Is Windows Officially Shattered?

According to various news stories published this week, Microsoft will reverse course on their Windows 8 strategy during the next major update to the operating system. User backlash has been so strong against the changes introduced in Windows 8 (as record-low sales figures seem to support) that analysts expect that the codename “Blue” update due by the end of the year may include a return of the “Start Menu” as well as a way for users to completely bypass the “tiled” interface that is the defining characteristic of the Windows 8 interface.

Many are calling this the biggest commercial failure since New Coke. As I have described in my previous articles about Windows 8, Microsoft needed to hit a home run with Windows 8. Unfortunately, it seems they have struck out and Windows 8 now has a nasty stigma associated with it, just like Windows Vista. The difference is that Microsoft had time to recover from their previous debacles. The mobile device market dominated by Apple and Google is moving much too fast for Microsoft. I don’t believe Windows 8 will be able to shake the “New Coke” label in time to seriously compete in The New World of Technology.

As before, this is simply another sign for small business owners, professionals, and technology-concerned individuals to plan their migration away from a Microsoft-dependent environment. The writing is all over the wall here. There’s no use in crying over the new “New Coke”.

The PC Market is Flatlining

This news was so big that it was even being covered by the mainstream media yesterday: for the first quarter of 2013, PC shipments fell by 13.9% according to research firm IDC. This is the largest drop in PC sales since 1994, which is when IDC began tracking this information. Competing company Gartner, which uses a different methodology to track shipments and sales, reported that PC shipments fell by 11.2%, also one of the biggest declines in history.

It’s no secret PC sales have been declining over the last several years. PC industry pundits have been contorting themselves in all sorts of different ways to try to explain why this is, but most are simply avoiding the stark reality: the PC era is over. It’s time to come to grips that we are in The New World of Technology.

The underlying theme to this story is the fact that Windows 8 has done nothing to help PC sales. The real question, given the lackluster response to the operating system, is Windows 8 actually hurting PC sales? As I’ve said before, unless Microsoft hits a home run with Windows 8, the future of the company is seriously in doubt. At this point, it not only seems they’ve struck out, but to continue the baseball analogy, it seems they’ve let the runner get doubled up as well.

What does this mean for you? If it hasn’t been clear to you before now, hopefully news like this makes it glaringly obvious that you must get on board with New World Technologies NOW. The time to wait has long passed. Those who have waited to this point are already at a big disadvantage to those that have already begun benefiting from all that new technology has to offer. Anyone who continues to wait, especially from a business perspective, does so at their own peril. Specifically, if you thought Windows 8 was going to be Microsoft’s resurgence, all evidence points otherwise.

Do not invest further into Microsoft-based technologies without consulting with experts who have experience with both Old World and New World technologies. All too often, those who were experts in Old World technologies have little to no experience with New World technologies in a real-world environment. They show a bias towards Old World implementations because that is all they know and are comfortable with. Make sure you are getting advice from those who have actual experience with both New and Old World technologies and can make unbiased recommendations based on your needs, not their own.

The 8 Biggest Trends at CES 2013 – Slideshow from PCMag.comPundits were decrying this year’s CES from the get-go, thanks to Microsoft pulling out of the show for the first time since the mid-1990s.

I wanted to respond to a couple of things the author said.

There’s also a general sense out there that devices really aren’t the story anymore. Hardware manufacturers don’t want to hear that, necessarily, but it’s true that it’s no longer about specs for the majority of consumers. It’s more about what apps you can run and what services you can use—especially now that, as a rule, hardware has become powerful enough to do what people want.

I couldn’t agree more! But I’m surprised it’s taken this long for others to realize.

Hardware design will always be important, and in fact, it’s more important than ever. But the days of shopping for a PC based on how much RAM it comes with or how fast the processor is are pretty much gone, and that’s beginning to hold true for phones and tablets too.

Beginning to hold true for phones and tablets? It’s been true since the first day the iPhone came out! Welcome to The New World of Technology, buddy! Better late by 5 years than never, I guess

Early reviews seemed to back up my own testing. The Windows RT (and Windows 8) operating system felt like Microsoft had created a Frankenstein-ed mess, clumsily throwing together concepts from traditional Windows with a brand-new tablet interface. The Surface all together just did not feel like a final, polished product, awkward to use and rough around the edges. It’s been a few months now and unfortunately for Microsoft, the reviews haven’t changed much. I read an article, Sorry Microsoft, I am breaking up with the Surface, that highlighted many of the issues I uncovered.

After too many hours trying to make the Surface fit into my daily work routine, I have placed it on a shelf while I use other devices to go about my business.

This is exactly what many of my clients did with older tablet PCs running Windows that were available years before the iPad. They were all excited to get them, and then the reality of the the devices were underwhelming at best. Many of them went unused or relegated to use as a heavy laptop. It looks like Microsoft hasn’t learned their lesson.

It’s because I require the gear I use to do everything I need and without fuss. The Surface fails me in this regard despite a big effort on my part to make it work.

“Without fuss”. That is exactly what most people expect from their technology devices. Which is exactly what Apple delivers so much better than any other company. Which is exactly why Apple catapulted past Microsoft and everybody else to become the most valuable technology company in the world.

Whatever the reason, I am tired of constantly trying to get stuff done with my Surface, only to put it away after a few hours in sheer frustration. I can pick up any other gadget in my possession, and that’s quite a few, and easily get things done with little effort.

Do I need to go on?

I am sure some will think I’m too sensitive or that I haven’t given the Surface with Windows 8 enough time. That may be but I’ve given it far more time and effort than I’ve given any other platform and device I’ve used. It’s left me in a continual state of frustration every time I’ve used the Surface to work and I just can’t take it anymore.

I think this statement can easily apply to the Old World of Technology in general. Years of suffering with hard-to-use technology left people frustrated. As soon as a viable alternative showed up, people flocked to Apple and haven’t looked back. Microsoft’s Surface is a throwback to those long days of suffering, and I don’t think anyone wants to go back to that.

I long ago wrote off RIM, er BlackBerry, as dead. Once they announced they were delaying BB10 until after the 2012 holiday season, I called Time of Death. Truly, last year was their only chance at capitalizing on a new platform, and by missing the holiday season, they effectively lost an entire year. Assuming there even is room for a 3rd place competitor in the mobile device market, BlackBerry will be fighting for table scraps against Microsoft and there really won’t be any winners in that war.

By and large, most pundits agree that BlackBerry’s chances are extremely slim. But if you follow the technology industry at all, or if you are exposed to people in the technology industry, you will read or hear some positive reviews as well as some arguing that BB10 will save BlackBerry. Let me summarize why none of this matters, especially to consumers and small business owners.

While I haven’t had any hands-on with a BB10 device (the devices won’t be released until March or April), many reviews are positive regarding the BB10 user experience. I won’t argue those points. The real question should be is BB10 so much better than its competitors that it will cause a huge defection from people using iPhones or Android-based phones? Almost certainly not. Especially considering that changing phones will mean the loss of purchased apps for that platform, and in the case of the iPhone, a move away from the iTunes ecosystem. BB10, just like Microsoft’s Windows 8 phones, will have a huge challenge fighting the inertia of the installed user base of the iPhone. Evidence shows Android phone users are not as loyal, so they might gain some adopters from that platform, but not likely much of any consequence.

Why should you care if BlackBerry has a large marketshare? The reality is that most developers will not put the effort into writing Apps for a platform without a sufficient user base to profit from. But without quality Apps, a platform will not attract a large user base. It’s a chicken-and-egg problem that BlackBerry just doesn’t have the time or financial resources to overcome. Microsoft maybe, but even that’s to be seen.

One train of thought I’ve seen from technology writers is that the BlackBerry 10 will be a hit among its traditional stronghold of corporate IT departments. They claim that IT departments will be eager to upgrade the BlackBerry devices they currently deploy to their corporate users. This might be true, although there is also a chance that IT departments will be slow to adopt the entirely new BB10 platform, either because they want to take the time to thoroughly test it or because they aren’t convinced of its future. Even assuming that IT departments like the BB10 platform, the reality is that it simply doesn’t matter.

First, corporate smartphone users, who used to make up the vast majority of the market in The Old World of Technology, now make up a fraction in The New World of Technology. Consumers and small business owners now rule the roost, and they have all but forgotten about BlackBerry. Second, because of this consumerization of the technology market, the Bring Your Own Device (BYOD) movement is spreading rapidly across the corporate IT world. In a nutshell, BYOD is the idea that employees are expecting that their workplaces will support the use of their personally-owned technology devices, such as smartphones. By and large, these devices are iPhones – not BlackBerry phones. And by and large the movement is so strong that corporate IT departments have little choice but to comply with their users’ wishes. The era of corporate IT dictating smartphones to their users has passed. The idea that corporate IT will have any significant influence on the smartphone market is wishful thinking.

The bottom line is that if BlackBerry’s only hope is in corporate IT, then they have almost no chance at all. The era of trickle-down technology, where small business and consumers waited to see what technology shook out from big business, is over. Since small business and consumers drive The New World of Technology, BlackBerry has simply become irrelevant. BB10 is BlackBerry’s last gasp before they sink below the surface; don’t get dragged down with them.

At this point, Microsoft’s future is quite uncertain. For as large of a company Microsoft still is, all of their strength lies in the PC market. However, the PC market is shrinking rapidly, largely being replaced by mobile devices such as tablets and smartphones. Mobile devices won’t completely eliminate the PC market, but it will reduce it down to a size that will likely not support a company the size of Microsoft – at least not in the manner they are accustomed to existing. So while Microsoft is in no immediate danger of collapsing, such as a company like RIM, their future 5 years out is shaky at best. Microsoft’s only chance of remaining a dominant company in the future is to compete successfully in the mobile device market. Up to this point, Microsoft has had no success at all.

Windows 8/RT is Microsoft’s attempt to bridge their dominance in the PC market into success in the mobile device market. The Surface is Microsoft’s attempt to inject a level of control over an entire platform, both hardware and software as Apple has successfully done. The strategies are independent yet intertwined. If Windows 8 and RT are wildly successful on their own, it will prove that the Old World Technology paradigm of one company making software for a plethora of hardware vendors can still be viable. However, it appears that Microsoft is hedging their bets and getting their feet wet with hardware manufacturing. If Microsoft’s hardware partners can’t make inroads into the dominance of Apple’s iOS devices and Google’s Android-based devices, then Microsoft’s last hope will be to offer consumers a 100% Microsoft solution, one in which they control all aspects of production and, perhaps more importantly, marketing and promotion. The next few months should give us a good indication how successful Microsoft’s strategies will prove. Unfortunately, even today at day one, it seems they are already off to a rocky start.

So far early reviews have been mixed. The general consensus is that while Microsoft’s Surface may have strong hardware specs, the software leaves much to be desired. Too many inconsistencies and missing features plague the new Windows RT platform. While Microsoft could afford to release subpar products into the PC market, they are not afforded the same luxury in the mobile device market. Consumer expectations are set very high due to the ease-of-use and robustness of Apple’s iPhone and iPad. Consumers and small business owners are not as forgiving of flaws as are corporate IT departments. These flaws could very well hurt Windows adoption on the mobile device front.  Given the rapid pace of technology development and the speed at which products come and go, a slow start is a bad sign for a mobile device platform these days. If Microsoft strikes out with Windows on a mobile platform now, they may be relegated to a third-place also-ran, behind Apple and Google.

Microsoft is betting that those people who currently are still tied to Microsoft on the PC will hold out for Microsoft on mobile devices. While that’s Microsoft’s only bet, it’s not a good bet for consumers and small business. The mobile device market has established itself without Microsoft and will continue to entrench itself over the next few years while Microsoft is still figuring out how to catch up. I can not recommend that any small business wait to see how Microsoft fares in this market. The longer any business waits to jump into The New World of Technology, the further they fall behind their competitors who are embracing it. Waiting for Microsoft to get their act together is time that most small businesses simply can’t afford.

The release of the next iPhone model this fall will mark the second upgrade cycle opportunity that customers will have to switch to the iPhone on Verizon and Sprint. This past year I have seen a high number of my clients switch to the iPhone that have Verizon or Sprint. I know many people who say they are waiting for the next iPhone to switch away from their Android or BlackBerry phones this year. Assuming that this small sample size will extrapolate out further, Apple stands to benefit from some pent-up iPhone demand this upgrade cycle. By next year’s iPhone release, customers on Verizon and Sprint will have had at least two full years to complete the usual two-year contracts that most carriers require before upgrading their phones. I expect that we will see the full impact of Apple’s entry into the Verizon and Sprint markets by that time.

Regardless, even if one is inclined to look at the raw marketshare numbers of the various Android-based smartphones on the market, the reality is that pure volume does not drive the success of the smartphone market. Studies have shown that iPhone users are very different than Android users, primarily when it comes to spending money on apps or driving profits for mobile carriers. In addition, Apple makes a lot of money from their iPhone sales, where most of the various Android device makers are not generating great profits, nor does Google derive any real profit from their Android platform. For the sake of the long-term health of a platform, not making any profits doesn’t bode well for continued industry support.

The bottom line is that any perceived marketshare victories for the Android platform in the past were largely due to the simple fact that people who wanted the iPhone on their carrier couldn’t get it. After this upcoming upgrade cycle, we should see further evidence of the ever-growing dominance of the iPhone. There’s little reason to believe that the iPhone is losing its status as the premier smartphone platform, especially when bolstered by the dominance of the other iOS device, the iPad. If you are considering an iPhone or iPad purchase, proceed without hesitation. If you are planning an Android device purchase on the premise that the Android platform is reaching parity with Apple’s iOS devices, please consider very carefully before committing your money.

• The October 2011 BlackBerry outage was a huge PR nightmare for the already struggling company
• RIM announced earlier this year that that their upcoming BlackBerry 10 operating system would be delayed until fall 2012.
• RIM warned it would post a Q1 loss, its first operating loss in 8 years
• RIM’s stock slipped under $10/share, the lowest the stock has been since 2003, and down from it’s highpoint of $147.55 in 2008
• RIM’s announced loss for Q1 was significantly higher than expected
• RIM cut 30% of its workforce in an attempt to preserve its cash reserves

Even with all that, I gave RIM a sliver of hope that if they could survive until the fall of this year, the release of their BlackBerry 10 operating system before this Christmas holiday season might give them some sales that could keep them breathing for another year. But now, a couple of things have happened that I believe are the final nails in the coffin for this once great company.

First, RIM has just announced that the BlackBerry 10 operating system will now be further delayed until early 2013. This means that they will miss this year’s holiday season, effectively putting them another full year behind the iPhone. That by itself is a fatal blow. Start writing the eulogy because RIM is terminal.

If that wasn’t enough, it has been confirmed that carriers are negotiating to lower the fees they pay RIM for the BlackBerry service. These fees are charged to the carriers by RIM for every subscriber that uses a BlackBerry and accounts for one-third of RIM’s revenue. RIM can ill-afford to lose any revenue right now, but it is likely that the carriers have leverage against the struggling company. Consider that there are no such fees charged by Apple for their iPhones or Google for any Android-based phones or Microsoft for any Windows-based phones. The reality is that due to the legacy nature of the BlackBerry service, RIM must support infrastructure costs that Apple or Google or Microsoft do not. When BlackBerry was king of the Old World of Smartphones, carriers just had to deal with those fees. Now with RIM on the ropes, carriers probably know they can get lower fees. So if RIM loses even more revenue it will only accelerate the end.

The question is what does “the end” mean for the BlackBerry? RIM is rumored to be courting companies to buy them out. The question is who would want to buy them? What company could do anything better with the BlackBerry brand? It may be very possible that no company is truly interested. If this is the case, the end may come suddenly and abruptly for the BlackBerry, possibly leaving their users without e-mail service if some company or companies (perhaps the carriers) do not pick up the management of the BlackBerry service infrastructure. However, even if some company does buy out RIM, will the BlackBerry brand fare any better than the Palm brand did when HP bought them out? HP couldn’t gain any marketshare with their WebOS-based devices and completely killed the line last year. The tale of Palm’s WebOS and its fate with HP seem to be have many parallels with BlackBerry’s situation to this point. Companies may be heeding HP’s costly lesson which would explain why there is little interest in purchasing RIM. Any way you look at it, It seems certain that the days of the BlackBerry are numbered. If you currently depend on the BlackBerry, it would be wise to start planning a migration to another platform as soon as possible.