Content Insider # 120 – Cloud Work
Netbooks…The Easy Way to Sell More Service
“No one gets left behind! No one gets left behind! Outstanding soldier!” Frank (Steve Carell) – Little Miss Sunshine (20th Century Fox – 2006)
There are slightly more than six billion people on the planet.
Not everyone is connected as those folks in the Silicon Valley areas of the world. We have about 15 +/- percent of the adults who work on systems/devices, creating stuff, collaborating, sharing content/information and even blend the devices into their social networks and entertain. They buy newer/better/more devices every 3-6 months.
Then we have another 15 +/- percent who use the basic mobile device applications – email, phone, photo/video exchange, use the web for productivity and creativity.
They upgrade or add devices every 6-12 months.
Jump to the other end of the spectrum and we have about 50% of the folks who:
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suffer from information overload and don’t mind disconnecting now and then
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use their systems, devices “now and then”
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feel the mobile phone, Internet are intrusions to their business/personal life but use them because…they need them
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don’t have/don’t want Internet access, mobile phone
It is pretty expensive and difficult to first encourage the slackers to use the always-on devices/services and then to buy new units more often!
Ok if we want to keep sales of hardware, software, service humming we have one alternative…feed the habit of the connected.
We don’t need to focus on industrial country kids. They figure out a way to justify the next technology.
Take our son.
He’s watching a video of the Mars Lunar Lander, Skyping a friend in Boston, explaining the string theory to us, twittering whomever what a retard his dad is on his notebook, all while texting someone on his smartphone.
Our daughter is on her notebook sorting photos on a photo website, texting friends, listening to music from a radio station in India, studying for a chem exam and recharging her smartphone.
Expanding the User Base
No we need to reach, inform, entice more of the 20-something and older crowd.
According to IDC the PC industry is working on selling the second 2 billion computers (mostly notebooks). The ITU (International Telecommunications Union) says there are over 4.1 billion mobile phone subscribers (yes some have multiple subscriptions).
The noise over the OLPC (one laptop per child) has passed the hype point and has lost its sex appeal.
But Dan Costa over at PC Mag has a better, cheaper, lower power consuming solution for developing countries…the one cellphone per child.
There are reasons it could work (http://www.pcmag.com/article2/0,2817,2344283,00.asp) but sorry Dan you’ll have a tough time building excitement around the idea because it ain’t sexy and it ain’t big dollars.
No the industry and marketplace needs a new “hot” idea.
Something that will appeal to people who count…retailers and service providers.
So the netbook was unveiled.
Bridge Product – Most netbooks offered today provide keyboards larger than smartphones but smaller than notebook keyboards. The screen is usually 8-9 inches in diagonal and the system should provide six-eight hours of battery life. Several mobile service providers are ramping up netbook bundle programs. Photo -- NYTimes
It’s a great idea that will change the course of mankind or as Frank said, “Yeah, we're all with ya on that one.” True it doesn’t slip in your pocket like your smartphone. But it also isn’t as big (or as powerful) as your four lb plus notebook.
Fit Your Fancy – Smartphone producers are adding (expensive) features and applications to their units, they envision nibbling feeding at the bottom of the notebook market. Not interested in losing any of their market to someone else, computer manufacturers are delivering the netbook solution which may reduce some notebook sales but will probably attract more of the smartphone market. Or…we’ll all carry around more devices. Source – NYTimes
The netbook does a few things very well:
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gives smartphone chip suppliers (Qualcomm, Freescale, ARM , Nvidia) new sales opportunities
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gives Intel and 2nd tier PC chip suppliers new outlets
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gives all of the OS folks – MS, Linux, Android new users
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gives us yet another way of staying continuously connected to the world
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Habitual Users – The Internet has become our primary highway to communicate with people around the globe in text and video form. The web has become a valuable resource for personal, business information and entertainment. “Abandoning” online connections for a weekend can often be traumatic. Chart source -- IDC
Mobile service providers make very little or nothing when individuals swap out, upgrade or sign up with a new cellphone or smartphone. Service Sales
It’s all wrapped up in your two year contract.
Sign Here – Mobile service providers make it extremely easy and attractive for consumers to upgrade standard/smartphones and add services such as netbooks and air cards. Upgrading or adding new devices cost little or nothing. It just means an added two years on your contract.
Smartphones like the iPhone really helped the service providers kick up their bandwidth usage.
People not only have to call more people more often (usually hollering while walking down the street or driving down the road) but they increasingly use the units for digital media applications such as music, photo, short video downloads. Thanks to the new app stores you can also use GPS service, play more games, watch TV or just about anything.
Occasionally They Call – People in the Pacific Basin often text more than they talk on their mobile devices because it keeps them in touch and is less intrusive. IMing and texting has grown rapidly in other industrialized countries as well. Smartphones and application libraries have given people even more reasons to stay online to work and play. Source – Nokia
But admit it. The smartphone screen is…small.
Service providers and content sellers need a “little bigger” screen to keep eyeballs attached. And the netbook for these applications provides the best compromise.
Once you go beyond voice and text you become concerned with image quality.
Playing mobile games, viewing video clips, doing content rich communications, web research, watching more video all require advanced capabilities, good battery life and a screen you can watch and appreciate.
Too many people call the netbook the total reinvention of the PC industry because you can do “everything” now with a super cheap device -- $50 to $100 with your contract – with a lighter unit without having to upgrade software, etc because it’s all…on the web!
Well not everything little miss sunshine!
True netbooks are selling (service contracting) well right now.
However even the most optimistic analyst projections indicate that netbooks will achieve about 12% of the total notebook sales.
Zero to 50 – The netbook segment of the computer/phone market has gained a lot of attention because cellphone chip manufacturers see the units as an opportunity to dislodge Intel’s leadership. Google, Linux producers and mobile device OS producers see an opportunity to capture market from MS. While numbers ramp up netbook sales for the next few years will still equal about 15 percent of notebook sales worldwide. Source -- IDC
That’s an important percentage for mobile service providers because as long as they can keep growing their bandwidth and offering more content services that interest, entice, assist people …service volumes will follow.
Bandwidth Busy – As mobile service providers rush to expand the capacity of their service backbone, they are also working to expand the depth and breadth of services – especially video – to entice consumers to use them on a continuing basis for their entertainment. Source: Cisco, NYTimes
Yeah But…
The netbook hypists gloss over the sales volume difference because at least something is selling even though little or no profit is involved.
They ignore the fact that according to some analysts observations about 20 percent of the units are returned because they simply aren’t powerful enough or easy enough to use for heavy gaming, presentation development, long periods of content (text, photo, video) production.
They are great for taking with you to the office or class to handle email, do web searches and light word processing.
Oh we almost forgot.
They are also going to be dynamite for external storage device sales.
Personal Storage – While mobile service and web service providers tell marvelous tales of doing everything in the clouds, netbook sales should also increase the sale of external storage devices such as low-cost, high capacity hard drives and flash drives. So that you’ll never have to worry again, the idea runs counter to people’s desire to have their stuff – data, photos, video, music – with them all the time, and to have it stored somewhere in the cloud.
That’s because of human nature. People will also want their stuff with them. You know your ppt presentations, your business documents/files, personal photos/videos and you know…stuff!
What’s There – The idea of putting your stuff in the cloud and using the slimmed down netbook sounds excellent in theory. But the move often runs counter to people’s desire to have their stuff – data, photos, video, music – with them all the time, and to have it stored somewhere in the cloud. Source – Parks Associates
So they’re going to help the industry’s long tail sales.
Us?
Real Work Machines
Well we have a cellphone for calls and the occasional texting. We’ve got an air card for our notebook to stay in touch and do things the old-fashioned way – email, browsing, photo/video viewing, stuff.
That’s because the system isn’t very heavy (come on four pounds isn’t that bad!).
We get roughly 2.5 hours of battery life.
There’s plenty of keyboard area for work and hard drive space for storage.
When we’re Wi-Fi connected we’re being charged and when we’re offline we’ve got the power, performance and space to work.
Wedging a netbook in between the features/capabilities of a smartphone and notebook just isn’t a good productivity move.
However, they are putting a lot of margin pressure – at all levels of the value chain – on notebooks.
As Frank said, “You're not nearly as stupid as you look.’
Will we get a netbook?
Sure, probably.
But we’ll do it for the right reason…we can’t stand not being connected all the time!
Good, Bad – Computers aren’t good or evil until the system crashes, data mysteriously disappears or malware producers violate your personal files. When that happens you have a huge hole to climb out of to get back on top of the situation. Photo – 20th Century Fox
Oh there’s another good reason for our getting a netbook…we don’t like our kids being more technology savvy than we are. So we’ll take Richard’s advice…“Everybody just pretend to be normal.”
