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Microsoft Makes Clever Moves

mobile internet, software By February 1, 2015 Tags: , , , 19 Comments


by Jean-Louis Gassée

While Microsoft Office for mobile is a satisfying success, the company can’t seem to create — or even buy — a mobile operating system that can compete with iOS and Android. Perhaps they’ve been looking in the wrong direction and can return to their “trusted” Embrace and Extend tactics.

Microsoft published its numbers for its Fiscal Year 2015 2nd quarter ending in December 2014. While the company isn’t the money machine it once was, it is healthy: Revenue grew 8% to $26.5B, Operating Income declined only a bit (- 2%) at $7.8B, there will be another $.31 dividend for the quarter, and cash reserves stand at $90B.

Such numbers give Satya Nadella the space he needs to implement the Mobile First – Cloud First vision he outlined last year. A key component of this plan is to spread Office applications across all platforms and devices: PCs, tablets, and smartphones – native apps as well as Web versions. Last week, Microsoft took another step in this direction with the release of its historic Outlook PIM (Personal Information Manager) app for Android and iOS.

While the Outlook release was warmly received, I’ve learned to take enthusiastic press reviews with caution. I prefer to “play customer”: I buy and use the product in klutzy ways engineers can’t foresee and, as a result, I get a better idea of how the product will fare in the real world. So, I installed Outlook on my iPad mini and, not to pour salt on some wounds… It Just Works. It runs my Exchange account at work, and it speaks Gmail and iCloud as well. No ifs, no buts.

Perhaps the most interesting aspect of the release is that it completes the core components of the native MS Office bundle: Word, PowerPoint, Excel, and now Outlook. It doesn’t matter which platform you use — Windows, Mac, Android, or iOS — you now have the full complement of Microsoft’s productivity apps built specifically for your device.

I used to think that if Apple could get its software house in order and work out the  (numerous) bugs, iWork could easily displace Microsoft Office on Mac, iCloud, and iOS. After all, iWork is free… Now, I’m not so sure. With this release, MS Office provides a fit and finish, a safe and effective cross-platform solution that’s worth the price of admission, particularly in the Enterprise world.

But Apple isn’t the competitor Microsoft worries about. Cross-platform Office is a powerful countermove against Google Apps. Microsoft doesn’t have a dog in the old Web vs. Native Apps fight, it offers both everywhere.

In other matters, however, things aren’t entirely rosy for Microsoft. Its smartphone hardware business isn’t doing well. A look at the recent 10-Q and at the slide presentation for the Earnings Release shows hardware revenue of $2.3B, for 10.5M Lumia phones and 39.7M on-Lumia devices:

Phone Hardware

Microsoft’s smartphone business is still dealing with the Nokia acquisition trauma, so these numbers are less reliable than in a stable business. But even if we proceed with caution, when we divide the $2.3B revenue number by 50.2M (the total number of devices), we get a meager ASP (Average System Price) of $46.

One could argue that the computation is misleading because it throws Non-Lumia phones — such as the Nokia X running Android — into the same pot as worthier Lumia devices. So let’s take take another stab at the numbers: Let’s imagine that all non-Lumia phones are simply given away, $0 ASP. That leaves us with 10.5M Lumia phones divided into $2.3B revenue for a yield of $219 ASP. Compare this to the $687 ASP Apple got for its iPhones last quarter. Playing with numbers a bit more, if you assume a $20 ASP for non-Lumia “dumbphones”, the ASP for Lumia smart devices comes to $143.

As discussed here last December, even with “forever” cash reserves, why bother? Big enterprises such as Bank of America and Chase that have discontinued Windows Phone support agree.

After fruitlessly jumping into a Broad Strategic Partnership with Nokia and then promptly Osborning it, Microsoft acquired the company’s smartphone business rather than letting it die. It’s still not working and, as the most recent industry numbers show, there’s little hope that Microsoft’s phone hardware business, while saddled with the hapless Windows Phone OS, will be anything other than a waste of time, money, and reputation. Many have suggested that Microsoft drop its OS efforts and fork Android, returning, in Ben Thompson’s words, to “its roots of embracing and extending”.

That brings us to Cyanogen. In the grand tradition of Homebrew Computing that gave birth to Microsoft, Apple and countless others, developers have taken the Open Android operating system and opened it even more, creating a raft of improved versions.

Initially, many thought these variants were just for the hacker who wanted to play with his Android device, reflash its ROM, and grow hair on his chest. But one Android strain, CyanogenMod, exhibited such vitality hat it spawned an organized, for-profit company. In 2012, Benchmark and Redpoint led a $7M Series A investment in Cyanogen, Inc. (“Series A” is typically the first serious VC money, after a Seed Round.) In December, 2014, there was a more substantial $23M Series B round, led by another member of the Valley’s VC nobility, Andreessen Horowitz. And now, there is talk of a $70M round…  in which Microsoft might be a “minority” player.

Kirk McMaster, Cyanogen’s CEO, has been unusually candid about the company’s goal [emphasis mine]:

“I’m the CEO of Cyanogen. We’re attempting to take Android away from Google.”


We’ve barely scratched the surface in regards to what mobile can be. Today, Cyanogen has some dependence on Google. Tomorrow, it will not. We will not be based on some derivative of Google in three to five years. There will be services that are doing the same old bulls— with Android, and then there will be something different. That is where we’re going here.”

Ambitious words, indeed, but they’re backed by some of the Valley’s smartest money.

Microsoft’s role in Cyanogen is probably just a minor one; perhaps it will help with the patent portfolio it unleashes on Android OEMs. But the company’s involvement at all could be seen as part of its long battle with Google. Recall that “Google acquired Android in 2005 as a defense against Windows Mobile dominating smartphones just as Windows dominated PCs.” Later, in 2008, Microsoft acquired Android founder Andy Rubin’s previous company Danger, whose Sidekick design inspired Google’s pre-iPhone G1 devices.

Cyanogen has long been in Google’s cross-hairs. In its early days, CyanogenMod (since renamed to Cyanogen OS) was perceived as such a nuisance — or a threat — that its users suddenly found that they needed to perform contorted workarounds to load Google’s proprietary apps (Google Map, YouTube, GTalk, and so on). Can Microsoft resist the temptation to aid this Google irritant?

Tantalizing as the Cyanogen investment is, it might not be enough to keep Microsoft in the brutal smartphone hardware business, but it’s consistent with the company’s efforts to undermine Google’s ecosystem by any means necessary. Including gathering allies to do to Android what Bill Gates once did to Lotus 1-2-3.

Let’s keep in mind that the mobile industry is no more mature than the PC industry was in the mid eighties. Things could get interesting as Cyanogen reveals more of the business model its muscular investors have bought into. And they will become particularly interesting if the company can corral support from industry players who are eager to get out from under Google’s thumb.


Europe: The Digital Squeeze Is Coming

mobile internet By November 9, 2014 Tags: 16 Comments


By Frédéric Filloux

A recent Bain & Co survey paints Europe’s digital future as squeezed between the explosive demand of emerging countries and the dominance of US-based internet giants.

The “Next Billion”, a phrase coined and propagated by the Quartz team, refers to the explosive internet growth in emerging countries — almost entirely fueled by mobile usage. The new phrase got its own  conference (last week in NYC, next May 19th in London) and a dedicated section on the Quartz site.

For Europe, the Next Billion will be hard: Last week, the global consulting firm Bain & Co published a survey that exposes what’s at stake. The report, titled Generation #hashtag (pdf here), was commissioned by The Forum d’Avignon, a yearly gathering of intellectuals and business people that explores cultural changes; the survey was conducted by Bain’s staff in Paris and Los Angeles over 7,000 respondents in 10 countries with the following internet status:


Source : Internet World Stats

Bain’s key findings follow:

The next period is going to be dominated by digital natives, i.e. audiences that won’t have even known other forms of media vectors (video, communication, news or entertainment). In emerging countries, powerful forces are now in motion (emphasis mine):

Across the BRICS countries, the percentage of consumers 25 and younger—who are, on average, 40% more prevalent than in developed economies, according to Euromonitor—suggests the rapid rise of Generation #hashtag in emerging markets. (…) Over the past year, smartphone ownership rose significantly in emerging markets: from 45% to 50% in China, 14% to 21% in India, 45% to 54% in Brazil and 45% to 63% in Russia.

The chart below shows two important elements. One is the importance of the Generation #hashtag: the digital population comprised with digital “migrants” and “natives”. The second and even more interesting is the demographic distribution which, for emerging countries, clearly states the potential:


These demographics show two major gaps: disposable income and networking infrastructure. Taking the long view, the first one could be overcome by strong growth in key areas. For the second, in many countries of Asia or Sub-Saharan Africa, land lines equipment is staying flat — and sometimes decreasing — while cellular networks are growing like weeds. A couple of weeks ago, Benedict Evans, from the Andreessen Horowitz venture firm, released his Mobile is Eating the World slide deck – from which I extracted these two charts :



These figures might prove to be conservative as heated competition for the Next Billion has already started between tech giants. Google’s Project Loon, Facebook’s future drones network, both aimed at delivering broadband internet in developing countries, are soon to be joined by  Elon Musk’s plan to deploy 700 micro-satellites at a cost of $1bn to serve the same purpose. If we factor in Mark Zuckerberg’s idea to get a 100x improvement on internet delivery (10x reduction in cost of serving data multiplied by 10x improvement in compression and caching technologies), we can project the internet’s global availability challenge as solved within the next five years or so.

In this picture, Europe faces a huge industrial problem. The players who will benefit from the exploding demand in emerging markets are everywhere but in Europe, except maybe for Nokia Networks (not the handset division, now owned by Microsoft, but the remaining independent infrastructure business), and Sweden-based telecom maker Ericsson. Other are mostly Chinese, Taiwanese and Korean (Samsung and many others), they cover the entire field from networking infrastructure to mobile terminals. Symmetrically, most of the engineering brainpower and very large investment capabilities are concentrated in the United States with immensely rich companies such as Google or Facebook (or Musk’s Space X) thay are focused on capturing this Next Billion.

Europe’s options are limited. With no common language, no political leadership, encumbered by a gigantic bureaucracy, scattered and uneven access to capital (compared to the Keiretsu-like American venture capital system), Europe could choke, squeezed between Asian hardware markers and US-based software giants. Unfortunately, instead of organizing itself to favor the emergence of tech leaders — through decisive education programs and smarter immigration policies for instance — Europe’s main contribution to technologies has been the creation of tax havens. A textbook example of a missed opportunity.


The Future of Mobile Apps for News

design, mobile internet By August 17, 2014 Tags: 34 Comments


The modern smartphone is 7 years old and yet, when it comes to designing mobile applications, we are still barely scratching the surface. Today we’ll see how harnessing technology already embedded in a phone can unleash great potential. 

A mobile news app has simple goals: Capture and retain reader attention, and repeat the process, several times a day. Pretty straightforward. But not that simple in the real world. For a news provider, the smartphone screen is the the most challenging environment ever seen. There, chances are that a legacy media or a pure-player will find itself in direct competition, not only with the usual players in its field, but also with Facebook, Snapchat, Instagram and scores of gaming applications. Distraction is just one icon away; any weakness in functional or graphic design can be lethal.


Hence the questions for publishers: What type of news should they put on their mobile apps, what formats, what about images and video, sharing, curation, connections to other apps? Should they be selective or stuff as much as they can in their app? Or should they build easily digestible news blocks à la Circa? Or put more emphasis on a nice, small package of news items, as Yahoo News Digest brilliantly does? Or — the last trend –design an app for fast reading, like The New York Times NYT Now? (I must say, NYT Now, is my favorite news application — and I tested many; it delivers exactly what its promises: a constantly updated news stream, sending back to NYT’s stories, and well curated picks from the web. At the same time, Les Echos, the business media I work for, released LesEchosLive, an app also built around a single vertical “rail” of news with compact stories that expand and collapse as needed — readers seems to like it a lot…)

But… Good as they are, these forays into mobile news consumption are not enough. The  mobile tsunami has just begun to unfurl. Soon, it might flood a solid half, then two thirds of all news pageviews — and we can expect further acceleration after the release of the next batch of iPhones: their larger screens will provide more attractive reading.

If mobile is to become the dominant vector for news, retaining readers will be much more challenging than it is on a PC or tablet (though the latter tends to engage readers 10x or sometimes 20x more). A news app needs to be steered with precision. Today’s digital marketing tools allow publishers to select multiple parameters monitoring the use of a application: They can measure how long the app is used, when, for how long, why and where people tend to drop it, what kind of news they like, if they hit a paywall and give up, and why they do so, etc. Similarly, when an app remains unopened for too long, smart tools can pinpoint the user and remind her of the product’s benefits. These tools are as good as the people who (a) set the parameters, (b) monitor them on a daily basis, and (c) take appropriate action such as launching a broadside of super-targeted emails. But these are incremental measures, they don’t breed exponential growth in viewership (and revenue).

Why not envision a few more steps forward and take advantage of technologies now embedded in every smartphone? A mobile phone is filled with features that, well directed, can significantly improve user experience and provide reams of usage data.

Imagine a news feed natively produced in different formats: long, short, capsules of text, with stills and videos in different sizes and lengths. Every five minutes or so, the feed is updated.

After a while, your smartphone has recorded your usage patterns in great detail. It knows when you read the news and, more importantly, under what conditions. Consider Google Now, the search engine’s intelligent personal assistant: It knows when you are at work or at home and, at the appropriate moment, it will estimate your transit time and suggest an itinerary based on your commute patterns; or take Google Location History, a spectacular — and a bit creepy — service for smartphones (also tablets and laptops) that visualizes your whereabouts. Both Google services generate datasets that can be used to tailor your news consumption. Not only does your phone detect when you are on the move, but it can anticipate your motions.

Based on these data sets, it becomes possible to predict your most probable level of attention at certain moments of the day and to take in account network conditions. Therefore, a predictive algorithm can decide what type of news format you’ll be up for at 7:30am when you’re commuting (quickly jumping from one cell tower to another with erratic bandwidth) and switch for faster reads than at 8:00pm, when you’re supposed to be home, or staying in a quiet place equipped with a decent wifi, and receptive to richer formats.

By anticipating your moves, your phone can quickly download heavy media such as video while networks conditions are fine and saving meager bandwidth for essential updates. In addition, the accelerometer and internal gyroscope can tell a lot about reading conditions: standing-up in a crowded subway or waiting for your meeting to start.

By poring over such data, analytics specialists can understand what is read, watch and heard, at what time of the day and in which environment. Do users favor snippets when commuting? What’s the maximum word-length for a story to be read in the subway without being dropped, and what length is more likely to induce future reading? What’s the optimal duration for a video? What kind of news package fits the needs and attention for someone on the move? What sort of move by the way? Motion and vibration for a car are completely different than the ones from the Bay Area transit system or London’s Tube. Accelerometers and motion sensors can tell that for sure — and help to decide if it’s better to serve the smartphone owner with a clever podcast while she is likely to be stuck in her car for the next 50 minutes on Highway 101 heading to San Jose (as revealed by her trajectories and GPS patterns of the last few months) or favor text and preloaded videos for BART commuters between Oakland and San Francisco.

This approach, based on a large spectrum of patterns analytics, can enormously increase readers’ appetite for news. This is yet another reason for media companies to lean more and more on the technology side. Until now, with very few exceptions, legacy media have been slow to move into that direction. As someone who loves good journalism and smart news formats, the last thing I want to see is newcomers providing cheap editorial succeed at capturing people’s attention only because they’ll have been first to harness these technologies. We’ve had that experience on the web, let’s not make the same mistake twice.


News on mobile: better be a Danish publisher than a Japanese one

mobile internet By July 14, 2014 Tags: , , , 6 Comments


This is the second part of our Mobile facts to Keep in Mind (see last week Monday Note – or here on Quartz). Today, a few more basic trends and a closer look at healthy markets for digital news. 

Last week, we spoke about the preeminence of mobile applications. Not all readers agree, of course, but I found more data to support the finding; among many sources, the remarkable Reuters Institute Digital News Report (PDF here) is worth reading:

47% of smartphone users say they use mainly apps for news

According to the report, this figure has risen by 6 percentage points in just one year. By contrast, 38% of the news consumption is made via a browser — which is losing ground: -4% in just a year.

The trend is likely to accelerate when taking in account demography: On smartphones, the most active groups are the 18-24s and the 35-44s; on tablets the most active group is the 45-54 segment.

Platform usage varies in accordance to local market share, but when it come to paying for news, Apple leads the game:

iOS users are x1.5 likely to pay for news in the US
and x2 likely to pay in the UK than Android or other users

Here is the bad part, though. Again based on the Reuters report, the use of smartphones does narrow the range of news sources. More than ever, the battle for the first screen is crucial.

Across the ten countries surveyed,
37% of users rely on a single news source
vs. 30% for PC users

In the UK, the trend is even stronger with 55% of mobile users relying a single news source. This goes along with good news for those who still defend original news production: mobile news consumption is quite focused on legacy media. The BBC app crushes the competition with 67% of respondents saying they used the app the previous week, vs. 25% for Sky, MSN and Yahoo are trailing with respectively 2% and 7%.

If you want to survey a healthy digital news market, go to Denmark


A Viking logo (from the TV Series) as viewed by the Brand New blog;
note the ancient reference to technology…

Not only does Denmark rank among the best countries to live and develop a business in, but when it comes to digital news, it leads the pack in several of ways:

Despite the digital tsunami, Denmark retains many strong media brands. As a result, legacy media are the prime way for accessing digital news. And since Danish media did well embracing new platforms, they enjoyed similarly success on social, funneling readers to their properties.
The opposite holds for France and Germany where the transition is much slower; in those countries digital users rely much more on search to reach news brands. Two side effects ensue: News readers are more accidental and therefore generate a much lower ARPU; and the greater reliance on Google is problematic (hence the call to arms in France and Germany against the search engine giant.)

— Because of the strength of its traditional media brands, the Denmark news market has left very little oxygen to pure players: They weigh only 10% of weekly digital news, vs. 39% in the US and 46% in Japan were legacy media have been severely hit.

— Danes are the heaviest users of both smartphones and tablets to access news.

— They use mobile apps more than anywhere else: 19%, vs. 15% for US and 12% for Germany.

— They are mostly Apple users : 58% say they use an iOS device to access news in the last week (vs. 28% in Germany), hence a better ARPU for mobile publishers.

—  Danish news consumers generously overlap their devices way more than in any country. 79% use a PC, 61% a smartphone and 39% a tablet. Only 24% use only a PC for news. In Japan by contrast, 58% admit using only a PC for their news diet; up there, the use of smartphone and tablet to access information is respectively one half and one third of Denmark.

— In Danish public transportation, smartphones has overtaken print as the main news vector by 69% vs. 21% of the usage.

We all know where to seek inspiration for our digital news strategies.


Mobile Facts To Keep In Mind – Part 1

mobile internet By July 6, 2014 33 Comments


By the end of 2014, many news media will collect around 50% of their page views via mobile devices. Here are trends to remember before devising a mobile strategy. (First of a two-part series.)

In the news business, mobile investments are on the rise. That’s the pragmatic response to a major trend: Users shift from web to mobile. Already, all major media outlets are bracing for a momentous threshold: 50% of their viewership coming from mobile devices (smartphones and tablets). Unfortunately, the revenue stream is not likely to follow anytime soon: making users pay for mobile content has proven much more difficult than hoped for. As for advertising, the code has yet to be cracked for (a) finding formats that won’t trigger massive user rejection, and (b) monetizing in ways comparable to the web (i.e. within the context of a controlled deflation). Let’s dive into a few facts:

Apps vs. WebApps or Mobile sites. A couple of years ago, I was among those who defended web apps (i.e. encapsulated HTML5 coding, not tied to a specific OS platform) vs. native apps (for iOS, Android, Windows Phone). The idea was to give publishers more freedom and to avoid the 30% app store levy. Also, every publisher had in mind the success enjoyed by the when it managed to put all its eggs in its web app and so retain complete control over the relationship with its customers.

Credit: Vintage Mobile / Popular Mechanics

All of the above remains true but, from the users’ perspective, facts speak loudly: According to Flurry Analytics, apps now account for 86% of the time spent by mobile users vs. 14% for mobile sites (including web apps.) A year ago, the balance was 80% for apps and 20% for mobile web.

Trend #1: Native apps lead the game
at the expense of web apps and mobile sites 

One remark, though: the result must take in account the weight of games and Facebook apps that account for 50% of the time spent on mobile. News-related usage leans more to mobile as there is not (yet) demand for complex rendering as in a gaming app. But as far news applications are concerned, we haven’t seen major breakthroughs in mobile web or web apps over the last months and it seems development is stalling.

News vs. the rest of the app world. On a daily total of 2hrs 50mn spent by mobile users (source: eMarketer), 2% to 5% of that time is spent on news. Once you turn to growth, the small percentage number starts to look better: The news segment is growing faster (+64% Y/Y) than messaging and social (+28%) or gaming and entertainment (+9% each); the fastest usage segment being the productivity apps (+119%) and that’s due to the transfer of professional uses from the desktop to the mobile.

Trend #2: On mobile, news is growing faster
than game or social 

…And it will grow stronger as publishers will deploy their best efforts to adjust contents and features to small screens and on-the-go usage and as mobile competitors multiply.

iOS vs. Android: the monetization issue. Should publishers go for volume or focus on the ARPU (revenue per user)? If that’s the reasoning, the picture is pretty clear: an iOS customer brings on average five times more money than an Android user. And the gap is not about to close. However, Android OS has about one billion users vs. 470m users for iOS, but most of Android users are in low income countries, where phones can cost as little as $80, and prices are falling fast. By contrast, an iPhone will cost around $600 (without a carrier contract) and the not-so-successful “cheap” iPhone 5C shows that iPhone is likely to remain a premium product.

Trend #3: There is more money to make on iOS
than Android and that’s not likely to change

Beside, we must take in account two sub-trends: iOS will gain in sophistication with the arrival of iOS 8 (see Jean-Louis’ recent column about iOS 8 being the real version 2.0 of iOS) and a new breed of applications based on the new Swift  programming language. Put differently: Advanced functionalities in Swift/iOS 8-based apps will raise the level of user expectations; publishers will be forced to respond accordingly: as apps reside side by side on the same mobile screen, news apps will be required to display the same level of sophistication than, say, a gaming app — that’s also why I’m less bullish on web apps. Behind the iOS/Android gap lies another question: Should publishers have the same app (content, features, revenue model across) all platforms – or must they tailor their product to platform “moneygraphics”?  That’s an open question.

I’ll stop here for today. Next week, I’ll explore trends and options for business models, marketing tactics, why it could be interesting to link a news app to the smartphone accelerometer and why news media should tap into game developers for certain types of qualifications.



The Network Is the Computer: Google Tries Again

mobile internet By July 6, 2014 Tags: , , , 29 Comments


All you need is a dumb device attached to a smart network. It’s an old idea that refuses to die despite repeated failures. Now it’s Google’s turn.

In the late 1980s, Sun Microsystems used a simple, potent war cry to promote its servers: The Network Is The Computer. Entrust all of your business intelligence, computing power, and storage to Sun’s networked SPARC systems and you can replace your expensive workstation with a dumb, low cost machine. PCs are doomed.

Nothing of the sort happened, of course. Sun’s venture was disrupted by inexpensive servers assembled from the PC organ bank and running Open Source software.

PCs prospered, but that didn’t dampen the spirits of those who would rid us of them.

Fast-forward to the mid-1990s and thought re-emerges in a new guise: The Browser Will Be The Operating System (a statement that’s widely misattributed to Marc Andreessen, who holds a more nuanced view on the matter). The browser will serve as a way to access networked services that will process your data. The actual OS on your device, what sort of apps it can run — or even if it can run any (other than a browser) — these questions will fade into insignificance.

Soon after, Oracle took a swing at the Network is the Computer piñata by defining the Network Computer Reference Profile (or NCRP), a specification that focused on network connectivity and deemphasized local storage and processing. It was understood, if not explicitly stated, that an NCRP device must be diskless. A number of manufacturers offered NCRP implementations, including Sun (which would ultimately be acquired by Oracle) with its JavaStation. But despite Larry Ellison’s strongly expressed belief that Network Computers would rid the industry of the evil Microsoft, the effort went nowhere.

Today, The Network Is The Computer lives on under the name Cloud Computing, the purest example of which is a Google Chromebook running on Chrome OS. (And thus, in a sense, Sun’s idea lives on: Google’s first investor was Sun co-founder Andy Bechtolsheim.)

So far, Chromebooks have shown only modest penetration (a topic for musings in a future Monday Note), but despite the slow adoption, Google has become one of the largest and most important Cloud Computing companies on the planet. Combine this with the Android operating system that powers more than a billion active devices, could Google bring us to the point where The Network Really Is The Computer?

It’s a complicated question, partly because the comparison with the previous generation of devices, traditional PCs, can (excuse me) cloud the view.

Unlike PCs, smartphones rely on an expensive wireless infrastructure. One can blame the oligopolistic nature of the wireless carrier industry (in English: too few companies to have a really competitive market), but that doesn’t change the simple fact that wireless bandwidth isn’t cheap. The dumber the device, the more it has to rely on the Cloud to process and store data, and the more bandwidth it will consume.

Let’s visit Marc Andreessen actual words regarding Network-As-Computer, from a 2012 Wired interview [emphasis mine]:

“[I]f you grant me the very big assumption that at some point we will have ubiquitous, high-speed wireless connectivity, then in time everything will end up back in the web model.”

If we interject, on Andreessen’s behalf, that wireless connectivity must be as inexpensive as it is ubiquitous, then we begin to see the problem. The “data hunger” of media intensive apps, from photo processing to games, shows no sign of slowing down. And when you consider the wireless bandwidth scarcity that comes from the rapid expansion of smartphone use, it seems that conditions are, yet again, conspiring against the “dumb device” model.

The situation is further confounded when we consider that Google’s business depends on delivering users to advertisers. Cloud computing will help drive down the cost of Android handsets and thus offer an even wider audience to advertisers…but these advertisers want a pleasant and memorable UI, they want the best canvas for their ads. When you dumb down the phone, you dumb down the ad playback experience.

In a recent blog post titled The next phase of smartphones, Benedict Evans neatly delineates the two leading “cloud views” by contrasting Apple and Google [emphasis mine]:

“Apple’s approach is about a dumb cloud enabling rich apps while Google’s is about devices as dumb glass that are endpoints of cloud services…”

But Google’s “dumb glass” can’t be too dumb.  For its mobile advertising business, Google needs to “see” everything we do on our smartphones, just like it does on our PCs. Evans intimates as much:

“…it seems that Google is trying to make ‘app versus web’ an irrelevant discussion – all content will act like part of the web, searchable and linkable by Google.”

Native apps running on a “really smart” device are inimical to Google’s business model. To keep the advertisers happy, Google would have to “instrument” native apps, insert deep links that will feed its data collection activities.

This is where the Apple vs. Google contrast is particularly significant: iOS apps are not allowed to let advertisers know what we are doing – unless explicitly authorized. Apple’s business model doesn’t rely on peddling our profile to advertisers.

In the end, I wonder if Google really believes in the “dumb glass” approach to smartphones. Perhaps, at least for now, The Computer will remain The Computer.