On Connectivity

The following was published in Dealerscope in November 2007:

The first International CES debuted 41 years ago. Since then technology has made great strides, introducing a plethora of innovative products that not even George Orwell could have predicted. The 1970s were the information decade. The average household owned just 1.3 technology devices, and consumer technologies were largely used to receive information. Families gathered around a television or radio at a set time for the latest news and entertainment.

The 1980s introduced the productivity decade. The technology industry unveiled the mobile phone and the personal digital assistant (PDA). The fax machine took off and software began leveraging the awesome power of the personal computer.

My Favorite Things: Hong Kong

Hong Kong from the Peak

Earlier this month I was in Hong Kong for a few days.  Hong Kong is one of those classically fabulous international cities. Here are a few of my favorite things from past trips:

Taxi ride from the airport: The second I arrive at HKG I look forward to descending the ramp to the taxi stands. The red cabs signaling Hong Kong Island, the green for Kawloon and the new territories and the blue for Lantau are the first signs that you are in Hong Kong.

Custom tailors: I had my first custom suit made in Hong Kong on my first trip to the city.  Everyone should have a Hong Kong tailor and you really can’t come to Hong Kong without leaving with custom clothing.…

Evolutionary Currents: Adding Context to the Nook Color Upgrade

This week Barnes & Noble upgraded the software running on their Nook Color e-reader tablets. Users can now access apps, have email pushed to the device and watch flash videos.

There are a variety of reviews on the web (see: here, here, and here) discussing the anticipated update so here I’ll take a differ tack and discuss two things: what we learn about the evolution of technology in the Nook and what it means for adjacent categories like tablet computers (as opposed to tablet e-readers).

While their initial foray into personal electronics with the original nook might have been more than just an experiment, B&N moved relatively quickly onto the Nook Color. The original Nook was launched in November 2009 and while it was largely sold out during that introductory holiday season, there was likely very little opening stock available. By June 2010 the price had been cut consistent with pricing cuts across the entire e-reader category. Within a year of the initial Nook launch, B&N had a higher-end, full color screen e-ereader tablet and the Nook line collectively was “the company’s biggest bestseller ever in its nearly 40-year history.”

Retail Trends to Watch

The following was published in Dealerscope Magazine in December 2010:

The last three years have been a volatile period in the history of consumer electronics. While a recovery is slowly taking shape, I believe the next few years will offer as much change as the in the last year or so. Here are a few trends worth watching:

Store-within-a-Store Model Expands
In the late 1990s, Apple’s presence within major retailers began to change, ultimately transforming into the now familiar store-within-a-store model. This gradual transformation pulled Apple products together within the store. Instead of merchandizing Apple products within the category where the products would sit next to similar devices, Apple products were increasingly merchandized next to other Apple products. The retail presence for Apple changed from an existence within categories to one of brand. As the Apple ecosystem of products expanded, so too did Apple’s store-within-a-store presence.    While this trend has yet to catch-on widely within the U.S., it is starting to emerge outside of the U.S. for other brands. We’ll see this trend accelerate in the U.S. and beyond.

To create a 360-degree experience (a combination of hardware, software and ecosystem) for consumers, companies are highlighting how the interoperability of their different devices can provide a seamless experience for the end-user. The store-within-a-store model is also expanding slowly as the more traditional categorical view recedes. When devices move away from conventional category definitions, brand becomes the natural organizational default.

Estimating iPad Second Quarter Unit Sales

Through the first three quarters of iPad availability, Apple sold 3.4 million, 4.3 million, and 7.33 million iPads respectively for a total of 15.03 million units through the first nine months.   The estimates for Apple’s second quarter iPad sales are all over the board.  For example, JP Morgan is expecting 5.3 million, RBC Capital is expecting 7 million, some are calling for something comparable to the 7.3 million sold last quarter, and Credit Suisse is estimating 7.84 million for the quarter.  Estimates of 13 analysts compiled by Bloomberg averaged 6.1 million units for the quarter.

My personal forecast of around 4 million for the quarter – made in December 2010 – is clearly on the low side.  At the time I expected a quarter-to-quarter sequential decline because the first calendar quarter is seasonally weak and that trend has been more pronounced in recent years.  More, I expected a new iPad launch that would slow gen one unit sales while at the same time production shortages would limit sales of gen two unit sales. 

Apple’s AirPlay Remains the Sleeper Hit for 2011

Back in January I wrote that Apple’s AirPlay would drive a renaissance for audio.  Networked audio solutions have been building slowly to a crescendo I believe plays out over the next 24 months.  Of course companies like Sonos and Logitech with their Squeezebox suite of devices left important early footprints while defining the market for networked audio solutions.  Several years ago I spoke with the guys at BridgeCo (who’s  JukeBlox Connectivity platform now enables Apple AirPlay) and could see the potential of network audio solutions.

Today several pieces have come together to make 2011 the year I expect to see networked audio move into the mainstream.  First, television sales are declining which will free dollars that can be spent on other tech categories (like audio). This development started in 2010 and will continue for at-least the next 4 years. At the same time consumers are maintaining their historically high levels of spending on technology relative to other durable goods. After spending a decade plus updating and upgrading video in their homes, consumers are starting to look at audio – something I’ve expected to see for the past several years, but is now just materializing. More, the strong growth in portable products like tablets and smartphones is creating the network effects that will ultimately power this ecosystem.

10 Themes for 2011

10 predictions for 2011 published in the January edition of CE Vision.  You can see the entire issue here.

1)      The unemployment rate will end 2011 close to where it is today

During the muted economic recovery many metrics and measures have significantly underperformed past economic recoveries despite the fact that the significant depth of the 2008–2009 recession should have been followed by a steeper recovery. The rate of unemployment is one of the most noteworthy of these underperforming metrics. While the economy will begin to more fully recover in 2011, the unemployment rate will not.

on Kindle Pricing Part II

Last week I provided an estimate of the implied revenue Amazon expects to earn in advertising from the newly discounted Kindle with Special Offers. I happened to catch MG Siegler’s post on TechCrunch on the same topic.  Siegler takes an approach I heard frequently immediately following the announcement, namely that $25 isn’t a strong enough discount.  Amazon should have been more aggressive and marked the device down to $99 – then we’d be talkin’.

I agree with Siegler that this is part of a broader pricing experiment for Amazon.  Amazon loves to experiment with pricing (among other things) and by so doing they can more accurately estimate demand elasticity (among other things). Thus, the recent price cut could have simply been an info gathering exercise. On the other hand, Amazon has on several previous occasions cut the Kindle price so I imagine they have a good handle on the shape of the demand curve as well as demand for ebooks (additional books sold) as a result of additional devices moving into circulation. As I wrote, Amazon could have arbitrarily picked $25 – it is after-all a very round number.  In this spirit, I don’t agree with Siegler where he suggests Amazon “must have looked over the potential numbers from advertising and determined that $114 was as low as they could go.” They could have gone lower, but opted not to. And I don’t think that decision was heavily influenced by per unit revenue loss rates.