe the real opportunity lies in the ability to provide online IT services and applications for small business and companies like Intuit and SmartOnline are poised to be important players in this emerging market.
5. 3G networks will force companies to rethink their mobile and wireless work styles.
I was recently in Los Angeles where I was able to use my Verizon 3G EV-DO wireless card at the higher speeds offered in that area. Up to now, Verizon’s EV-DO networks are only turned on in cities like Washington, DC, New York, San Digeo, L.A and a few other major cities but by the end of 2006 they claim they will have at least 80% up and working at speeds up to 1.5 megs over their wireless 3G network.
Although I did not get speeds in the 1.5 meg range, I did consistently get speeds close to 300 K and after only having 2.5 G speeds of around 90K in the past, this seemed like a speed demon by comparison. As more and more people get access to EV-DO and ATT’s 3G Edge networks, the ability to be connected at pretty good speeds all the time has major ramifications for businesses of all types. I believe that the reality that 3G is going to be available in the US in most of the country in 2005 (albeit at a high prices at first) is going to become a bigger issue for IT and that they will start factoring these 3G networks into next generation applications and services in the New Year.
Some other general predictions:
PC vendor consolidation will continue.
Gartner recently published a report that said that three out of the top ten PC companies will be out of the business by 2007-2008. Within days of this reports release, the NY Times reported that IBM had decided to get out and some speculation has out that suggested HP would be next. I don’t buy that theory. I believe the next company to jump ship will be a Japanese company who will weigh the cost of being in this low margin business and make the decision to get out of the PC market sometime in the next 18 months.
Low, Low costs PC’s will get more attention.
The recent announcement of AMD’s Personal Internet Communicator did not get a lot of press and that is a shame. I think this is one of the most important new product concepts to hit the PC market in the last decade since these PIC’s as they are called sell for $185 and are aimed at the third world or developing countries. AMD’s first foray with this PIC is into India, and will eventually go to other markets like Mexico, certain areas of the Caribbean and then places like South America, parts of Asia and the African content, etc. At this price, there are very low margins if any since they must be at this price given the fact that their potential audience or family makes only about $1000-$2000 a year. But these devices could have a dramatic impact on the education and communications of these users in these markets and be extremely important for the financial growth of these countries and help towards getting them out of poverty.
PC vendors need to see this market as giving them another 1. 5 billion new customers and although they won’t make much on the device itself, they need to think more creatively around services and applications they can deliver to add value to the device itself and make money that way. Keep an eye on this space as it should get more play and think time from the PC vendors in 2005.
Apple extends lead in MP3 Players.
Thanks to the partnership with HP, I believe Apple is poised to sell over 15 million iPod’s world wide in 2005. While Apple has done a great job of increasing their own distribution of the iPod through their stores as well as outlets like CompUSA, Fry’s and even some mainstream consumer stores, HP gives them an additional 15,000 plus selling points WW thanks to this strategic partnership. And the first Motorola phones that are iPod based that can use the iTunes store should hit the shelves in 2005. I think these will become the hottest phones on the planet. Apple could have one of its best years of its life just ahead.
Google adds more online apps to their program.
Google’s acquisition of Picasa, a photo management tool that is now online and free on their site, gives us a glimpse of where the company is going in the long term. Although they have already added specialty features such as the Google desktop and Goole search, I believe their long term play is to provide a host of applications for managing your personal digital lifestyle through their site and become a major aggregator of consumer and entertainment content for the WW mass market. More importantly, they want to be your single stop for digital lifestyle management and give the apps away free but make oodles of money through the contextual advertising links. Yahoo and MSN are going down similar paths but Google is leading this charge right now. Look for Google to make at least two more product acquisitions in 2005 that helps them bolster their online digital consumer management strategy.
My best guess is that they will add photo search and video management and search tools to their stable of products as well as instant messaging, IP telephony and perhaps even the videophone links in the next year.
There is a great deal of skepticism by other analysts as to whether or not these strategies will lead to more computer sales for Apple. I believe it definately can and will. However the bigger question is does Apple see it's PC sales as being the biggest money maker in 5 years, or do they view selling more high margin products and consumer electronics products. Even though I believe Apple's strategies will help them sell more PC's. A more important point is that these strategies will help them sell more products that aren't PC's as well.
As I look closer at what Apple has done to get them to where they are today, I truly believe many of the building blocks are in place to expand their market share. They have succeeded to become a brand people are excited about. One thing I always loved about Mac users, myself included is the passion for the brand. Those that use a Mac love it and would never consider anything else. I believe as Apple continues to innovate and create technology products they way they should be, more of the world will buy Apple products.
http://www.csinsights.com/index.php?action=pg_article&id=53
Wednesday, June 6, 2007
What Apple is Doing Right
Apple Computer is on track to become the next great consumer electronics company. I believe this because they do things with electronics that few others can claim to do, which is make technology the way it should be.
Apple has always made great products, products that just work and are easy to use. Over the past few years I have observed Apple make some brilliant strategic moves that help the world understand how great their products really are. The first was positioning an Apple computer as the hub of the “Digital Lifestyle”. A few years ago at Macworld I heard Steve Jobs say “We (Apple) want to do for entertainment what Microsoft Office did for productivity”. He was making this statement while explaining the value of iTunes, iPhoto, iMovie, and iDvd. This was a telling statement about where Apple was heading.
The next great move Apple made was the iPod. They created this product around something everyone loves, music. They made this product affordable enough so more people can get their hands on an Apple product and see how great they are for themselves. Again the iPod was and is an MP3 player and more, the way it should be. Shortly after the iPod release they announced the iTunes music store, taking a model that was chaos before and creating a legitimate music service the way it should be. Even more recently they announced the iPod Photo, capitalizing on something else near to everyone’s heart, photos. With iPod photo they now expanded the iPod into more than just music and tightly integrated it with iPhoto, photo management the way it should be.
Lastly the Apple retail stores provide a fantastic way to let everyone see and use all the great products Apple creates. These stores capitalize on the notion that once you get to try an Apple product, it’s hard to want anything else. Apple’s retail presence has never been that of Windows machines. With these retail stores they control their retail presence and are in a much better position to make sales by having qualified sales reps talking to customers. Who also happen to love the products they sell, something I’m not sure many other computer retail sales reps can say.
There is a great deal of skepticism by other analysts as to whether or not these strategies will lead to more computer sales for Apple. I believe it definately can and will. However the bigger question is does Apple see it's PC sales as being the biggest money maker in 5 years, or do they view selling more high margin products and consumer electronics products. Even though I believe Apple's strategies will help them sell more PC's. A more important point is that these strategies will help them sell more products that aren't PC's as well.
As I look closer at what Apple has done to get them to where they are today, I truly believe many of the building blocks are in place to expand their market share. They have succeeded to become a brand people are excited about. One thing I always loved about Mac users, myself included is the passion for the brand. Those that use a Mac love it and would never consider anything else. I believe as Apple continues to innovate and create technology products they way they should be, more of the world will buy Apple products.
http://www.csinsights.com/index.php?action=pg_article&id=50
Apple has always made great products, products that just work and are easy to use. Over the past few years I have observed Apple make some brilliant strategic moves that help the world understand how great their products really are. The first was positioning an Apple computer as the hub of the “Digital Lifestyle”. A few years ago at Macworld I heard Steve Jobs say “We (Apple) want to do for entertainment what Microsoft Office did for productivity”. He was making this statement while explaining the value of iTunes, iPhoto, iMovie, and iDvd. This was a telling statement about where Apple was heading.
The next great move Apple made was the iPod. They created this product around something everyone loves, music. They made this product affordable enough so more people can get their hands on an Apple product and see how great they are for themselves. Again the iPod was and is an MP3 player and more, the way it should be. Shortly after the iPod release they announced the iTunes music store, taking a model that was chaos before and creating a legitimate music service the way it should be. Even more recently they announced the iPod Photo, capitalizing on something else near to everyone’s heart, photos. With iPod photo they now expanded the iPod into more than just music and tightly integrated it with iPhoto, photo management the way it should be.
Lastly the Apple retail stores provide a fantastic way to let everyone see and use all the great products Apple creates. These stores capitalize on the notion that once you get to try an Apple product, it’s hard to want anything else. Apple’s retail presence has never been that of Windows machines. With these retail stores they control their retail presence and are in a much better position to make sales by having qualified sales reps talking to customers. Who also happen to love the products they sell, something I’m not sure many other computer retail sales reps can say.
There is a great deal of skepticism by other analysts as to whether or not these strategies will lead to more computer sales for Apple. I believe it definately can and will. However the bigger question is does Apple see it's PC sales as being the biggest money maker in 5 years, or do they view selling more high margin products and consumer electronics products. Even though I believe Apple's strategies will help them sell more PC's. A more important point is that these strategies will help them sell more products that aren't PC's as well.
As I look closer at what Apple has done to get them to where they are today, I truly believe many of the building blocks are in place to expand their market share. They have succeeded to become a brand people are excited about. One thing I always loved about Mac users, myself included is the passion for the brand. Those that use a Mac love it and would never consider anything else. I believe as Apple continues to innovate and create technology products they way they should be, more of the world will buy Apple products.
http://www.csinsights.com/index.php?action=pg_article&id=50
Tim Bajarin's 2006 Predictions
Over the past few years I have had the opportunity to get involved in some projects with the entertainment industry that has helped me develop some great relationships and contacts in that industry. One of the primary reasons I have willingly immersed myself in these projects is because I know how much the technology industry needs Hollywood. Yet the single fact remains that these two industries, technology and entertainment, operate on very different levels. So I embarked on a journey to mingle and develop relationships with people in the entertainment industry who know that industry better then anyone else. My hope is that now that I have a fairly deep understanding of the entertainment industry and how they work and conduct business that I can act as a bit of a middle man between the technology industry and the entertainment industry. The funny thing is I believe only a neutral trusted source can do this and it can’t be any one company acting as the middle person. The reason for this is the constant fear on both sides that the other is trying to rip them off. This is especially true in entertainment; I have never met so many distrusting people in my life. Which is the biggest reason that they all operate by relationships. I have been fortunate enough to develop such relationship with movers and tastemakers as they call them in the entertainment industry. This group is made up of promoters, managers, agents and celebrities themselves. It is my hope that these relationships and myself as a trusted source to both sides can help bridge the gap even if only in the smallest way.
Now the first time I realized this gap was gigantic was when I witnessed Grammy parties from both sides. Intel threw a Grammy party, which I witnessed and Kayne West threw a Grammy party, which I witnessed. To say these parties were distinctly different would be an understatement. After spending some time in the entertainment industry I am convinced that we here in the technology sector don’t throw enough parties. However I truly believe we should not throw any parties without the help of folks, promoters in particular, in the entertainment industry. That being said the entertainment industry throws parties literally all the time. The funny thing is they love having sponsors at these parties. Usually they are fashion and beverage sponsors but the one thing that really peaks celebrities and Hollywood’s attention is technology. I was recently at a party at a mansion in Beverly Hills. It was a party thrown by a PR agency called the House of Hype and they were putting this party on because it was the day before the MTV Movie awards. This party had literally 10-15 sponsors. Mostly made up of fashion, beverage and beauty companies. There were two I would consider somewhat technology centric, VTech and Vivendi video games. Now the intelligent question is why does anyone care to sponsor such an event. The answer is because these parties have many celebrities and tastemakers at them. So they hope to get celebrities interested and in many times give them their products with the hope that they get on TV with them or talk about them etc. Now one thing happened that was interesting. The guy who was throwing the party is a DJ and his name is DJ Skee. Now Skee had the Motorola Q and he had just got it that day. Of course he knew everyone at the party and he never put the Q in his pocket because as the saying goes in Hollywood “You’re only as cool as your cellphone.” Now all though there were tons of fashion and other companies there giving away free stuff what do you think was the most popular item at the whole event. If you guessed the Q then you were right. Mobs of people were always around this guy checking out his phone. There were probably 100 or more people who went home that night and ordered it. I witnessed at least two celebrities get on their phone and call their manager with the order to buy them that phone. Now where was Motorola at this event? Well no one thought to talk to them why because the entertainment industry does not talk to the technology industry. As amazing as it sounds that these folks are obsessed with gadgets and technology the industry at large was absent from this event. That is where I hope to lend a little help given now that I have connections in both sides. Let’s just hope for the sake of consumers we bridge this gap sooner then later.
http://www.csinsights.com/index.php?action=pg_article&id=84
Now the first time I realized this gap was gigantic was when I witnessed Grammy parties from both sides. Intel threw a Grammy party, which I witnessed and Kayne West threw a Grammy party, which I witnessed. To say these parties were distinctly different would be an understatement. After spending some time in the entertainment industry I am convinced that we here in the technology sector don’t throw enough parties. However I truly believe we should not throw any parties without the help of folks, promoters in particular, in the entertainment industry. That being said the entertainment industry throws parties literally all the time. The funny thing is they love having sponsors at these parties. Usually they are fashion and beverage sponsors but the one thing that really peaks celebrities and Hollywood’s attention is technology. I was recently at a party at a mansion in Beverly Hills. It was a party thrown by a PR agency called the House of Hype and they were putting this party on because it was the day before the MTV Movie awards. This party had literally 10-15 sponsors. Mostly made up of fashion, beverage and beauty companies. There were two I would consider somewhat technology centric, VTech and Vivendi video games. Now the intelligent question is why does anyone care to sponsor such an event. The answer is because these parties have many celebrities and tastemakers at them. So they hope to get celebrities interested and in many times give them their products with the hope that they get on TV with them or talk about them etc. Now one thing happened that was interesting. The guy who was throwing the party is a DJ and his name is DJ Skee. Now Skee had the Motorola Q and he had just got it that day. Of course he knew everyone at the party and he never put the Q in his pocket because as the saying goes in Hollywood “You’re only as cool as your cellphone.” Now all though there were tons of fashion and other companies there giving away free stuff what do you think was the most popular item at the whole event. If you guessed the Q then you were right. Mobs of people were always around this guy checking out his phone. There were probably 100 or more people who went home that night and ordered it. I witnessed at least two celebrities get on their phone and call their manager with the order to buy them that phone. Now where was Motorola at this event? Well no one thought to talk to them why because the entertainment industry does not talk to the technology industry. As amazing as it sounds that these folks are obsessed with gadgets and technology the industry at large was absent from this event. That is where I hope to lend a little help given now that I have connections in both sides. Let’s just hope for the sake of consumers we bridge this gap sooner then later.
http://www.csinsights.com/index.php?action=pg_article&id=84
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