Apple today updated its online store and issued a press release around a new 9.7″ iPad, confirming a change in strategy which seemed apparent when the 9.7″ iPad Pro launched but wasn’t made explicit until now. The new iPad drops the Air branding, and offers specs a year or two behind the iPad Pro line, while reducing the price to the lowest in Apple’s iPad lineup, at $329 (the only iPad mini available now is the 128GB model, which starts at $399, meaning that for the first time it’s cheaper to buy the new 9.7″ iPad than the newest iPad mini). What we have now, then, is a clear bifurcation between the iPad Pro, which is the latest and greatest with high-end specs, new features, and accessories like Pencil and the Smart Keyboard, and the more basic and low-end iPad. The iPad Pro is therefore not just the iPad for people who want to replace their laptop, but also the best iPad for everyone else. The iPad, then, becomes the low-cost alternative, the one for people with simpler needs, for giving to kids, and so on. That’s going to do interesting things to average selling prices, which had gone up slightly with the launch of the iPad Pro line and will now come down, but also to Apple’s competitiveness in a price band where it really hasn’t played before, expanding its addressable market. This new iPad is effectively the equivalent of the iPhone SE, taking older innards and wrapping them in new branding to bring the price down to a new level, and I suspect that – like the iPhone SE – it will indeed bring the device to new people. However, I suspect it’ll take quite a bit more share of the overall market than the SE has in iPhones.
Facebook’s Building 8 working on camera, augmented reality, mind reading projects – Business Insider (Mar 20, 2017)
This is an interesting roundup of signals about what Facebook is working on in its advanced hardware projects group, which is named Building 8. The most interesting part of the article in some ways is that Facebook might show off some of this stuff at its F8 developer conference next month, which I’ll be attending. The whole point of a division like this, though, is to try to do hard things, which means many of their efforts will fail, and ultimately even many of those which succeed might not be built by Facebook. Though Facebook does now have an explicit hardware product arm in Oculus, it just doesn’t strike me as a company well placed to make a big hardware push, so I’d expect a lot of what this group develops to be proofs of concept and prototypes, with the technology open sourced, spun off, or otherwise made available to other organizations to build and market. There will be some exceptions that end up being built into things like Oculus, but I suspect – as with Google’s similar ATAP group – we won’t see many actual Facebook hardware products come out of Building 8.
via Business Insider
Nintendo to Double Production of Switch Console – WSJ (Mar 17, 2017)
Another sign that the Switch is a hit, despite some fairly mixed initial reviews: Nintendo is reportedly doubling its production run for the console from eight to sixteen million, which would put it on pace to match the initial sales of the Wii, and well ahead of Wii U sales. It should also help prompt more game makers to produce titles for the console, which is a good thing since lack of games was one of the big criticisms at launch. That will, of course, take time, so it’s not an instant fix by any means, but it looks like Nintendo finally has another hardware hit on its hands after a tough few years. Alongside a long-awaited push into mobile gaming, that could mean a good period of growth for Nintendo is coming, assuming they learn the lessons from their Super Mario Run launch.
There are several interesting elements here – a cheaper Nest thermostat, a thermostat with the power to control the temperature in individual rooms, and a home security system. Bringing the price down could certainly help drive adoption – $250 is a little steep for a single thermostat, but it really adds up when you have several (as we do in our home). Of course, one of the reasons why you might have several Nests installed is to control the temperature in different rooms more effectively – we have a number of different zones for just this reason, and no smart thermostat I’ve seen can manage more than one zone at once. Of course, this might also require a professional HVAC technician to create some new zones in your home – I can’t imagine how it would work without those changes. However, all that said, I think the security system is potentially the most interesting thing here, because it opens the door to the kind of service model I think is key to the future of the smart home (see the narrative attached to this post). When Nest’s new CEO was installed, I pointed out that he comes from a services background and would be an appropriate leader to drive a transition from a retail model to a services model – I’m very curious to see if we see a move in this direction when this hardware launches. That could drive much stronger growth in Nest’s business, but it would likely be heavily reliant on partnerships, which is the other important part of such a shift.
It’s almost certainly not a coincidence that not one but two rumors about Snap working on additional hardware have sprouted the week of its IPO, both apparently well sourced yet conveniently vague on whether a product will actually ever be launched. This is good hype fodder for an IPO with some serious question marks over it, and yet non-specific enough that the company can afford never to release either of these two products (the Times reports a drone, while TechCrunch discusses a 360 degree camera). None of this is to say that Snap – which now calls itself a camera company and has one piece of camera hardware already in Spectacles – won’t release more camera hardware in future. In fact, I’d say it seems very likely. But when it happens, we’ll see whether that’s actually a bet that ends up moving the needle or just ends up being a novelty as Spectacles seem to have been. I’m still not convinced that Snap will ever be able to make a serious business out of hardware, its marketing genius notwithstanding.
HTC is making several announcements at the GDC gaming conference, but to my mind the most interesting is its installment plan for paying for a Vive headset. Instead of paying a lump sump of $799, would-be buyers can now pay $66 per month for 12 months, much as many of us now pay for our phones. One of the criticisms (and limitations) of early high-end VR is the price, but of course an iPhone 7 Plus or Samsung S7 Edge or Pixel XL comes in at $750-770, and we don’t all balk at that price, because none of us pays it upfront. Installment plans make these purchases a lot more palatable, and that’s going to be important for reducing the barriers to adoption here. That doesn’t mean we’re all going to rush out and buy one of these, not least because it still requires a high-end PC as well, but this kind of small step will help accelerate the spread of VR just a little bit.
Samsung is doing its flagship smartphone reveal a month from now in New York, so it’s focused on other things at MWC. I already covered its VR headset update, but another announcement involved a couple of new Windows tablets. As is so often the case with these trade show announcements, specific prices haven’t been announced, but these are on the ultraportable side of the PC range, looking a lot like some of Samsung’s Android tablets but with Windows onboard instead, and with detachable keyboards. This definitely feels like the hottest segment of the PC/tablet market at the moment, with Microsoft’s own Surface, lots of alternatives from OEMs, and of course Apple’s iPad Pro coming at this from a different angle.
Huawei Watch 2 and Watch 2 Classic officially unveiled at MWC 2017 – AndroidAuthority (Feb 27, 2017)
These two watches are somewhat reminiscent of the LG smartwatches that debuted with Android Wear 2.0 a few weeks back – there are again two, with somewhat different form factors, but this time the feature set is more consistent across them, as is the price. That price, though, is fairly steep – in line with the low end of Apple’s Watch price range, which continues to be a tough place to be when your watches look very much like the smartwatches they are rather than nice pieces of smart jewelry. Huawei definitely has the scale to do some interesting things in watches if it chooses to, but I can’t see these new models selling in very large numbers at these prices.
HMD Launches New Nokia Phones – Wired (Feb 27, 2017)
Quick explainer for those that haven’t followed the saga of Nokia over recent years: Microsoft bought Nokia’s Devices and Services business, including the smartphone and feature phone businesses, a few years back, along with exclusive use of the Nokia brand in these markets for several years. That exclusivity has now expired, and Microsoft last year sold the rump of the feature phone business to a new Finnish entity called HMD Global, which now has the rights to manufacture phones under the Nokia brand. The original owner of the Nokia brand and devices business, which now mostly makes telecoms network gear, has essentially nothing to do with these new phones. The MWC announcement actually covered three smartphones, the Nokia 3, 5, and 6, but almost all the attention has been on its resurrection of the extremely popular candy bar feature phone from 17 years ago, the Nokia 3110. It’s fascinating to see both the BlackBerry and Nokia brands get reboots at MWC from new companies – both were once key players in the global industry but have fallen enormously from those heights, and are probably past the point where a meaningful resurrection is possible, considerable nostalgia notwithstanding.
Fitbit Reports Final Q4 2016 Earnings (Feb 22, 2017)
I covered Fitbit’s preliminary earnings release a little while back, and we already knew these results weren’t going to be pretty. This was the first quarter of year on year declines, and also featured the company’s first meaningful losses since 2013, when it recalled its Force device. Its costs, especially its sales and marketing costs, rose considerably as a percentage of revenue, and its cost of revenue in particular was well up on last year’s despite the much lower revenue. As I said a few weeks ago, though Fitbit is downplaying these results as a temporary setback and promising a recovery, I see little evidence to support that assertion. Interestingly, some of the metrics Fitbit only provides once a year around user numbers suggest that it’s sold relatively few second devices to the same users – its registered user number is over 80% of its total number of cumulative devices sold, suggesting under 20% were sold as second devices to the same users; in addition, its active user number is now under half its total registered user number, suggesting an over 50% abandonment rate. Those two combined, together with the relatively small addressable market for dedicated fitness devices, are why Fitbit is having such trouble.
via Fitbit (PDF)
I always figured Snap would put Spectacles on sale online eventually – its bot-based model was great for creating intrigue and interest early on, but clearly wasn’t great for making the glasses available to everyone who wanted them. Now that the initial excitement has long since worn off, selling whatever remaining inventory online makes sense, though I’d argue they should have started this new phase much earlier, towards the end of last year. The initial hype didn’t seem to last that long, and the New York City store had long since stopped having a regular stream of customers.
Magic Leap engineers scramble to finish prototype ahead of February board meeting – Business Insider (Feb 8, 2017)
This and the earlier reporting from the Information and others on Magic Leap have been so powerful precisely because the company combines secrecy and slightly outlandish claims about its future products, which just begs reporters to investigate and dig up this kind of dirt. Magic Leap has almost zero control over its narrative because it refuses to provide any concrete evidence to the broader world about the progress it’s making on its product, while evidence is mounting on the other side that the product is nowhere near ready. The same phenomenon can affect established companies too in areas where there’s widespread reporting about future business the company itself hasn’t commented on – see Apple’s car-centric Project Titan. In the case of Magic Leap, there are quite a few people who say they’ve seen a live demo which was impressive, but one of the key questions continues to be whether the company can deliver that experience in the form factor it claims to be working on, and this story casts some doubt on that idea. I’m not sure there’s any way for Magic Leap to turn the narrative around here unless it starts opening up significantly, something it seems unlikely to do.
via Business Insider
Another chapter in the bizarre saga of Google’s various voice and assistant technologies. Now was Google’s proactive non-voice assistant play for years, while Google Voice Search handled the voice aspects. With the launch of the Google Assistant, it was logical to assume that it would displace this combination, and yet its still not clear whether that will actually happen. Google is discontinuing the Google Now Launcher as part of the GMS bundle OEMs use to pre-package various Google apps and services, but isn’t replacing it with an Assistant-based launcher, and gives OEMs the option of not replacing it with anything within their own launchers. So, Now dies as part of GMS (and in the Google Play Store) but there’s no official communication still about when Assistant might be made available broadly to OEMs. Google’s decision to make the Assistant exclusive to the Pixel at launch was a massive strategic shift, and has arguably cost them significantly in the voice platform race against Amazon, and it continues to provide very little clarity on its future as part of Android for OEMs.
via Android Police
Sony Reports Results for December 2016 Quarter (Feb 2, 2017)
Sony’s been such an interesting company to watch over recent years, because almost every aspect of its hardware business has been challenged, and it’s even exited some, like PCs. However, it’s had something of a renaissance in the gaming space, with the Playstation outperforming the Xbox in the current cycle, and actually growing year on year in the December quarter. The other interesting hardware business to watch at Sony its smartphones, because it’s taken a unique approach for an Android vendor, which appears to be paying off. That approach has involved focusing the smartphone business on the premium segment, resulting in a smaller but more profitable business. Sony’s smartphone shipments have dropped by about half from 2015 to 2016, but its margin rose to over 8% in Q4, well above the low single digit or negative margins most consumer electronics businesses generate. There’s an interesting signal here for other Android vendors about what it could take to find success, though there probably isn’t room for more than one or two vendors pursuing this premium strategy.
via Sony (PDF)
Chalk another one up to either the Hardware is Hard or Android is Hard narratives (I’ve tagged this against both). Another Kickstarter-backed hardware company which had an intriguing approach to an established category and got lots of interest from tech bloggers and reporters calls it quits and gets bought by a bigger existing hardware player. I was always skeptical on Nextbit – it just didn’t feel like its few unique features and design were enough to overcome the massive barriers to entry that exist around scale, distribution, and dominant existing players in the Android market. I can’t say I’m surprised to see it fail, though it’s disappointing because the team had some interesting ideas and the design was definitely more interesting than your average phone. Razer seems an unlikely buyer – this Recode piece says the group the Robin team is going to has been focused on gaming, so it doesn’t sound like we’re going to get a Razer phone from these guys anytime soon.
Source: Google’s Pixel 2 to feature improved camera, CPU, higher price, but ‘budget’ Pixel also in works | 9to5Google (Jan 26, 2017)
Lots of interesting stuff in here, but of course none of it certain to pan out in the actual product. To my mind one of the most interesting aspects is that the price of the Pixel 2 is expected to be $50 higher than the first-generation Pixel, which was already priced at premium levels – that part doesn’t ring quite true to me, unless it’s an Apple-like creation of an additional tier above the standard ones. Pricing its only phone higher than the base iPhone model would unnecessarily limit the market, and that seems unlikely. The camera focus makes sense – the first version majored on the camera and the Assistant differentiator should have been eroded relative to other Android devices by then, so hardware features will be important. The budget version is also interesting in the context of the recent reports about Google bringing Android One to the US – it certainly wouldn’t be unprecedented for two parts of Google to be working on essentially the same problem in different ways, but the hardware strategy there has been more joined up lately. The other thing to note is the details about chips, as Google is apparently testing both Samsung and Intel components as well as something it’s built itself. There have been repeated rumors about Google building ARM-based servers, and it’s possible that it’s also experimenting with its own ARM-based chips for smartphones too, though this would be a massive multi-year effort, especially tough without an acquisition of significant existing skills a la Apple/PA Semi.
Snapchat NYC Spectacles store is mostly empty – CNBC (Jan 26, 2017)
Snap’s foray into hardware coincided with its new company name, and the marketing strategy for the Spectacles was genius – very short supply combined with a sales model that made availability even narrow by focusing it on single vending machines that moved around, combined with a single permanent store in New York City. However, it’s becoming apparent now (if it wasn’t obvious from the start) that Spectacles aren’t going to be massive sellers. Yes, hundreds of people lined up early on to buy them, but the crowds have now disappeared. I’m somewhat surprised Snap hasn’t put Spectacles up for sale anywhere else yet – it’s still basically impossible to buy a brand new pair at list price unless you live in or visit NYC or happen to be in one of the other places where the moving machines have turned up. That suggests, though, that this move into hardware was more experimental than strategic, and raises the question of whether we’ll see more of this from Snap in future. There’s certainly potential for some interesting new functionality around AR in future versions, but there are few indications at this point that Snap has any big plans.
I’ve spoken to Jeff Moore, the head of Wave7 Research, multiple times, and he’s very good at what he does, so I trust these numbers in general terms. As usual with supply shortages, there’s the question of whether the crunch is coming on the demand or supply side – in this case, it seems likely that Google was simply very cautious in its planning here and has an unexpected hit on its hands with demand it now can’t quickly fulfill. I like Google’s new hardware – both the Pixel and Home are good devices that do their jobs well, and the Daydream is also a much more user friendly version of the mobile VR concept than the Samsung Gear VR, so I expect these products to do well, though the Pixel in particular will be hamstrung by not just these supply shortages but its lack of carrier distribution beyond Verizon. Look for signs of strong sales in Alphabet’s earnings soon too.
Andy Rubin, the creator of Android and its leader at Google for many years, is now apparently about to get back into the smartphone business, or more accurately into the ecosystem business, with a smartphone and potentially several other devices fleshing out the portfolio. On the one hand, this makes sense – few people want to buy just a phone anymore – they want to know that it comes with services and potentially other devices which will increase its value. On the other hand, creating such an ecosystem from scratch is incredibly tough and costly, as we’ve seen with LeEco recently too, so the prospects for success when trying to get there in one big leap are slim. The other big question about all of this, of course, is which operating system the Essential phone will run…
Apple in 2016: The Six Colors report card – Six Colors (Jan 12, 2017)
This Six Colors survey of Apple observers is an interesting exercise, because although this is a crowd that’s mostly made up of Apple fans, most are unafraid of speaking their minds and being critical where warranted (a complete listing along with a link to their verbatim comments is at the bottom of the post). The Mac was the area where Apple was hardest hit in this report card, understandably given the mounting frustration over the lack of new desktops, but I found the criticism on the Apple TV side less warranted – it got decent software upgrades, and the few gaps in video content have been filled, though admittedly it’s ever clearer that it won’t be an important gaming platform. It’s well worth reading the whole thing, because it’s a mostly honest evaluation of the tough year Apple had in 2016, with quite a bit of detail from some of the people who follow the company most closely. The big question for Apple is how it balances the need to please this vocal but arguably unrepresentative audience with its massive base of mainstream users – in 2016 it clearly served the latter more than the former, and got hit hard for it.