Posts Tagged ‘Microsoft’

By now most readers will be aware that Google is buying Motorola Mobility. I started to write about this when I first heard the news but I wanted to think about it and explore the implications and potential reasons. Time is up. Here are my thoughts.

The most straight forward reason is patent defense. When Google lost out to Microsoft and Apple in the bidding for the Nortel patent portfolio it left Google in a very bad position. Android violates several of the Nortel patents. Google launched an offensive claiming Apple and Microsoft were using patents, as opposed to compelling solutions, as a way to attack Google. We must remember that Google also bid for these patents and, had they won, would have probably used them against Microsoft and Apple. Furthermore, an offer to join with Microsoft and Apple in acquiring the patents was rebuked by Google. If the purchase of Motorola Mobility is indeed a defensive play then this is nothing more than another round of that old patent game “I’ll cross license mine if you will cross license yours.” Considering the large amounts of cash Google is sitting on, this might be a very sensible move.

Could there be more to the acquisition than patents? Google has made cell phones in the past when it was jump-starting Android. But, should they be a cell phone producer? In the PC space Apple has been a small closed ecosystem compared to the loose and very diversified Microsoft ecosystem. The result was a larger, cheaper and more diversified hardware and software ecosystem for Windows (Microsoft) compared to OSX (Apple). Recall that, at one time (Apple II), Apple dominated the desktop space. The diversity of the Microsoft based environment resulted in Apple becoming a niche player. Today, despite Apple’s early lead, there is a strong possibility that Android will be the Windows of the smartphone and tablet space. I see no reason for Google to try to “out Apple” Apple. Think of the strange relationship that is going to exist with companies like HTC and Samsung. In the recent past, market pressure pushed those companies towards Google. Apple was closed to them. Microsoft Windows Phone 7 was open but Nokia was clearly customer number one and in a special, preferred customer, position. Now Google is not just a supplier but a competitor. I think Microsoft is secretly happy about all of this. It makes their relationship with Nokia look tame by comparison.

Could this be herd instinct? Apple makes the iPhone. HP bought Palm. Microsoft is in bed with Nokia. RIM makes Blackberry. Perhaps Google fell victim to the “everyone else is doing it” syndrome. Somehow I doubt it. The people at Google are nothing if not sharp. Still, it has happened at this level before.

One possible reason for the acquisition might be to push NFC. NFC requires that very specific hardware be placed inside smartphones. The Motorola Mobility arm of Google could push this. However, I think NFC can be effectively pushed without making the phones themselves. I don’t buy this as a reason for the acquisition.

That brings me to one final reason for the purchase – set top boxes. I have discussed how the real goal is a very broad and unified ecosystem. The TV is a big part of that. Google could merge GoogleTV into the Motorola Mobility set top box units. As a competitor in the set top box space they might be in a good position to drive their ecosystem. I have argued before that consumers don’t like extra boxes and hence AppleTV and even external game boxes (PS3, Wii, Xbox) are interim solutions. The one external box that has some life left is the cable box.  Google could merge the cable box, GoogleTV and Android games into one piece of hardware. Moving between cable product, internet streams and applications could be made very unified and essentially transparent to the consumer.

Summary: This acquisition is all about the patent portfolio and using it as a counter to Apple and Microsoft. However, Google is left with a hardware business that competes with key customers.

My recommendation: If I was willing to tell Apple what to do then why not another multibillion dollar company that is highly profitable? So Google, here is what you should do. Sell off the mobile device arm of Motorola Mobility but keep set top boxes. Keep all of the patents and just license them to the entity acquiring the cell phone business. Finally, merge GoogleTV into the cable box and make GoogleTV fully compatible with Android games. Use your new found cable box presence to drive a broader ecosystem that is more unified than what consumers have now.

Just about every company pays lip service to the value of hiring new college grads, NCG’s, but few do a great job utilizing this raw talent. To start with, few realize the true potential and why NCG hires are so important. They hire a few, sprinkle them around the company and are done. Some pay lip service to training but with training that is poorly targeted. Even fewer understand what they should be looking for in NCG’s.

Let’s start by understanding the fundamentals of hiring NCG’s and what to look for. To do this we need to look at what the downsides are to hiring experienced engineers. If your first thought is salary then you are way off base. When you go for experienced engineers you are rarely able to get the best people. The best people usually have golden handcuffs keeping them at their present company. You get the person below the best. He may be great. However, the interview often tells you less than you think. It is difficult to decide whether the candidate is the creative mind generating the great work on his resume or a following mind led by someone else. Knowledge is great but the ability to generate new knowledge and be creative in previously unexplored areas of engineering are what make great engineers.

Now consider hiring NCG’s. There are no golden handcuffs. They assume they will be relocating so they are very mobile and will go where you want them to. You stand a lot better chance of getting that brilliant, creative mind. You do have to aim you interview process in the proper direction. The interview questions must look at understanding and insight rather than memory work. I once got told that all you had to know to pass my interview was Ohm’s Law, Q=CV, and charge conservation. That’s a bit of a stretch but there is truth in it. I replied that to pass my interview you didn’t have to just know those items but they must be understood at a deep, inner, level to where they had become intuitive. Those people are rare, whether experienced or not. However, your best shot at hiring one is looking at NCG’s.

Once you have hired that rare, insightful mind, you need to make good use of it. That means training them, setting expectations, and generating the habits of great engineers. It does not mean throwing them onto a project and calling the hiring process done. What I have done in the past is put the NCG’s through a five to seven week  training program. A proper training program should accomplish several major goals. First, the student must learn the basics of the tools he will use. Secondly, he must come to understand the overall framework that a design process follows. This is much like a student taking general physics in college. The classes that follow, optics, mechanics, relativity, thermodynamics, etc. are elaborations of what was taught in general physics. The general physics class acts as a framework onto which the new knowledge is placed. In the engineering world it is important that it is always understood how individual processes and engineering steps fit into the overall design process. The third item that needs to be inculcated involves a number of attitudes that make up a great engineer. These attitudes are often overlooked. With experienced engineers they either have them or they don’t. With NCG’s you stand a good chance of forming a proper view of the engineering world. These attitudes are so important I will make them the subjects of separate posts. It’s just too much to include right now. It takes a lot to get these concepts ingrained but it starts with the first design review. The training program should involve designing a small part from start to finish. It should cover more than what the engineer will work on when on a real project. It is important that the NCG develop a sense of the issues confronting others and how his work will interface to their work product. The training, if successful, ends with a design review. It can be a bit brutal since it is meant to be a reality check. For that reason it is limited to senior staff who are intimately familiar with the goals of the training process. It is this review which introduces the engineer to concepts such as why 99% is a failing grade, the limits of his decision making authority, how an engineer manages his time and resources to prevent spinning his wheels, and how to properly run a design review so that the correct objectives are achieved.

After the design review has been successfully completed, the NCG is ready to become part of a design team and commence work on his first project. The project lead can extend the basics the NCG has learned during training and concentrate on bringing him along as an engineer. The group, having a common set of values and attitudes, is stronger and more functional. During the early days, Microsoft was built on this idea. It is key that everyone be well integrated into a common culture which elevates getting the job done in a correct fashion and discourages destructive behavior. Properly done, this culture brings out creativity rather than stifling it while keeping divergent activities in check. After all, the goal is to sell a product and make money. We’re talking engineering and not science.

There is a caveat here. Life is gray. It’s all about balance. I have been focusing on new college graduates. There is also a place for the experienced engineer. When to go for experience and how to select that engineer is a topic for another post.

I mentioned that Mango showed that Microsoft could come on strong once they recognized they were behind. I saw a few unexpected features in Mango and it gave me hope that Microsoft was still in the game if very far behind. However, with the release of more information about Windows 8, I am truly surprised. Microsoft really gets it. They see the need for a unified OS across platforms and for a transparent user experience. Furthermore, Microsoft is using its strength on the desktop to leverage itself into the tablet and phone space. This isn’t my pick for the easiest path in general but it is the easiest and best way for Microsoft. More than other releases, Windows 8 will be about an aggressive business strategy. I love it when business, the consumer, and engineering mesh at such an intimate level.

Windows 8 is important on several levels. First, let’s start with the fact that it will not only run on X86 CPU’s but on ARM. Wow! Let that sink in. This means Windows on a CPU that isn’t compatible with the Intel X86 architecture. There will be no emulation layer so current X86 apps won’t run on ARM based hardware. However, this is important in and of itself. Microsoft will be encouraging developers writing lighter apps to write in Java and HTML5 so the apps will be independent of the CPU used. Add this to Apple toying with the idea of an ARM based MacBook Air and you know why Intel is nervous.

The next surprise is the breadth of Windows 8. It is really a tablet  OS where the mouse and keyboard can substitute for touch. You read that correctly. The OS is, in many ways, a tablet OS first and a desktop OS second. This doesn’t mean a compromised desktop OS. What it does mean is an OS with touch infused throughout.  The same OS will run on tablets, laptops and desktops.

They say a picture is worth a thousand words and the next surprise is best illustrated with a couple of pictures. Here is one of Windows 8 on a PC:

Next I have a picture of the home screen from a phone running Windows Phone.

Do you see what I am excited about? Just like Apple, Microsoft is making the desktop OS look and feel like the phone OS. Do you believe me now when I talk about the push for transparency of the computing experience? Now go back to the comment above about Microsoft pushing for apps written in HTML5 and Java. Those will be easy to port to Windows Phone and vice versa. Microsoft may be late but they are coming on strong.

What does this mean on the business side? Obviously the push onto ARM is a threat to Intel and AMD. In terms of the other hardware and software players here is how I see it. RIM is in an increasingly bad position. They have zero desktop presence and Microsoft is stronger in the corporate world than RIM. Windows 8 might seem independent of RIM’s Blackberry world but, in actuality, it has the potential to do great damage. HP may take a hit too. They are betting a lot on WebOS. I don’t see what the value add is for WebOS. Call this one more wait and see but be skeptical. HP could quickly shift to being Windows 8 centric if need be. Heck, they are Windows centric today.  Apple probably fairs OK in the near term. Longer term they might lose some of their momentum. However, I see Apple as the best positioned against Windows 8 if they can continue to move towards merging iOS and OSX. I’m still very strong on Apple. Next up for Apple is iOS 5 and iCloud which will be announced next week. Windows 8 could be problematic for Google. I have trouble believing in Chrome as a desktop OS. Google will still be ahead in the TV space but compared to Microsoft and Apple they lack the desktop. Android is the largest selling smartphone OS and we are about to be inundated with Android tablets including some excellent ones such as the Samsung 10.1. I still see Microsoft being behind Google but it is a lot more interesting than it was a day ago. Apple just made iWork available on the iPhone in addition to the iPad and OSX devices. Microsoft will have Office running across all devices. Will people buy into Google’s idea that web based solutions are the best answer for their productivity apps? People may but only if Microsoft screws things up. Then again, Microsoft mucked things up in the past with poorly conceived products like Works.

It may seem like I have been mostly regurgitating news. Look deeper. I am trying to point out the trends of convergence and transparency and how they are reaching everywhere. On the surface Google Wallet is a nice tweak to how you pay for what you buy. In terms of those affected it is easy to see the retailers, banks and credit card companies. If you look on the surface at semiconductor companies you might just think about those chips which enable NFC. This is part of something much bigger that affects many more companies. NFC services like Google Wallet will make transactions more transparent i.e. easier and more convenient. They also converge services into the phone and continue pushing the phone towards becoming your dominant computing platform. This is what I started this blog off with. It doesn’t matter if Google Wallet in it’s present form becomes big or not. It’s a symptom of a larger movement. No matter what business you are in you need to evaluate your strategy with convergence and transparency in mind. How will your business play out when the phone is the dominant computing platform? Intel and AMD are reacting to this today. For once the interests of AMD and Intel are aligned. They need to bring the X86 architecture to tablets and then mobile phones. Microsoft is also reacting as they worry about Windows being marginalized. Think how differently this would have been had the iPhone and iPad been based on the Atom processor. For the other chip companies there is the increasing importance of LTE and the cloud. Flash memory will continue to be pushed to grow in density and decrease in price. The world is moving towards one gigabyte of storage in the phone. Remember reading about how over built the global network is? Think again. OLED screens will finally become a mainstream technology driven by the phone. Eventually they will grow to be the dominant technology in both laptops and TV’s.  This shift affects media. The RIAA and  MPAA continue their vain attempts at protecting intellectual property rather than embracing the technology trends and profiting from them. That’s an entire blog (or two or three) in and of itself. Is your company preparing for the upcoming changes? More importantly, have you looked deep to see how convergence and transparency will change your business landscape?

A Tasty Mango

Posted: May 26, 2011 in Apple, Google, Microsoft
Tags: ,

Microsoft just described some of the changes in their next release of Windows Mobile 7 which they are calling Mango. If you have been following along with me then you know I haven’t been kind to Microsoft. If this was a horse race, the gates opened and the Microsoft horse just stood there. However, Microsoft is a strong horse. Once you get Microsoft’s attention, they can be a tough competitor. Just ask Netscape. This shows with the introduction of Mango.

At one time Microsoft had a large share of the smartphone world. With Windows Mobile 6 they had a powerful if flawed basic platform. However, it was conceptually trying to be the desktop version of Windows crammed into a phone and it could be a real pain to use. The browser was next to worthless. Then Apple introduced the iPhone and changed the landscape. While late, Microsoft released Windows Mobile 7 in an attempt to become relevant again. It takes a bit of a different approach and isn’t as “me too” as one might expect of a product coming from Microsoft. However, there were major limitations. Heck, even cut and paste wasn’t supported. That was fixed in a patch release but yesterday Microsoft showed more than patches. They showed that Microsoft can actually have some vision. I’m not going to go over all that was presented. Microsoft is claiming over 500 changes. I suggest you read here and here. What I want to comment on is a theme that I see in Mango and perhaps the long term direction of Windows Mobile. That theme is integration. This means integration of social networking and integration of search. More importantly, the underpinnings are there to enable deeper integration as developers take advantage of the new hooks in Windows Mobile. Here are a couple of relevant comments direct from Microsoft:

Threads. Switch between text, Facebook chat and Windows Live Messenger within the same conversation.

Hands-free messaging. Built-in voice-to-text and text-to-voice support enables hands-free texting or chatting.

App Connect. By connecting apps to search results and deepening their integration with Windows Phone Hubs, including Music and Video and Pictures, “Mango” allows apps to be surfaced when and where they make sense.

Improved Live Tiles. Get real-time information from apps without having to open them. Live Tiles can be more dynamic and hold more information.

I suspect we’ll see more voice to text and text to voice in upcoming releases of Android and iOS. The ability of search to interact with other apps and the merging of threads form Facebook, text, and Messenger hint at something bigger. Microsoft is breaking down app isolation. This is a very interesting trend they are pushing. I have been thinking of transparency of data and use but this is different. It means doing what you want when you want and thinking less about which app you are using and more about what you want to do. It compliments what I have been discussing and, in hindsight, seems obvious. It made me think about how isolated apps are in iOS and how nice it would be if they weren’t.

I still see Microsoft in a weak position. They are a distant third in the phone OS war and don’t have an entry in the tablet area. As far as the TV set, Windows Media Player seems stagnant and still focused on the PC. Still, Mango adds excitement to Windows Mobile. We’ll have to wait and see if Google and Apple offer compelling moves in the app integration area. This “Post PC Era” battle is going to be interesting and a lot of fun to watch.

Did Intel read my blog? Interesting posts about Intel here and here and here.

Of the Android tablets, the Xoom was the first to look reasonable but the iPad 2 made it look dated. The first real iPad 2 challenger appears to be the Samsung Galaxy Tab 10.1. Don’t confuse this with the thicker 10.1v. Engadget has a good review here. They also have a review of the HTC Flyer posted here. While not as positive as the Galaxy Tab review, I think the integration of audio and notes on the Flyer has a lot of promise.

Does anyone else think Microsoft buying Nokia’s smartphone business is a bad idea? That would make Microsoft like Apple but still trying to be like Google. Pick an approach! If Microsoft tries to straddle the fence then they will fail. Why should HTC or anyone else make a Windows Mobile phone if their direct competition on the Windows Mobile space will be Microsoft. Microsoft could wind up being the sole manufacturer of Windows Mobile phones. At that point I give a big advantage to Apple.

I haven’t talked much about Chrome and the Chromebook. A good article on them is here.

If you are following what I am saying about transparency and convergence I suggest you read  Sarah Rotman Epps’ Blog.

Lesson of the Week

Posted: May 11, 2011 in Apple, iPad
Tags: , , ,

“Save your work.” I have given that advice more times than I can remember. I should have taken my own advice. I had a couple of topics ready to post today. I wrote them yesterday and figured I would read them over this morning. Late yesterday I went to update my iPad from 4.3.2 to 4.3.3. This is a minor update that has been giving me fits. Yet again the update failed. I called AppleCare and was told I had to completely uninstall Norton 360. It seems Norton was keeping my Mac from communicating with Apple’s server. It made sense so I uninstalled Norton. A reboot was required. I was very good about shutting down Windows and then Parallels before the reboot. Unfortunately, the problem is still there. This morning I went to reread the blog posts I created yesterday. They weren’t there. I had forgotten to save my work. Not to worry I thought. There should be a recovery file. Well, there isn’t. Recently I have been using Pages instead of Word. While less full featured it is cleaner and easier to use for the simple work I have been doing. It seems it lacks the autosave feature of Word. There is no recovery file. Crud. Lesson learned. There is a program, Foreversave, that fixes this but this feature should be a part of all of the iWork applications. Gripe about Microsoft if you will but their Office line dominates its market for a reason.

The old school model has been data everywhere and in its proper place. This directly relates to an old world paper model. Whether at home or at work each bit of data had a place. There was a file folder, nicely labeled, and placed in a drawer. That’s why, when you go to the doctor, you get to write the same information down several times on different sheets of paper. Each sheet has a purpose and a location it will get filed into.  As we have moved into the computer age we have carried this model with us. There was data on the desktop at work, data on the desktop at home, data on the file server and data on the laptop; oh, and data on the phone.

Lo and behold we found that, sometimes, data wasn’t where we wanted it. The first solution was manual transfer. I mean a really manual transfer. We would write data on a piece of paper and enter it back into another computer. Some people still do this when moving contacts from their desktop to their phone. This was replaced by sneaker-net where data was copied onto a storage medium and then read back in on another computer.  First there was the floppy disk and today there is the USB thumb drive. Next came the network. Finally data was easy to move. That is it was easy as long as you were on the net.

The problem was that home wasn’t connected to work nor was the hotel room connected to either one. This was attacked via remote logins and by sending email messages with files attached. However, attachment file size limits have made email problematic for the transfer of large files. FTP transfers had no such limitation but were cumbersome. Another attempt, still widely used today, is syncing. You sync your iPhone and iPad to your home computer so your songs and data travel with you. Less successful have been attempts to sync laptops to your desktop. The latest attempts at fixing this issue have been Dropbox, Yousendit, MobileMe, Windows Live Mesh and Live Sync. These help and are the first steps towards a cloud computing solution. Well, technically, Live Sync and Yousendit aren’t cloud based but I see them as very related. Live Sync can be viewed as a peer to peer extension of classic synchronization software but it feels closer to the cloud solutions when you use it. Actually, Dropbox, MobileMe, and Windows Live Mesh are really a merging of synchronization and cloud services. Synchronization has the advantage of maintaining a local copy so work can continue smoothly when the network is down or slow. The cloud aspect means that you can access your data even when you are away from a machine that is being synchronized. As an example, if a PICTURES folder is on the MobileMe iDisk, under the Dropbox folder, or is selected for Windows Live Mesh, the content in PICTURES can be accessed from a friend’s web browser with the proper login. Sharing content with others is also fairly straightforward. If you haven’t used these services be sure to try them. All but MobileMe are free at the basic level. MobileMe is about to get a major change so hold off on it till you see what the changes bring.

What we are seeing is the rising importance of transparency. In this case it is transparent data access. We want our pictures, music, movies and documents whenever we decide to view them, wherever we happen to be, and using whatever device is handy at the moment. The methods above aren’t totally transparent but they are a big improvement. When I got my iPhone, I left the Apple store with email, contacts and my calendar on my phone. Today, between my laptop, iPad and iPhone, a contact, calendar event or email added to one appears on all of the others.  If need be, I can access it all through a web browser on any machine with web access. Key files, including the document I am editing now, are synchronized across devices as well as being stored in the cloud. What we are seeing is the beginning of data transparency. There is a lot more to be done. In the end you won’t think about where your data is.

Recall what I said about major trends. Do the approaches above seem too similar? Is transparency just a minor trend that seems major? Was I wrong about trends and is this a case of one with a clear development path?  The answer is no to all of the above. There are other directions to data transparency.

Look at the RIM Playbook.Its Blackberry Bridge technology takes a different approach to transparency by tethering the Playbook to a Blackberry phone. One advantage of this is a single data connection, and hence a single expense, for both the phone and the tablet. By definition email is in sync since email is really through the phone at all times.  A big problem with this is that the tablet becomes tethered to the phone in such a strong way that it is no longer a separate device.

Need another direction? Look at the Motorola Atrix with its laptop dock. In this case the laptop is just an accessory screen and keyboard for the phone. Like the Playbook, the laptop is worthless without the phone. For some reason I don’t see that as a major problem. However, layz person that I am, I dislike the idea of having to plug and unplug the phone from the laptop accessory.

Yet another approach was outlined by HP CTO Phil McKinney here. He describes the Fossil Metal Watch which will allow you to carry your data with you.  All of your devices connect to the watch for data access. One problem, among several, is that a lot of people don’t wear a watch anymore. Furthermore, the watch screen is useless for data access. This means that you must, at the minimum, carry a phone in order to have access to a useful screen. Since you are carrying the phone anyway, why not just build the ability to be the data hub into the phone? In reality, that is what is going to happen.

So, what is the final answer? All of the above or at least parts of all of the above will survive the cut. The cloud will become very important and syncing will hang around. Rather than wearing a watch with our data stored on it, we will carry our phones. The phone will move from being an accessory to the laptop to being the main computing device with the laptop as an accessory. The current iPhone has 32GB of storage. It won’t be long until 1TB will be the standard. At that point there will be enough storage for the phone to be the primary data store. But, there will still be a need for offline storage. Also, there is the need to make sure critical data is backed up. That means syncing will stay around. This also means a cloud services component. Cloud services will allow access when the device isn’t with you and the sharing of files with friends. Mixing syncing with cloud services will mean gaining access to you apps and songs and OS updates without resorting to a PC. Expect to see iTunes move more completely to the cloud very soon i.e. in the next few months. What about the Atrix type device? My problem with the Atrix is that I am lazy and I think others are too. I don’t want to take out my phone and plug it in. Instead, I want it to link wirelessly to a keyboard-screen combination. Imagine going home and sitting at your computer. It lights up with what you were working on last. You get up and walk away. The screen goes blank. When you get to work and sit down the screen lights up again with what you were working on. A quick click of a mouse button switches the device to your work configuration and you are on your way. Your tablet will link to your phone to transparently gain access to your data. The same will be true for your TV. Imagine a video call on your phone. You sit down, tap an icon on your phone and the call is transferred to your TV so the entire family can see and talk to Grandma. Wherever we are, we will use the device that suits us at the moment. That device will have immediate access to all of our data. We will move from device to device easily even when we are in the middl of a task. The companies that best develop and integrate with this ecosystem win.

During its peak no one ever thought Rome would fall. Similarly, in the world of technology, no one has thought the pairing of Windows and Intel could be challenged. For decades Microsoft has dominated the computer software space while Intel, with its X86 processor line, has dominated the chip side of high tech. This Wintel hegemony has been unassailable. It hasn’t been for lack of trying. IBM tried with OS2. Apple had some limited success once they brought out OSX. Motorola tried with the 6800 and 68000 chips. Sun tried with the SPARC processor and there was MIPS. These are just a few. HP, DEC and Fairchild had processors. IDT had the Winchip. Some survive today but only AMD, with its X86 clones, ever had much success as measured by volume shipped. Today things have changed. After WWI, the French built the Maginot Line. Everyone agreed it was unassailable. What France neglected was the rise of mobile warfare. Since the Germans couldn’t defeat the Maginot Line they went around it. The same is happening today in both the operating system area and in microprocessors. The attack on the Wintel hegemony is both real and potentially fatal. The outcome hasn’t been determined but the battle has started. Just like Germany flanked the Maginot Line, the Wintel alliance is being flanked. For Germany the enabler was mobile warfare and the development of the blitzkrieg strategy. Today the enabler is the smartphone together with iOS and Android.

In Q4 2010, according to IDC, there were more smartphones sold than PC’s. This is an important statistic. It means that the smartphone is set to become the dominant computing platform. Few smartphones run a Microsoft OS. Currently Microsoft’s share is at 7.5% which is down from 8.4% just a few months ago (see here). As far as the CPU, most smartphones use the ARM processor (see here). The tablet is more closely aligned to the smartphone than to the desktop. iOS and Android are the dominant operating systems. Microsoft won’t have a contender on the market till 2012. How about another shocker. Apple has surpassed Microsoft in both revenue and profit (Businessweek). No longer is Apple the little weakling hoping Microsoft won’t notice them. During the 90’s Microsoft was threatened by Netscape. Once Microsoft awoke to the threat it wasn’t a fair fight. The sheer size of Microsoft allowed them to give away Internet Explorer and destroy Netscape. Today the battle is different. Both Apple and Google have massive resources.

I’m a chip guy. I’ve been talking software. What about chips? Specifically, what about Intel? On the plus side Intel has vast wealth and controls the best semiconductor fabrication technology in the world. Intel continues to push R&D so, at least when it comes to semiconductor process technology, they can’t be accused of sitting still. They make the Atom processor line so they have an entrant in the low power, low cost processor market. Their problem is convergence at the chip level. Recall that I said convergence is much bigger than people think. Convergence is the dominant trend in the semiconductor business. More and more functionality is being integrated onto a single chip. Chip count is going down. Look inside a DVD player and you will see that there isn’t much there. Intel has made its money selling discrete microprocessors and selling them at high margins base on a near monopoly in the desktop CPU space. Back in 2009, Intel made the Atom core available through TSMC. However, the main core used today is ARM. The Apple A5 chip contains a dual-core ARM Cortex-A9 MPCore CPU and a dual-core PowerVR SGX543MP2 GPU. Samsung is the foundry for the chip although Apple may be moving to TSMC. LG is getting into the act and will be designing its own chip. The future is clear. Companies are buying IP and integrating it into one chip. This is a huge threat to Intel. With ARM becoming the dominant processor, Intel is losing its grip on the processor market. Even if Atom cores sell well the profits will be nothing like what Intel has seen in the past. None of this spells near term doom for Intel. They continue to mint money in the desktop and laptop space. Netbooks are dominated by Atom processors. Long term the outlook is different. Netbooks are being hurt by ARM based tablets. The smartphone is driving convergence. Soon it will be the smartphone, tablet and TV vs. the notebook and desktop. One rumor already has Apple moving from X86 to ARM for their laptops. This move seems premature to me but something that will eventually happen. In and of itself this wouldn’t threaten Intel. Apple isn’t their major client. However, imagine if the Android market were to progress in that fashion i.e. ARM based Android phones drive an ARM based Android tablet world which eventually drives a Chrome/Android notebook market. The force behind this? Convergence! Intel sees this and is pushing its own smartphone solution. For this reason the outcome isn’t certain. What is certain is that there will be a battle royal with Intel no longer having a monopoly.

If you are in the chip business there is something broader to be taken from this. Integration continues to increase. The system on a chip, SoC, is the dominant trend. That may seem obvious but I continue to see companies ignoring this trend. Analog companies fail to see that they will be integrated into an SoC. RF companies don’t see how they are being isolated as surrounding functionality gets integrated. Consider the GPS chip. The market for stand alone GPS chips continues to diminish as better and better solutions get integrated into chips like the Quallcomm MSM8660. Either you are a Quallcomm or Broadcom and doing the integration or you are being marginalized in the GPS marketplace. Expand this to the chip business in general. Sound chips (are you listening Wolfson), power sequencers, and others will be integrated. Consolidation is happening in semiconductors just like it happened to the automobile industry during the 1900’s.

From the earliest days of the PC we have hooked our computers to the TV. Originally the main display device for the personal computer was the TV. As inexpensive, high resolution monitors became available we divorced the computer form the TV. However, there has been a constant pull to reconnect the two. Microsoft made a major push in this area with Windows Media Player. I thought this would be a big hit. I played with the software and found a lot to like. However, I never quite got around to a Media PC. They were either noisy or expensive or lacked certain features. The cable industry dragged its feet on cable tuners and the CableCard and helped to kill off the media center. Rather than enabling a new technology the old guard stood in the path of progress.  This was sad. I liked the Microsoft Media Extender idea. An inexpensive device would allow your Media Center device to ship music, pictures and video to another TV elsewhere on your home network. Today few owners know or care that their Xbox 360 can be used as a Media Extender.

In another attempt to bring media to the TV we have the stand alone media player. There have been numerous devices in this space. The Tvix devices were the first I ran into. Later there were devices from Netgear and finally Apple. Today Apple TV is the best know device but also one of the most limited in functionality. For all of the myriad devices out there, nothing has really taken off. Yeah, Apple sells a lot of Apple TV devices but the numbers pale compared to iPad sales. Yet, there must be something there. People keep trying to get it right.

A related group of devices is the network enabled DVD player. Many of the newer DVD players can stream Netflix and YouTube. This is an easy way for someone to get some media connectivity. Hey, you were going to buy that Blu-Ray player anyway. You might as well be able to stream Netflix. Just click here to check out a nice Pioneer model.

The next group of devices are the network enabled game systems. Netflix is a major item on all of them. The PS3, Xbox 360 and Wii are all Netflix enabled. For a lot of people this is their first and easiest introduction to media streaming. Some like the the PS3 are much more capable than others such as the Wii. Currently I use a PS3 to play movies off of a central file server. The limitation is that I only have one PS3 so I can only stream to one TV.

There is still yet another group. This is the group of network enabled TV’s. Here the TV is connected directly to the network and is able to go on the web or view content off of a file server without an external device. Examples include Viera Connect and Bravia Internet Video. A problem with these devices is that the TV update cycle is very long. Unlike smartphones, people don’t update their TV’s every two to four years. It’s one thing to buy a new $99 Apple TV and quite another to upgrade a $3,000 big screen TV. Still, I suspect this is the winning approach. People want fewer boxes. Convergence says people want devices to merge. Just like the amp, preamp and tuner merged to make the stereo receiver the dominant form factor so I think the game system, media player and TV will merge. In addition, they want connectivity on every TV and not just the big one in the living room. This process will be slowed by several hurdles. Some TV manufacturers, including Panasonic, are going their own way. This will limit the size of their application ecosystem. Those going with Google TV will run into fragmentation as Google has trouble bringing new features to new hardware without making older systems orphans. Apple will want to be controlling. Yeah, what else is new. They will offer TV’s but that means the ever present Apple tax i.e.high prices. They will also face the issue of rapid obsolescence. I have a solution to Apple’s problem but I doubt they will listen to me. Apple should define a small form factor card that holds the Apple TV and allows it to be embedded in the TV and upgraded later. You would buy your LG large screen TV branded with “Apple TV inside!” and upgrade the card for $99 every two or three years. That would keep your experience fresh. It would preserve that unique ability Apple has to make Apple fanboys feel anything older than two years needs to be thrown out after a trip to the Apple store.

A good friend disagrees with me when it comes to the media box getting consumed by the TV. He owns two Apple TV devices. He says they are small and cheap. He feels the difference in the upgrade cycles will keep the devices separate. We’ll see. What do you think?