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Apple Installed Base (Number of Users)
Apple Installed Base (Number of Users)

For the second year in a row, Apple held a developers conference that should frighten its competitors. Relying on a nearly maniacal obsession with the user experience, Apple is removing oxygen from every market that it plays in.

At the same time, the tech landscape is riddled with increasingly bad bets, indifference, and a lack of vision. Apple is pulling away from the competition to a degree that we haven’t ever seen before.

Source: Above Avalon: Apple Is Pulling Away From the Competition

Above Avalon analyst Neil Cybart says Apple is stealing a march on other technology companies. He says the company has made long-term decisions that mean its rivals will struggle to catch up.

The story needs to be read through a careful filter. Cybart writes about the company both from an investment point of view and from a Silicon Valley perspective.

This doesn’t necessarily make his analysis biased or wrong, it isn’t,  but it can lack broader context.

Coherence

Cybart’s main idea is that Apple has pulled now all its strands together. The range of products and services has a new coherence and a clear direction.

This, according to Cybart, comes at a time when rivals are weakening.

Together these two trends have set up conditions that will move the company even further ahead of rivals over the next decade.

He makes a good case. Yet there are flaws in this line of thinking. Maybe flaw is too strong. Let’s say questions.

Samsung lack of vision

In the middle of the web post Cybart lists the ways Apple is beating key rival technology companies. He, rightly, notes that Samsung “remains rudderless from a product vision perspective.”

While that’s true, Samsung is a major component supplier to Apple and other hardware companies. If you look closely at Samsung’s financials, it’s clear the areas that compete with Apple are not central to Samsung’s profits.

The areas where the two companies co-operate are more important to Samsung.

Cybart correctly dismisses Google and Amazon as direct rivals. In the greater scheme of things their hardware products are inconsequential. Yet both remain on growth trajectories that could yet pose a threat to Apple.

Microsoft hardware

Microsoft’s hardware move has failed to alter the balance of power between Macs or iPads and Windows hardware. Cybart is right on the money when he says Surface mainly takes business away from Microsoft’s Windows partners.

Yet like Amazon and, to a lesser degree Google, Microsoft is powering ahead with cloud computing. These companies are building a significant digital world where Apple doesn’t play.

This is not a criticism of Cybart’s story. He is on the money as far as personal computer hardware and its immediate successor technologies are concerned. Apple does look set to dominate.

Beyond this there are parallel markets where Apple is, at best a bit player. These markets interact with Apple’s market. In the future they may interact in ways that are not yet clear.

Shorn of context, Apple is powering ahead. But let’s not forget Amazon and Microsoft are also powering ahead. Technology is not a simple zero-sum game.

At this week’s NZ Tech Podcast host Paul Spain threw me a hospital pass: Is it time to stop hating Microsoft?

Younger readers may not remember, but at one time Microsoft was unpopular in many circles. Yes, there were even people who hated the company.

There were reasons for this. Pedants might argue Microsoft Windows was not a monopoly. Yet its 95 percent plus share of desktop operating systems sure felt like one.

Abusive monopoly

In effect Microsoft called all the shots. At times it abused its monopoly. It wasn’t always ethical1.

There are too many examples to mention. People have written books and doctrinal theses on the subject.

Microsoft attempted to parlay its desktop OS monopoly into other areas.

At one point it set out to win the desktop applications software market. Microsoft Word and Excel were up and coming challengers at the time.

The Lotus position

There are reports an internal message went to developers: “Dos ain’t done until Lotus won’t run”. In other words, bosses told them to build the operating system so a rival spreadsheet was useless.

That story may be a myth. Yet it explains why there was so much ill-will towards Microsoft. The accusations didn’t have to be true. They only had to feel true.

There are actual examples of bad behaviour. Some ended up in court.

The Internet Explorer antitrust action was a low point.

In those days critics suspected Microsoft’s motives even when it did good things.

In 1997 Apple was struggling and needed cash in a hurry. Microsoft came to the rescue. It agreed it would support a Mac version of Office for five years. It is still going today. Apple agreed to drop a law suit over Microsoft copying Apple’s OS look and feel.

Microsoft personalities

Microsoft’s key personalities did not help. Bill Gates’ rubbed people up the wrong way. Steve Ballmer took that to new levels.

Ballmer left Microsoft in 2014. While he was boss the company’s share price stagnated. So did its technology. And the company’s hardball attitude. Often Ballmer would sink innovative projects to protect the Windows and Office monopoly.

Some of that was baffling. Like the excellent iOS versions of Office apps which was held back from the market.

Nadella takes over

Early in 2014 Satya Nadella took over the reins. He moved the company into cloud computing. More to the point, Nadella stopped the aggressive defence posturing.

Today’s Microsoft is a different beast. It is still big, some of the time it is the world’s largest company by market capitalisation. It can still upset people. Every large corporation has its critics.

No doubt there will be those who continue to hate Microsoft. You don’t get to be number one without creating a few waves. Yet there is less to hate, less to object to.

Even, gasp, Microsoft Open Source

Today Microsoft has embraced open source. It is possibly the world’s largest provider of open source products. By some measures the company’s Azure cloud services uses more open source than proprietary software.

Windows is no longer a monopoly. It still runs on more computers than any other OS. But it now has to compete with ChromeOS, MacOS, iOS and Android. It doesn’t dominate.

Likewise while Office remains popular, it is not the only game in town.

You don’t have to love Microsoft. Actually that would be weird. There are still plenty of things to criticise. But if you carry a grudge from 20 years or so ago against a company that is now different in many ways, that seems like a waste of energy. Go and do something creative with it instead.


  1. What’s the point of building a monopoly if you don’t abuse it? ↩︎

A week ago Catalyst Cloud launched a low-cost storage service. Or to be accurate its Object Storage service. You can see the full press release at Scoop.

The story didn’t get a run in any reputable New Zealand media.

Contrast this with the extensive coverage Microsoft got the following day when it announced it was opening a New Zealand cloud region.

The Microsoft story was everywhere. It popped up at Stuff, RNZ and Reseller News among others. There were overseas runs at TechCrunch, CRN and Computerworld.

The prime minister even talked about it on TV.

Big run

My point here isn’t about New Zealand media giving the overseas company a bigger run than the local company. Although that could be a story in its own right – see Comparing the stories below.

What the contrast between two stories show is how much damage the lack of local technology coverage does to New Zealand’s home grown technology sector.

No-one here has the resources to file a story that is, by local standards, somewhat significant.

No one is watching, does anyone care?

We no longer have a native technology press. It’s a situation which, presumably, will be worse again if or when Stuff is no longer operating as a separate entity.

Last month Bauer Media closed its New Zealand operation shutting off Peter Griffin’s excellent regular features in the Listener.

The most visible remaining NZ tech title, Reseller News, is run out of Australia, with a part time local reporter. The Herald, Stuff, RNZ and Newsroom all have the occasional story, but it is mainly sporadic and far from comprehensive coverage.

An exception would be Juha Saarinen’s regular Herald columns.

This web site is also sporadic. There are stories here, but they are written in between my paying journalism work. That means it can’t be timely.

There are a couple of other outlets, but the big picture is that New Zealand can no longer sustain a commercial tech publishing sector with the resources to cover stories like the Catalyst Cloud storage launch.

Filling the vacuum are many overseas sites. Whatever their merits, they are not going to zoom in on the activities of a local cloud provider.

Comparing the stories

There’s no question the arrival of a New Zealand Microsoft cloud region is the bigger news story. Microsoft is the world’s second largest cloud operator, it has many customers here and there is a pent-up demand for a world-scale cloud operator to open shop in New Zealand.

In contrast, the Catalyst story, is, in effect, not much more than a feature update.

There are interesting angles to the Catalyst story. The cost of its Object Storage is on a par with costs for world scale cloud operators. It costs three cents a month to store a gigabyte.

The ‘everything is stored in New Zealand’ angle would be important, but then it’s also an important part of Microsoft’s story. And, no doubt, Microsoft could make the same claim about only using renewable energy.

Uphill battle

What this illustrates is the uphill battle a company like Catalyst has to be heard above the noise.

It must be galling for people at Catalyst and other New Zealand technology companies to do something innovative like introducing low cost cloud storage only to wake the following day and see a rival’s news splashed around the place.

Longer term it is a worry. Wikipedia says:

“If a tree falls in a forest and no one is around to hear it, does it make a sound?” is a philosophical thought experiment that raises questions regarding observation and perception.

Tech companies need that observation and perception. New Zealand’s tech sector no longer has either.

Microsoft’s uses Surface to take the laptop fight to Apple. While it leaves mainstream Windows hardware to the likes of HP and Dell, its own brand adds an element of sophistication and a different take on innovation.

This week there was a new Surface Book and a new Surface Go.

Surface Go is Microsoft’s smallest and cheapest tablet. Local prices start at less than NZ$600. You can get cheaper tablets, but anything other than an iPad or Surface in that price range or lower is likely to disappoint.

More screen, less bezel

The new Surface Go 2 is the same size as the earlier model, but the screen size bumps from 10 to 10.5 inches. That’s thanks to smaller bezels, the edge around the screen. Surface Go 3 works with existing Go 3 accessories.

That kind of size increase might not sound much, in this case the screen resolution also increases to 1920 x 1280 pixel. The battery is bigger, Microsoft says you now get 10 hours.

There is also a new model with a faster Intel 8th Gen Core m3 processor. Yet the base model still comes with a Pentium Gold processor, that’s the same as the earlier Surface Go. You might want to avoid that.

Surface Book 3

It has been three years since the Surface Book 2. Longer since the first Surface Book. The models brought innovation and style to Windows, although at a high price.

The Surface Book 3 has a big speed bump, there are 10th generation Intel processors and updated NVIDIA graphics.

Sadly, there’s not much else to excite potential buyers. Physically the new laptops look much the same as the models they replace.

They still have the neat ability to unlock and remove the screen so it can be used as a large tablet. In my review of the earlier Surface Book I speculated that owners rarely use this feature. That appears to be correct.

Interesting hybrid

It still feels like the most interesting variation on the Windows 2-in–1 hybrid theme. Yet it would be nice if there was some fresh innovation in this department. When the first Surface Books appeared the design was well ahead of the curve, today other notebook models feel more up to date.

Microsoft hasn’t sent out review models in New Zealand to date. From the promotion material it looks as if the new Surface Book models continue the solid, well constructed design. Surface Books feel more robust than other mainstream PCs. Apparently it is heavy by laptop standards at about 1.5 kg for the 13.5-inch model.

The next comment will annoy many Windows fans, but the touch screen Windows 10 operating system doesn’t always feel right on 2-in–1 hybrids from other brands. Microsoft seems to have nailed this aspect of design in the past and there’s no reason why the Surface 3 doesn’t continue that legacy.

On the fifth anniversary of Windows 10, we look back at what it was supposed to be and what it ultimately became. Almost nothing turned out as planned, and that’s OK.

Ed Bott brings the state of Windows 10 up to date at ZDNet with: Windows 10 turns five: Don’t get too comfortable, the rules will change again.

He writes:

I celebrated the occasion by upgrading a small data centre’s worth of Windows 10 devices to the new build and monitoring for glitches. This year, the process was refreshingly uneventful and almost shockingly fast. On newer PCs, almost everything happened in the background, and the wait after the final reboot was typically five minutes or less.

Five minutes seems incredible. There were early iterations of Windows 10 where you might need to set aside the best part of the day for an upgrade.

That was for the essential pre-upgrade back-up along with an hour or so for the upgrade itself. On top of that was time needed to familiarise yourself with the new reality.

Often things would go missing. In some cases key features would be dropped or change beyond recognition.

One lesson at that time was to never automate or customise Windows 10 because you’d never know if an update would break everything.

There were also times when an automatic upgrade might happen without warning and you’d wake up in unfamiliar territory.

It’s not clear to me how long it took Microsoft to get Windows 10 to the point where upgrading stopped being a risky venture.

Microsoft’s cunning plan

Ed Bott:

Back in 2015, Microsoft’s vision for Windows 10 was expansive. It would run on a dizzying assortment of devices: smartphones running Windows Mobile, small tablets like the 8-inch Dell Venue 8 Pro 5000 series, PCs in traditional and shape-shifting configurations, Xbox consoles, the gargantuan conference-room-sized Surface Hub, and the HoloLens virtual reality headset.

In 2020, that vision has been scaled back. Windows 10 Mobile is officially defunct, and small Windows 10 tablets have completely disappeared from the market. Of all those chips scattered across the craps table, only the 2-in-1 Windows device category appears to have paid off.

There was a time when Windows Mobile, or Windows Phone as it was called, beat the pants off Android and gave iOS a run for its money. Windows Phone 7 was great. It integrated neatly with everything else Windows and Office. For a while the Windows desktop and mobile combination was the most productive option.

Microsoft, being Microsoft, couldn’t resist tinkering with great, making life more complicated. Let’s face it, too complicated.

Windows Phone 8 may have had better features, but it was already on the path to clumsy and cluttered. From that point things kept getting worse.

Of course the real killer was that mighty Microsoft, once the world’s largest company and still among the biggest, couldn’t assemble a credible suite of phone apps.

Microsoft would have done better spending more of its capital seeding phone app developers than on other failed investments. Or maybe it was always a lost cause. It doesn’t matter because a reinvented Microsoft went on to greater things with Azure and enterprise products and services.

There are times when 2-in-1 Windows devices sparkle and shine, but for the most part non-Surface Windows PC hardware feels almost held back by Microsoft.

HP, Dell and others give every appearance of being capable of making great hardware. Yet they never quite reach the lofty heights. Ever so often something special appears, but you have to move fast and buy it at the time because the good stuff never gains traction.

Likewise Microsoft’s own-brand Surface products don’t always hit the target. There have been missed. Yet on the whole the Surface experience is fine even if product reliability isn’t up to scratch. And if you want to spend that much money, Apple can look relatively inexpensive by comparison.

On conspiracy theories

More Bott:

And then there were the dark scenarios that Microsoft skeptics spun out around the time of Windows 10’s debut.

The free upgrade offer was a trap, they insisted. After Microsoft had lured in a few hundred million suckers with that offer, they were going to start charging for subscriptions. Five years later, that still hasn’t happened. If Microsoft is running some sort of hustle here, it’s a very long con.

There’s more conspiracy coverage in the original story. As Bott says, it is all nonsense. The conspiracy theories looked daft at the time. They showed a lack of understanding about Microsoft’s direction and where Windows 10 fits in the big picture.

Windows 10 did the job it needed to do

As Bott puts it:

Despite the occasional twists and turns that Windows 10 has taken in the past five years, it has accomplished its two overarching goals.

First, it erased the memory of Windows 8 and its confusing interface. For the overwhelming majority of Microsoft’s customers who decided to skip Windows 8 and stick with Windows 7, the transition was reasonably smooth. Even the naming decision, to skip Windows 9 and go straight to 10 was, in hindsight, pretty smart.

Second, it offered an upgrade path to customers who were still deploying Windows 7 in businesses. That alternative became extremely important when we zoomed past the official end-of-support date for Windows 7 in January 2020.

It’s taken Microsoft eight years to recover from Windows 8. In some ways it still hasn’t fully recovered. It may never recover. Windows 8 was the point where Microsoft no longer dominated.

Yes, things happened elsewhere. There was a switch from PCs to phones. But the key point is that when Microsoft faced the first serious competition to its dominance, it released a terrible operating system. Or at least the wrong operating system to meet the challenge.

Windows 10 didn’t halt Microsoft’s OS decline

If anything Windows 8 accelerated Microsoft’s OS decline.

Stockholm syndrome means that many Windows fans couldn’t see how awful Windows 8 was. Switching from 7 to 8 was a horrible experience. People who could put off those upgrades and stayed with 7. Today about 20 percent of all OS users still have Windows 7, an operating system that is well past its sell by date. Microsoft no longer supports 7.

Other users switched to Apple, Linux or even ChromeOS. And there was a huge switch away from computers to phones.

Before Windows 8 Microsoft’s OS market share was around 90 percent. Today it is about 35 percent and comes in behind Android. Apple is about 8.5 percent.

Windows 10 offers a credible path for Windows 7 users. The fact that so many users, especially enterprise users, have stuck with 7 tells you how bad things were for Microsoft.

To a degree Microsoft has lost interest in Windows. It no longer makes rivers of gold from the operating system. At least not directly. It remains important as a gateway for business users to move to the company’s Azure cloud services. But the days when Windows called the shots are over.