Horace Dediu (@Asymco) drops in to chat on #MWC14

It’s a good thing Horace Dediu got ready to start our Mobile World Congress #MWC14 tweetchat (#IBMMWCChat on 2/24) a few minutes early – because as usual, the dialogue took off fast and went full steam ahead for an hour.

 Here is our basic topic list (ordering is mine, chat was slightly different)

  • Android Commoditization
  • Nokia, Microsoft and Google
  • The OS, The Platform and the Ecosystem
  • Tizen
  • Wearables
  • Monetize This
  • The Operator Challenge
  • Nest (again)
  • The odds and endings

 Android Commoditization

Android Commoditization 

Paul – The implications for the big manufacturers are sure to be huge. @asymco who has the most to lose from this trend?

Horace – Biggest worry would be for Samsung.

Cristene –  that’s a big statement right out of the gate – why? examples?

Horace – Amazon joined by Nokia/Microsoft and Yandex in forking Android. Samsung has been paid off but was likely to move.

Paul – As a strategy, what do you think are the best options for Samsung to deal with these challenges?

Horace – 3 options: Software, software, and software

Horace – Being integrated with solutions is essential. No single module can win when each module is a commodity

Paul – Samsung has their big S5 announcement scheduled for tonight… will that help to slow commoditization?

Horace – Can’t see how it will fight off the Chinese invasion.

Paul – do you think the likely winners will be in this Chinese invasion? Is it all Chinese?

Horace – Chinese devices enable local solutions/brands. It’s more a metaphor.

Cristene – @asymco Clearly the commoditization has been building but it’s only been a two horse OS race, now what?

That answer, we will find comes up in a number of places, as we move to another of the big stories of the week – the Nokia announcement.  (Here’s the take on it from the Verge)


 Nokia, Microsoft and Google

Before the chat started, Sanjay Pannikar posted this question: what does Nokia/Microsoft aim to accomplish with a heavily customized Android phone? something akin to Amazon kindle?

Paul – @asymco now many of my colleagues are wondering where Nokia fits into all of this picture

Thorsten – How did Nokia engage Google to use Android against their own fleet?

Horace – @pbrody The big question in my mind is whether Nokia will teach Microsoft something.

Paul –  @asymco what is the key lesson Microsoft should be learning?

Horace –  Building compelling devices at scale. Hardware is hard.

Rami – @asymco Nokia is positioning Android as a tier below “real” smartphones. Will Android remain in the high end too?

Horace – @ramiahola Android is many things to many people. It’s important to distinguish OS from platform and ecosystem

Paul – @asymco will this fuel the Android Open Source Project (AOSP) and potentially start moving Android away from Google?

Paul – @asymco Google has been tightening their grip on Android – this could be a sign of a backlash?

Horace –  @pbrody They’ll do what they can but let’s not forget what openness means.

Paul – @asymco so are we entering a new era when mobile platforms splinter even further?

Horace – @pbrody 2 major mobile platforms are stable. Ecosystems are where the fights are.

Horace –  iOS and WP are home to one ecosystem each. Android is home to many.

Paul – @asymco So is the issue in Android too many chefs in the kitchen? Certainly enterprise buyers don’t like all that fragmentation

Horace – Crucially, Android is home to Google’s chief ecosystem rivals.

Paul – What would make sense for “not Google” is doing an Android fork like all the cool kids.

Horace – pbrody It’s the nature of openness. Google made its bed. Now it lies in it.

Paul – asymco I think you just gave us the best retweet of the day!

Cristene – @asymco – but that’s a damn big bed…and it seems to belong to a very rich king

Horace – @hermione1 True, but there seems to be a crowd of others in it.

And we should probably just let that joke end right there.


The OS The Platform the Ecosystem

Horace reminded us of what these are in his seminal bog post on the topic: all understand an OS, so let’s look at his definition of platform and ecosystem:

Platform: These are products or infrastructure that allow other products to be ‘built on top’ and can thus charge rents from them…In terms of innovation theory, a platform is a signal to industry that the company is willing to allow its innovations to be extended and thus share in the creativity of adopters…It takes a great deal of work to platformize a product. I would guess 10x more than a similar product which does not allow collaborative innovation. Platforms are difficult to build, require delicate balancing acts to maintain but can be enormously valuable due to network effects

Ecosystem: The word ecosystem as it applies to technology was coined by Palm to describe the app vendors that built apps and the accessories for its Palm Pilot. This is not a common word as it’s largely equivalent to Platform. The subtle difference is that it’s used in a marketing context to signal platform value. Having a large ecosystem implies the acceptance of a platform by a large base of developers. For example a platform may not have a viable ecosystem if there are few developers and/or little economic value ‘on top’ of the platform. Symbian is often cited as being a decent OS, but a poor platform with a mediocre ecosystem.

This 2011 blog post garnered a lot of retweets and reminders.  It’s a critical lesson we may need to remember again.

Paul – @asymco is it too late for any newcomers? Isn’t the history of platforms done leaders set in? No new non-IBM mainframes coming

Horace – @pbrody I’m afraid on the OS/platform front, it’s too late. Ecosystems however can still be built.


On to wearables

Paul –  This (OS debate) surely has a lot to do with their  (Samsung’s) wearables strategy – so it can be more than just software?

Horace – Wearables today feel like smartphones did before the iPhone.

Horace – We have to uncover the jobs to be done for wearables. Inspecting the job gives clues to business model.

Horace – @pbrody E.g. health maintenance. If that can be solved it opens up a trillion dollars of income.

Cristene – @asymco – IMHO, wearables will explode when we equip the aging population with fall detection, med notifications

Horace – @hermione1 Indeed. Many, many open problems that can be solved.

Cristene – @asymco – wearables for safety is a new job, one that governments, health companies & families want to solve


And while we’re (still discussing Samsung), let’s head over to Tizen

Marc – @asymco Now that the first Tizen devices are coming out, do you think it will be a serious option?

Horace – @marchaesen Tizen feels like an OS not an ecosystem.

Shubham – @asymco What’s your view on #Samsung’s new mobile OS #Tizen that was suppose to launch at #MWC14? #Android is here to stay!

Horace – @shubhs77 Tizen is not new and it’s not clear what the platform and ecosystem play is

Paul – @asymco is the Tizen play just Not Google? Showing that you have a strategic alternative to preserve your independence?

Paul – @asymco perhaps Tizen was intended as a warning shot rather than a serious threat

Horace – @pbrody Powerful observation but they lose revenue in either case and gain what in exchange?

Paul -@asymco Samsung could be improving their position behind the scenes with it – we don’t know if they’re actually winning

One thing we always counsel clients, Samsung is brilliant competitor – never count them out. If anyone can make a new OS come to life, it’s likely to be Samsung.


Monetize This – a discourse on Facebook’s 19B purchase of Whatsapp

Sanjay – @asymco fb’s $19B whatsapp buy – what’s the buzz @ MWC? social platforms, analytics cornered by fb?

Paul – @psanay13 great question! All I see here in Barcelona are some very jealous executives. 🙂

Horace – @psanjay13 Can’t speak for others, but my question is about whether Whatsapp can be “monetized”

Horace – I’m thinking of writing a post titled “Monetize this” on the impossible expectations being builtMonetize This

Bhaswar – @asymco @psanjay13 will it be a case of winners curse?

Paul – @asymco Certainly at $19bn, one knows this was not an acquisition built on a discounted cash flow.

@mywickedtwin – Would cover most tech headlines: “@asymco: I’m thinking of writing a post titled “Monetize this” on the impossible expectations”

Cristene – @asymco – I think monetization challenge is that smaller companies are scrappy – the scalable goal comes too late

Paul – @asymco back to WhatsApp for a second..carriers have an even better solution called SMS – they could make it free to compete?

Horace – @pbrody Presumably the messaging models are built around “owning” the traffic and graph

Bhaswar – @IBM_Electronics @asymco @pbrody guess the value would be reduced power of google?

Horace – @pbrody I suspect it was a bargaining chip used with Google. Money/IP is also changing hands there.

While we know Horace’s posts normally get a lot of readers, we can make a prediction that Monetize This will go viral.


The Operator Challenge – Or How to Avoid Being a Dumb Pipe

Burak actually asked the first question just before the chat started, and it took us a while to circle back to it completely, but once we got there, it was fertile ground.

Burak – @hermione1 @pbrody What kind of new services have to be provided by the operators to enable/empower new use cases/new devices?

Horace – @burakkircali Operators are in a bind. Almost all value is OTT. They may have to appeal to governments to bail them out in a few

Cristene – @asymco – are carriers happy or sad about google’s deep ties? is there anyone so good they aren’t worried?

Horace – @asymco: @ibm_electronics @hermione1 Operators are in trouble no matter whose Ecosystem is running over their networks.

Paul – @asymco is it just OTT that’s giving operators nightmares? And why do they insist on ruining the experience so often?

Horace – @pbrody Operator’s dilemma. We need a way to capture and tell it poetically.

Cristene – @asymco, the new nature of ecosystems is coopetition – where can carriers exert influence (and show customers love)?

Horace – @pbrody What’s puzzling is why operators have not exploited the data they have (I suspect they’re not allowed to)

Marc – @pbrody @asymco Whatsapp is more like MMS, which carriers still mistake for a cash cow

Horace –We have to appreciate that operators are regulated and OTT players aren’t. There is much bitterness over this point.

Horace -Operators don’t want to be data pipes but they behave like one every chance they get.

Nest (again) + Google and What Next?

And now we return to a topic where we spent a lot of time at our CES tweetchat – Nest + Google, but this conversation went a whole lot deeper and further.  One of the more interesting pieces of conjecture was Google’s own loyalty to its business model…

 Burak – @asymco What would be the impact of Google’s purchase of Nest on Android mobile ecosystem?

Paul – @burakkircali – great question

Horace – @burakkircali Nest is an asset acquisition. They offer what Moto should have been (my opinion).

Paul – @asymco and by asset here, you mean people

Horace – @burakkircali I don’t see much of an Android angle. I think Google wants to become great in hardware/integration.

Horace – @pbrody Yes. People, IP and some processes.

Paul – @asymco still should we expect to see Nest devices work “better” in the presence of an Android handset with NFC?

Marc – @asymco Isn’t Google most interested in information and data on us and our lives?

Horace – @pbrody Hard to see a huge improvement. I think Nest engineers have some impressive power, coding skills.

Sanjay – @asymco @burakkircali is it one of Google’s big bets on internet of things?

Bhaswar – @pbrody @asymco do you see any industrial applications – AI robots based on android?

Horace – @marchaesen I think you’d be surprised by how little loyalty Google has to its own business model.

Horace -@marchaesen So my answer would be that they don’t care that much about the data.

Paul – Google’s Nest integration strategy, in a picture: 



 Paul – @asymco can you elaborate on the idea that Google is not “loyal” to it’s own business model?

Cristene – @asymco – WHAT?!? they don’t care about the data? As an analyst and data guy, do you think that’s just wrong?

Horace – @bhasu007 @pbrody Industrial/enterprise market is difficult for Google. Difference in DNA.

Paul – @asymco won’t Microsoft have the same issue as Google – reconciling a mix of B2B and B2C? Certainly IBM did not find that easy

Shubham – @asymco I see a lot of potential in #NFC or sensors that would make an IoT sharing info autonomously to tap multiple benefits.

Horace – @pbrody If you offered to Google a business that offered revenues without ads/user data, I think they’d drop it in exchange

Horace – @pbrody Yes, Microsoft leans much more toward B2B (and struggles with B2C)

Paul – @asymco fair point, certainly Nest doesn’t seem to depend on advertising at all

Marc – @asymco But Google’s current business model is purely B2B, selling ad space to companies, they don’t make money off of consumers

Horace – @pbrody Are there any companies which blend both successfully? (See also Motorola before the split).

Horace – @marchaesen Google cares about their users more than they care about their customers. (Yes, it’s complicated)

And that understatement closed us out on Nest + Google, for now.


The odds and endings

At the end, we touch on devices, wishlists and features we really would like to have more of.

Cristene  Any buzz about Xiaomi going on? They rocked singapore selling out in 8 minutes

Horace – @hermione1 Bear in mind that Xiaomi scarcity mostly due to limited production (on purpose).

Cristene – @asymco @pbrody any sightings of curved phones or fun new handset forms?

Horace – @hermione1 @pbrody Just a note: there were many more phone form factors before the iPhone. Lots more.

Paul – @asymco @hermione1 I saw the e-ink covered Yotta phone this morning, looks nice, not sure I would get it myself

Paul – @asymco @hermione1 Also played with the very responsive Jolla phone

Horace – @pbrody @hermione1 Jolla feels like WebOS. Hope it turns out differently.

Abe-san why does nobody sell the e-ink note which has 20 pages enough and it can show some digital data and hand-writing function.

There’s never a dull moment in this industry.  Thanks for reading along.  It was fun.  We have Jean-Louis Gassee and Ben Bajarin’s chats next in the queue and we bet you’ll find them equally as thought-provoking  -c-
Our last chat with Horace for CES can be found here.

Special thanks to @JohnWLewis – who not only created easy to read transcripts of the chat for me for my editing, he has made them available for you too:


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