desktop

Microsoft's Steve Ballmer argues that the tablet computers (aka slates, media tablets or iPads) are PCs. Steve Jobs argues that they are post-PC devices. There are analogies to trucks, cars and various metaphors for what these new devices symbolize. Some argue that because the iPad needs a PC, it's not a post-PC device.

But how to define a new generation of computing? Since the PC is not the beginning of computing, it may make sense to look to the eras of computing that preceded it.

The first post-mainframe computers worked alongside mainframes and were typically used by engineering departments (vs. the finance and accounting departmental role occupied by mainframes.) They did not require a dedicated (often external) mainframe service team and could be administered by in-department system administrators. Input was not through dedicated data entry personnel and output was not a ream of folded paper. Users could use a CRT terminal to interact with the computer directly. Digital Equipment Corporation, Control Data, HP, Honeywell, Prime, et. al. grew up in the shadow of IBM but thrived. Their products were cheaper and simpler to operate. Initially, the products were not more powerful.

The first post-minicomputer microcomputers (also known as PCs) were used alongside mainframes and mini-computers. They were typically used for 2-dimensional spreadsheets analysis by individuals in many departments and were easier to justify cost-wise than the time-sharing cost structure of the incumbent computers. Many microcomputers were able to access mini-computers and mainframes through terminal emulation software (and sometimes special hardware boards) so they were still able to work with existing business processes. They did not require dedicated personnel for administration but had a shared support department. Input and data storage were on the "desktop" as was printing. Compaq, Dell, HP, Apple and IBM embraced this new form factor. Their products were cheaper and simpler to operate than the previous generation of computers. Initially, the products were not more powerful.

The first post-microcomputer tablets are used alongside microcomputers for tasks such as presentations and entertainment. They have software available that allows access to desktop computers and services dependent on PC-architectured servers. They depend on PCs for data backup and software updates. They do not require IT support. They do not require a keyboard or a desk. Apple and many mobile phone vendors are embracing the new technology. They are cheaper and simpler to operate. The new products are not more powerful.

To define a new generation of computing by its isolation and exclusion of the previous generation is not sustained by the history of computing.

I would suggest that the definition of a new generation of computing is that the new products rely on new input / output methods and allow a new population of non-expert users to use the product more cheaply and simply.

I might add that the consequences of each generational shift are:

1. Consumption increases
2. Skill required decreases
3. Support required decreases
4. There are new applications and use cases
5. The economics are not favorable for incumbents
6. The economics are favorable for new entrants
7. The older generation slowly fades through diminished growth but never disappears

When the iPhone vs. Android rhetorical war heats up, both sides bring up the history of Macs vs. Windows PCs. The commonly held thesis is that Windows triumphed as the PC was commoditized (and modularized). This triumph was at the expense of the over-serving and over-priced Mac.

This is a largely accurate view of what happened during the 90s. But the problem with this thesis is that (1) the PC's job has been slowly changing in the last decade (2) the Mac keeps growing faster than the PC and (3) Apple keeps capturing a vast portion of the profits in the PC industry.

These anomalies or contradictions to the thesis imply that something changed. What changed and can these changes turn the tables on the market and create an opportunity for a new computing disruption?

The PC of the 90s was hired first by companies as a productivity boosting tool and second by consumers as a way to duplicate their work productivity and communications in their personal lives.

However something changed with PCs when the laptop became "good enough". With portable computing, the job the PC was hired to do evolved. It was more important that the product be well designed (for aesthetic value, usability and reliability) than just fast and spacious. The microprocessors were plenty fast but what mattered more was low power consumption, a low profile and tighter integration with software.

The product was also purchased in a different way. A desktop could be purchased on specs alone, sight unseen, from a catalog. But a laptop had to be touched, hefted and the screen had to be observed and the whole design contemplated before a purchase decision was made. The product had an integrated keyboard, display, touchpad and storage. It was not easily serviced by end users. It was, in a word, re-integrated.

You can see how portability changed the job and therefore everything else as well. Consumer tastes became important, retail distribution became necessary and R&D resources had to be applied to solve what was no longer good enough: the whole package.

Vendors which did not prioritize design, retail and R&D were left flat-footed.

At the same time, systems software became more commoditized and productivity software became portable. The old measures of performance were being over-shot while the new measures of performance were under-served.

While this shift was underway on the hardware side, Microsoft continued to improve their product to serve more demanding business productivity jobs. Their software was not getting optimized for this new portable consumer job. They left the new market open to disruption.

In stepped the MacBook with good enough (and improving) office productivity. With excellent appeal along the dimensions of performance consumers demand most of all. It was priced higher than other laptops but the price points were affordable and, inflation-adjusted, lower than they'd ever been. It should not be a surprise that Apple was one of the first vendors to see its portables line become bigger than its desktop lines. The market evolved to the point where what Apple had was what the buyers needed.

The shift to portability is a compelling story for Apple as disruptor in the PC market. It may not result in a complete reversal of the PC hegemony but it allows Apple to grow a product line at triple the growth rate of the market. A market that was considered completely dominated by entrenched incumbents with an unbreakable profit formula.

But with the iPad Apple is clearly also aiming at disrupting the Mac (and, transitively, the PC as a whole.) The iPad can be seen as an evolution toward seamless portability; the mobile computing paradigm shift.

Adobe is one of the last surviving desktop software companies. So is Microsoft. Consolidation happens when an industry matures and excess capacity and excess overhead can be squeezed out of the value chain, giving a temporary burst of earnings growth.

So, in this way of thinking, recognizing that the sun is setting on desktop software, a merger of old schools of thought may make sense. Rather like Sun and Oracle or HP and Compaq.

But then a lot of other things make more sense. Like both companies trying to expand into new growth areas. Like Microsoft talking to RIM or Adobe developing tools for HTML5. Adobe's cash cow products are not going anywhere without a deep reset. Same is true for Microsoft. They will both face these challenges whether standing alone or together.

There would be nothing strange about a Microsoft Adobe merger, but there would be nothing great about it either.

With QNX now firmly roadmapped at RIM and Android spreading among vendors like a virus, I wanted to point out that these operating systems share one ancestor: Unix.

A technical triumph

Technically Linux, which underlies Android, among others, is walled off from Unix from an IP point of view, but the philosophical and architectural lineage goes back to 1969's Unix. It was an amazingly well thought-out operating system which has stood the test of time mostly due to its modular architecture. It was not always clear that Unix would make it this far, and in many ways it was written off.

There is some poetic justice in its comeback. Unix could have become a default for desktop computers. When Windows emerged from the shadow of DOS, Microsoft had the option to base NT on a flavor of Unix. But Bill Gates, no doubt motivated by license fee considerations, hired a group of developers from Digital Equipment Corporation and many elements of the NT design reflect earlier DEC experience with VMS and RSX-11. Microsoft went with that new architecture rather than Unix and that code lives on even in the current Windows 7.

So Unix missed a chance to become the core of the desktop experience throughout the 1990's. It was relegated to the perilous high end: Sun workstations, servers and supercomputers. It seemed to be at a dead end. Fortunately, in stepped open source. Linux picked up the pieces and forged ahead to become a serious server operating system but never got beyond a toehold in the desktop.

The death of Unix(tm) was also forestalled because of the efforts of others. Sun, IBM and even a startup called NeXT kept development alive. When NeXT was acquired by Apple, OS X was born and in 2000 Unix was once again on the desktop.

Meanwhile, the Linux kernel also became device friendly and it was embedded into an increasing number of vertical applications while powering most of the new web servers that fed the dot com era.

Now we've entered a new decade of devices where Unix(-like) operating systems will, on a CPU basis, probably out-install Windows. Not only is iOS based on Unix, but Android and MeeGo and even Bada are based on Linux as are QNX and WebOS. Google, Apple, HP, RIM, Samsung and Nokia are all now betting heavily on Unix or Unix-like implementations. The success is so overwhelming that there are really only two hold-outs: Microsoft and the rapidly depreciating Symbian.

Value Chain Evolution

There is more to this than a sentimental technology riches to rags to riches story. The history of kernel adoption is evidence of the evolution of value chains and the tension between modular and integrated business architectures. It also supports a hypothesis of why Microsoft could not respond to a tectonic shift of power.

As a kernel, Unix was modular which allowed it to scale both down to devices and up to mainframes. It could conform to the applications above it (like being a server or being an embedded controller) and did so far more readily than Windows. In fact, Windows could not conform to applications outside its core PC and server domain.

For Unix, the point of modularity was reached early in the 1990's and, through the Linux implementation, it allowed the lowest layers of the software to become commoditized (and free). This commodity status was actually what Microsoft tried to avoid by integrating Windows with the layers above it. This was a conscious and deliberate decision which also led to trouble with anti-trust regulators. The decision seemed to have paid off. Microsoft won.

However, the very strategy which Microsoft used to maintain a monopoly caused its rigidity of response to a new, post-PC market. Unix fit right in with the new shift in the basis of competition: toward more personal, portable and conformable computing. Windows did not. Microsoft had to build a completely new OS to deal with devices (Windows CE has little if any shared code with Windows NT et. al.). The dual OS strategy continues to hobble Microsoft as each is stretched into new dimensions: the desktop Windows being dragged into the high end and into tablets while the device Windows is re-written to accommodate new input methods.

The modular Unix just keeps conforming to new applications. It helps that it's open source but the open sourcing is a result of the modularity not the cause for it. So far, it looks like there is no stopping the revenge of Unix. It's been a long journey for Unix and I, for one, am cheering the comeback.

This is one of the most thought provoking things I've ever heard.  Some of the implications are unfathomable.  Before we dive into the implications of iAd, here is the exact quote from the Apple Special Event, April 2010 (iPhone 4.0 launch) around 45 minutes in.

When you look at a mobile phone, it's not like the desktop.

On the desktop, Search is where it's at.  That's where the money is.

But on a mobile device Search hasn't happened. Search is not where it's at. People aren't searching on a mobile device like they are on a desktop.

What's happening is that they're spending all their time in apps.

When people are looking for a place they want to go out to dinner they're not searching. They're going into Yelp. They're using apps to get the data on the internet rather than a generalized search.

And this is where the opportunity to deliver advertising is.

Not as part of search but as part of apps.

Jobs is making a set of huge claims:

1. There is no search on devices.
2. There is no money in search on devices.
3. Apps create an inventory of billions of ad impressions every day
4. Apps are better at delivering the data from the internet than a browser
5. Apps are therefore the new browsers and eyeball aggregators

This is heavy stuff.  I believe what gives Apple the confidence to make these claims is the vast amount of data on user behavior that the app store collects. It's possible they're wrong, but it's more likely they're right.

If they're right, what are the implications?  First, obviously, iAd adds up to a lot of cash « Asymco.  Second, this has dire consequences for Google.  Jobs could not be more blunt: search is not where the money is at.

I can chip in some personal experiences that confirm this preference for apps over browser interfaces, but I leave it as an exercise to the reader.