Editor’s note: Peter Relan is a formerdeveloper and Oracle’s former VP of Internet Division, a serial entrepreneur since 1998, and a Silicon Valley angel investor. Relan founded YouWeb Incubator in 2007, spinning out a string of successful mobile and gaming companies. Follow him on Twitter @prelan.
Even before Apple’s 10 percent stock dip, it was clear that one battle was already over. Put down your arms – Android has won the smartphone OS marketshare war. The competitive drama of the smartphone battle has already unfolded to a large extent and is well understood: Android dominates unit shipment volumes, while iPhone dominates profits associated with smartphones. It may seem like too early a claim, but history tells us Google’s Android distribution model puts the large part of the smartphone market in its corner. No other OS has seen a reversal of fortune this late in the game (think Windows in the early ’90s and Nokia with feature phones in the early aughts).
And yet, many unknowns remain in the larger post-PC-era war, which has only just begun and has already seen an explosion of devices and form factors, all competing to fill the void of the now-ancient desktop computer: tablets, smartphones, minis, phablets, ultrabooks, hybrid laptops. As the market evolves, these devices will be competing to fulfill niche needs, with certain devices bound to flourish and others bound to fail. A number of factors will influence which device types will survive through 2015:
- Consumer and worker choice
- Device distribution channels
- Platform ecosystems
- Technology advances
- Economic development in BRIC
1. CONSUMER AND WORKER CHOICE
So what happens to PCs and laptops? The obvious answer is that the tablet will take over, but there are multiple form factors. Current designations include the large tablet, the mini tablet, and the hybrid tablet (think the Microsoft Surface — a tablet with a removable keyboard and OS designed for both leisure and productivity).
Consumers will be sticking to their large and small tablets for email, Facebook and watching movies; let’s call them leisure activities requiring a light and easy-to-use second screen. These home consumers don’t need a physical keyboard nor do they want it, and at a $250-$600 price point, tablets are hard to beat. Hence the success of the iPad. And the iPad mini with a Retina display could even be the “next big thing.” The Nexus 7 is already in the 7.X-inch form factor, so the mini tablet wars are just getting started.
Prosumers on the other hand, use laptops across different use cases: leisure combined with light productivity work, such as creating documents and presentations. Some prosumers might opt for the ultrabook and mini-tablet combo, but for most, the hybrid tablet will play a crucial role in the coming years. The hybrid tablet is where portability meets leisure meets work-related tasks. However, a consumer tablet in the home will still exist for these families.
Professionals tend to follow the same patterns as the prosumer, although they wait for more proven solutions to emerge. With BYOD allowing professionals to make their own choices for leisure, some might opt for the simplicity and ease of the hybrid, allowing them to use their devices for both work and play. On the other hand, there are a large number of professionals who use high-power software and will continue to use laptops or ultrabooks. In this case, power matters, and hybrid tablets won’t reach the necessary threshold before 2014.
2. DEVICE DISTRIBUTION CHANNELS
Smartphones. The reason Android phones dominate unit shipments in smartphones is simple: Telecom carriers such as AT&T and Verizon love to give away phones and make money on data plans. Android makes this possible because the OS is free and because hardware manufacturers can commoditize the hardware. Even with the carriers giving away the iPhone 4 now with two-year contracts, the power of distribution channels to carry 50 different Android phone varieties with all kinds of (possibly meaningless) features still wins. More open-source challengers will arrive but are unlikely to take off. But carriers are not the best managers of app stores and ecosystems, which are a critical element of the power for distribution leverage. And Apple remains king here from its curated App Store to its high-traffic Apple Store.
Tablets. Tablets are a different story. The distribution channel is obviously not your phone company, but rather the Apple Store, or your electronics store, or online store. Eighty percent of tablets are Wi-Fi-connected, so the carrier has far weaker distribution power. With the competition playing out in stores rather than through carriers, and with Android again offering a larger spectrum of choices over Apple, this will be a close one. Android has the cheapest, most flexible platform, but being three years behind will be hard to overcome in 2013. Look at schools and enterprises today: the iPad dominates.
Laptops. Although Chrome seems to be at the forefront of Google’s enterprise strategy, when it comes to laptops, the Chromebook doesn’t have the enterprise design chops to dethrone Windows 8 yet. Not to mention Windows is already working on bringing its productivity software to the cloud, which was Google’s Trojan horse. Similar to Android and the carriers, Microsoft has an even longer established presence among laptop manufacturers. The “laptop” channel will be fought out between three operating systems: OS X, Win8 and Chrome. OS X gets a great shot in the enterprise because BYOD brings with it iPhones and iPads.
3. PLATFORM ECOSYSTEMS
Apple will continue to dominate the app ecosystem to win the minds of consumers for the “premium” smartphone and tablet market, especially if the iPad mini gets a Retina display. A hybrid tablet is unlikely from Apple, given their distaste for the hybrids produced by the Microsoft camp (although they did say the same about the 7-inch tablet).
Amazon will be the commoditizer of the tablet market with the hope of selling services and content at cheap hardware price points, but 2013 will be a tough year for Kindle as the iPad mini and Android cannibalize the e-Reader, and with Amazon failing to attract a large number of apps to its app store. Music and video will be important, but having software choice is becoming a baseline necessity for consumers. Amazon will find itself in even more trouble when hybrid LCD and e-ink devices hit the market in the coming two years.
Samsung is the one supplier that will drive Android tablet sales and become a strong competitor to the Apple tablets. They have demonstrated the ability to produce a great device with the Galaxy series, and they have both the big tablet and the “phablet” form factor in the market. Plus Samsung is HUGE in Asia, and it owns the entire vertically integrated stack except for the application software ecosystem. Borrowing that from the Android ecosystem works for now. So the real winner of the platform ecosystem remains Google. Samsung only helps to drive volume, and volume attracts developers to Google’s platform since Samsung doesn’t have a developer ecosystem yet.
Microsoft, with the introduction of the Surface this year, has really stumbled onto something. Microsoft will continue working on this hybrid tablet, but inevitably its manufacturing partners will out-innovate the company and Microsoft will do what it does best: sit back and watch someone build their product — just faster and more efficiently.
The “others” are not to be underestimated. Mobile web OSes are the new, new thing. Mozilla and possibly Facebook are trying to figure out how to get the mobile web jump-started. They don’t have app stores and frankly they don’t like app stores. They would love to go back to the future of the web. But HTML5 continues to disappoint them in user experience, so it will be hard to get developers behind the mobile web, at least for another couple of years. In the longer term, the mobile web OSes may well rise to fight the app stores.
4. TECHNOLOGY ADVANCES
There will obviously be advances in both hardware and software over the next two years, but there are three advances that are in development now that will completely change the world of personal devices and technology in general forever: augmented-reality products, smart-home devices and gesture interfaces.
Augmented reality products like Google Glass are the direction in which this kind of innovation is heading. Google Glass has not yet been released and the competition is already gearing up, with Microsoft filing patents for augmented reality glasses set to display real-time information during events. Wearable form factors will change the way business is done and meetings are held; the way we communicate with our loved ones and book plane tickets; the way we see the Internet.
Smart-home devices, such as televisions, are another massive opportunity that have yet to be tackled. With the rumored Apple TV never showing up, this might take longer than expected. Still, we’re seeing early signs of innovation wars coming to the living room.
The gesture interface, kicked off by Xbox Kinect, is picking up steam and should soon be coming to a smart TV near you.
But, none of the above will be the x-factor in the next couple of years.
5. ECONOMIC DEVELOPMENT IN BRIC
Last but certainly not least, the economic development around the world will play an absolutely crucial role to the development and distribution of devices in the post-PC era. The biggest emerging markets – Brazil, Russia, India and China – are exploding as millions move into the middle class. In areas where cost is a major issue, there is incredible opportunity. In India, the feature phone is still by far the most dominant form of phone. And not only phone – it is the most dominant form of Internet access used by consumers. Major suppliers, including Nokia, Apple and Android OEMs are aggressively duking it out.
All of these markets are expanding, with a massive wealth shift creating millions of newly minted consumers. Apple has its sights set on China, and it is entering India with local (meaning lower) pricing for digital content. But the developing world likely belongs to Android, the most versatile platform in the world working on almost any device in the world (other than Apple, of course).
With the compatibility and accessibility of the Android platform and the move toward mobile-focused UIs, I predict that in 2015 an Android OS will power nearly 70 percent of all computing devices.
Based on the above, it seems as if Google will continue to reign supreme and snatch markets from Apple, Microsoft and Amazon with the help of its partner Samsung.