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Cloudy visions…

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You don’t have to have studied computer science to realise that the way we now use our computing devices is fundamentally shifting.  As a result of these widespread behavioural changes some of today’s technology giants will flourish and others will have to adapt or rapidly whither and decline.  Unless you happen to invest in technology stock you may not be interested in which companies will become the winners and which will be the losers.  Yet you should be concerned, because those that flourish will shape the software capabilities and probably determine the kind of devices you will be using for the rest of your life.  We’ve seen the extraordinary struggles following every transition to the next computing-age and history shows that there will probably be few victors this time, so which companies will win through in the greatest computer game of all?  It’s a difficult call because every time the landscape shifts things are never repeated in quite the same way.  And, of course, all the players start from unique positions with different resources and contexts, and they play their cards with varying levels of skill.  And some are undoubtedly luckier than others… It might surprise you that one key indicator which may affect the situation this time is the computing device you used when you were at school.  Depending on your age you will probably remember the point at which you joined the computer era by the hardware you first used.  Was it mainframe, mini-computer, personal computer (desktop and then laptop), smartphone or tablet computer?  IBM ruled the mainframe era; Digital Equipment (DEC) controlled the mini-computer era; and the desktop and laptop era was dominated by two companies – Intel and Microsoft.  I bet that whatever you used at school will be influencing you now.  Read on and see how important this can be. At the moment the kings of the smartphone and tablet era appear to be ARM, Apple and Google, while Intel and Microsoft are hangers-on from the past but so far failing to have much relevance.  As I wrote in February, because of the flexible screen technology that could arrive next year, but is more certain the year after, we will probably see the more expensive smartphones merge into fully functioning tablets.  Looking at the chart above, based on U.S. data, we seem to have passed the peak of tablet use. Over the last two years more people were likely to reach for their smartphone to access the Internet than any other device.  This data comes from Adobe, whose web analytics software measured 1.7 trillion visits to 16,000 websites during January 2014 through to January 2017, and 130 billion app launches during the same period.  Using such a large amount of people’s aggregated Internet behaviour is an ideal method to spot shifting trends.  And this big data clearly shows a downward trend in tablet use since 2014.  Drilling down further into the Adobe’s global data it becomes obvious that the sales of tablet computers only ever really took-off in the richer developed countries. They’re a commodity that only the affluent could afford.  This is the reason behind the current deep discounting of tablets in many countries.  In poorer places the preference is for a smartphone and or a laptop computer because these are perceived as much more useful than a tablet.  Tablets are considered as a luxury, a less capable device to be primarily used for entertainment. But even in affluent countries like the U.S. sales of tablets are not showing any signs of growth.  In the last American holiday season average discounts on tablets reached 25% but tablet sales and their usage still remain flat.  And the Adobe data shows this pattern was repeated globally, with no country seeing an increase in tablet usage.  Apple may well be the most profitable of the tablet manufacturers, (its tablets are also the most expensive to buy), but it saw its iPad sales peak in 2013, and sales are now roughly half what they were.  At the lower cost end of the tablet market Amazon is selling its new 8-inch display Fire HD for £89.99 - which includes 30 days of Prime free deliveries and movies.  At this level, profit for the manufacturer is either miniscule or non-existent.  For some tablet manufacturers the double whammy of a shrinking market and declining prices has not just meant a loss of profits but overall losses as well.  This is why you will see very few new tablet devices in future, and those that you do spot will have keyboards that detach (like Microsoft’s Surface Pro) as well as having pen input.  In short, tablet designs will morph to become more like clamshell laptops with detachable keyboards, and so double as much more functional but smaller laptop computers. All over the globe, people are addicted to their smartphones yet when it comes to real work like using a spreadsheet or word processor the preferred form factor still seems to be an ultra-slim laptop of conventional clamshell design.  For many people the high-end versions of these devices are too expensive, costing well in excess of £1,000, and when lower-priced slim-laptops, like the Asus ZenBook UX330UA, appear in shops or online they sell out quickly.  You can see these conventional but thinner laptops in action being used by journalists at any press launch of a tech product – very few, if any, tablets are being used.  Tech-journalists set the “money no object” trends because they can often get the latest devices for free or at heavily discounted prices, but naturally they use whatever form factor is best suited for their task.  Still at the lower-priced end of the market the same clamshell design is just as successful with thin Chromebook laptops, these link into Google’s cloud online, for additional processing and storage.  Back to school!  For the last 30 years Apple computer devices have dominated the education market, primarily because they were discounted and although, despite the discounts, they were still expensive, they were widely perceived as easier to use.  That situation no longer prevails in America.  The popularity of the even simpler to use, easy to maintain, more secure and much cheaper to buy Chromebooks have taken Apple by surprise.  In 2013 Chromebooks had a 1% share of the K-12 market (children from four years old through to 19 years old).  But last year Apple was shocked as Chromebooks leapt up to take a 51% market share at the entry level end of the market.  That this has happened so quickly, in just three years, has really upset the Apple cart.  Its future sales are predicated on getting children locked into using Apple computers and Apple software.  Yet right now a large cohort of American children are happily becoming familiar with using Google’s cloud and Google’s software.  They have no need or desire to lock into Apple for premium priced computer devices.  Ominously for Apple, when these children eventually leave school they will be so tied into Google’s cloud they will naturally want to buy Android smartphones which use the same apps and services as their Chromebooks, not Apple iPhones.  If this trend gets repeated in other countries it will eventually affect Apple’s sales as, obviously, the software that people are used to using is always the easiest to use.  So in the long term it looks as if Google will clearly be one of the winners in cloud computing, especially now that Android apps will soon work on the latest Chromebooks.  I wrote about the rising popularity of Chromebooks and low cost laptop computers back in October 2014, and many of the issues I noted then still apply. There was a very close relationship between Intel and Microsoft throughout the desktop and laptop era, as computing spread into ubiquitous use.  Intel produced the microprocessors that powered all the millions of computers running Microsoft Windows.  Although “Wintel” as this software/hardware partnership became known, is still a close relationship, it is no longer an exclusive one.  Microsoft really stumbled badly when, like Intel, they misunderstood how important mobile technology was going to become.  In hindsight, this left what was to become the most important market for consumer hardware and software vendors, wide open for ARM designed microprocessors which use miniscule amounts of power.  At the time this was all happening I wrote several articles showing how the two giants of the computing world completely overlooked the way the world was changing beneath their noses.  Both companies are still trying to recover.  Intel has given up competing with ARM for mobile devices and is, instead, focussing its resources on connected devices in the home and computing for automobiles.  As for Microsoft, it actually took a change of Chief Executive to pivot the company towards the new world order in computing.  When the new CEO, Satya Nadella, a usually verbose and convoluted speaker took over, he defined Microsoft’s new strategy as: “mobile first, cloud first.”  Perhaps he could have said that he was going to try to make Microsoft more like Google.  Judging Nadella’s progress three years on, we can see Microsoft’s cloud (something that was an already established product) has been improved to meet the needs of corporate clients, and Microsoft has now almost managed to close the gap between itself and the market leader in cloud computing: Amazon.  The score to date in terms of corporate cloud market share is Microsoft’s 28.4%. to Amazon’s 37.1%.  The advertising company, Google, still leads in terms of cloud technology and data centres as it continues to concentrate on consumer rather than corporate cloud computing.  So in terms of Nadella’s twin strategy his “cloud first” moves have been reasonably successful and he’s increased revenue and made up some of the ground that had been lost to Amazon.  But it is his “mobile first” side of things that has proved more difficult because virtually all mobile smartphones run on ARM microprocessors – a platform that Microsoft Windows doesn’t support.  This major weakness has been a problem for some time.  Microsoft’s past attempt at using ARM processors was the Surface RT, an expensive failure that I wrote about back in September 2013, something that cost Microsoft a $900 million write down of unsold stock. It invariably takes several iterations of software or hardware before Microsoft gets anywhere near a good solution.  This is the obvious result of the fragmented way that the company insists on developing its products:  It focusses on development rather than concentrating on making the task that the product is designed for much easier to complete.  With that in mind, it’s no surprise that Microsoft is now having another go at getting Windows to run on ARM microprocessors.  (In fact if Windows software wasn’t running on ARM processors, Microsoft wouldn’t have any mobile presence at all.)  This time Microsoft is working closely with Qualcomm to emulate 32bit Windows running on a 64bit ARM processor.  So far things look very promising (you can see a demo here) and products using this technology should be on the market around the end of 2017, or possibly early Spring 2018 if there are delays.  The project’s success will depend on how fast the emulation performs.  Of course the real solution would be a native port of 64bit Windows running on 64bit ARM processors but we are unlikely to see this because of the time and resources that would be involved.  But it’s certain that amongst computer products next year we will see low cost, clamshell, laptop designs running Windows on ARM microprocessors that will have a much better battery life than more expensive Intel processors, and they’ll connect to cellular networks as well as WiFi. For Microsoft’s Nadella it was absolutely essential to have a mobile strategy, and he must now be aware that according to Statcounter, Android running on ARM processors has just overtaken Windows as the most used operating system to access the Internet globally.  Microsoft has now made the internal decision to run around half of the servers in its data centres using ARM servers.  This will not only save power, it will also give Microsoft engineers the experience of working with a different microprocessor design.  And they rapidly need to get their heads round that one.  In the meantime, to compete with Chromebooks, and hopefully to win over the hearts and minds of the next generation of computer users, Microsoft has produced a version of Windows that will run in their Cloud.  It’s been especially designed for schools, but who knows if it’s easy to use and maintain?  And will Microsoft be able to sell its clamshell laptops as cheaply as Google’s Chromebooks?  Google was always a cloud first company and when it created Android it quickly became the dominant mobile platform - long before Microsoft made any moves in this direction.  Windows isn’t going away anytime soon, but Microsoft is having to adjust to no longer being top dog and my bet is that more and more school children will experience Chromebooks as their first introduction to computing.  Although, paradoxically, they will probably have to learn to use Microsoft Windows when they get their first job, if not before.  Ironically, Microsoft’s Cloud version of Windows for schools, called Windows 10S, has one unique advantage that is a hangover from it’s past, it can also store files on the computer being used and doesn’t have to do everything “cloud first.”  So, place your bets and hang on tight. I reckon it’s going to be a fascinating contest. May 2017 
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You don’t have to have studied computer science to realise that the way we now use our computing devices is fundamentally shifting.  As a result of these widespread behavioural changes some of today’s technology giants will flourish and others will have to adapt or rapidly whither and decline.  Unless you happen to invest in technology stock you may not be interested in which companies will become the winners and which will be the losers.  Yet you should be concerned, because those that flourish will shape the software capabilities and probably determine the kind of devices you will be using for the rest of your life.  We’ve seen the extraordinary struggles following every transition to the next computing-age and history shows that there will probably be few victors this time, so which companies will win through in the greatest computer game of all?  It’s a difficult call because every time the landscape shifts things are never repeated in quite the same way.  And, of course, all the players start from unique positions with different resources and contexts, and they play their cards with varying levels of skill.  And some are undoubtedly luckier than others… It might surprise you that one key indicator which may affect the situation this time is the computing device you used when you were at school.  Depending on your age you will probably remember the point at which you joined the computer era by the hardware you first used.  Was it mainframe, mini-computer, personal computer (desktop and then laptop), smartphone or tablet computer?  IBM ruled the mainframe era; Digital Equipment (DEC) controlled the mini-computer era; and the desktop and laptop era was dominated by two companies – Intel and Microsoft.  I bet that whatever you used at school will be influencing you now.  Read on and see how important this can be. At the moment the kings of the smartphone and tablet era appear to be ARM, Apple and Google, while Intel and Microsoft are hangers- on from the past but so far failing to have much relevance.  As I wrote in February, because of the flexible screen technology that could arrive next year, but is more certain the year after, we will probably see the more expensive smartphones merge into fully functioning tablets.  Looking at the chart above, based on U.S. data, we seem to have passed the peak of tablet use. Over the last two years more people were likely to reach for their smartphone to access the Internet than any other device.  This data comes from Adobe, whose web analytics software measured 1.7 trillion visits to 16,000 websites during January 2014 through to January 2017, and 130 billion app launches during the same period.  Using such a large amount of people’s aggregated Internet behaviour is an ideal method to spot shifting trends.  And this big data clearly shows a downward trend in tablet use since 2014.  Drilling down further into the Adobe’s global data it becomes obvious that the sales of tablet computers only ever really took-off in the richer developed countries. They’re a commodity that only the affluent could afford.  This is the reason behind the current deep discounting of tablets in many countries.  In poorer places the preference is for a smartphone and or a laptop computer because these are perceived as much more useful than a tablet.  Tablets are considered as a luxury, a less capable device to be primarily used for entertainment. But even in affluent countries like the U.S. sales of tablets are not showing any signs of growth.  In the last American holiday season average discounts on tablets reached 25% but tablet sales and their usage still remain flat.  And the Adobe data shows this pattern was repeated globally, with no country seeing an increase in tablet usage.  Apple may well be the most profitable of the tablet manufacturers, (its tablets are also the most expensive to buy), but it saw its iPad sales peak in 2013, and sales are now roughly half what they were.  At the lower cost end of the tablet market Amazon is selling its new 8-inch display Fire HD for £89.99 - which includes 30 days of Prime free deliveries and movies.  At this level, profit for the manufacturer is either miniscule or non-existent.  For some tablet manufacturers the double whammy of a shrinking market and declining prices has not just meant a loss of profits but overall losses as well.  This is why you will see very few new tablet devices in future, and those that you do spot will have keyboards that detach (like Microsoft’s Surface Pro) as well as having pen input.  In short, tablet designs will morph to become more like clamshell laptops with detachable keyboards, and so double as much more functional but smaller laptop computers. All over the globe, people are addicted to their smartphones yet when it comes to real work like using a spreadsheet or word processor the preferred form factor still seems to be an ultra-slim laptop of conventional clamshell design.  For many people the high- end versions of these devices are too expensive, costing well in excess of £1,000, and when lower-priced slim-laptops, like the Asus ZenBook UX330UA, appear in shops or online they sell out quickly.  You can see these conventional but thinner laptops in action being used by journalists at any press launch of a tech product – very few, if any, tablets are being used.  Tech-journalists set the “money no object” trends because they can often get the latest devices for free or at heavily discounted prices, but naturally they use whatever form factor is best suited for their task.  Still at the lower-priced end of the market the same clamshell design is just as successful with thin Chromebook laptops, these link into Google’s cloud online, for additional processing and storage.  Back to school!  For the last 30 years Apple computer devices have dominated the education market, primarily because they were discounted and although, despite the discounts, they were still expensive, they were widely perceived as easier to use.  That situation no longer prevails in America.  The popularity of the even simpler to use, easy to maintain, more secure and much cheaper to buy Chromebooks have taken Apple by surprise.  In 2013 Chromebooks had a 1% share of the K-12 market (children from four years old through to 19 years old).  But last year Apple was shocked as Chromebooks leapt up to take a 51% market share at the entry level end of the market.  That this has happened so quickly, in just three years, has really upset the Apple cart.  Its future sales are predicated on getting children locked into using Apple computers and Apple software.  Yet right now a large cohort of American children are happily becoming familiar with using Google’s cloud and Google’s software.  They have no need or desire to lock into Apple for premium priced computer devices.  Ominously for Apple, when these children eventually leave school they will be so tied into Google’s cloud they will naturally want to buy Android smartphones which use the same apps and services as their Chromebooks, not Apple iPhones.  If this trend gets repeated in other countries it will eventually affect Apple’s sales as, obviously, the software that people are used to using is always the easiest to use.  So in the long term it looks as if Google will clearly be one of the winners in cloud computing, especially now that Android apps will soon work on the latest Chromebooks.  I wrote about the rising popularity of Chromebooks and low cost laptop computers back in October 2014, and many of the issues I noted then still apply. There was a very close relationship between Intel and Microsoft throughout the desktop and laptop era, as computing spread into ubiquitous use.  Intel produced the microprocessors that powered all the millions of computers running Microsoft Windows.  Although “Wintel” as this software/hardware partnership became known, is still a close relationship, it is no longer an exclusive one.  Microsoft really stumbled badly when, like Intel, they misunderstood how important mobile technology was going to become.  In hindsight, this left what was to become the most important market for consumer hardware and software vendors, wide open for ARM designed microprocessors which use miniscule amounts of power.  At the time this was all happening I wrote several articles showing how the two giants of the computing world completely overlooked the way the world was changing beneath their noses.  Both companies are still trying to recover.  Intel has given up competing with ARM for mobile devices and is, instead, focussing its resources on connected devices in the home and computing for automobiles.  As for Microsoft, it actually took a change of Chief Executive to pivot the company towards the new world order in computing.  When the new CEO, Satya Nadella, a usually verbose and convoluted speaker took over, he defined Microsoft’s new strategy as: “mobile first, cloud first.”  Perhaps he could have said that he was going to try to make Microsoft more like Google.  Judging Nadella’s progress three years on, we can see Microsoft’s cloud (something that was an already established product) has been improved to meet the needs of corporate clients, and Microsoft has now almost managed to close the gap between itself and the market leader in cloud computing: Amazon.  The score to date in terms of corporate cloud market share is Microsoft’s 28.4%. to Amazon’s 37.1%.  The advertising company, Google, still leads in terms of cloud technology and data centres as it continues to concentrate on consumer rather than corporate cloud computing.  So in terms of Nadella’s twin strategy his “cloud first” moves have been reasonably successful and he’s increased revenue and made up some of the ground that had been lost to Amazon.  But it is his “mobile first” side of things that has proved more difficult because virtually all mobile smartphones run on ARM microprocessors – a platform that Microsoft Windows doesn’t support.  This major weakness has been a problem for some time.  Microsoft’s past attempt at using ARM processors was the Surface RT, an expensive failure that I wrote about back in September 2013, something that cost Microsoft a $900 million write down of unsold stock. It invariably takes several iterations of software or hardware before Microsoft gets anywhere near a good solution.  This is the obvious result of the fragmented way that the company insists on developing its products:  It focusses on development rather than concentrating on making the task that the product is designed for much easier to complete.  With that in mind, it’s no surprise that Microsoft is now having another go at getting Windows to run on ARM microprocessors.  (In fact if Windows software wasn’t running on ARM processors, Microsoft wouldn’t have any mobile presence at all.)  This time Microsoft is working closely with Qualcomm to emulate 32bit Windows running on a 64bit ARM processor.  So far things look very promising (you can see a demo here) and products using this technology should be on the market around the end of 2017, or possibly early Spring 2018 if there are delays.  The project’s success will depend on how fast the emulation performs.  Of course the real solution would be a native port of 64bit Windows running on 64bit ARM processors but we are unlikely to see this because of the time and resources that would be involved.  But it’s certain that amongst computer products next year we will see low cost, clamshell, laptop designs running Windows on ARM microprocessors that will have a much better battery life than more expensive Intel processors, and they’ll connect to cellular networks as well as WiFi. For Microsoft’s Nadella it was absolutely essential to have a mobile strategy, and he must now be aware that according to Statcounter, Android running on ARM processors has just overtaken Windows as the most used operating system to access the Internet globally.  Microsoft has now made the internal decision to run around half of the servers in its data centres using ARM servers.  This will not only save power, it will also give Microsoft engineers the experience of working with a different microprocessor design.  And they rapidly need to get their heads round that one.  In the meantime, to compete with Chromebooks, and hopefully to win over the hearts and minds of the next generation of computer users, Microsoft has produced a version of Windows that will run in their Cloud.  It’s been especially designed for schools, but who knows if it’s easy to use and maintain?  And will Microsoft be able to sell its clamshell laptops as cheaply as Google’s Chromebooks?  Google was always a cloud first company and when it created Android it quickly became the dominant mobile platform - long before Microsoft made any moves in this direction.  Windows isn’t going away anytime soon, but Microsoft is having to adjust to no longer being top dog and my bet is that more and more school children will experience Chromebooks as their first introduction to computing.  Although, paradoxically, they will probably have to learn to use Microsoft Windows when they get their first job, if not before.  Ironically, Microsoft’s Cloud version of Windows for schools, called Windows 10S, has one unique advantage that is a hangover from it’s past, it can also store files on the computer being used and doesn’t have to do everything “cloud first.”  So, place your bets and hang on tight. I reckon it’s going to be a fascinating contest. May 2017 
Home Click here to download the PowerPoint chart: Click here to download the PowerPoint chart:

Cloudy visions…

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