Monday, August 08, 2016

[Tech] State of Tech

When I heard Verizon was in going to buy Yahoo, my thoughts turned to Computer Shopper magazine. You're probably too young to remember Computer Shopper (it might still exist as an emaciated shadow of its former self), but it was an enormous computer oriented magazine -- and when I say enormous, I mean physically. Unlike most magazines which are roughly 8.5 x 11, it was 11x14. Apart from the glossy cover it was printed on pulp, and its 800-ish pages made it about two inches thick. Every single month. There were the requisite reviews and opinion pieces but the vast bulk of it was filled with ads for white-box PC compatibles (as desktop computers were then known) in various states of assembly, or parts for those who could roll their own. Back then, there were actual differences in the PC compatibles and which hardware/software combinations made the best machines was a matter of some debate among the nerdy set. Now there are maybe, what, 6 or 7 practical sources for PCs, almost exclusively of Chinese construction, and the only way to tell the differences is in measured testing and only obvious in edge cases.

Similarly, PC Magazine used to hold an annual Word Processor review. In their heydey, there were dozens of choices often with significant differences in features and performance and interface philosophy. Now there is MS Word and couple of minor others that do their best to copy MS Word on the cheap. But then, people don't generally produce "documents" such as they were. We complete forms and templates, write email or text messages, compose posts and tweets, and so forth. All these need a simple, specific interface, not the generalist tool of MS Word. The majority of my writing is done in Google Docs.

It has been a remarkable transformation in the technology market over the past quarter century from the wild west of garages and basements to the oligopoly we are settled into. The purchase of AOL and Yahoo is Verizon's attempt to stay relevant. I don't have much hope for them. Let's review the players.

Google has to be considered the top dog. Their fingers are in everything, and they seem to be pretty well positioned in most markets, although Facebook probably has the better social media presence -- Google has youtube; Google Plus seems dead in the water, but it's still valuable as platform waiting in the shadows for Facebook to screw up. Google has the best ad engine in history. They own search, which is now much more than search. In my discussion of snapchat in another post, I opened my browser and typed "what are the advantages of snapchat" and it guided me to a number of pages. That's a very powerful position to be in. Think of all the ways you used to try to find info on anything in the past -- now all you have to do is ask you browser and you'll get links and videos galore - the only price is an ad or two to look at and some stranger possibly tracking your preferences. That's not bad.

Google has a hardware brand without actually making the hardware. The Nexus line of phones and tablets, all of which are good enough, but nothing more. They own Android which I hate but, again, it works and it sells and is open for use in just about anything. They have an outside shot at an operating system/pc combo with chromebooks. As most everything moves to the cloud, a decent chromebook is probably all you need, right? We'll see. For content delivery they have Google Play (new, but promising) and the Chromecast stick device thing (meh).

Google also has an toe in pipes and tubes. They're rolling out Google Fiber at an agonizingly slow pace, but wherever it hits, it can put your cable company to shame for throughput. And now they have the Fi service to complete with cell providers, and frankly it's probably the overall best product in that space, unfortunately you need a Nexus device to use it. All in all, Google is in a terrifyingly good position.

Most people would say their biggest competitor is Apple, but I think it's Amazon. Amazon is the only store left standing in any non-niche sense. About the only thing you can't get from Amazon is products that are fairly specialized and can be purchased simply from the producer. Plane tickets comes to mind. Certain tech items you probably will buy direct from Microsoft or Apple or Dell. Amazon still doesn't do great with groceries, but nobody does. And of course eBay also counts as a competitor for sales. But generally if you have something to sell, you're better off setting up an Amazon storefront and taking advantage of all their tools rather than trying to roll your own. The power of Amazon's position is best illustrated by seeing what a weakling WalMart, one of the biggest retailers in history, looks like when they try to compete. The only potential competition they face is Chinese retailer Alibaba. It will be interesting to see how things progress forward as the two companies butt heads more and more. (A Jack Ma vs. Jeff Bezos throwdown would be epic.)

Although Amazon has eschewed tubes and pipes, they have yet another area where they are the 900 pound gorilla and that is cloud sourcing. Amazon Web Services is enormous and they have a huge leg up on anyone else when it comes to hosting cloud functions. This is really back-end/behind the scenes stuff, but one way to think about it is that cloud services are your personal computers when everything is on the cloud. That gives you a sense of how big this market is and Amazon already has a dominant position.

Another unique move for Amazon is in content, where they are leveraging their Prime service. Prime music can't compete with Spotify (yet) but it's improving and it has the advantage that it's already got a huge base of possible users. You still have to sign up for Spotify (and 30 million have) but there are more twice many Amazon Prime users. So let's say you are like me and you've had Amazon Prime for years mostly for the free shipping. Or let's say you're a Spotify user and you decide to get Amazon Prime for free shipping or for video content. In either case, as soon as Prime Music approaches Spotify in features and selection, I am either dropping or never considering Spotify -- it's superfluous. The same argument can be made for Prime Video vs. Netflix. Both Spotify and Netflix will be at a constant disadvantage because of how Amazon has brilliantly leveraged their retail strength.

Amazon has tried their hand at devices and it hasn't been encouraging. The standard Kindle line has been a great success, but the Fire tablets less so and the Fire phone was an outright flop. (Personal aside: I have a Fire phone a Fire tablet and a Fire stick. The phone has ceased to be able to charge. It doesn't even know it's plugged in. The tablet freaked out after the last OS update and now thinks it's ad supported when I paid for it to be ad-free. It was lousy tablet anyway. The Fire Stick is a solid streamer, but no more Fire things for me.) And then there's Alexa and those re-order buttons you can buy -- I suppose it's possible those will succeed, although I have heard nothing to suggest they will.

But that's a comparatively small concern. I don't see any lessening of Amazon's might in the upcoming years.

Apple has to be one of the most overrated companies. As near as I can tell they have one asset: the iOS ecosystem. That's huge, but beyond that I don't see anything. Apple Music (iTunes) is sizable but no longer the leader and were it not for it's deep integration with iOS, it would be an afterthought. Apple TV has made no inroads. Macs, like all personal computers, are flatlining at best. What is Apple's strategy for the future? They have no play in Pipes and Tubes. They have no play in Content. They have no play in the Cloud. iOS is, quite frankly, better than Android, but as we have seen, better is no guarantee of growth. Profits are still huge, as is market cap, but as I see it Apple is no longer an innovator and a tech leader. Their latest big product release was a essentially a copy of the Microsoft Surface. They are milking a cash cow now. Steve Jobs is spinning like a blender.

Microsoft is really the most interesting one of the bunch. Like Apple, they are milking a cash cow, but theirs is a little more broadly based: Office/Windows. They also have solid software positions in various development tool/back end markets. They have the IE/Edge browsers, the only value of which that I can see is that it can have Bing as the default search and hope you won't bother to change it to Google.

On the hardware side they have Xbox, which is a worthwhile thing to have as a potential platform unifying games and streaming entertainment. The Surface line of tablets and laptops has had some success, but to what end in the cloud future? Windows Phone/Mobile has cement boots, which is sad because it was the best phone interface ever made and the hardware was as good a iPhone. Microsoft has suffered this fate before with Zune, which was also quite wonderful and actually set software design standards for much of the current clean and flat styling you see in apps. Note: I was using my Fire Phone as a dedicated music player and when it died, I fired up my old Zune and it didn't miss a beat.

They bought Skype which conceivably would have put them in position to create a Google Fi type carrier service that switches between wi-fi and cell networks for calls and texts, but Google, not surprisingly, were the ones who made it a product.

Groove Music, their music service is another instance of Microsoft keeping its fingers in things with a market afterthought, like Bing and Windows Mobile. It's almost as if they are intending to keep these products around in the hopes of having technology ready if a unifying vision ever occurs to someone.

Right now that vision seems to be a focus away from the consumer to the business market which their purchase of LinkedIn seems to align with. They have a solid cloud strategy, called Azure, leveraging their Office products into a software-as-a-service offering and presumably offering very hardware/networking combinations with Surface as a managed point of entry and various remote services including Skype. Their vision messaging on this sucks but I could see businesses, and not just big corps, becoming "Microsoft shops" again, as many were back in the early 2000s.

On the other hand, Microsoft has a remarkable propensity for developing great products only to have them fail for one reason or another, so who knows. Like I said. The most interesting player right now.

The only other name that comes up in a Tech oligarchy discussion is Facebook, but Facebook is a one trick pony. You have to admire the eyeball count, but they are pure social media. They'll make tons of money, and what with the Instagram and Whatsapp purchases they will battle Google for the consumer profiling dollars. But as a prime influencer in tech, I don't see much.

So that's what makes Verizon look so lame. A solid old school carrier and couple of beatdown consumer profilers (AOL, Yahoo) do not relevancy make.

The long term oligopoly is shaping up with Google and Amazon as GM and Ford and the rest as a handful of smaller orbiters. The good news is that perhaps that means stability of some sort is coming and we won't have interfaces to re-learn and incompatibilities to struggle with. At least until the next revolution.