REQUIRED READING: The Freight Train That Is Android – by Bill Gurley

Screen shot 2012-01-09 at 8.36.56 AMIf you care about #mobile and smartphones at all, it is crucial that you fully appreciate the depth of what is going on with Google’s Android strategy (which is why I’ve clipped a lot of key excerpts from this great post; by all means keep an eye on Bill Gurley, his stuff is usually excellent and in depth).

The only thing that they are lacking is Apple’s branding finesse, but it is pretty hard to compete with “LESS-THAN-FREE” in the long run…

Why would Google “bare [almost] any burden” (including the $12B purchase of Motorola Mobility, in large part to defend Android in the #PatentWars) to buy their way into this? Because… “The Future Of Mobile Is The Future Of Everything”.

From – The Freight Train That Is Android:

…the more I wonder if I too may have underestimated the unprecedented market disruption that is Android.

One of Warren Buffet’s most famous quotes is that “In business, I look for economic castles protected by unbreachable ‘moats’.” An “economic castle” is a great business, and the “unbreachable moat” is the strategy or market dynamic that heightens the barriers-to-entry and makes it difficult or ideally impossible to compete with, or gain access to, the economic castle. …

For Google, the economic castle is clearly the search business, augmented by its amazing AdWords monetization framework…and Google would clearly want to put a “unbreachable moat” around it. …

So here is the kicker. Android, as well as Chrome and Chrome OS for that matter, are not “products” in the classic business sense. They have no plan to become their own “economic castles.” Rather they are very expensive and very aggressive “moats,” funded by the height and magnitude of Google’s castle. Google’s aim is defensive not offensive. They are not trying to make a profit on Android or Chrome.

They want to take any layer that lives between themselves and the consumer and make it free (or even less than free). Because these layers are basically software products with no variable costs, this is a very viable defensive strategy. In essence, they are not just building a moat; Google is also scorching the earth for 250 miles around the outside of the castle to ensure no one can approach it…

Because they are “giving away” money to use their product, this creates a rather substantial conundrum for someone trying to extract economic rent for a competitive product in the same market.

This is the part that amazes me the most. I don’t know if a large organized industry has ever faced this fierce a form of competition – someone who is not trying to “win” in the classic sense. They want market share, but they don’t need economics. Imagine if Ford were faced with GM paying people to take Chevrolets? How many would they be able to sell?…

[First curated on]

Related -> This SiliconAlleyInsider Sub Headline Reveals Why You Must Move The Freeline

Steve Ballmer’s Nightmare Scenario

ScreenHunter_10 Feb. 24 10.41BusinessInsider recently published “STEVE BALLMER’S NIGHTMARE: How Microsoft’s Business Actually Could Collapse”. And while you may think that this is an extreme scenario used as linkbait (and by all means read their entire post as well), here are some data points that show that some of the pieces of the puzzle have already been falling into place:

1) Windows Phone 7 isn’t really going anywhere, and Nokia’s new Lumia 800, etc. offerings don’t feel (price) competitive enough to make much of a dent in either that trend, or Nokia’s own downfall.

2) While Android tablets have failed to make any meaningful inroads against the iPad thus far, at least they have sold somewhere between 1-2 Million (U.S.), and shipped many more (sitting in inventories, waiting for drastic price cuts…).

But Microsoft won’t even be in the game until some time later this year (what will the actual date be? Q3? Q4?!), when tablets with Windows 8 are expected to ship in quantity. So Microsoft is starting from way behind in third place.

3) More importantly, there are no guarantees that the tablet/touch-centric bet of Windows 8 is going to pay off. In fact, it could well be that because the touch UI (User Interface) is bolted onto a relatively heavy-weight, resource-intensive Windows NT OS base, Win 8 will require too-expensive, high-end spec’d tablets, while as a standard desktop/laptop OS, few consumers and companies will see a true need to upgrade to Win 8 from 7.

It’s just a few years after 7 was introduced, and for all apparent purposes, it is running everything anyone would need on a Windows laptop/desktop just fine. So why spend money on 8 in a difficult/uncertain macro-economic environment?

4) Windows developers have been relatively unhappy about having to massively retool for writing apps for Windows 8, so there could be trouble brewing here as well.

5) While all of this still doesn’t spell immediate collapse for Microsoft’s business, legacy sales of Windows 7 upgrades, MS Office upgrades, and various enterprise software is not going to suffice in the long run.

6) It is also telling that Windows 8 was being completely overshadowed by… just about everything else thus far at CES, including Google’s Android 4.0 version “Ice Cream Sandwich”. Keep in mind that CES had until now been Microsoft’s showcase, even though it is now withdrawing from the event for the future.

(This apparently due to the timing creating a mismatch with Microsoft’s own internal launch calendar, which may explain the long history of relative vaporware coming out of Redmond at CES.)

But this has got to smart: Windows 8 is Microsoft’s major bet on a unified OS to run “on all three screens”, desktop/laptop, tablet, and smartphone. It is a bet so large, one might say Ballmer is betting the farm on Windows 8 being a hit, and that if it isn’t, Microsoft is in real trouble.

7) As Robert Scoble recently stated in the discussion on his Google+ thread here, Windows Phone might already be done:

…What matters is the PRODUCT THAT SHIPS TODAY. Microsoft is missing 450,000 apps TODAY and NOTHING you say can make that go away. Microsoft knows it’s in a deep hole. So do most consumers. …the problem is that THE MICROSOFT PRESS thinks it’s doomed. It’s not just one guy, either. It’s people who cover Microsoft for a living and live in Seattle and they think Microsoft Mobile sucks. So you’re on the wrong side of the line. It’s not getting better, it’s only getting worse. Android and iOS aren’t standing still, you know.”

So if Windows Phone (WP) isn’t catching, and Microsoft is actually indirectly telling developers with the Windows 8 unified strategy that WP (7 or higher) is going away sooner rather than later anyway, where are the Windows 8 prototype/show/reference phones at CES?

Even the CES-announced (promised for March) LG phone featuring the new Intel (!) “Medfield” CPU for smartphones will be running, wait for it… Android!?

8) The Q4 sales figures tell the tale that Microsoft is running behind on a PostPC Era that appears to be upon us (and them) a lot faster than just about anybody predicted:

From GigaOm’s Macs sales growing, but U.S. PC market stagnates:

Things were so bad, IDC has dubbed 2011 the “the second-worst year in history” for the U.S. PC market. The overall 5 percent contraction of the market since 2010 is second only to the 12 percent decline after the Y2K buildup and the dot-com bust of 2001.


This while Apple managed to sell about 300,000 more Macs and grow 18% to a U.S. market share of nearly 11%. But I consider that more of a Halo-Effect from the mindshare captured by the iPhone and iPad. Yes, the 2011 Macbook Airs were really sexy which is why everybody copied them since late last year and at this CES as (Wintel) “Ultrabooks”.

But that doesn’t explain how U.S. PC shipments dropped by nearly 1.4 Million in the quarter Y/Y, or even more with the Mac growth factored back out. Despite some macro-economic headwinds, the only thing that explains this is the “iPad effect”:

Apple has likely sold around 40 Million iPads in 2011 globally (just under 15M in 2010). Let’s say half of those are U.S. sales, so 5M per quarter on average. And the actual numbers for the Q4 Holiday Shopping quarter should be a good bit higher than say Q1/2011 where additionally the iPad 2 wasn’t even shipping yet, so 5M for Q4 is actually pretty conservative. [UPDATE: Apple announced 15.4M iPads sold globally in Q4 at their earnings call. So my 5M number for the U.S. sales estimate still feels conservative.]

That would mean that Apple has taken 5M of 23.5M (18.5M PCs + 5M iPads) = 21.2% share with the iPad alone! Add to that the 11% (of the 18.5M) Mac share and Apple is at about 29%. It’s not that COMPUTER sales are really dropping, it’s that a lot of iPads and other tablets are replacing a lot of new PC purchases for the mainstream user.

And this phenomenon is only expected to grow, analysts think Apple might sell 55M total iPads in 2012. One must wonder if there so much pressure on Windows 8 on tablets to be a success that it is setting it up for failure?!

Blog Is Back In Action

Strategic PlanAs I’ve mentioned previously, I had been doing a lot of Curation over at, but the community there due to various issues is now nearly defunct (the arrival of Google+ for Interest Graph related discussions was partially responsible). And more importantly, the response time of Amplify has gotten so slow that I feel I can no longer even use it as an archive.

In the last 7 months most of my blogging and curating has happened on Google+ (find me here and add me to your Circles), but for various reasons that I will explain later (one of them is that the affordances for longer, more serious posts with multiple images or screencaps are still very poor there), I’ve come to the conclusion that I want to revive this blog.

As a first step, I am going to republish (and update) a number of key posts from both my Amplify and Google+ streams, those with the most evergreen value to refer back to in future posts, of which I have quite a few in the pipeline.

Here are the topics I have been writing most frequently about, designated by #hashtag for easy recognition on all services (Blog, Google+, Twitter, asf.):

#Dinomedia – issues around Old Media still trying to resist the digital age, and is still confused about the problem of

#Freeconomics – how to still charge for something when everything digital is trending toward $0.

#Content – the overall problem of Content Overabundance and the Content Creator’s Dilemma, and how they relate to #Blogging and #Curation.

#MobileWars and #TabletWars – Apple’s iOS against… well, mostly it’s just Android now, even though as I predicted, the going is much tougher for Android on tablets than on smartphones.

#PatentWars – especially in Mobile, but in general in technology and software. In the past I have also filed many items under #PatentlyAbsurd, and sometimes under #CopyWrong, where we are dealing more with the issues of Copyright in the Age of Freeconomics and Moving The #Freeline.

#GeoWars have been a subsection of Mobile topics, and while they aren’t burning as brightly as they did in 2010/2011, we’ll keep our eyes on the developments there. Basically, Foursquare has been pulling away in the space, in part due to its keen understanding of #Gamification.

Last but not least, I always collect and write about #Mindhacks (especially Business Mindhacks such as #Pricing and #Branding psychology that has reared its head in a big way for the would-be iPad competitors), #Lifehacks, and Productivity / Getting Things Done ( #GTD ).

I will very likely include a new/updated detailed “pillar post” for each of these. The Business Mindhacks blog is also going to get a visual redesign in short order, including an overhaul for better rendering/readability on Mobile devices.

By the way, today 31 / 366 = 8.5% of your year have already expired. Time to get busy. Tick tock…

Best wishes – Alex Schleber