What a Trump presidency means for the tech industry.

I waited a few days to write and publish this piece in order to allow the post-election chaos to settle somewhat. Some might say that the chaos has only grown, and looking at the response to the election around the US and the world, I might have to agree. Regardless, a decision was made on November 8, 2016 that will have ramifications for years if not decades to come. Many people will comment on what this means politically, socially, fiscally and in terms of international relations in the coming days and weeks (maybe months), but my area of focus is the tech industry. What does this mean for us in tech, and how will it impact us in the long and short term?

The first thing we need to address is where the tech industry lies on the political spectrum. This is not as simple as it may seem. While the heart of the industry is in Silicon Valley, in the very liberal San Francisco bay area, the industry itself is made up of many transplants from other parts of the country and the world. The tech industry flourishes with an abundance of talent from all over the world, many here on H1B and other visa types. Most of the patents filed within the tech industry over the last few years have been by immigrants. The tech industry, by nature of its diversity and inclusiveness, is also perceived as very socially liberal. This does not mean that the industry is a one-sided echo chamber. Most people in the tech industry are not California, let alone Silicon Valley, natives. Many come from other parts of the US that are not of the same political leanings, yet they all manage to get along and do great things together. My point here is to illustrate that the tech industry is not one homogeneous political entity. It is a large collection of very different cultural viewpoints, cultural backgrounds, nationalities, religious affiliations (or lack thereof), gender identities, sexual orientations, political viewpoints and social viewpoints. The two main things that almost everyone in the industry share are: high levels of education and high levels of tolerance and acceptance. This is key in framing what this election means for the tech industry going forward.

In the short term, I don't think there will be much change in the tech industry. We do need to address some very glaring issues we saw with respect to social media manipulation and the proliferation of false "news" stories, especially on Facebook, but that will all be resolved by the time mid-term elections happen in 2018. Startups will continue to derive value from their inherent ideas and execution. If a startup was on a pathway to success on Monday, they will still be on that path Wednesday and for the foreseeable future. I can't think of any technologies that face immediate scrutiny from a change in political figureheads, nor can I think of any reasons that the tech industry should fear for immediate changes that would cause potential problems. Some of the toxic rhetoric around immigration could potentially have some spill-over into the H1B visa situation, upon which the tech industry thrives, but the likelihood of that is low at this point. From a financial perspective, the tech industry is one that tends to fund itself, and rarely cares what Wall Street says or does, so any fallout from that angle seems low. Again, because the heart of the industry is in Silicon Valley, in California, it is relatively insulated from the toxic rhetoric against people of different nationalities, faiths, gender identities, sexual orientations, ethnicities, etc. The people of the tech industry will be able to continue working to change the world, relatively isolated from what has transpired.

Bradley Tusk, of Tusk Holdings, also laid out some potential upsides to the change in political leadership.
The odds of seeing activist, tough-on-business, cabinet members who aggressively pursue regulatory action are lower. This also means that pending mergers are far more likely to be approved, charter schools will not face federal opposition, the sharing economy will not risk being shut down by new federal worker classification regulations, the SEC will not aggressively involve itself in private, illiquid companies and assets, and peer-to-peer lending will not face significant federal opposition, among many, many other issues."

In the long term, I think we face some more serious challenges. Going back to the issue of visas and immigrants, there may be a conflict at some point due to how other industries use and perceive the H1B and other visas. While H1B visa recipients in the tech industry are often well paid and major contributors to the industry and the world, other industries have been caught abusing the program. Disney was recently caught using the H1B program to replace higher paid American workers with cheaper replacements. (Note that while the Disney scandal also focuses on tech workers, this is not the same as the larger tech industry in Silicon Valley. That is an entirely different and long story which does not belong here.) If there is to be an overhaul of the H1B program, and many in the tech industry feel there should be, it has to take into account the differences in industries and how they use the program. The abuse needs to stop, but we cannot afford to have a negative impact on the tech industry due to abuse from a few bad actors.

The other area that is slowly becoming an issue is the relentless pace at which technology replaces human beings in most jobs. Many Americans have felt ignored and disenfranchised as they have watched their jobs go overseas. Many of these jobs were manufacturing jobs. Current politicians make a big deal out of this and promise to 'bring the jobs back to America.' They ignore two important facts when they say this. First, the main reason that the jobs left was due to cost. Even if they were able to bring the jobs back, they will never pay a livable wage. Businesses would not be able to generate a profit, so they will elect to close down rather than lose money. Second, and more important to the tech industry, is that technology and automation are now starting to displace workers, even in these low labor markets. Ironically, the manufacturing sector may have come back to the US anyway, but done mostly or entirely by automatons. Technology currently touches nearly all sectors of the US economy and American lives. As technology progresses, increasing automation and artificial intelligence (machine learning) will dramatically increase the efficiency and output of each of these sectors of the economy. Much of this efficiency will be at the cost of human participation (which can be very inefficient), and this can further alienate people who feel they are being left behind. We will need to become better at working with elected officials to transition people out of these roles, before they are forced out.

Other long term concerns have to do with privacy, government surveillance, a fundamental lack of understanding by politicians and non-technical people of encryption and its necessity in the modern world, and the increasing prevalence of hacking by foreign state actors and individuals. I'm not sure how this new administration will approach these issues, as they have been notoriously vague about everything. This is usually a bad sign, as when you start to see vagueness and ambiguity within a startup or company, it usually means the leadership has no idea what they are doing. This new administration will be in over its head from day one, but hopefully there will be some outreach from the leaders within the tech industry to help guide the ship from a tech perspective. As it becomes more apparent how this new administration will approach these issues, I will publish new articles covering how the tech industry can and will respond. Overall, I don't see too many areas for serious contention, but then again, we are in uncharted waters at this point.

In the end, I think Mark Zuckerberg phrased the sentiment in the most positive light, speaking of how he watched the election with his daughter Max.

Holding Max, I thought about all the work ahead of us to create the world we want for our children. This work is bigger than any presidency and progress does not move in a straight line. The most important opportunities of Max's generation - like curing all disease, improving education, connecting everyone and promoting equal opportunity - will take long term focus and finding new ways for all of us to work together, sometimes over decades. 
We are all blessed to have the ability to make the world better, and we have the responsibility to do it. Let's go work even harder. - feeling hopeful. 

Has Microsoft become more innovative than Apple?

The new Surface Studio is an amazing machine that is targeted at ‘creatives’ - Apple’s long time core audience. The new MacBook Pro was an expected upgrade to the venerable portable line for ‘creatives’, but the new OLED Touch Strip seems like a gimmick. Has Apple lost its way?

If you read through my past blog posts, you will quickly see that I am no Microsoft apologist. My feelings toward the Redmond giant have wavered between indifference and hate for most of my computing life. Just about every gadget I own is from Apple, with the exception of a few Chrome devices. Something happened though, when Satya Nadella took over the reigns at Microsoft, and a slow evolution toward a cloud-centric existence seems to have turned the company around from the disaster that was Steve Ballmer. This past week, the two tech titans released new products aimed at the same audience, and I was forced to ask myself “has Microsoft become more innovative than Apple?”

Let’s start with the Apple announcement. Apple has finally released a new MacBook Pro line (not a word on the Mac Pro Desktop), the portable targeted at their core audience of creatives. Intended for powerful portable computing for tasks such as photo, video and sound editing. Apple showed off the power of the new USB-C Thunderbolt 3 ports, as well as new stand-alone monitors from LG. The newest innovation for Apple’s highest-end laptops came in the form of an OLED Touch Strip, which takes the space of the traditional function keys, above the number row on most keyboards. It shows interactive buttons that are context-native to whatever application or task you are working on, as well as having a Touch ID sensor for securely unlocking your Mac by fingerprint or using Apple Pay. Admittedly this is by far my favorite feature after having Touch ID for so long on my iOS devices. The new MacBook Pro is thinner, lighter, and more powerful than its predecessor, while having more battery life as well. The processor options are amenable to most creatives, but the upper limit on memory (RAM) seems to be a bit low for most creatives - at 16GB. All in all, the new MacBook Pro is an amazing product for the mobile creative professional.

The one key product that was not mentioned in the Apple event was the Mac Pro desktop. Now at 3 years old, it was expected to have a refresh, as this is the workstation for the consummate creative professional - more powerful than any laptop can ever be. Perhaps Apple is waiting on the new Kaby Lake processors (expected H1 2017) from Intel to make a refresh more meaningful, but it has left many creatives feeling as if Apple has left them behind in pursuit of a more lucrative and expansive mobile market. 

One company, however, seems to have made a play at this target market segment, just as Apple dropped the ball. Microsoft released its first ever desktop computer, called the Surface Studio, and this beautiful machine is exactly what a creative individual will want, assuming they can stomach using the Windows operating system. Microsoft went a step further to announce that the next major release version of Windows 10 will be called the “Creators Update.” It will be released for free this spring.

The hardware on this new machine is quite simply amazing. It has a 28” 4500x3000 touch-sensitive display, Intel Core i5 or i7 processor, up to 4GB NVIDIA GeForce GPU and up to 32GB RAM (admittedly half of the 64GB a current Mac Pro can hold). It has two hybrid drive options that offer 1TB or 2TB of hard drive space to work in. It has a plethora of ports to connect external devices, and the display works with the Surface Pen (for drawing and note taking). Lastly, though not part of the Surface Studio bundle but available separately, the Surface Dial is an amazing addition to the creator’s tool arsenal. It allows you to access tool menus in a new way, with radial display of menu options, allowing you to simply turn the dial to the selected option. One can’t do this tool justice in text, so you should absolutely check out the videos Microsoft has made available on the Surface Dial info page. I feel like this machine is something Apple would have (should have) designed, not something Microsoft would. It was odd yet impressive to see Microsoft make such a huge entry into the desktop space, especially one so targeted at Apple’s core audience. 

One thing to keep in mind is the traditional replacement cycle for most personal computers. In the enterprise, it is typically 3 years, though some enterprises will extend to 5 years when there are budget constraints or when they adopt a web-portal driven software base. We as consumers do not need new computers every year, nor has it been the norm to replace them every year. I, as a power user, typically replace my machines every 2-3 years, though I do have some older Macs that are approaching 5 years old. The build quality on Apple’s products allows them to remain fully functional and relevant long past the 3 year mark. That being said, if we consider the 3 year mark to be the average refresh cycle, the Mac Pro has passed that mark, and should have been updated. 

Product release cycles for most items that are not mobile phones have slowed down significantly as people are able to use their devices for longer. Even iPad has shown a drastic slowdown in sales as the market has flooded and some of the oldest versions of iPad are still running just fine. The PC market overall is shrinking, and this trend will only accelerate as two major trends continue: 1. Most computing is being done on mobile devices as opposed to traditional desktop and laptop PCs. 2. Many businesses, tired of the cost of owning and managing so many desktops and laptops are moving towards web-portal-driven applications, allowing them to primarily use mobile devices and thin-client “desktops.” As such, it is no surprise that Apple’s own product cycles (the iPhone notwithstanding) will slow down as well.

So, has Apple lost its way? Has Microsoft become more innovative than Apple? It’s hard to say. While I have been underwhelmed by most of Apple’s product releases in the desktop and laptop space for the last few years, I do understand that Apple’s main business today is iPhones. As such, this is where they need to put most of their efforts and money. They must continue to innovate in this key area, in order to keep increasing market share, revenue and profit. At the same time Apple needs to be really careful in how they address their desktop and laptop consumers. For the average consumer, I believe that what Apple is doing is just fine. Again, most people will not replace their desktop or laptop sooner than every 3 years unless it breaks or is damaged prematurely. Likewise, most people will often stay with a machine as long as reasonably possible, so long as it suits their needs, in order to remain fiscally responsible. 

For the power user, the pro and creatives, however, Apple seems to be slipping. Counting myself among this group, I do love to see new, innovative machines as much as the next person, but more importantly, I expect to see a methodical, rhythmic release schedule for these products. For several years now, Apple has gradually transitioned their laptop and desktop machines from ‘user serviceable’ to ‘appliances’, meaning that the user can no longer fix or upgrade components in Apple’s desktop and laptop products. The machine has essentially become an appliance, in which the only way to upgrade is to buy a newer better machine. Because Apple has chosen to go this route, to the chagrin of many, they have implicitly created and accepted the responsibility to provide the upgrade paths that their user base requires. If I buy a new iMac, Mac Pro or MacBook, knowing I cannot upgrade anything inside of them, I expect that Apple will release upgraded versions of these machines, on a regular cadence, so that I can upgrade or replace them when needed. They have dropped the ball completely with Mac Pro, almost completely with the Mac Mini, and somewhat with the new MacBook Pro models. 

It is hard for me as an Apple consumer to decide what I should replace my current MacBook Air with. While Apple did not say that they are doing away with the MacBook Air line, they also did not mention it other than to show how much thinner and lighter their new MacBook Pros are than the current Air. It’s almost as if Apple wants to keep the regular MacBook as the low end product, then have a user step up to a MacBook Pro with no Touch Bar as a MacBook Air replacement, and finally, the MacBook Pros with Touch Bars for the power users and pros. From a strictly product placement vision, this seems solid. It does not, however, fit from a cost perspective. The current MacBook and MacBook Pro without Touch Bar are too expensive to take up the low end of the product line and serve the same purpose the current MacBook Airs did - low cost entry point to the line. Apple really needs to fix this in the next release or two. In order to function in both capacities (product placement and cost differentiation) we need to see a sub $1000 MacBook, a close to $1000 MacBook Pro without Touch Bar, and more expensive MacBook Pro models.

While the Touch Bar on the new MacBook Pros is an innovation in and of itself, the overall machine does not come off as an innovation. This is perfectly OK if you are simply releasing an incremental upgrade to an existing line. For a long awaited re-design of an entire line, however, I feel that we need more. Microsoft has absolutely not out-innovated Apple in the mobile market when comparing the MacBook Pro line against Microsoft’s own Surface Book. The surface book had so many power and heat issues, along with so many unfulfilled promises in the capability of the machine. 

The Surface Pro, however, is one area where Microsoft has pushed the boundaries of two separate devices and tried to meld them into one. This was truly an innovative move, prior to Apple’s release of iPad Pros with keyboards, and the only fault I have found with regular use of my Surface Pro 3 is the absolutely crappy keyboard. Some feel that the keyboard for the Surface Pro 4 is much better, but the keyboard on the Surface Pro 3 is absolute garbage. I haven’t bothered to try and test the Surface Pro 4 keyboard on my Surface Pro 3, but if someone in Redmond is reading this, I would happily test one out and report my findings. 

In the desktop space, the race is much closer. Apple definitely innovated in the design of the Mac Pro, but then dropped the ball after leaving it to stagnate for 3 years. The iMac has continued to get new innovative designs and features, but the new Surface Studio has surpassed it in just about every respect. It is the product that Apple should have designed, but they cannot because they do not believe in a touch-centric PC operating system. It looks like Microsoft has taken the lead here in innovation, and I am not sure that Apple has the willingness to challenge them on this front. Since the PC market is shrinking every year, this may not be a huge deal in terms of revenue and market share, but it is a huge deal in perception among the pros and creators out there. I have been in the market for a new desktop for a few months now, and while I was originally waiting for the new release of the Mac Mini (I prefer to keep my desktop and monitor separate and modular), I am not seriously considering the new Surface Studio. That is the level of innovation that Microsoft has shown here. While I vastly prefer OSX (now MacOS) to Windows 10, I am equally at home with either. If Apple does not release a serious upgrade to the Mini in the next 6 months, with a new quad-core processor option, I will likely look elsewhere. 

Overall, I believe that the innovation score is a dead heat at this point between Apple and Microsoft. This says a lot more about the new direction Microsoft has taken since the amazing Satya Nadella took over, than it does about Apple’s lack of innovation. Always the Apple fan, even I am starting to become concerned that Apple is struggling to innovate in a post-Steve Jobs world. The next 6 to 12 months will tell a bigger story about how these two tech titans will fare in the innovation department moving forward. This must all be taken into perspective, however, with respect to the overall state of innovation at both companies. Apple continues to dominate the innovate the space in mobile phones and tablets, and Microsoft threw the towel in with Nokia. Apple continues to release software of higher quality (for free), across the board, than Microsoft, but Apple has also slipped a few times with regards to their software stability. Microsoft is, thus far, out-innovating Apple in terms of cloud services and software, but Apple is making strides to catch up, At this point, Apple still holds the lead in overall innovation, but Microsoft is making a strong run to catch up.

Beware the Ides of March

It has been almost a year since the last post on this blog. As a matter of fact, the last post was written on the Ides of March, 2015. Suffice it to say, I have been beyond busy in the world of Enterprise Cloud Computing. Perhaps that is a topic for another blog post, but this one is to discuss the rumored upcoming Apple event next month. March is normally a very exciting month for me as it is Easter Jeep Safari time in Moab, UT, but this March, there will be a second reason for excitement, and it almost seems as though the timing is more than a coincidence.

Traditionally, Apple holds the large press event (usually an iPhone event) in early September, and the new iPhones go on sale in late September. There has been a separate event for iPads farther in the past, usually in October (I believe). It was no surprise that as that product line matured and normalized, Apple would eventually combine it with the iPhone launch event, even if iPad releases were a little further out on the horizon as opposed to the iPhone. Keep in mind, though, that there are many other product lines at Apple, not least of them is Apple Watch. In my humble opinion, there are too many to cover at a single yearly event, and even if they could, it makes no sense operationally to release all products at the same time of the year. Apple really needs to get a solid cadence going with respect to public events that is predictable and spaced out enough to allow the supply chain to ebb and flow in a more even manner.

So, if we know the main yearly event is in September (mainly because iPhone is the largest line of business at Apple today), March makes perfect sense for a second yearly event as it is exactly six months away. I am venturing out on a limb here to posit that Apple may be making this a pattern as opposed to a one time event. We'll know next March I suppose. What interests me most about this March event is the rumored new smaller iPhone that is going to launch.

Bear in mind that all of the following is speculation at this point, but it is interesting to me none the less. The iPhone 5se, as it will be called, will be a smaller iPhone with a 4-inch screen. It seems that this phone is designed to meet the demands of a market that prefers smaller phones. The current iPhone 6s and 6s+ are 4.7 and 5.5-inch respectively. While I do know a very small number of people who prefer small phones, my own experience has been that the larger phones are much better. I moved straight to a 6+ from my 5s and skipped the 6 as I have rather large hands, and the small screen on the 4 and 5 lines was a common complaint from me. Initially, the difference was a major adjustment, but within a week or two, I couldn't imagine going back to the smaller phone. Today, I wish I had an even bigger screen, perhaps 6 inches, but I worry that it would enter the realm of ridiculousness, especially the few times I actually raise it to my ear to take a call like a normal phone.

Aside from the size difference, the phone is rumored to be based on the 5s chassis, with upgraded internals what will help run the newest iOS versions and modern apps. It should also be getting the same front and rear cameras as the current iPhone 6, additional sensors, an NFC chip for Apple Pay, upgraded A and M chips from the 6 line (not sure which yet, but A9/M9 are likely due to economies of scale in manufacturing), upgraded LTE/Wifi/Bluetooth antennas and chips, and same colors as the current 6/6+ line. This all sounds great for someone who really wants that 4-inch screen, but it does leave some unanswered questions.

My main question here is what is Apple's angle with this phone? I do understand that some people want smaller phones, but is it really that many? Is there a large enough market to justify making another phone to address that market? Are there enough "hold-outs" refusing to upgrade from old iPhone 4s and 5s that Apple sees a strategic opportunity to cater to them with this smaller phone? Or, is this a possibly play into a lower profit margin area of the overall mobile device market? I'm fairly certain Apple would not price this so low that it would compete with the plethora of junk Android devices littering that end of the market, but maybe they can price it low enough that the Apple name and quality will draw more people up from that segment into a premium segment of the market.

The other interesting angle here could be Apple changing its product mix and market approach. Growth for the iPhone has been phenomenal, but everyone, including Apple, knows this growth cannot be sustained forever. They need to expand into other market segments. Historically, when a new iPhone model is released, Apple takes the current one, lowers the price, and offers it as the economical option. The new line gets new hardware, including new chips, and the old models keep their current hardware. At the scale Apple has to manufacture at today, it may be becoming a problem to maintain two separate supply chains for older and newer models, not to mention two supply chains within those for the larger and smaller phone. It may make sense at this point to increase the product mix to include three phones (small, medium and large) which share many or most of the same internal components, thus simplifying the supply chain and shrinking the manufacturing delta between the models.

I suppose we will find out on March 15 when we see the real specs on the phone and can compare all of the components with the others in the current 6s and 6s+. We will also see if Apple discontinues the sale of the only the older 5s, or also the 6 and 6+. I'm also interested to see if there will be any other announcements, perhaps a new Apple Watch?