Month: February 2012

The Consumer PC Market Today

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For almost 20 years, home (and business) computing has pretty much amounted to one choice: X86 (probably Intel)- based hardware, running a version of Windows. It’s only in  the past 1 to 2 years that we have started to see some real alternatives:

  • Apple’s continued growth of its Mac business. It’s still very much a ‘niche’ player compared with the Windows PC market as a whole, but oh what a niche! Apple controls the entire ecosystem with high margins, world-leading designs, and revenues from all elements of the ecosystem (hardware, software, accessories, and content). Plus, that Windows market is split between 5 to 10 global players, dozens of regional ones, and hundreds of local assemblers — looking at them individually,  Apple is no longer so ‘niche’. It’s No. 3 in terms of Q4 2011 US PC sales and probably between 6th and 8th place globally for the quarter (according to combinations of Gartner and Canalys data — not something I’d recommend doing other than to illustrate a point!).
  • The rise and rise of tablets. Again, Apple’s role here cannot be overstated; the original tablet PCs and, looking even further back, PDAs had managed to carve out small niche markets but were always too underpowered or overpriced to cross the chasm to reach a mass market. The iPad changed all this; a beautifully designed content consumption device (again tied into the Apple ecosystem), it demonstrated that the flexibility and power of a PC (whether Mac- or Windows-powered) was overkill for a lot of tasks and people. Naturally, Apple’s success has bred competition, but aside from a couple of devices — perhaps even only the Kindle Fire — these haven’t really hit a home run yet.
  • Google dabbling with Chromebooks while getting serious about operating systems. Chromebooks are still in the starting blocks, but they may ultimately demonstrate the merits of simpler devices. Chromebooks basically do away with pretty much all local software in favour of cloud services accessed via a browser. If Chromebooks are an aspiration for Google, Android on smartphones and Android-powered tablets are concrete success stories for the search giant. Amazon’s Kindle Fire will probably guarantee Google’s OS overtakes iOS as the most popular tablet OS, as it has done with smartphones. There isn’t much money in this for Google — arguably, the reason it has got so far so fast is by giving away its OS — but it does provide many more devices tied into Google’s ecosystem (Gmail, apps, search) and therefore more advertising opportunities.
  • Microsoft embracing ARM-based hardware. This is perhaps the most interesting area for speculation at the moment (and I’m sure I’ll add my voice to this at some point). The success of the iPad has led Microsoft to look at the ARM architecture more seriously; what was previously too underpowered is now seen as a way of slimming down form factors and delivering superior battery life. That the ARM architecture has developed incredibly fast over the past 2 years thanks to the smartphone market and other tablets hasn’t hurt either. Will Windows ARM tablets be full PC replacements? It’s too early to tell, but probably not; Microsoft won’t want to kill the revenue streams of its other software offerings like Office, and these products are unlikely to command the same price from consumers when offered via a Metro-UI-based app store.

All of the above means that the next 1 to 2 years will be an unprecedented period of change and competition in the PC space — and consumers will be at the forefront of this change; business users are typically slightly more conservative in embracing new platforms. Hardware and business models are only really half the story; we also need to consider what matters to consumers when buying a new ‘computer’ (whatever that may come to mean) and what usage scenarios really play into this. I’ll be looking at both of these in my next posts.

So . . . what’s with the name?

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When discussing my new venture with friends and colleagues, this in one of the first questions I get — which is perfectly valid, given that it’s not an obvious choice. Essentially, in choosing AardvarkA as my company name, I was driven by two things:

1) I really didn’t want to be ‘Jackson Research’ or ‘PJ Consulting’ — partly because those names/domains were already taken (darn you, common surname!), but mainly because I’ve bumped into too many analysts who have set up their own, eponymous firms and with one exception — she’ll know who she is — they have all been unbearable.

2) I have had a long-term obsession with Cerebus the Aardvark by Dave Sims and Gerhard.

Largely coincidentally, it’s also a great YPO (Yellow Pages optimization) name — you’ll almost certainly be at the top of any alphabetical list. That’s why there are so many ‘Aardvark Plumbers’!

Gamification: The New Virtual Worlds?

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Six years ago, I was caught up in (and probably contributed to) the hype around virtual worlds — environments typically built using videogaming technology for training, meeting, or social interaction and entertainment. Second Life (which is still going, believe it or not) was the best known of these. For consumers, the main problem with many of these worlds was that they lacked clear goals — making it difficult to retain a critical mass of engaged users, especially given the limitations of keyboard and mouse control of 3D avatars. (Some of the games that could be classed as virtual worlds, such as World of Warcraft, Star Wars: The Old Republic, and even Minecraft,  work well because of their compelling stories and user-engaging goals. Perhaps we’ll see a successful second wave of virtual worlds as voice/motion control UIs and 3D displays create a more immersive experience.)

Anyway, I was reminded of the above when looking at the newest, hottest “videogames-without-the-actual-game” topic of gamification. While the idea behind gamification is not as fundamentally flawed as that of virtual worlds (ain’t hindsight great!), the field is developing in a very similar way:

1) A couple of visionary firms start “gamifying” their consumer interactions — Mint is a great example here.

2) Other firms jump in with either their own offerings or infrastructure to support gamification — see Badgeville for a good example of the latter.

3) Breathless articles start appearing in the press about how gamification is going to be BIG! These are usually accompanied by new conferences springing up to support the field. See No, Second Life not overhyped versus Inside the gamification gold rush. Ahem.

4) Brand marketers jump in, all hoping that this will give them an advantage — albeit temporary — over their competitors in consumers’ eyes.

5) Profit?

Now, I recognize that being around cutting-edge technology for as long as I have can make you cynical, but I think it’s clear that gamification is not the panacea that many marketers hope it will be. From the consumer’s perspective, we have:

  • The good: Making mundane tasks more interesting is a good thing; setting and achieving goals and sharing experiences makes ongoing commitment more likely — as WeightWatchers knows well. And there are few areas as dull and ripe for sprucing up as personal finance, professional networking (see the BeKnown Facebook app), or regular shopping trips. Gamification is win-win here.
  • The bad: But, as with ‘following’ a product, how many of these different games, badges, and groups can consumers really stomach? Early-adopter brands may gain a fleeting advantage, but competitors will copy them — often at a fraction of the cost, given all the new tools. That’s the reality of modern marketing.
  • The ugly: You the consumer start ‘playing’ a personal finance service, love it to bits, and recommend it to everyone you meet. The trouble is that most other people don’t bite, so the service is shelved (virtual worlds hit a similar stumbling block here); you’ve spent hours getting badges/points/custom items, all of which will shortly vanish. Now, how does that make you feel about the brand concerned?

I’ve experienced this last point first hand recently. I’m a big fan of Japanese role-playing games (JRPGs) in general and the Final Fantasy series in particular — so I jumped at the chance to start playing Square Enix’s Knights of the Crystals Facebook game around 2 years ago and have been dutifully building my characters pretty much every day since. But at the end of this month, it is closing down — and I feel like I’m losing a friend! (I certainly spent more time on it than with any of my real or Facebook friends over the past couple of years.) Before jumping on the gamification bandwagon, marketers need to think carefully about the long-term sustainability of their game — or risk alienating their most engaged  followers.

It is good to be back

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So, after two years of working for Microsoft, I’m back on the industry analyst side of the fence. Exciting times – especially as I’m doing my own thing this time instead of working for a big analyst house like Forrester. In the coming weeks I hope to fill out this site more with some analysis, trends and what I hope to achieve with AardvarkA Research (including why the name!).